China’s market turmoiled overnight after the Caixin Manufacturing PMI fell to 50.5 from 51.5 in November (significantly worse than the median forecast of 51.7 by economists).

The findings reflect uncertainties facing Chinese exports, which have powered the $18 trillion economy’s uneven recovery but may take a hit when Trump takes office later this month.

“Exports dragged on demand amid mounting uncertainties stemming from the overseas economic environment and global trade,” Wang Zhe, senior economist at Caixin Insight Group, said in a statement accompanying the release.

Chinese President Xi Jinping acknowledged new challenges from the external environment in a New Year’s Eve speech on Tuesday.

China’s 10-year government bond yields slid three basis points to 1.64%, a fresh record low. The offshore yuan gained 0.2% after the Chinese central bank set a strong fixing to support the currency.

But it was stocks that felt the brunt of the weakness, with Chinese stocks suffering the worst start to a year in nearly a decade.

“It’s a bit troubling that investors are starting the new year in a cautious mode as this is happening after clearer stimulus signals from Beijing during its December policy meetings,” said Homin Lee, senior macro strategist at Lombard Odier.

“The underlying momentum for China remains quite fragile, and it will take some efforts from the authorities to change the conversation on the country’s medium-term deflationary dangers.”

The CSI 300 Index closed down 2.9% on Thursday, its steepest drop on a year’s first day of trading since 2016. The Hang Seng China Enterprises Index slid as much as 3.1%. 

The bloodbath in Beijing spread across most of Asia with MSCI AsiaPac down 0.6% with Taiwan and Hong Kong suffering most.

“As we position our funds into 1Q 2025, it just seems far more likely that downside risk is far greater than upside for China,” said Xin-Yao Ng, an investment director at abrdn Plc.

The biggest freefallers were the big Chinese banks led by major declines in AgBank, ICBC and CCB

“Financials in HK going ex-dividend contributed to the fall, but sentiment is fragile as we begin the new year,” says Kok Hoong Wong, head of institutional equities sales trading at Maybank Securities

Which leads us to ask, as Christopher Balding questions at The Epoch Times, just how dire is the situation of Chinese banks?

Lost amid all the different announcements of stimulus and busy work made to appear like stimulus is the regularity with which Chinese officials announce the funding of bank recapitalizations. Beijing rolled out small programs to boost consumption and help local governments start investing again, but the biggest funding items prop up bad banks.

All this funding for a sector supposedly with low levels of bad loans forces the question: how bad are Chinese banks?

Banks depend on capital and reserves to cover bad loans and remain liquid to cover daily cash demands from businesses and consumers. Because banks make money by investing that money in low-risk ways, such as lending cash to other banks or homes and businesses, banks do not hold all deposits in the form of cash. Banks hold cash and reserves to engage in their own business and serve the needs of their clients.

Chinese banks, by all official measures, claim to be doing very well. In the past year, most major Chinese banks reported higher levels of capital. Since the pandemic, China reports that official non-performing loan levels dropped from 1.73 percent in January 2022 to 1.56 percent in September of this year, down from 1.59 percent in September 2023. Officially, these numbers should be the picture of health for a banking system.

However, recent funding behavior by Beijing paints a more worrisome picture. In October, Beijing had a 1 trillion yuan bank recapitalization funding in 2024 by selling Chinese government bonds to provide the capital. Though details remain a little murky, China has announced sovereign debt funding amounting to 3 trillion yuan in 2025, with approximately 1–2 trillion yuan designated for additional bank recapitalization. Put another way, within the past three months, Beijing announced a potential bank recapitalization totaling as much as $415 billion, or 2–3 trillion yuan. This seems rather puzzling for a banking sector that is supposedly the picture of health.

The Chinese banking sector is under incredible strain despite the official cheery proclamations. Larger banks are rapidly swallowing small and mid-size banks. Though there is no official word on why these banks have been disappearing quickly, given their known precarious position, the primary suspicion is their risk to the larger system. City and county-wide banks have had to be rescued despite reporting safe and stable financial positions, leading to skepticism about rosy public proclamations.

Chinese banks have stated in their initial public offering documents that their accounting standards do not match those of banks in other countries, even though they use the same words and terms. One bank noted that it classifies a loan as doubtful if the business has not been operational for more than 12 months. Personally, that seems more than doubtful, but I am not a Chinese bank regulator.

As a simple example, in 2016, a Chinese steel company facing financial difficulty reported that a major subsidiary had not paid interest on loans since 2011. Evergrande, the failed mega developer, alone accounted for more than 50 percent of the Chinese economy’s officially counted bad loan reserves. Investors have good reason to be skeptical of official financial statements.

Though no official reason is given for why China has been spending large sums of money regularly on shoring up banks, the official whisper campaign is that in 2025, Beijing will unleash stimulus forces to get the economy going again. While anything is possible, it seems much more likely that Beijing is simply trying to fend off deep financial problems in the banks that keep funding everything they are told to fund.

Beijing has already announced it will start releasing restrictions on local government debt levels with heightened expectations for stimulus in 2025. At the recent Central Economic Work Conference, they shifted from prudent to ease, harkening back to language not seen since the global financial crisis in 2008. This may be true, but bank lending in November and December is below trend. While this may be storing up the ammunition for a 2025 rollout, it seems entirely possible the banks are just in bad shape, and the regular market expectations of Beijing stimulus will once again prove unfounded.

If China unleashes enormous fiscal stimulus in 2025, then there is some logic to the recapitalization splurge. Otherwise, this seems more about quietly staving off a financial crisis. Given the regularity with which Beijing has disappointed the hopes of investors calling for stimulus, it seems like the better bet is not to put your money in a Chinese bank.

US equity futures rebounded strongly on the first trading day of 2025 after 4 straight days of losses, ending 2024 on a soggy note, thanks to – what else – a bounce in tech stocks, even as China suffered its worst start to a new year since 2016. Nasdaq 100 and S&P 500 contracts rallied by at least 1%, although gains eased modestly by 8:00am ET. All the Mag7 names traded higher (Nvidia (NVDA) +1.7%, Microsoft (MSFT) +1%, Alphabet (GOOGL) +1%, Amazon (AMZN) +1.4%, Meta Platforms (META) +1% and Tesla (TSLA) +1%). European energy shares outperformed after a sharp increase in natural gas prices. The euro fell to the weakest against the dollar in over two years. Treasuries and European government bonds gained. Bitcoin extended its rally to a third day. Macro data today includes initial and continuing jobless claims, as well as the Mfg PMI and construction spending.

In premarket trading, Mag7 names all gained pushing the Nasdaq more than 1% higher: Apple (AAPL) is little changed, Nvidia (NVDA) +1.7%, Microsoft (MSFT) +1%, Alphabet (GOOGL) +1%, Amazon (AMZN) +1.4%, Meta Platforms (META) +1% and Tesla (TSLA) +1%. Here are some other notable premarket movers:

• CACI International (CACI) rises 1% and Maximus (MMS) climbs 2% as Raymond James turns bullish on both, noting opportunities in the government services industry after stock weakness driven by news around President-elect Donald Trump’s spending-cut commission, known as the Department of Government Efficiency.
• MicroStrategy (MSTR) rises 4%, up with other cryptocurrency-exposed stocks, as Bitcoin gained ground after a bumper year; Coinbase (COIN) +3, Riot Platforms (RIOT) +4%
• Neumora Therapeutics (NMRA) sinks 79% after saying Phase 3 KOASTAL-1 study of navacaprant for treatment of major depressive disorder didn’t show statistically significant improvement on primary or key secondary endpoint.
• Topgolf Callaway (MODG) rises 8% as Jefferies upgrades to buy, saying the stock appears to be oversold at a time when the golf market is supported by robust tailwinds.
• Unity Software (U) climbs 9% as a block of 1.32 million shares in the video-game tool maker was traded at a market value of $29.7 million on Tuesday night.

US stocks are poised to snap a losing streak that took some shine off the S&P 500’s best two-year run dating back to the days of the Clinton administration. The index has surged more than 50% since the start of 2023, driven by the Mag7 tech megacaps amid enthusiasm about the boost to profits from artificial intelligence.

“At the beginning of the year, analysts tend to be pretty optimistic — you have pretty robust year-on-year earnings forecasts,” Daniel Morris, chief market strategist at BNP Paribas Asset Management, said on Bloomberg TV. “Even if we don’t quite get say 20% earnings growth for Nasdaq, the way analysts might suggest, if it’s only 15, likely markets will do well.”

Meanwhile, an attack on revelers celebrating New Year’s in New Orleans thrust US domestic security back into the spotlight less than a month before Donald Trump is sworn in as president. The FBI is probing that incident as well as the deadly explosion of a Tesla Cybertruck outside of Trump’s hotel in Las Vegas.

Going back to markets, investors will have some early 2025 economic data to process Thursday, including US jobless claims. In the months to come, the growth outlook in Europe and China, the Federal Reserve’s policy path and Trump’s agenda will be among the most pressing items on traders’ radars.

In Europe, the Stoxx 600 fell 0.2%, reversing earlier gains as auto and bank shares dragged. Energy stocks outperformed, tracking gas prices which rose to the highest since October 2023 as the transit deal between Russia and Ukraine expired on New Year’s Day, with no alternative in place.and as the region braced for freezing winter temperatures without Russian supplies delivered via Ukraine.

In Asia, sentiment was subdued, with Chinese equities leading declines as data pointed to a slowing economy and traders looked ahead to potentially higher tariffs. The MSCI Asia Pacific index fell as much as 0.6%, sliding for the 3rd day in the past four, and posting the biggest decline in nearly two weeks as key markets reopened after the New Year holiday, with TSMC, China Construction Bank and ICBC contributing the most to the drop. Chinese stocks had their worst start to the year since 2016, with the CSI 300 index closing 2.9% lower. The country’s manufacturing activity slowed in December, further raising concerns about a recovery for the continent’s largest economy. Stock benchmarks also fell in Taiwan and Hong Kong, while Australia’s climbed. Japanese markets are closed through Jan. 6 and New Zealand remains on holiday.

“As we position our funds into 1Q 2025, it just seems far more likely that downside risk is far greater than upside for China,” said Xin-Yao Ng, an investment director at abrdn Plc.

In FX, the Bloomberg Dollar Spot Index rose 0.1%, trading at session highs as the Euro plunged. The Aussie dollar is the best performer among the G-10’s, rising 0.5% against the greenback, while the pound fell 0.4%. However, all eyes are on the euro which tumbled to 1.031, the lowest since 2023. The euro’s slump against the greenback reflects concerns about European growth and monetary policy divergence with the US. There are concerns export-orientated European economies will be hit by US trade tariffs and expectations the European Central Bank will cut rates more aggressively than the Fed. Many strategists are forecasting a slide to parity with the dollar or even lower this year.

In rates, treasuries climbed, with US 10-year yields falling 5 bps to 4.52%, following similar moves across core European rates ahead of weekly jobless claims data at 8:30am New York time. Treasury yields are lower by 3bp to 4.5bp across maturities with gains led by intermediates, richening the 2s10s30s fly by around 2bp. Focal points include an expected raft of corporate bond issuance during January, with up to $200 billion of offerings expected. Bunds also rise, albeit to a lesser extent with German 10-year borrowing costs falling 3 bps.

In commodities, oil prices advanced, with WTI rising 1.4% to $72.70 after an industry report signaled US crude stockpiles continued to shrink. A report from the American Petroleum Institute showed inventories fell by 1.4 million barrels last week, which would be a sixth straight drop. Gold rose. Spot gold climbs $21 to $2,646/oz. Bitcoin rises above $96,000.

The US economic data calendar includes jobless claims (8:30am), December final S&P Global US manufacturing PMI (9:45am) and November construction spending (10am). December ISM manufacturing is ahead Friday. No Fed speakers are scheduled for Thursday. Barkin is scheduled to speak Friday at an event hosted by the Maryland Bankers Association

Market Snapshot

• S&P 500 futures up 0.6% to 5,970.50
• STOXX Europe 600 little changed at 507.19
• MXAP down 0.2% to 181.30
• MXAPJ down 0.4% to 567.31
• Nikkei down 1.0% to 39,894.54
• Topix down 0.6% to 2,784.92
• Hang Seng Index down 2.2% to 19,623.32
• Shanghai Composite down 2.7% to 3,262.56
• Sensex up 1.8% to 79,933.12
• Australia S&P/ASX 200 up 0.5% to 8,201.24
• Kospi little changed at 2,398.94
• German 10Y yield little changed at 2.35%
• Euro little changed at $1.0360
• Brent Futures up 0.6% to $75.08/bbl
• Gold spot up 0.5% to $2,637.93
• US Dollar Index little changed at 108.42

Top Overnight News

• Joe Biden said authorities are investigating if there’s a possible connection between the New Orleans truck attack — which left at least 15 people dead — and the Cybertruck explosion in Las Vegas. The FBI said an ISIS flag was recovered from the vehicle in New Orleans. The suspect, US Army vet Shamsud-Din Jabbar, was killed at the scene and may not have acted alone, the FBI warned. The Sugar Bowl in New Orleans was rescheduled to today. Elon Musk suggested the truck blast outside Donald Trump’s hotel was an act of terrorism. BBG
• US dockworkers and port employers are poised to restart negotiations on January 7th, according to Bloomberg
• China’s Caixin manufacturing PMI for Dec falls short of expectations at 50.5 (down from 51.5 in Nov and below the consensus forecast of 51.7). Also, Hong Kong’s retail sales for Nov fall short of expectations, coming in -7.3% Y/Y (vs. the Street -3.4%).  BBG
• Apple is offering discounts of up to CNY 500 on its iPhone models in China from January 4-7th. The promotion, aimed at defending its market share against local competitors like Huawei, applies to several models, including the iPhone 16 Pro and iPhone 16 Pro Max, Reuters reports. Separately, UBS lowered its iPhone unit and revenue estimates for December, citing weak iPhone sell-through. It’s analysts revised its revenue forecast to USD 120.8bln and EPS to USD 2.25, both below consensus. Apple Services’ revenue forecast was slightly raised, however, and UBS maintains a Neutral rating on Apple, with a USD 236 price target.
• ECB’s Lagarde expresses optimism about hitting the central bank’s 2% inflation target in 2025. BBG
• Gaza ceasefire deal unlikely to happen before the end of Biden’s administration as negotiations between the two sides have hit an impasse in recent days. WSJ
• Deutsche Bank is targeting the Americas to boost its fixed income trading business, as part of a plan to expand its investment bank and rebuild its operations in the region. FT
• Oil rose after US crude inventories fell by 1.4 million barrels last week, the API is said to have reported. That would be the sixth weekly draw and bring total holdings to the lowest in more than three months if confirmed by the EIA today. Distillate inventory jumped the most in a year. BBG
• TSLA is set to report Q4 deliveries on Thurs and anything north of 500K is likely to be “good enough” (the company needs to hit 515K+ in order to have growth in deliveries for the full year 2024). Barron’s
• Nvidia will likely enjoy another year of robust performance as the CPU-to-GPU transition accelerates and competition (including from AMD and custom chips) takes only a small sliver of share. Barron’s

A more detailed look at global markets courtesy of Newsquawk

ASX 200 +0.5%; CSI 300 -3.1%; Hang Seng -2.2%; Nikkei 225 closed overnight. China’s manufacturing PMI slowed to 50.5 in December from 51.5 in November, missing expectations. Capital Economics said that while the Caixin manufacturing PMI suggests that factory activity softened in December, wider economic momentum still looks to have improved thanks to faster growth in services and construction, and adds that increased fiscal support should continue to lift growth in the near-term given that deficit spending is likely to be front-loaded at the start of 2025. Ahead, Bloomberg writes that investors are anticipating further economic stimulus, especially amid concerns over potential tariffs from President-elect Trump’s return to the White House.

Top Asian News

• China’s MOFCOM says it added 28 US entities on list of export controls; firms on the list include Lockheed Martin (LMT), Raytheon Missiles & Defence (RTX), and General Dynamics (GD). Bans exporting dual-use items to firms to safeguard China’s national security. Adds 10 US firms to unreliable entity list for involvement in arms sales to Taiwan.

European bourses began the European session on a firmer footing, in contrast to a mostly negative APAC session; China considerably underperformed after the region’s poor Manufacturing PMI figures. Soon after the cash open, equities then gradually dipped lower with Europe now displaying a mostly negative picture, but without a clear catalyst. EZ Manufacturing PMI were revised a bit lower, but ultimately sparked little move in the complex. European sectors initially opened with a positive bias, but now display a mixed picture. Energy is the clear outperformer today, for two reasons; firstly, crude oil prices are a touch higher today, helping to prop up the likes of Shell and BP. Secondly, gas companies such as Saipem, and Eni both benefit from the strength in gas prices after Gazprom halted natgas supplies via Ukraine. Banks are found at the foot of the pile today, joined closely by Consumer Products; the latter weighed on by Luxury names, which is being hit following the poor Chinese Manufacturing PMI metrics overnight.

Top European News

• Comments on 31st Dec: European Central Bank President Christine Lagarde expressed optimism that the ECB will reach its 2% inflation target in 2025. She noted significant progress in 2024 and confirmed that efforts would continue to stabilise inflation sustainably at the target level.
• Riksbank Minutes: Deputy Governor Jansson believes the 2025 cut needs to come quite early in the year, in January or possibly at the meeting after that in March. 

FX

• The USD has kicked 2025 off on a modestly weaker footing vs. most peers with newsflow relatively light around the US ahead of tomorrow’s House speaker vote; in recent trade, the Dollar has pared earlier losses to trade flat on the session. DXY remains on a 108 handle and was granted some mild reprieve following a pullback in European stocks. DXY currently sits towards the top end of the 31st December range of 107.86-108.58.
• EUR a touch firmer vs. the USD with fresh macro drivers from the Eurozone on the light side aside from a minor downward revision to December’s EZ manufacturing data and recent comments from ECB President Lagarde who noted that the Bank aims to hit its inflation target this year.
• JPY is flat vs. the USD after USD/JPY slipped below 157 in early European trade with no clear driver behind the move and Japanese markets closed overnight. For now, the pair is contained within the 31st December range of 156.01-157.54 with potential interim resistance coming via the 21DMA at 157.16.
• GBP lagging vs. the USD in quiet trade with not much in the way of fresh fundamentals for the UK aside from a downward revision to the UK December PMI print. Cable has delved as low as 1.2487 with the next target coming via the December 2024 low at 1.2474 and the May 2024 low at 1.2446.
• Antipodeans are both firmer vs. the USD and top of the G10 leaderboard with no follow-through from disappointing Chinese manufacturing PMI data overnight. AUD/USD is currently caged within the Dec 31st range of 0.6189-0.6231; the lower bound of which was the 2024 low. NZD/USD is also within the 31st December range at 0.5587-0.5646.

Fixed Income

• USTs are in the green as the region awaits its own data prints which include weekly jobless claims before the Final Manufacturing PMI for December and then the US Treasury will announce sizes for next week’s 3yr, 10yr reopening, and 30yr reopening sales; no changes to the auction sizes are anticipated. Currently at the top-end of a 108-18+ to 109-03 band, though it remains shy of 109-06 from the end of 2024. Benchmarks are perhaps deriving impetus from the soft China data (more below) and the relatively tepid European tone.
• A slightly softer start to the session for EGBs, though the benchmarks have been picking up in recent trade with the risk tone tepid. Bunds to a 133.76 high. Earlier, saw some modest two-way action seen around the morning’s Final Manufacturing PMIs which saw the EZ revised down slightly, Germany and France unrevised and Italy revised higher.
• Gilts are in-fitting with EGBs; the region’s own Manufacturing PMI figures were revised a touch lower but sparked no real reaction. Similarly to Bunds, Gilts initially in the red but are lifting into the green and at the upper-end of 92.18-43 parameters, resistance at 92.64 from the last trading day of 2024.

Commodities

• WTI and Brent hold an upward bias, despite the lack of fresh fundamentals, but with gains coming alongside strength in natgas after the Ukraine/Gazprom transit deal expired without renewal (details in the bullet below). Brent Mar sits at the upper end of a USD 74.72-75.71/bbl parameter thus far.
• Dutch TTF prices gapped higher this morning with the front-month hitting EUR 51/MWh before wiping out gains to sub-EUR 49/MWh (vs EUR 48.889/MWh prior close on Dec 31st). Russian gas via Ukraine stopped after a 2019 transit agreement expired on January 1st, 2025, with Ukraine refusing to renew the contract due to ongoing hostilities with Russia.
• Precious metals in general hold an upward bias as the Dollar kicks the year off on the backfoot. Newsflow for the complex has been light. Spot gold resides in a USD 2,622-2,639.90/oz range thus far as it reapproaches levels closed to its 50 DMA (2,659.07/oz).
• Overall, a mixed and tentative mood in the base metals complex with prices failing to garner much traction from the softer Dollar amid the overhang of downbeat Chinese PMI data. 3M LME copper currently resides in a USD 8,782.50-8,878.50/t range.
• Weekly API energy inventory data reportedly showed headline crude stocks drawing down by -1.4mln bbls (exp. -2.8mln), gasoline stocks built by +2.2mln bbls (exp. +0.3mln), while distillate inventories built by 5.7mln bbls (exp. -0.1mln); the more widely followed DoE weekly energy inventory report will be published later today.
• Gazprom has halted natural gas supplies through Ukraine following the expiration of five-year transit agreements on January 1st. Gazprom said that Ukraine’s refusal to extend the agreements left it without the technical and legal means to continue the gas transit.
• UAE’s ADNOC sets Feb Murban crude OSP at USD 73.28/bbl vs prev. USD 72.81/bbl.
• Oman sets 2025 budget on an avg. oil price of USD 60/bbl, according to State news.
• China is to raise retail fuel prices from January 3rd, according to NDRC; to raise gas and diesel prices by CNY 70/t respectively from Jan 2nd 2025

Geopolitics

• US President-elect Trump is reportedly preparing to increase activity against the Houthis, according to journalist Stein. “Trump and his people are interested in increasing their activity against the Houthis. Among other things, the administration is expected to turn to the Gulf states to upgrade the regional coalition.”. “It is possible that if Trump agrees to give the capabilities to defend themselves against the Houthis to the UAE and other Gulf states, such as Saudi Arabia, they will agree to join actively.”

US Event Calendar

• 07:00: Dec. MBA Mortgage Applications, prior -0.7%
• 07:00: Dec. MBA Mortgage Applications
• 08:30: Dec. Continuing Claims, est. 1.89m, prior 1.91m
• 08:30: Dec. Initial Jobless Claims, est. 221,000, prior 219,000
• 09:45: Dec. S&P Global US Manufacturing PM, est. 48.3, prior 48.3
• 10:00: Nov. Construction Spending MoM, est. 0.3%, prior 0.4%

DB’s Jim Reid concludes the overnight wrap

Welcome back, hope you all had a relaxing break, and Happy New Year. As it’s the start of the new year, we’ve just published our annual performance review for 2024 (link here), looking at how different assets performed over the year just gone. Overall, 2024 was another strong year for asset returns, with economic growth surprising on the upside and central banks finally beginning to cut rates. That meant the S&P 500 posted a total return of +25%, marking the first time since the late-1990s that we’ve had back-to-back annual returns above 20%. However, with rate cuts taking longer than expected, bonds struggled to gain traction. Indeed, the 10yr Treasury yield moved up for a 4th consecutive year for the first time since the 1980s. And with several lingering concerns around inflation and geopolitics, gold prices saw their biggest gain since 2010. See the report for a full recap of the year just gone.

So with 2024 out of the way, obviously all minds are now thinking about what’s going to happen in 2025. But don’t expect to get many clues today from the first trading day of the year. In fact, for the last 4 years, the first trading day has been a contrarian indicator, with the S&P 500 ending the year in the opposite direction it moved on the first day. For example, we began 2024 with three consecutive daily declines, before the index ended the year up more than +20%. By contrast, 2022 saw an all-time high on day one, before we then witnessed the S&P’s worst annual performance since 2008.

As we look forward to the year ahead, it’s also worth remembering that none of the last 5 years have exactly gone to plan or consensus in the macro sphere. 2020 was the best example of that, with the pandemic making the 2020 outlooks redundant by the end of Q1. And since then, the surprises have kept on coming. After all, the surge of inflation in 2021 surprised virtually everyone if you look back at consensus forecasts. Then in 2022, markets were caught completely off guard by the most aggressive rate-hiking cycle since the 1980s. By 2023, the consensus was then expecting a US recession that didn’t happen. And in 2024, the upside growth surprises continued, and the S&P 500 has just seen its strongest two-year performance since the late-1990s. For some thoughts on potential curveballs that could happen this year, Jim and I put out a chartbook last month looking at some positive and negative tail risks for 2025 (link here).

In terms of what the year ahead might bring, Q1 is set to bring several political events, including the inauguration of Donald Trump for a second term as US President on January 20. In addition, tomorrow will see the new session of Congress begin, where the Republicans will have a majority in both the House of Representatives and the Senate. So for markets and the economy, a big question will be how the new administration moves on new tariffs, and which countries they’re focused on.

Thus far, we’ve already seen markets react in response to Trump’s social media posts, having discussed new tariffs on China, Canada and Mexico. But it’s still an open question as to whether various deals might be reached with other countries to avoid higher tariffs, or whether they’ll get imposed, which in turn opens up the risk of retaliatory tariffs in response. So there’s the potential for a significant shift in global trade patterns, and we know from Trump’s first term that markets can be very reactive to any tariff news.

Staying on politics, on February 23 we’ve then got the German federal election taking place, which has been brought forward by several months following the collapse of the federal coalition last year. For investors, a key focus is on whether there might be any changes to the constitutional debt brake after the election, which in turn could enable a more expansive fiscal stance with more borrowing. But in economic terms, even if there is a change, any easing in the debt brake would more likely be a 2026 story, given that it normally takes a few months for a government to be formed after coalition negotiations, and it would then take time for those policies to be implemented. For more information, see our economist’s Germany outlook here.

In the meantime, central banks are set to stay in the spotlight in 2025. Over the course of 2024, most of the major central banks finally began to ease policy, with both the Fed and the ECB cutting rates by 100bps. Moreover, they’ve signalled that further rate cuts are ahead, with the Fed’s dot plot pointing to another 50bps of cuts this calendar year. But for both the Fed and the ECB, headline and core inflation rates are still lingering slightly above the 2% target, and we know that there are potential price pressures in the pipeline, not least from any new tariffs. So it’s going to be interesting to see if we do get the additional rate cuts that markets are pricing in, or whether this will be another year (as with the last three) where market expectations prove to be too dovish.

Elsewhere, the Bank of Japan are still moving the other way and normalising policy, with markets pricing in further rate hikes for this year. The BoJ was a big focus for markets in 2024, particularly around the summer, when their rate hike was a contributing factor to the unwinding of the yen carry trade and the significant turmoil in early August. So that’s an important story to keep an eye on, and whilst we’ve been away the 10yr JGB yield closed at its highest level since 2011 on December 27.

Otherwise, geopolitics will remain in focus, and another key story over the break has been that Russian gas has stopped flowing via Ukraine to Europe following the expiry of a transit deal. So this is a potential issue for central European countries in particular, who’ll have to find alternative supplies. Moreover, European natural gas futures closed at a one-year high on New Year’s Eve of €48.89/MWh. Now it’s worth bearing in mind that prices are still well beneath their levels seen throughout the entirety of 2022, but European gas storage ended 2024 at its lowest year-end level in three years, and the recent increase in prices is set to add further to inflationary pressures.

Overnight in Asia, 2025 hasn’t got off to a particularly good start in trading so far. Weak data hasn’t helped matters with China’s Caixin manufacturing PMI coming in softer than expected in December, at 50.5 (vs. 51.7 expected). Against that backdrop, the CSI 300 (11.56%), the Shanghai Comp (-1.21%) and the Hang Seng (-1.51%) have all seen clear declines this morning, whilst South Korea’s KOSPI (-0.22%) has also lost ground. Japanese markets remain closed until next week.

Those declines overnight come on the back of a clear risk-off move since Christmas. Indeed, the S&P 500 has lost ground for 4 consecutive sessions for the first time since September, falling -2.62% over that time. That’s been driven by losses among tech stocks, with the Magnificent 7 down by a larger -5.30%, which took some of the shine off a very strong overall performance last year. That said, futures are pointing towards a recovery this morning, with those on the S&P 500 (+0.41%) and the NASDAQ 100 (+0.58%) both advancing. Meanwhile in Europe, futures on the Euro STOXX 50 are up +0.53% this morning.

To the day ahead now, and data releases include the US weekly initial jobless claims, along with the December manufacturing PMIs from around the world. There’s also the Euro Area M3 money supply for November.

Welcome to the second day of 2025.

Federal authorities and investigative teams are probing a potential military connection between a US Army veteran who displayed an Islamic State (IS) flag and was described as “hellbent” on causing maximum damage by steering a Ford F-150 Lightning (EV) into a crowd on Bourbon Street, killing at least 15 people and injuring dozens, and another US Army veteran who drove an explosives-filled Tesla Cybertruck that detonated almost like a VBIED outside Trump’s Las Vegas hotel just hours after the Bourbon Street massacre.

Two law enforcement sources familiar with the New Orleans truck-terror-ramming attack and the Las Vegas incident told NBC News that federal investigative teams are probing a potential military connection between the two individuals involved in both attacks.

New Orleans terror suspect Shamsud-Din Jabbar, 42, who died in a subsequent close-range firefight with police after the ramming attack, was a US national and Texas resident. He worked in the US Army’s human resources and information technology departments between 2006 and 2020, including a deployment to Afghanistan in 2009. 

What do you make of the fact that Shamsud-Din Jabbar, 42, was an American citizen born in Texas, who served in the U.S. Army for many years and posted a message on social media that he was inspired by ISIS? pic.twitter.com/IuwIKCIE92

— Simon Ateba (@simonateba) January 2, 2025

The suspect in the Cybertruck explosion at Trump’s hotel in Las Vegas has been identified as “Matthew Livelsberger,” according to Newsweek. 

🚨 CONFIRMED: The Daily Mail confirms that the Las Vegas Cybertruck terrorist was MATTHEW LIVELSBERGER, and that he previously served at the same military base as the New Orleans terrorist Shamsud Din Jabbar. pic.twitter.com/yD2LphPibl

— Autism Capital 🧩 (@AutismCapital) January 2, 2025

NEW: The Army Veteran who blew up a Tesla Cybertruck in front of the Trump International Hotel in Las Vegas has been identified as 37-year-old Matthew Livelsberger.

Livelsberger served 19 years in the Army, 18 of them were spent with Special Forces as an Intelligence and… pic.twitter.com/bFcUz2qiqs

— RedWave Press (@RedWave_Press) January 2, 2025

Denver-based station ABC7 reported that Livelsberger once served at the same base as Shamsud-Din Jabbar. However, no evidence yet confirms whether they had direct links of any sort. 

However, both vehicles used in New Orleans and Las Vegas were rented from San Francisco-based Turo.

Turo wrote in a statement, “We do not believe that either renter had a criminal background that would have identified them as a security threat, and we are not currently aware of any information that indicates the two incidents are related.”

Louisiana Attorney General Liz Murrill told NBC earlier that investigators believe multiple people were involved in the Bourbon Street massacre. She said authorities believe explosive devices were made in an Airbnb rental in the New Orleans metro area.

“We know that these individuals had rented the house were using it for that purpose,” Murrill said.

Murrill also said she wanted to postpone the Sugar Bowl at the Caesars Superdome in New Orleans for another day. The football game is currently scheduled for tonight after it was postponed following the attack.

Murrill noted that “the community is safe” because of the increased law enforcement presence in the city. However, the delay of the Sugar Bowl may only suggest that something larger is unfolding. 

Here we go. 

FBI Hostage Rescue Team callsign aircraft seems headed to New Orleans. The quick reaction team is always on four hour readiness to move. Considering when attack took place, looks like they are moving en masse with all the gear. Going cell hunting… pic.twitter.com/L7Kju4zlNL

— Tom Rogan (@TomRtweets) January 1, 2025

In a recent discussion on the Shawn Ryan Show, former CIA targeting officer Sarah Adams warned of a potentially devastating attack planned by Al-Qaeda terrorists on American soil.

Former CIA Officer Warns: 1,000 Al-Qaeda Fighters In US For Next Homeland Attack https://t.co/YXALAWaf8P

— zerohedge (@zerohedge) January 2, 2025

Finally, with just a few days left until Trump is inaugurated, we can’t help but wonder at the timing of this sudden chaos.

Authored by Steve Cortes via RealClearWire.com,

Time to prioritize the citizens and taxpayers of our homeland…

When considering immigration policy, we must first affirm that America is a country, not merely an economy. We are a national family, not a corporation. Incoming Vice President J.D. Vance said it well when he stated at the 2024 Republican National Convention that “America is not just an idea. It is a group of people with a shared history and a common future. It is, in short, a nation.”

Indeed, the economy of America exists to serve those people, those citizens … and NOT the other way around. We are far more than cogs in an economic machine, than simple inputs into a GDP model.

Just as important as enterprise, America must work always to exalt our shared culture, heritage, and ideals. In this regard, building broad prosperity is far more important than just growing topline GDP. America’s strongest economic eras prioritized a Main Street capitalism that sustains and grows families and communities through the distributism of financial success.

In contrast, a fixation on massive corporate profits concocts a false policy north star that distorts our fraternal bonds and dehumanizes the masses. So, America at its best emphasizes economic subsidiarity, the philosophy of widely dispersed economic power. But mass migration predominately suppresses the working classes and centralizes economic power among a small cadre of credentialed, connected elitists who derive disproportionate benefits from the constant flow of cheap foreign labor.

Accordingly, in recent days, the winning 2024 Republican coalition stirs into tumult as a needed and healthy debate unfolds regarding legal migration to the United States. This argument juxtaposes populist nationalists vs. the international, business wing of the nascent Trump 2024 coalition.

The issue of immigration drove much of the impressive Trump victory on November 5, winning the popular vote, sweeping every swing state, and piling up massive gains in deeply blue jurisdictions like New York City. Those voters who rallied to President-elect Trump demand real action to secure America’s border and fix a badly broken immigration system that serves the interests of multinational conglomerates and nongovernmental organizations, to the detriment of everyday American citizens.

On specifics, Trump voters almost universally agree on a massive crackdown on illegal migration, but major fissures open up regarding the legal side of immigration. This issue resonates as the total foreign-born population of America exploded under Joe Biden, and now stands at 50 million people, the highest percentage in American history at 15% of the population. This massive cohort eclipses even the levels of the Ellis Island era of the Industrial Revolution, when the need for human labor was nearly insatiable.

That period of massive immigration poured into an America that provided almost zero safety net for migrants and into a country that demanded assimilation. After that period of heavy inflows, restrictionists prevailed and America’s foreign-born population share plunged in the 1950s, to only 5% of the country, as American workers thrived and patriotism pervaded. Then, after the 1965 Hart-Celler Immigration Act was signed by Lyndon B. Johnson, the flow of foreigners began to soar.

In addition to the upsurge in legal migration, the flow of illegals vaulted higher following Ronald Reagan’s misbegotten decision to amnesty illegal aliens in 1986. Now, America faces an all-out crisis as Biden threw open the front door to our homeland with reckless disregard for public order or the prerogatives of American citizens.

Americans have clearly had enough of this porous border radicalism, including worker visa programs like H-1B which are massively abused and serve the interests of C-suite American executives and Asian foreign nationals, while undermining the pay and job stability of American citizens. These programs were intended to allow the truly exceptional outliers of the world to enter and assimilate into America. But, like so many government programs, visa programs have been hijacked and perverted by powerful corporate interests, both here and abroad.

After a lot of online debate, it seems the populist nationalists prevail, with Elon Musk agreeing with the most potent and efficient reform of all: requiring large salaries and fees from employers to bring in such foreign workers. The super wealthy mogul, himself a legal immigrant, posted on X that worker visas only make sense  by “raising the minimum salary significantly and adding a yearly cost for maintaining the H1B, making it materially more expensive to hire from overseas than domestically.”

Bingo. Therein lies the solution.

Now, the devil is in the details, of course. So, a reasonable annual fee for each incoming worker on a visa should be at least $50,000, with half going to the state of the business and half to the federal government. The average minimum salary for these workers should be at least $250,000 per year, and should be mandated to stay above three times the median household income as determined by the Census Bureau ($80,000 in 2023).

Such high minimums would guarantee that work visas only welcome in the truly talented stars that will bring big advances to American society. Instead of a worker replacement program that undercuts Americans, this new system would bring in a very small but super-talented pool of outperformers – and it should replace the entirety of current, confusing worker visa programs.

If these foreign workers are actually essential, then U.S. firms will willingly pay the high fees and salaries!

Once these reforms are joined with strict border enforcement and vigorous deportations, then America will reclaim sovereignty, build diffused prosperity, protect our culture, and pave the way for a new “roaring ’20s” period ahead. Such a roadmap can also maintain the unity of the broadening America First coalition.

Authored by The Empowerment Alliance via RealClearEnergy,

Much has been said in recent months about America’s energy production and consumption. Specifically, which types of energy are optimal for today and — perhaps more importantly — for our needs tomorrow is a subject from town halls to coffee shop conversations and kitchen tables.

Bloomberg Intelligence’s research shows data centers, buildings filled with servers and other computing equipment for data storage and networking that supports operations and artificial intelligence (AI), could be responsible for as much as 17% of all U.S. electricity consumption by 2030. 

One data center can require 50 times the electricity of a typical office building, according to The Department of Energy.

As America wrestles with its future energy needs, this indisputable fact remains: Natural gas is the affordable, reliable and clean energy source that should serve as the benchmark by which all other energy sources are measured.

Consider:

• Carbon dioxide emissions from electricity generation have declined 61% due to increased use of natural gas over other sources like coal, according to The American Gas Association.
• The restarting of coal plants underscores the real issue, which is the need to build more gas-fired power plants fairly soon.
• U.S. utilities and investors plan to add 133 new natural gas-fired power plants to the nation’s grid, according to S&P Global Market Intelligence data, by 2030.
• Renewable energy sources can’t keep up with our growing energy needs.

A tale of two Heartland states

One community in Omaha, Nebraska, is considering restarting an old coal power plant. We understand the urgency here, but the neighborhood that has had some of the worst air pollution in the region should consider other options. 

The fact that they’re bringing a coal plant online in Nebraska illustrates the dire situation facing officials and energy companies with AI and the growing need for affordable, reliable energy for decades to come.
Here’s a better example from the neighboring state of Kansas, which is what The Empowerment Alliance (TEA) advocates should be happening nationwide.

• Kansas’ largest electric utility plans to build two new natural gas plants by the end of the decade.

Evergy, which serves 1.6 million customers in Kansas and Missouri, will construct combined-cycle natural gas plants — each with a 705-megawatt capacity — in 2029 and 2030.

A key takeaway comes from Democrat Gov. Laura Kelly, who said the plants would ensure reliable energy, including in emergencies or periods of high demand, like hot summer days. “As Kansas continues to transition to more sustainable energy, we’re doing it responsibly. These plants are much cleaner than traditional coal plants.”

We agree with Gov. Kelly’s rationale and we encourage other states with growing data center footprints, such as Ohio and Virginia, to follow suit.

Energy Security ARC

At TEA, we have a plan for our energy future called the Energy Security ARC. Natural gas is the obvious solution to our clean energy needs.

The two examples above underscore the crossroads that many communities, large and small, are facing regarding energy choices. The decisions made affect local jobs (165 new jobs in this city), and will have a direct impact on consumer costs for decades. 

So they shouldn’t be taken lightly, based on these facts:

• The U.S. is the world leader in lowering carbon emissions, largely because of increased use of natural gas for electricity generation.
• Increased use of natural gas for electricity generation is the top reason for power sector emissions reductions over the past 17 years — almost double the impact compared to renewables.
• In 2022 alone, the shift to natural gas provided an emissions reduction equivalent to 156 coal-fired power plants operating for a year.

There are various practical options for energy, and those may include nuclear and coal. But natural gas is the clear choice when discussing affordable, reliable and clean energy. This pertains to millions of households, small businesses, family farms, factories and technologies still being developed.

Natural gas is America’s trusted energy choice — past, present and future.

The Empowerment Alliance was formed in 2019 to offer common-sense energy solutions that promote production and consumption of Affordable, Clean, Reliable natural gas. We believe that our nation’s energy independence is essential for America’s independence.

Authored by Michael Snyder via The Economic Collapse blog,

What kind of year is 2025 going to be?  If you ask 1,000 different people that question, you will probably get 1,000 different answers.  There are some that are very optimistic about the year ahead, but there are others that are very pessimistic about the year ahead.  In fact, Gallup just conducted a survey that discovered that most Americans believe that 2025 will be a year of “political conflict, economic difficulty, international discord, increasing power for China and Russia, and a rising federal budget deficit”…

Americans foresee a somewhat challenging year ahead for the country, based on their predictions for various aspects of U.S. affairs and daily life. Majorities of U.S. adults think 2025 will be a year of political conflict, economic difficulty, international discord, increasing power for China and Russia, and a rising federal budget deficit.

I agree with all of that.

The U.S. is facing both internal and external turmoil, and our economy is very rapidly moving in the wrong direction.

But another major global health crisis would make things so much worse.

In recent weeks, so many of the usual suspects have been doing interviews in which they warn that a bird flu pandemic among humans has become inevitable.

Do they know something that the rest of us do not?

Already, we are starting to see public officials freak out.  The state of California recently declared a state of emergency, and now it is being reported that Arizona has detected bird flu in the wastewater in the cities of Phoenix, Tempe and Surprise…

Bird flu has been detected in wastewater in multiple metro Phoenix cities, county health officials confirmed Monday.

Routine wastewater surveillance in Phoenix, Tempe and Surprise — the three cities in the county where monitoring occurs — confirmed the presence of avian influenza, according to a press release from the Maricopa County Department of Public Health (MCDPH).

The influenza subtype, which includes bird flu as H5N1, has been detected in multiple locations in the Valley in the past couple of months.

Meanwhile, the bird flu continues to spread like wildfire among animals all over the nation.

123 million birds, most of them chickens and turkeys, have already died in the United States alone.  And now a farm in Ohio that has nearly a million chickens has been infected…

Ohio agriculture officials are investigating after avian flu was detected in nearly one million chickens in Darke County.

The National Veterinary Services Laboratory confirmed Highly Pathogenic Avian Influenza was detected in Darke County on Dec. 27, involving 931,302 chickens.

Since it’s an active case, the ODA did not identify the individual farms.

Cats are dying from coast to coast too.

In Oregon, it has been determined that a cat that recently died from the bird flu caught it by eating turkey-based cat food…

Experts and some public officials are warning against raw pet foods after a cat in Oregon was found to have died from a product contaminated by bird flu. The maker of that cat food, Northwest Naturals, has since recalled certain batches of the turkey-based food.

If humans start getting infected and dying on a widespread basis, it really will be a nightmare scenario, and the level of panic that we will witness will be off the charts.

It appears that 2025 will also be a year of war.

The U.S. and Israel are openly talking about conducting a pre-emptive strike on Iran’s nuclear program, North Korea is threatening to invade South Korea, and long-range NATO missiles continue to hit targets deep inside Russia.  In response, the Russians just fired missiles at Kyiv…

Russia launched an aerial attack on Ukraine on Tuesday, striking the capital and other regions with multiple missiles and drones.

Ukraine’s air force reported a ballistic missile threat at 3:00 a.m. (0100 GMT), with at least two explosions heard in Kyiv minutes later. Another missile alert was issued at 8:00 a.m. followed by at least one explosion in the city. Missile debris fell in the Darnytskyi district of the capital with no reports of casualties or damage, the local administration said.

Elsewhere, Chinese President Xi Jinping is boldly declaring that “reunification” with Taiwan is inevitable and nobody will be able to stop it…

No one can stop China’s “reunification” with Taiwan, Chinese President Xi Jinping said in his New Year’s speech on Dec 31, laying down a clear warning to what Beijing regards as pro-independence forces within and outside of the island of 23 million people.

In the past year, Beijing has stepped up military pressure near Taiwan, sending warships and planes almost daily into the waters and air space around the island in what Taiwanese officials view as a creeping effort to “normalise” China’s military presence.

Will 2025 be the year when China finally pulls the trigger?

When it happens, we will instantly be at war with China.

Ominously, the Chinese are in the midst of “the largest military build-up of any nation in the world since Germany in the 1930s”…

According to a report by a national security expert, the People’s Republic of China has ordered the largest military build-up of any nation in the world since Germany in the 1930s, raising concerns about the military threat presented by China.

On top of everything else, it appears that Afghanistan and Pakistan are on the brink of “all-out war”…

Fears of an all-out war erupting between Afghanistan and Pakistan are rising after the Taliban sent troops to the border as the two countries continue to trade deadly strikes.

The Afghan Taliban has unleashed a series of devastating artillery strikes on Pakistani military checkpoints along the tense border, sparking fears of a full-blown conflict between the two neighbours.

The hardline Islamist group boasted it had obliterated ‘several’ Pakistani positions and mobilised battalions of fighters to confront any retaliation from Islamabad, in a chilling show of force.

While all of this is going on, our entire planet continues to become even more unstable as well.

On average, we experienced a “billion dollar disaster” in the United States about every two weeks in 2024.

Just think about how crazy that is.

And that doesn’t even count all of the “billion dollar disasters” that have been happening in other nations.

Sadly, this is just the beginning.

Today, we are being warned that a massive underwater volcano off the coast of Oregon that is thousands of feet tall is likely to erupt in 2025…

Scientists have warned that an underwater volcano off the coast of the northwestern US is likely to blow sometime in 2025.

The volcano, called Axial Seamount, is more than 3,600-feet-tall and sits half a mile underwater just 300 miles off the coast of Oregon.

Our world is going completely nuts, but for the moment those at the very top of the economic pyramid continue to party like it is 1999.

On Tuesday, it was being reported that the 500 wealthiest people in the world now have a combined net worth of 10 trillion dollars…

The world’s 500 richest people got vastly richer in 2024, with Elon Musk, Mark Zuckerberg and Jensen Huang leading the group of billionaires to a new milestone: A combined $10 trillion net worth.

An indomitable rally in US technology stocks played a key role in turbocharging the trio’s wealth, as well as the fortunes of Larry Ellison, Jeff Bezos, Michael Dell and Google co-founders Larry Page and Sergey Brin. The eight tech titans alone gained more than $600 billion this year, 43% of the $1.5 trillion increase among the 500 richest people tracked by the Bloomberg Billionaires Index.

If you are one of the lucky few that is sitting on a giant mountain of money, life may still seem pretty good for the moment.

But a day of reckoning is coming for them too.

2024 was certainly a chaotic year, but I am entirely convinced that 2025 will be much more wild.

Brace yourself for what the next 12 months will bring, because it appears that all sorts of craziness is about to start breaking loose.

*  *  *

Michael’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

Authored by Haley Zaremba via OilPrice.com,

• Rare earth elements are crucial for clean energy, advanced technology, and modern warfare, making them a new axis of geopolitical power.

• China currently dominates the global rare earth market due to its near-monopoly on refining capacities.

• Western powers are concerned about China’s control over rare earth supply chains and are seeking to diversify sources and develop their own refining capabilities.

Rare earth elements are the new oil. This group of 17 metallic elements has become indispensable for the clean energy transition and for modern manufacturing in general. These elements have unique characteristics that make them essential ingredients for the future of technology.

“[Rare earths] just change everything about automobiles; about green technology; about the accuracy of weapons systems. And so they’ve just become essential.” said Jim Kennedy, the president of ThREE Consulting, a rare earths consultancy.

“You want a Prius? You need rare earths. You want a long-range Tesla? You need rare earths. You want a cruise missile that is accurate to 1 meter? You need rare earths.”

The particular utility of rare earth elements primarily comes from their uses as catalysts and magnets in traditional and low-carbon technologies. Other important uses of rare earth elements are in the production of special metal alloys, glass, and high-performance electronics. Rare earth elements “have remarkable physical and chemical properties that make them arguably the superheroes of the periodic table,” Ryan Castilloux, the managing director of minerals consultancy Adamas Intelligence, told Foreign Policy.

Rare earths aren’t really as ‘rare’ as the name would lead you to believe. These minerals are naturally occurring all over the world – but the key lies in finding them in great enough concentrations to make their extraction worth the time and money required. 

All of this serves to make rare earths the new axis of geopolitical power on a global scale. The nations that have naturally occurring reserves of these elements and the capacities and resources to extract and refine them will find themselves wielding enormous financial and political leverage in the coming years.

So which countries are at the top of this new geopolitical totem pole?

China is far and away the largest producer of rare earth elements. After China, which provides about 38 percent of the world’s raw rare earth minerals, Vietnam has the next biggest rare earth reserves, accounting for about 19 percent. Then there is Brazil with 18.1 percent, Russia with 10.4 percent, India with 6 percent, Australia with 3.5 percent, and finally a tie between the United States and Greenland, accounting for 1.3 percent each. No other country has more than one percent of rare earth reserves. 

However, out of all these countries, only one really has geopolitical control of rare earth supply chains and all of the secondary markets that rely on those materials, and that country is China.

China supplies about 85–95 percent of the world’s refined rare earth minerals and has dominated the global market since the late 1990s. This is because Beijing has a near-monopoly on rare earth refining capacities. As we know, a handful of other countries also have significant reserves of critical rare earth elements, but lack the established infrastructure necessary to process them for use in an efficient or cost-effective manner.

China alone accounts for 85-90 percent of the world’s rare earth mine-to-metal refining. What’s more, Chinese refineries supply 68 percent of the world’s cobalt, 65 percent of nickel, and 60 percent of EV-battery-grade lithium. As a result, a whopping 75 percent of all EV batteries are made in China.

There is significant concern that if other nations rich in rare earths don’t step up to compete with China, this is giving Beijing entirely too much leverage and creating a market that is anything but free. So far, however, some experts contend that such worries are overblown. But it’s no secret that rare earths are the new oil, and Western powers are scrambling to regain control. Global tensions around rare earth are certain to heat up in coming years, and mitigating such lopsided control of the market will be critical to maintaining balanced trade mechanisms.

This graphic, via Visual Capitalist’s Marcus Lu, measures diversity across OECD countries by their percentage share of foreign-born population.

Data was accessed via The Migration Observatory at the University of Oxford, and are as of 2022 or latest available year.

What is the OECD?

The OECD (Organisation for Economic Co-operation and Development) is an international organization that promotes policies to improve global economic and social well-being. It provides a platform for governments to collaborate on issues like trade, education, and environmental sustainability.

The OECD has 38 member countries.

Data and Key Takeaways

The data we used to create this graphic is listed in the table below.

Among OECD members, Mexico, Japan, and Poland are the most ethnically homogenous.

Mexico’s status as a developing country means its one of the world’s largest sources of immigrants for other countries. People typically emigrate from Mexico to seek better economic opportunities in places like the United States.

Japan, has a similarly homogenous population, even though it is an advanced economy. This could be due to things like language and cultural barriers, as well as stricter immigration policies.

Meanwhile, countries with the highest share of foreign-born population include Luxembourg and Switzerland, two wealthy nations with small populations and a high standard of living.

Both countries are able to attract professionals from around the world thanks to their developed industries (e.g. finance) and close ties with the European Union.

If you enjoyed this post, check out The Top Countries Losing People to Emigration on Voronoi, the new app from Visual Capitalist.

Authored by Andfrew Korybko via substack,

New York Times contributor Rajan Menon wrote in a mid-December op-ed that Trump is unlikely to agree to give Ukraine the security guarantees that Zelensky is demanding in temporary lieu of NATO membership. He’s apparently unaware that Trump will soon inherit the bilateral security agreement that the Biden Administration reached with Ukraine in June. It essentially institutionalizes existing US military aid for Ukraine and obligates it to resume the present scale and scope of such if the conflict reignites.

Nevertheless, Menon’s factually inaccurate assessment raises the question of whether Trump would terminate that agreement as part of his plan to “Pivot (back) to Asia” for more muscularly containing China, which his administration could never do in full if it maintains such commitments to Ukraine. Last June’s document stipulates that “Either Party may terminate this Agreement by providing a written notification through diplomatic channels to the other Party” within six months of planning to abandon it.

It’s therefore legally feasible, but Trump would predictably get a lot of flak from his “deep state’s” Russophobic hawks, though he’d then free the US up to “Pivot (back) to Asia” without worrying about being dragged back into another proxy war with Russia in Europe. Moreover, by depriving Ukraine of the US security guarantees that it took for granted, he’d make it less likely that Kiev would violate the ceasefire in an attempt to manipulate America and others into fighting Russia on its behalf afterwards.

Far from reducing the chances for peace, Trump would greatly raise them by withdrawing the US from the so-called “coalition of the willing” that Ukraine aims to pit against Russia through its machinations. Without American participation, Ukraine would be much less likely to provoke another conflict with Russia since it couldn’t take for granted that its other security guarantee partners (e.g. the UK, Germany, Poland, etc.) would risk war with Russia if NATO’s core member isn’t willing to do so anymore over this.

Another important point is that Trump’s reported plan for NATO, whereby he’d pressure them to spend more on defense and assume more responsibilities for their own security, would automatically become a fait accompli in this scenario. He wouldn’t have to bargain with or threaten them since they’d do this on their own out of their self-interests. Knowing that there’d be no chance of the US directly intervening to save Ukraine if the conflict reignites, they’d step up and begin doing what they should have decades ago.

The years of freeloading off of the US would instantly end, thus enabling Trump to accelerate America’s “Pivot (back) to Asia” and redirect the resources that he’d save in Europe to that theater instead. It’s therefore a win-win from the perspective of the US’ grand strategic interests, albeit one that requires tremendous political will. If Trump is serious about implementing his foreign policy agenda, then he should terminate the US’ bilateral security agreement with Ukraine on his first day of office.

Authored by Pepe Escobar,

It’s a dazzling Tuscan winter morning, and I am inside the legendary Dominican church of Santa Maria Novella, founded in the early 13th century and finally consecrated in 1420, in a very special place in History of Art: right in front of one of the monochrome frescos painted in 1447-1448 by master of perspective Paolo Uccello, depicting the Universal Deluge.

Paolo Uccello: Universal Deluge. 1448 fresco at Santa Maria Novella, Florence. Photo by Pepe Escobar

It’s as if Paolo Uccello was depicting us – in our current times of trouble. So inspired by neoplatonic superstar Marsilio Ficino – immortalized in a chic red robe by Ghirlandaio at the Cappella Tornabuoni – I tried to pull off a back to the future and ideally imagine who and what Paolo Uccello would feature in his depiction of our current deluge.

Let’s start with the positives. 2024 was the Year of the BRICS – with the merit for all the accomplishments going for the tireless work of the Russian presidency.

2024 was also the Year of the Axis of Resistance – until the serial blows suffered during the past few months, a serious challenge which will propel its rejuvenation.

And 2024 was the year that defined the lineaments of the endgame in the proxy war in Ukraine: what remains to be seen is how deep the “rules-based international order” will be buried in the black soil of Novorossiya.

Now let’s turn to the auspicious prospects ahead. 2025 will be the year of consolidation of China as the paramount geoeconomics force on the planet.

It will be the year where the defining battle of the 21st century – Eurasia v. NATOstan – will be sharpened in an array of unpredictable vectors.

And it will be the year of advancing, interlocking connectivity corridors – the defining factor in Eurasia integration.

Not by accident Iran is central to this interlocking connectivity – from the Strait of Hormuz (through which transits, daily, at least 23% of the world’s oil) to the port of Chabahar, which links West Asia with South Asia.

Connectivity corridors to watch are the return of one of the top Pipelineistan sagas, the 1,800 km-long Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline; the International North South Transportation Corridor (INSTC), which links three BRICS (Russia-Iran-India) and several aspiring BRICS partners; the China-Pakistan Economic Corridor (CPEC), the flagship Belt and Road Initiative (BRI) project; and last but not least, the fast advancing Northern Sea Route (or Northern Silk Road, as the Chinese call it), which will eventually become the cheapest and fastest alternative to the Suez canal.

A few days before the start of Trump 2.0 in Washington, Russia and Iran will finally, officially sign a comprehensive strategic partnership deal in Moscow, over two years in the making: once again, a key deal between two top BRICS, with immense, cascading repercussions in Eurasia integration terms.

A completely sealed channel of negotiation

Dmitri Trenin, respected member of Russia’s Foreign and Defense Policy Council, has what is so far the most realist road map for an acceptable end of the proxy war in Ukraine.

“Acceptable” does not even begin to describe it – because from the point of view of the collective West political “elites” which bet the farm and the bank on this war, nothing is acceptable except Russia’s strategic defeat, which will never happen.

As it stands, President Putin is in fact containing elite sectors in Moscow who favor not only cutting off the head of the snake but the body as well.

Trump for his part has less than zero incentive to be dragged into a further quagmire; leave that to the clueless European chihuahuas.

So a possible drive towards a wobbly “peace” agreement also suits the Global Majority – not to mention China, which understands how war is bad for business (at least if you’re not in the weaponizing racket).

When it comes to an always possible “existential” escalation, we’re not out of the woods yet; but there are still three weeks left for some major terror-fueled coup, as in a false flag.

The first two months of 2025 will be absolutely decisive, when it comes to sketching a possible compromise.

Elena Panina from RUSSTRAT has offered a concise, and sobering, strategic assessment of what may pan out.

What Trump essentially craves, like a trashy McDonald’s burger, is to look like the ultimate Alpha Male. So Putin’s tactical negotiating strategy will not be focused on undermining Trump’s tough guy act. The problem is how to pull it off without undermining Trump’s pop star power – and without adding more fuel to the NATOstan warmongering pyre.

Putin holds an array of trump cards close to his chest – related to Europe, the Brits, China, Ukraine itself and the Global South as a whole.

Determining spheres of influence will be part of a possible agreement. The thing is no specific details should be leaked – and must be kept impermeable to Western intel.

That means, as Panina notes, Trump needing a completely sealed channel of negotiation with Putin, which even the MI6 cannot crack.

A tall order, as privileged Zio-con silos across the Deep State are dizzy with the latest Old Testament psycho-pathological victories in Lebanon and Syria, and the way they enfeebled Tehran. Yet that does not mean the Iran-Russia-China-BRICS link is in jeopardy.

The dynamics are set; tread carefully

Putin and the Security Council should be ready to implement a quite complex, step-by-step diplomatic game, as they know that the trifecta of defeated, supremely angry Democrats, Brits and Bankova will apply maximum pressure on Trump and turn him into “an enemy of America” or some similar crap.

Moscow will accept no truce and no freeze: only a real solution.

It that doesn’t work, the war will continue in the battlefield, and Moscow has no problems with that – or with more escalation. The final humiliation of the Empire of Chaos will then be total.

Meanwhile, Cold War 2.0 between China and the U.S. will advance more on the pop sphere than in substance. The sharpest Chinese analysts know that the real competition is not over ideology – as in the original Cold War – but over technology, from AI to upgrading seamless supply chains.

Moreover, Trump 2.0, at least in principle, has less than zero interest in unleashing a proxy war – Ukraine-style – on China in Taiwan and the South China Sea. China has way more geoeconomic resources than Russia.

So it’s not exactly intriguing that Trump is floating the idea of a G2 between the U.S. and China. The Deep State blob will see it as the ultimate plague – and fight it to death. What’s already certain is assuming this goes ahead, the European poodles will be left drowning in a dirty swamp.

Well, political “elites” that appoint braindead specimens like the Medusa von der Lying and the batshit crazy Estonian chick as top representatives of the EU; who start a war against their most important energy supplier; who fully support a genocide broadcast 24/7 to the whole planet; who are obsessed on eradicating the culture which has defined them; and who at best pay only lip service to democracy and freedom of speech, these “elites” do deserve to wallow in filth.

On the Syrian tragedy, the fact is Putin knows who the real enemy is; certainly not a bunch of Salafi-jihadi head-chopping mercenaries. And the Sultan in Ankara is also not the enemy; from Moscow’s perspective, for all his lofty dreams of replacing “Central Asia” with “Turkestan” in Turkiye’s school textbooks, he is a minor geoeconomic and even geopolitical player.

To paraphrase the inestimable Michael Hudson – perhaps our Marsilio Ficino dressed by Paolo Uccello as a writer in a chic red robe – it’s as if in this pre-deluge juncture American elites were saying, “The only solution is total war with Russia and China”; Russia is saying, “We hope there’s peace in Ukraine and West Asia”; and China is saying, “We want peace, not war.

That may not be enough for reaching a compromise – any compromise. So the dynamics are set: the U.S. ruling class will keep imposing instances of chaos while Russia, China and BRICS will keep testing in the “BRICS lab” de-dollarization models, alternative set ups to the IMF and World Bank, and eventually even an alternative to NATO.

An anarchy and War of Terror cornucopia on one side; cool-headed, coordinated realism on the other. Be prepared – for anything. From Renaissance Florence, one of the – few – peaks of humanity, now living in memory, tread carefully across this flame-filled 2025.