US equity futures drop, and global stocks slide after Fed chair Jerome Powell signaled the Federal Reserve was in no rush to cut interest rates, and unease built over the composition of Donald Trump’s cabinet. As of 8:00am ET, S&P futures were down 0.5%, off session lows; and pointing to a second day of declines; Nasdaq 100 futures were down 0.9% with Mag 7 mostly lower: AAPL, MSFT and META are all 1.0% lower. Drugmakers Moderna, Novavax and BioNTech all slid in New York premarket trading after Trump picked vaccine-skeptic RFK Jr, as his Health secretary. Domino’s Pizza Inc. was among the prominent gainers, after Buffett took a small stake in the restaurant chain. Europe’s Stoxx 600 index slipped 0.3%, on track for its fourth weekly drop, with pharma sector among the biggest laggards, while the MSCI Asia Pacific Index climbed as much as 0.7%, snapping a five-day loss. Bond yields are modestly lower, and the USD retreated, trimming its weekly gain, as some market participants took profit before key data later on Friday and ahead of speeches from Federal Reserve policymakers despite Powell’s clearly hawkish comments. Commodities are mixed, with oil flat, reversing an earlier loss of -1.4%; base metals are lower, while precious metals rise.

Today, we will receive a slew of growth data: more clarity on the Fed’s path may emerge Friday, with retail sales data due and a host of Fed officials set to speak. Bank of America real-time credit and debit card data suggest a big miss in today’s retail sales print. We also get the October Industrial Production data.

In pre-market trading, Moderna and other vaccine makers fell in premarket trading after President-elect Donald Trump said he was tapping vaccine skeptic Robert F. Kennedy Jr. to lead the Department of Health and Human Services. Moderna -2%, Novavax (NVAX) -1%. Domino’s Pizza rose 6% after Berkshire Hathaway bought stock in the pizza chain as Chairman Warren Buffett cut back on some long-held investments. Here are some other notable movers:

• Alibaba ADRS (BABA) rises 3% as a profit beat offset revenue that came in below analyst estimates.
• Applied Materials (AMAT) drops 8% after the semiconductor capital equipment company gave an outlook that raised concerns over chip spending.
• Despegar.com (DESP) rises 13% after the online travel booking services company reported third-quarter revenue that beat estimates.
• Palantir (PLTR) gains 2% after the AI software maker said it was transfering its stock listing to Nasdaq from NYSE.

The S&P has now given up about a third of the trough-to-peak gains notched after the US presidential election, as some of the optimism over corporate growth under Trump fades. There’s also realization that interest rates will fall less quickly than anticipated, with recent data showing still-elevated inflation pressures and Powell confirming the Fed may take its time easing policy.

“Equity markets seem to be adjusting to the new rate cut trajectory but it doesn’t seem to be a game changer,” said Mathieu Racheter, head of equity strategy at Julius Baer Group Ltd. “Some controversial cabinet announcements obviously do not help the market.”

Powell’s remarks have pushed odds on a December rate cut to less than 60% from roughly 80% a day earlier. Yields on two-year Treasuries steadied after jumping in the previous session in response. The higher-for-longer rates view is supportive for the dollar, however. The greenback stayed below two-year highs hit on Thursday, but is set for its seventh straight weekly gain. More clarity on the Fed’s path could emerge later Friday, as the US releases retail sales data and a host of Fed officials are set to speak.  

In Europe the Stoxx 600 index slipped 0.3%, on track for its fourth weekly drop, with pharma sector among the biggest laggards, after Trump named RFK Jr to the top health-policy role. Vaccine makers Sanofi, GSK Plc and AstraZeneca Plc fell after the news. Generali and Aegon are both among the biggest gainers, both on their respective solid earnings. Here are the biggest movers Friday:

• Generali advance as much as 5.7%, the best performing stock on the Stoxx 600 Insurance Index, after the Italian insurer beat profit estimates and analysts said it’s on track to meet targets
• Aegon shares rise as much as 4.1% to hit their highest level since May, after the financial services and insurance company lifted its operating-capital generation guidance for the full year
• Evotec surges as much as 23% after the German drug developer received a non-binding proposal from Halozyme Therapeutics to acquire the company for €11 per share, valuing the firm at €2b
• Continental shares rise as much as 3% to their highest intraday value since June as UBS says the planned spinoff of the German car parts firm’s automotive division looks increasingly likely
• Land Securities shares rise as much as 3% after the property investment firm upgraded its guidance. Shore Capital noted management is more confident about an improvement in rental growth
• TT Electronics jumps as much as 39%, the biggest gain in four years, after rejecting takeover proposals tabled by fellow London-listed firm Volex, which has slumped as much as 11% this morning
• InterContinental Hotels edge up as much as 1.1%, hitting a new record-high, after analysts at Barclays upgraded the stock and said they now prefer the hotelier over its rival Whitbread
• European vaccine makers trade lower on Friday, weighing on the broader healthcare sector, after US President-elect Donald Trump said he’s tapping Robert F. Kennedy Jr. to run the Department of Health and Human Services
• Cargotec falls as much as 9.5% after the Helsinki-listed company signed an agreement to sell its MacGregor business to funds managed by Triton for an enterprise value of €480m

Earlier, in Asia the MSCI Asia Pacific Index climbed as much as 0.7%, snapping a five-day loss. Samsung Electronics provided the biggest boost as the South Korean chipmaker rose the most in four years. Mizuho Financial Group and Toyota Motor were among the other notable contributors to the advance. China’s CSI 300 Index dropped despite signs of resilience in the nation’s economy as concerns over a deepening rift with the US outweighed signs of economic stabilization. “Concerns over the Trump administration continue to suppress market risk appetite,” said Ken Chen, an analyst at KGI Securities, referring to Chinese equities. “In addition, some investors interpreted authorities’ appeal to build a slow bull market as an intention to cool down the rally, so they chose to take profit when they can.”

The dollar retreated, trimming its weekly gain, as some market participants took profit before key data later on Friday and ahead of speeches from Federal Reserve policymakers. The market pivoted from Trump trades to the Fed’s cautious tone on interest-rate cuts. Traders pared back December Fed rate-cut odds after Chair Powell’s remarks on economic resilience, stabilizing Treasury yields after Thursday’s swings. The yen outperformed G-10 FX near 155.20/USD on intervention speculation.

In rates, treasuries are mixed with front-end outperforming, recouping some of the losses from late Thursday after comments by Powell curbed wagers on a December rate cut. The yield curve is steeper, likewise reversing part of the flattening reaction to Powell. Front-end yields are richer by more than 3bp with 30-year slightly cheaper on the day; 2s10s and 5s30s curves are nearly 3bp steeper near session wides, erasing about half of Thursday’s flattening. Two-year USTs outperform comparable bunds and gilts, with US yields down 2bps to 4.32%; the US 10-year is little changed around 4.43%, Germany’s also little changed while UK 10-year yield is ~1bp lower on the day. Friday’s US session includes four Fed speakers and retail sales data.  

In commodities, oil and gold headed for a weekly drop, weighed down by the stronger dollar. WTI crude drops 1.1% to $67.94, gold steadies at $2,566/oz.

Another of the so-called Trump trades, Bitcoin, also gave up some gains. It hit a record $93,000 level earlier this week on hopes of crypto-friendly policies from the new US administration, but has since dipped back to $87,000.  “Much of the good news is already priced into Bitcoin. What the market needs now are concrete political steps from the Trump administration,” said Jochen Stanzl, Chief Market Analyst at CMC Markets. “Otherwise, as with many US equities, a cooling-off is overdue for this ‘Trump trade’ as well.”

Looking at today’s US economic data calendar we get November Empire manufacturing, October retail sales and import/export price indexes (8:30am New York time), October industrial production (9:15am) and September business inventories (10am). Fed speaker slate includes Goolsbee (8:30am, 2:05pm), Collins (9am, 10:30am), Williams (1:15pm) and Barkin (3pm)

Market Snapshot

• S&P 500 futures down 0.6% to 5,940.50
• MXAP up 0.4% to 182.01
• MXAPJ up 0.2% to 575.59
• Nikkei up 0.3% to 38,642.91
• Topix up 0.4% to 2,711.64
• Hang Seng Index little changed at 19,426.34
• Shanghai Composite down 1.5% to 3,330.73
• Sensex down 0.1% to 77,580.31
• Australia S&P/ASX 200 up 0.7% to 8,285.15
• Kospi little changed at 2,416.86
• STOXX Europe 600 down 0.4% to 504.95
• German 10Y yield little changed at 2.35%
• Euro up 0.4% to $1.0571
• Brent Futures down 1.1% to $71.79/bbl
• Gold spot up 0.0% to $2,565.78
• US Dollar Index down 0.13% to 106.53

Top Overnight News

• US President-elect Trump picked RFK Jr to be Health and Human Services Secretary and said North Dakota Governor Burgum will be the Interior Secretary. It was separately reported that a US private funds group asked Trump to review harmful rules, preserve pro-growth taxes and promote alternative assets: Reuters.
• China’s October economic data was mixed, with solid retail sales (+4.8% Y/Y, about 100bp ahead of the Street’s +3.8% forecast and up from +3.2% in Sept) but soft industrial production (+5.3% vs. the Street +5.6%) and continued pressure in real estate. Reuters
• Japan’s Q3 GDP slowed vs. Q3, but it still came in ahead of expectations while consumption rebounded, keeping the BOJ on track to continue tightening policy. WSJ
• Kazuo Ueda will speak on Monday in what may be his last major scheduled speech before next month’s BOJ meeting. The head of one of Japan’s largest labor unions said workers need to see consistent gains in real wages for the BOJ to continue raising interest rates. BBG
• Musk met with Iran’s UN Ambassador and discussed ways for Tehran and Washington to defuse tensions. NYT
• The UK economy cooled by more than expected last quarter, with most industries experiencing subdued growth amid growing concerns over Labour’s first budget. In September, GDP shrank 0.1% — consensus was for 0.2% growth. BBG
• The euro area’s GDP will increase by 1.3% next year and 1.6% in 2026, the European Commission said. That’s slightly stronger than what the IMF predicted last month and notably higher than the 0.8% seen by officials for 2024. BBG
• Senate Republicans are skeptical of Donald Trump’s aggressive new tariff plans — especially lawmakers from states with large agriculture industries that could bear the brunt of likely foreign retaliation. Politico
• Franklin Resources will begin taking over parts of its Western Asset Mgmt. and cutting costs following a recent exodus of assets. BBG
• Gold’s decline may continue on momentum-driving sales before bottoming, MLIV said. CTAs could sell an additional 15% of their holdings in the coming sessions, TD Securities said. Gold ticked up on the day. BBG
• Fed’s Collins (2025 voter) says a December rate cut is “certainly on the table but is not a done deal”, according to WSJ. Expects lower rates will be warranted. Says Fed policy is restrictive. Does not see signs of new price pressures. There will be more data between now and December meeting.
• US Treasury’s semi-annual currency report found no major US trading partners manipulated currency to gain unfair trade advantage in four quarters through June 2024 as no major trading partners met all three criteria for enhanced analysis during the review period. However, the monitoring list of trading partners whose currency practices ‘merit close attention’ includes China, Japan, South Korea, Singapore, Taiwan, Vietnam and Germany.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with a predominantly positive bias albeit with gains capped following the uninspiring handover from Wall Street and as participants digested recent earnings releases and mixed Chinese activity data. ASX 200 was led by outperformance in Utilities and with gains in nearly all sectors aside from Healthcare amid headwinds for the latter following pressure in the industry stateside after US President-elect Trump picked vaccine sceptic RFK Jr as HHS Secretary. Nikkei 225 rallied on the back of recent currency weakness and with outperformance seen in some financial names after Japanese megabanks’ earnings results, while GDP data was mostly either inline or better than expected. Hang Seng and Shanghai Comp ultimately gained but saw mixed price action throughout the day after various data releases in which Industrial Production disappointed but Retail Sales topped forecasts, while Chinese Home Prices showed a steeper Y/Y drop although the M/M decline moderated. Participants also digested tech earnings and the PBoC’s largest daily liquidity injection via reverse repos in over four years which is meant to counteract factors including maturing MLF loans and tax payments.

Top Asian news

• China’s Finance Ministry will reduce export tax rebate rate for refined oil products, photovoltaics, batteries, and select non-metallic mineral products from 13-9% from Dec 2024. Will cancel the export tax rebate for aluminium and copper products, and chemically modified animal, plant, or microbial oils and fats.
• Alibaba (BABA/ 9988 HK) reportedly mulling offering USD 5bln in bonds.
• China’s MOFCOM is releasing a dual-use item export control list, which will be effective from December 1st; does not involve adj. to specific scope of export control.
• Hong Kong revises 2024 GDP forecast to 2.5% (prev. forecast at 2.5-3.0%)
• PBoC injected CNY 981bln via 7-day reverse repos with the rate at 1.50% which was the largest daily cash injection through reverse repos since February 2020, while it stated that Friday’s cash injection through reverse repos was meant to counteract factors including maturing MLF loans and tax payments.
• China’s stats bureau said domestic demand is still insufficient but noted major economic indicators recovered ‘markedly’ in October and China’s consumer expectations improved, while they will consolidate the trend in economic recovery, step up policy adjustments and expand domestic demand. Furthermore, it stated that recent policies have shown positive effects on the economy and it is increasingly confident of achieving the 2024 economic growth target but noted that consumption growth still faces some constraints.
• Japanese Finance Minister Kato said they will take appropriate action against excessive FX moves, while he added that one-sided, sharp moves were seen in the FX market and it is important for FX rates to move stably reflecting fundamentals.

European bourses began the session on a mostly lower footing, in a continuation of the losses seen on Wall St. in the prior session; a paring of the strength seen in Europe on Thursday may also be at play. Since the cash open, sentiment gradually improved, but indices now display a mixed picture in Europe. European sectors are mixed vs initially opening with a strong negative bias. Energy is towards the top of the pile, with Banks and Insurance following just behind. Healthcare is by far the clear underperformer, with several heavyweights within the sector seeing notable downside after US President-elect Trump picked vaccine sceptic RFK Jr as HHS Secretary. US equity futures are entirely in the red, with slight underperformance in the tech-heavy NQ, in a continuation of the negative price action seen in the prior session; which was ultimately sparked by a hawkish-leaning Powell. US finalises USD 6.6bln chips subsidy award for TSMC, according to the US Commerce Department.

Top European news

• European Commissions sees EZ economic growth at 0.8% in 2024, 1.35% in 2025, 1.6% in 2026. Sees EZ inflation at 2.4% in 2024, 2.1% in 2025, 1.9% in 2026. Sees German GDP to expand by 0.7% in 2025 (prev. forecast 1.0%). GDP growth expected to accelerate to 1.3% in 2026 (remains below EZ avg. of 1.6%). German economy contract 0.1% this year vs 0.1% growth in spring forecast.
• Germany’s SPD leader says they do not need to wait for a new gov’t to begin debt brake reform, willingness to reform from the opposition leader is a good starting point, via Handelsblatt.

FX

• DXY is pulling back after another surge on Thursday which saw a high of 107.07, with hawkish Powell keeping the buck afloat in late hours. Ahead, US retail sales and a number of Fed speakers. Comments from Fed’s Collins who noted that a December rate cut is “certainly on the table but is not a done deal”, had little impact on the index.
• EUR is benefitting from a softer Dollar and seeing a rebound from yesterday’s worst levels (1.0496 low) as the pair attempts to climb back to yesterday’s best (1.0582).
• GBP is relatively flat and unable to benefit from the pullback in the Dollar following downbeat GDP data across the board.
• JPY is the G10 outperformer after a week of underperformance with desks citing pre-weekend profit-taking, whilst Japanese GDP data mostly matched or topped estimates. USD/JPY overnight hit a fresh weekly high of 156.74 before pulling back to a current 155.40 low.
• Antipodeans are modestly firmer as DXY pulls back from its weekly highs, in turn offering some reprieve to peers alongside the base metals complex.
• PBoC set USD/CNY mid-point at 7.1992 vs exp. 7.2482 (prev. 7.1966).
• Indonesia’s Central Bank says it has conducted “triple intervention” within the FX market to maintain market confidence.

Fixed Income

• USTs are under slight pressure as markets continue to digest the hawkish tone from Powell. As it stands, USTs have climbed above the overnight low at 109-06, and currently sits below its session high at 109-16+. Yields are currently firmer across the curve with the short-end leading after the Fed Chair. US Retail Sales and Fed speak is due.
• Bunds spent first part of the morning with a very slight negative bias, in-fitting with USTs. Benchmarks seemingly derived some support most recently from the latest Commission forecasts. EZ-specific updates have been fairly limited, but the docket ahead sees Lane, Cipollone & Panetta.
• Gilts are the modest outperformer as the morning’s GDP data serves as a dovish impetus. Though, market pricing hasn’t really changed with just a ~20% chance of a December cut. Up to a 93.89 peak, having surpassed the 93.85 from Thursday but is yet to test the 94.00 mark.
• UK DMO plans to hold three syndicated Gilt sales in the January-March 2025 period; intends to sell a new 10yr Gilt and 20-25yr I/L syndication in February and March.

Commodities

• Crude is lower across the board heading into the end of the week amid efforts to reach a ceasefire between Israel and Lebanon whilst Iran attempts to cool tensions with the US. Brent Jan also trades towards the lower end of its USD 71.33-72.39/bbl range.
• Mixed trade across precious metals this morning despite the substantial pullback in the Dollar, with some potential tailwinds emanating from attempts to cool geopolitical tensions amid efforts to reach a ceasefire between Israel and Lebanon whilst Iran attempts to cool tensions with the US. Spot gold yesterday briefly dipped under its 100 DMA (2,545.21/oz) to a USD 2,536.71/oz low.
• Mixed trade across base metals with a positive bias in recent trade as prices recover alongside the pullback in the Dollar. 3M LME copper trades on either side of USD 9,000/t in a current USD 8,997.50-9,077.50/t range. Copper caught a slight bid following news that China’s Finance Ministry will cancel the export tax rebate for aluminium and copper products.

Geopolitics: Middle East

• The Senior Advisor to Iran’s Khamenei says “we support any ceasefire decision taken by the Lebanese government and resistance”.
• Israeli source says Hezbollah’s response to the American outline is expected “within days”, according to Kann News.
• Iran provided written assurances to the US administration in October that it was not seeking to kill Presidential contender Trump, via WSJ citing a US official; assurances which were intended to cool tensions between the US and Iran.
• Iran is preparing for Operation Sincere Promise 3 to respond to the Israeli attack, according to Sky News Arabia citing a Member of the Expediency in Iran.
• Israeli army issues new warnings to evacuate buildings in Burj al-Barajneh and Ghobeiry in the southern suburb of Beirut, according to Sky News Arabia.
• Israeli forces push deeper into Lebanon in a widening war campaign, while the expanding ground operation risks protracted conflict but could build leverage for ceasefire talks, according to WSJ.
• Hezbollah said it targeted a military base in Israel’s Tel Aviv and targeted a gathering of Israeli enemy forces in the Kiryat Shmona settlement with a barrage of rockets, according to Sky News Arabia.
• Elon Musk and Iran’s ambassador reportedly discussed how to ease US and Iran tensions, according to NYT. Iran’s ambassador told Musk during the meeting on Monday that sanctions waivers should be obtained from the Treasury Department, while Iranian sources said the meeting was positive, according to Al Arabiya.

Geopolitics: Other

• US President-elect Trump said they will avoid what happened before with their military in Afghanistan and will deal with the situation in Ukraine better, as well as work to reach a solution to the crisis.
• US President Biden administration official said the US must be prepared to expand its nuclear weapons force, while the decision on expanding US nuclear force will be left to President-elect Trump, according to WSJ.
• US and UK brought into force an amendment to the 1958 agreement between the two countries for cooperation in the uses of atomic energy in defence which will make the agreement enduring in its entirety, according to the US State Department.
• North Korean leader Kim guided a test of attack drones and ordered the mass production of suicide drones.
• Taiwan President Lai is planning to stop in Hawaii and maybe Guam during a visit to Pacific allies in the coming weeks, according to sources cited by Reuters.
• China’s Coast Guard said with China’s permission, the Philippines sent a civilian ship to transport supplies to its ‘illegally’ beached warship at the Second Thomas Shoal.
• The US plans additional sanctions to restrict Russia’s energy trade, plans to prohibit banks from dealing with Gazprombank, according to Nikkei.

US Event Calendar

• 08:30: Oct. Retail Sales Advance MoM, est. 0.3%, prior 0.4%
  • Oct. Retail Sales Ex Auto MoM, est. 0.3%, prior 0.5%
  • Oct. Retail Sales Control Group, est. 0.3%, prior 0.7%
• 08:30: Oct. Import Price Index MoM, est. -0.1%, prior -0.4%
  • Oct. Import Price Index YoY, est. 0.3%, prior -0.1%
  • Oct. Export Price Index MoM, est. -0.1%, prior -0.7%
  • Oct. Export Price Index YoY, est. -1.7%, prior -2.1%
• 08:30: Nov. Empire Manufacturing, est. 0, prior -11.9
• 09:15: Oct. Industrial Production MoM, est. -0.3%, prior -0.3%
  • Oct. Capacity Utilization, est. 77.1%, prior 77.5%
  • Oct. Manufacturing (SIC) Production, est. -0.5%, prior -0.4%
• 10:00: Sept. Business Inventories, est. 0.2%, prior 0.3%

Central Bank speakers

• 08:30: Fed’s Goolsbee on CNBC
• 09:00: Fed’s Collins Gives Opening Remarks
• 10:30: Fed’s Collins Appears on Bloomberg TV
• 13:15: Fed’s Williams Gives Opening Remarks

DB’s Jim Reid concludes the overnight wrap

Risk assets struggled for momentum yesterday, with the S&P 500 (-0.60%) losing ground as investors reflected on some sticky inflation data and increasingly elevated valuations. The initial catalyst for that was the US PPI inflation for October, where the core PPI reading was stronger than expected, which added to fears that inflation could become stuck above the Fed’s target. Then later in the session, that narrative was reinforced by some hawkish comments from Fed Chair Powell, which added fresh doubts about the likelihood of a December rate cut. By the close, that meant futures had dialled back the probability of a December cut to 62%, down from more than 82% the previous day. Moreover, those moves have seen further momentum overnight, with the probability of a December cut down to 59% this morning, whilst the 10yr Treasury yield is currently at a 4-month high of 4.46%, and S&P 500 futures (-0.32%) are pointing to further losses.

In terms of Powell’s remarks, he explicitly said that the economy “is not sending any signals that we need to be in a hurry to lower rates”, and that its strength “gives us the ability to approach our decisions carefully”. Indeed, yesterday we found out that the weekly initial jobless claims fell to their lowest level since May, at 217k. So there was plenty of support for that message of economic strength, and it was a much more hawkish message from Powell relative his Jackson Hole speech in August, where he said that the “time has come for policy to adjust”. He also noted that yesterday’s PPI data was stronger than the Fed had pencilled in, seeing the data as consistent with a +2.8% yoy core PCE print.

Whilst the PPI data wasn’t that alarming by the standards of the high inflation of 2022-23, the problem was it showed inflation remaining stubbornly above levels consistent with the Fed’s target. For instance, the core PPI reading was at +0.3% (vs. +0.2% expected), which pushed up the year-on-year measure to +3.1% (vs. +3.0% expected). Moreover, that comes on the back of core CPI staying at +0.3% for a third month running, so the concern is that inflation is getting stuck at those levels. Now it’s worth noting that the Fed officially target the PCE measure of inflation, rather than the CPI or PPI measures, and we don’t get the PCE numbers until the end of the month. But we know several categories from the PPI release feed into the PCE, and those were on the stronger side, with sizeable increases in airfares and portfolio management prices. So one to look out for when the October PCE is released on November 27.

Against that backdrop, there were growing signs that investors were becoming more concerned about inflation. For instance, the US 2yr inflation swap up +0.7bps on the day to 2.63%, which is its highest in almost six months. In turn, that led to a notable rise in front-end Treasury yields, with the 2yr yield (+5.9bps) closing at 4.35%, its highest since July, having been near flat on the day before Powell’s comments. However, yields declined at the long end, with 10yr and 30yr yields -1.5bps and -4.9bps lower, respectively. So in some ways it was a mirror image of the curve steepening seen the previous day. One theme that persisted was dollar strength however, and the dollar index (+0.18%) posted a fifth consecutive advance to reach a one-year high.

For US equities, Powell’s comments reinforced what had already been a more challenging day, with the S&P 500 (-0.60%) seeing its largest decline so far this month. The NASDAQ (-0.64%) and the Magnificent 7 (-1.30%) saw sizeable declines, with Rivian (-14.30%) and Tesla (-5.77%) among the worst performers after Reuters reported that president-elect Trump plans to eliminate the consumer tax credit for electric vehicles. The small-cap Russell 2000 (-1.37%) lost ground for a third consecutive day, which marked its worst 3-day run since early August. By contrast in Europe, equities saw a strong rebound from the last couple of days, with the STOXX 600 up +1.08%, alongside gains for the DAX (+1.37%), the CAC 40 (+1.32%) and the FTSE MIB (+1.93%).

On the rates side in Europe, sovereign bond yields saw consistent declines, with those on 10yr bunds (-4.6bps), OATs (-5.6bps) and BTPs (-8.6bps) all moving lower. That also followed the release of the accounts from the ECB’s October meeting, where they delivered another 25bp rate cut. It said that if the slowdown in various indicators were just temporary, then an October rate cut would be like bringing forward a December cut, and so “there was little risk associated with cutting, especially given that interest rates would remain in restrictive territory”.

Overnight in Asia, we’ve had a mixed set of data out of China this morning. On the positive side, retail sales came in stronger than expected, with a +4.8% year-on-year reading in October (vs. +3.8% expected). However, industrial production was a bit weaker than expected at +5.3% year-on-year (v.s +5.6% expected). So Chinese equities have been steady against that backdrop, with the CSI 300 (-0.03%) and the Shanghai Comp (+0.02%) hovering either side of unchanged.

Elsewhere in Asia, we also had Japan’s Q3 GDP data overnight, which was a bit faster than expected with an annualised quarterly gain of +0.9% (vs. +0.7% expected). That’s helped support the Nikkei (+0.87%) to a stronger gain this morning, although it wasn’t all good news in the release, as Q2 growth was revised down to an annualised pace of +2.2% (vs. +2.9% previously). In turn, the Japanese Yen is losing ground for a 5th consecutive day against the US dollar, and this morning is trading at 156.45, which is its weakest level since July.

To the day ahead now, and data releases include US retail sales, industrial production and capacity utilization for October, along with UK GDP for Q3. Central bank speakers include the Fed’s Collins and Williams, and the ECB’s Lane and Cipollone. Lastly, the European Commission will release their latest economic forecasts.

Chinese-owned meat processing giant Smithfield has been fined $2 million to resolve a child labor compliance dispute with the Minnesota Department of Labor and Industry.

Local paper Minnesota Reformer reports a Minnesota DLI investigation from 2021 and 2023 found at least 11 children between the ages of 14 and 17 worked at Smithfield’s St. James area plant.

“It is unacceptable for a company to employ minor children to perform hazardous work late at night. This illegal behavior impacts children’s health, safety and well-being and their ability to focus on their education and their future,” DLI Commissioner Nicole Blissenbach wrote in a statement, adding, “Combatting unlawful child labor in Minnesota is a priority for DLI and it will continue to devote resources to addressing and resolving these violations.”

Smithfield released a statement denying “that we knowingly hired anyone under the age of 18 to work in our St. James facility. We have not admitted liability as part of this settlement; however, in the interest of preventing the distraction of prolonged litigation, we have agreed to settle this matter.”

The meatpacker noted that it utilizes E-Verify, a Department of Homeland Security database, to determine the eligibility of workers who are US or foreign citizens. 

“Each of the 11 alleged underage individuals passed the E-Verify system by using false identification. Each used a different name to obtain employment with Smithfield than the name by which DLI identified them to Smithfield,” the company said.

The Chinese-owned company noted it is opposed to child labor and has “taken proactive steps to enforce our policy prohibiting the employment of minors.”

There was no word on the citizenship status of the minors. However, we suspect some of those underage individuals were probably migrants. After all, many of the migrants – and illegal aliens – the Biden-Harris team allowed to flood the nation ended up somewhere in America’s food supply chain – this is no secret. 

This brings us to an entirely different issue: the exploitation of migrant children by mega-corporations…

“This shadow work force extends across industries in every state, flouting child labor laws that have been in place for nearly a century. Twelve-year-old roofers in Florida and Tennessee. Underage slaughterhouse workers in Delaware, Mississippi and North Carolina. Children sawing planks of wood on overnight shifts in South Dakota,” a recent New York Times article stated. 

Earlier this week, we informed readers that at least one non-profit was funneling migrants into mega corps. 

Dear Border Czar: This Nonprofit Boasts A List Of 400 Companies That Employ Migrants https://t.co/LuwWdgOzgD

— zerohedge (@zerohedge) November 14, 2024

The reports of trafficking networks and labor mules across the country because of Biden-Harris’ open southern borders are disturbing. 

“No Americans”: Insider Of Alleged Trafficking Network Reveals How Migrants Ended Up At Charleroi, PA Factory https://t.co/FUSMbqyB7E

— zerohedge (@zerohedge) September 21, 2024

Incoming “border czar,” Tom Homan, noted earlier this week: “Where do we find most victims of sex trafficking and forced labor trafficking? At worksites.” 

NEW: Trump’s ‘border czar’ Tom Homan says the administration will conduct workplace immigration raids; ‘The Biden-Harris Adm. has lost over 300,000 children’

“Worksite operations have to happen. Here’s why…

Where do we find most victims of s-x trafficking and forced labor… pic.twitter.com/2D6YGdE1F7

— Unlimited L’s (@unlimited_ls) November 11, 2024

Lining America’s food supply chain with migrants – some of which are illegal… This should be one of the biggest national security stories of the decade. 

Income tax rates in Europe vary widely and reflect different approaches to funding public services, with countries imposing higher top marginal tax rates often supporting extensive social welfare systems, while those with lower rates may prioritize competitiveness or maintain less comprehensive programs.

This map, via Visual Capitalist’s Kayla Zhu, shows the top statutory personal income tax rate of 36 European countries.

European countries typically use a progressive tax system, where higher income brackets are taxed at higher rates, with the top rate applying only to income above a set threshold. These are the highest personal income tax rates of each European country.

The data comes from the European Commission and PwC via Tax Foundation (updated as of February 2024), with combined central and sub-central top personal income tax rates and surtaxes shown. Social security contributions are not included.

Which European Countries Tax Top Earners Most?

Below, we show the top statutory personal income tax rate for 36 major European countries.

Among European OECD countries, the average top statutory personal income tax rate is 42.8%.

Denmark (55.9%), France (55.4%), and Austria (55%) have the highest rates, while Hungary (15%), Estonia (20%), and the Czech Republic (23%) have the lowest.

Generally, European countries outside the OECD have lower top tax rates and often use a flat tax system. Bulgaria and Romania have the lowest rate at 10%, followed by Moldova (12%), Ukraine (19.5%), and Georgia (20%).

Scandinavian countries, recognized for their extensive social safety nets and public funding for services like universal healthcare, higher education, and parental leave, also impose relatively high personal income tax rates.

Denmark is making substantial changes to its personal income tax system that will take effect in 2026, which may impact the country’s top earners significantly.

Under the new three-tier tax structure, high-income earners in Denmark making over DKK 2,588,300 may face a total marginal tax rate of up to 60.5%. Denmark ranks sixth in the world for countries with the highest wealth per person in both average and median wealth measurements.

To learn more about taxation across various countries, check out this graphic that visualizes major economies’ tax-to-GDP ratios.

Authored by Michael Njuko via The Mises Institute,

In the history of the social sciences, no other field of study has attracted so great a level of hostility as the science of economics. Since the inception of the science, the onslaught against it has been on the rise, extending across individuals and groups. And the outlook for a favorable reception of the science is bleak, given that a significant number of people are incapable of following through the extended chains of reasoning required for comprehending economic arguments.

Economics takes ends and goals of action as a given and—in matters of value judgments—it assumes neutrality (i.e., non-normativity), which is characteristic of a science. However, questions of suitability of means and various policies adopted to attain chosen ends are not beyond the scope of economic analysis.

The “Dismal” Task of the Economist

The competent economist—when presented with a proposed plan of action—always asks: Is the means adopted suitable for the attainment of the end in view? He critically analyzes the means in question and declares their fitness or unfitness on the basis of logical demonstrations that are unassailable and apodictly true. This peculiar task of the economist is often misapprehended as an expression of his value judgments and an attempt to frustrate the attainment of ends chosen. Thus, the economist is often met with disapproval.

More significant in the history of the science are the several attempts to discredit the economists through a denial of economics as a universally-valid science, applicable for all peoples, times, and places. This is a pernicious attempt because the social, political, and economic consequences tend to be disastrously far-reaching. This article attempts to establish a connection between a denial of economics and the emergence of totalitarianism.

Historicism as a Precursor of Totalitarianism 

Historicism was one of such concerted attempts at denying the universal validity of the body of economic theorems. The historicists advanced the view that economic theories are not valid for all peoples, places, and times; and thus, are only relevant to the specific historical conditions of their authors. The German Historical School’s rejection of the free trade theories, propounded by the classical economists, was not on grounds of inherent inadequacies in these theories—given that they never unmasked any logical errors as to the untenability of these theories—but motivated by ideological pre-possessions. Mises puts it very succinctly in Epistemological Problems of Economics: 

The historian must never forget that the most momentous occurrence in the history of the last hundred years, the attack launched against the universally valid science of human action and its hitherto best developed branch, economics, was motivated from the very beginning not by scientific ideas but by political considerations.

Historicism is bound to lead to some form of logical relativism, and it is not surprising that the doctrine of racial polylogism gained a general acceptance among many Germans in the early twentieth century. In order to invalidate the relevance of a theory on grounds of historical or racial origins of the author, one has to proceed with the indefensible assumption of differences in the logical character of the human mind amongst different peoples and within the same people at different historical epochs. But in fact, there is no scientific evidence as to the existence of these differences in the logical structure of the human mind. Thus the historicists’ arguments against the universal validity of economic theory are unfounded.

The social, economic, and political significance of a denial of economics would also imply the denial of insights from economics about the preservation of society—concerted action in voluntary cooperation. Economic theory asserts that there is greater productivity to be obtained from social organization under the division of labor than would be obtained in individual self-sufficiency. The Ricardian Law of Association explains the tendency of humans to intensify cooperation given a rightly-understood interest in better satisfying wants under the social order of the division of labor. While there are many ways for people to coexist in the world, there are fewer ways for them to coexist peacefully and prosperously. This is the central lesson of classical economics about human society.

Historicism’s denial of the universal validity of these theories on non-logical grounds betrays a prejudice for policies aimed at attaining the alternative of autarkic self-sufficiency and the substitution of the social apparatus with coercion and compulsion. In fact, the Nazi totalitarian regime, whose intellectual precursor was German historicism, never relented in applying force to induce cooperation while simultaneously pursuing autarkic self-sufficiency by means of disastrous policies. Thus, German historicism, in denying the universal validity of economic theory and the general laws of human action as advanced by praxeology, played a causal role by creating a favorable intellectual climate for arbitrariness and the subsequent emergence of Nazi totalitarianism.

Marxism as Pseudo-Economics

Marxist socialism, on the other hand, denies the validity of economic theories on grounds of the “class origins” of the economists. Like historicism, it subscribes to a variant of polylogism in which it asserts the existence of a difference in the logical structure of mind for the respective social classes—even though Marx never defined what he meant by “class.” Consequently, for the Marxians, the science of economics becomes mere ideological expression of the class interest of the exploiting class—the bourgeoisie.

It is precisely the fact that Marxism rejects the essential teachings of economics in favor of utopian ideas which fail to achieve the ends sought wherever it was tried. The ultimate goals of Marxians—improvement in material and social conditions of its adherents—are no different from those of their liberal counterparts of the late eighteenth and early nineteenth centuries who enjoyed considerable improvements in standard of living; it is in the choices of means that they differ. But it is the unsuitability of the means adopted by the Marxians that always and everywhere frustrated the attainment of ends sought by Marxism.

Furthermore, as with the capitalist system, based on private ownership of the means of production, the pure socialist commonwealth must be faced with the problem of allocation of resources in view of satisfying the most urgent wants of its citizens. And in this regard, Mises, in his irrefutable criticism of the socialist commonwealth, exposes the impossibility of socialism. He argues that, given the absence of a price structure for factors of production, the problem of impracticality of economic calculation must emerge in a socialist community. The planner, without recourse to tools of economic calculation, would be lost amid the sea of economic possibilities.

That capitalism has succeeded in improving the lives of men wherever its institutions are left unhampered is because those societies recognize the validity of economic theory about the potential benefits of the free market. They did not adopt arbitrary policies that economists declared unfit for the ends they sought to attain. Thus, the horrors brought about by the series of abortive attempts to implement the utopian ideas of socialist thinkers are the logical consequences of a denial of economics.

The Middle-of-the-Road Policy Leads to Totalitarianism

The doctrine of interventionism wrongly conceives of a compatibility of the market and violent interventions by the state, between social cooperation and the apparatus of coercion and compulsion. It purports to be a third economic system—a compromise between capitalism and socialism. But, as the logical demonstrations of the economists show us over and over, interventionism, so-called middle-of-the-road policy, inevitably leads to socialism. Interventionism is, in fact, a denial of economics in that economics recognizes that interventions of any sort in the market tend to produce outcomes that—judged from the point of view of their initiators—are even more dissatisfactory than the previous problems that they pretend to fix.

Mises clearly remarks in his short book The Historical Setting of the Austrian School of Economics that “the worst illusion of our age is the superstitious confidence placed in panaceas, which—as the economists have irrefutably demonstrated—are contrary to purpose.” Interventionism, carried to its logical conclusion, is bound to lead to totalitarianism, given that the more its policies fail to produce the desired outcomes, the more the statesmen who wrongly believe in the appropriateness of interventionist measures find it necessary to employ the coercive state apparatus to compensate for their failures.

Economics and the Free-Market System

The science of economics is a rational science that recognizes the primacy of the laws of human society. Economics teaches that the market is a system of logically necessary relations brought about by the actions of individuals seeking to satisfy their most urgent wants. It teaches that any instance of coercion aimed at influencing the actions of individuals is disruptive to the market process. A denial of these teachings would inevitably lead to the state of affairs in which force becomes the only means of eliciting the cooperation of individuals in society.

Russian Foreign Minister Sergey Lavrov has issued new comments on the incoming Trump administration at a moment his cabinet picks are being reported daily, including ‘Russia-friendly’ Tulsi Gabbard as Director of National Intelligence.

Lavrov in the wide-ranging interview on state-owned channel Russia-1 articulated that Moscow’s view is that Washington’s stance on the Ukraine conflict is unlikely to change significantly even under the Trump administration.

He explained that the United States will essentially always seek to dominate areas which fall under NATO influence, and that Trump too is likely to do the same, despite campaign promises to rapidly achieve a peace deal ending the conflict.

Ultimately, Lavrov’s position is that it doesn’t matter who is president of the US. Below is what he said according to Russian media translation:

“I have no doubt that they will want to keep these processes under their control… Washington’s attitude towards Ukrainian affairs and European affairs will not change in principle, in the sense that Washington will always strive to keep under its watchful eye everything that happens in the areas near NATO and the NATO area itself.”

The top Russian diplomat was also asked about recent widespread reporting that Trump is mulling concrete plans to ‘freeze’ the conflict while pressuring Kiev to give up its aspirations to join the NATO alliance for at least 20 years.

“Some [Western politicians] have started to look more soberly at the Ukrainian situation and say, ‘what’s lost is lost, let’s somehow freeze this entire thing.’ Yet… they still suggest having a truce along the contact line for ten years. These would be the same Minsk accords in a new wrapping, or even worse,” Lavrov said. The Kremlin’s position is that Minsk was a sham, and was simply used to buy time while the West armed Ukraine.

“The Minsk accords were final. They were about a small part of Donbass, to be honest. But everything collapsed because [the Kiev regime] categorically did not want to grant this part of Donbass – which would have remained part of Ukraine – special status, primarily in the form of the right to speak their native language,” Lavrov explained further.

He additionally asserted that a key cause of the war was the “deliberate extermination of everything Russian” in Donbass, and thus Russia will insist that any deal to end the war must guarantee protections for Russian-speaking people in Ukraine.

Tulsi was 100% right and only looks better in hindsight for having the courage to say it. https://t.co/IpUSor5cg8

— David Sacks (@DavidSacks) November 14, 2024

The Zelensky government has long waged a campaign to suppress Russian culture and language from public discourse, despite some one-third of the country using Russian as a first language. More than half the population also knows Russian, even when Ukrainian is used as their first language.

In addition, the Ukrainian government has been persecuting the Ukrainian Orthodox Church because it maintains communion with the Moscow Patriarchate, seizing churches and monasteries in the process, and arresting bishops.

Authored by Paul Joseph Watson via Modernity.news,

The Welsh government has been advised to create dog free spaces in outdoor public areas after an ‘anti-racist’ group asserted it is making black Africans ‘feel unsafe’.

Yes, really.

The environmental group Climate Cymru BAME has issued a report instructing the government to create “dog-free areas in local green spaces” as part of an “anti-racist” drive to make the country more “inclusive”.

The advice was reinforced by another group, the North Wales Africa Society, which complained that “one black African female stated that she feels unsafe with the presence of dogs” during a focus group meeting.

Welsh Labour and the EDI industry may have finally achieved ‘peak woke’. pic.twitter.com/SCgOh8pD9M

— Social Democratic Party (@SDPhq) November 14, 2024

A third group called Green Soul also warned that food growing groups are run by “majority White/British/Welsh individuals” and “older white people,” despite the fact that around 90 per cent Wales’ population is white British.

The reports are in line with a consistent narrative that the UK countryside is essentially “racist” because “ethnic minorities face “barriers” to the outdoors created by “exclusions and racism,” reports the Telegraph.

However, another focus group respondent pointed out that “the green spaces are not respected in areas where there is a bigger population of ethnic minority people.”

“Ultimately, the Welsh Government’s report, which will steer future policy, concludes that “people of ethnic minority background in Wales face barriers created by exclusions and racism,” according to the Telegraph report.

Wales’ government has vowed to ensure that racism is eliminated from “all areas of public life” by 2030.

As we previously highlighted, before this year’s UK election, police in Wales paid a home visit to a man because he displayed a Reform UK political sign on the wall.

As part of their manifesto pledge, Reform UK had promised to drastically reduce illegal immigration.

Thanks to the UK’s mass migration policy, there are now more South Asians living in the United Kingdom than there are Welsh people living in Wales.

Now we have to transform our public spaces and entire way of living because it is apparently causing offense to a small minority of foreigners.

*  *  *

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

Authored by Thomas Brooke via Remix News,

The Alternative for Germany (AfD) party has seen a significant increase in support, climbing to 19.5 percent, a rise of 1.5 percentage points since October, despite political opponents ramping up efforts to block its participation in future elections.

The latest polling, conducted by Insa-Consulere and published by the Bild newspaper, places the AfD firmly in second place, behind the center-right CDU/CSU at 32.5 percent.

Germany, INSA poll:

CDU/CSU-EPP: 32.5% (+0.5)
AfD-ESN: 19.5% (+0.5)
SPD-S&D: 15.5% (+0.5)
GRÜNE-G/EFA: 11.5% (+1.5)
BSW-NI: 7%
FDP-RE: 5% (+1)
LINKE-LEFT: 3.5% (-0.5)

+/- vs. 7-8 November 2024

Fieldwork: 8-11 November 2024
Sample size: 3,009

➤ https://t.co/obOCVirJfd#btw25… pic.twitter.com/gWDkbBw51B

— Europe Elects (@EuropeElects) November 11, 2024

The rise in AfD support comes at a critical juncture, with 112 Bundestag members from across the political spectrum pushing for the party’s exclusion from the Feb. 23 snap election. The motion to ban the AfD, citing its “anti-democratic” nature, has already been submitted to the Bundestag president, with the potential to escalate to Germany’s Constitutional Court. If successful, it could bar the party from standing in elections, effectively removing it from the democratic process.

🚨 BREAKING: Move to ban the AfD party in Germany now likely to occur before snap elections.

Already, 113 MPs have signed the application and submitted it to Bundestag President Barbel Bas.

The AfD is the second-most popular party in Germany, according to polls. pic.twitter.com/ig2hZesdHK

— Remix News & Views (@RMXnews) November 13, 2024

Proponents of the ban, including figures from the ruling SPD, argue that it is necessary to protect the integrity of German democracy. However, many AfD supporters and their allies view this as an undemocratic effort to silence the party’s growing influence.

Despite these efforts, the AfD’s profile continues to rise. In the latest polling, party leader Alice Weidel emerges as one of the most popular potential chancellor candidates, receiving 17 percent of support — placing her ahead of both Chancellor Olaf Scholz (SPD) and Economy Minister Robert Habeck (Greens).

The AfD’s growing popularity is particularly pronounced in eastern Germany, where Weidel leads with 27 percent support.

In addition to political opponents, some analysts point to international parallels, drawing comparisons between the AfD’s rise and similar populist movements in other parts of the West. Insa managing director Hermann Binkert noted that the “Trump effect” and dissatisfaction with the current coalition government’s policies have played a key role in boosting the party’s standing.

The outcome of the motion to ban the AfD could have profound implications for the political landscape, not only in Germany but throughout Europe.

As Remix News previously reported, most of the German establishment is working towards a ban, but there is disagreement about the pace and timing of such a ban. Some are also worried that the ban will backfire and make the AfD more popular than ever.

For one, a ban could take years, and second, the country’s top court may reject the ban, which would be a catastrophic outcome for the German establishment.

Read more here…

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

President-elect Donald Trump’s second term in office will likely bring sweeping changes to the nation’s Indo–Pacific policy and ongoing strategic competition with China.

Leaders throughout Congress and the national security space are therefore preparing for an era marked by increased confrontation as the administration pushes back on the Chinese regime’s aggression in the region.

Rep. John Moolenaar (R-Mich.), chair of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, said he expects a second Trump administration to adopt a firm approach to foreign policy in the Indo–Pacific.

“During Trump’s first administration, peace through strength was at the forefront of American foreign policy,” Moolenaar said in a statement shared with The Epoch Times by the committee’s staff.

That strength, Moolenaar suggests, would extend to the U.S. allies throughout the Indo–Pacific, where Trump is expected to push regional partners to increase their defense spending in order to receive continued U.S. support.

“The entire free world must act with urgency to invest in its collective military power in order to deter conflict, support global prosperity, and defend our values against CCP [Chinese Communist Party] aggression,” Moolenaar said.

Those increased expectations of Washington’s allies could bring both risk and opportunities to U.S. relations in the region as the nation attempts to pressure regional partners into adopting a more forward-facing defense posture.

They will also likely bring increased volatility to the United States’ relationship with China and the CCP, including by shaping the potential for an armed conflict between the two superpowers over the future of Taiwan.

Taiwan Flashpoint

The CCP claims that Taiwan is part of its territory. Though the communist regime has never controlled the island, CCP leader Xi Jinping has made unifying Taiwan with the mainland a legacy issue of his rule and has ordered the Party’s military wing to prepare for a potential conflict by 2027.

The United States does not officially support Taiwanese independence or the forceful unification of the two territories. But, since 1979, Washington has maintained obligations to sell Taiwan the arms it needs to maintain its self-defense.

Likewise, the United States has maintained a policy of so-called strategic ambiguity since 1979, in which it will neither confirm nor deny its willingness to enter a military conflict to defend Taiwan from CCP aggression.

However, U.S. political and military leadership have signaled that they are preparing for such an eventuality. To that end, Chief of Naval Operations Adm. Lisa Franchetti issued a guidance document in September ordering the Navy to prepare for war with China by 2027.

The United States is not interested in preserving Taiwan’s independence simply because of its democratic government. The island nation is responsible for manufacturing more than half of the world’s semiconductors and nearly 90 percent of the globe’s advanced semiconductors, used in electronic components for everything from laptops to pickup trucks to hypersonic missiles.

To that end, Trump’s transactional approach to international security deals has thrown Taiwan’s central role in the global economy into question.

In July, for example, Trump called for Taiwan to pay more for its defense, though the island is already one of the largest purchasers of arms from the United States.

Since 1950, Taiwan has spent more than $50 billion on U.S. weapons, making it the fourth largest purchaser of U.S. arms behind Japan, Israel, and Saudi Arabia, according to the Council on Foreign Relations.

Trump has also suggested that military force would not be necessary to protect Taiwan from the CCP and has instead claimed that a severe enough economic threat to China would prevent an invasion of Taiwan.

Russell Hsiao, executive director of the Global Taiwan Institute think tank, told The Epoch Times that Trump’s ambiguous stance on Taiwan’s defense could invite further CCP attempts to sway American and Taiwanese decision-makers away from aggressively defending the island’s de facto independence.

“The president-elect has already indicated that he would be less clear than President Biden as to whether he thought the United States had an obligation to come to Taiwan’s defense if China decided to invade the island,” Hsiao said.

“Washington and Taipei should be prepared for Beijing to exploit this in its cognitive warfare campaigns and quickly develop their own counter-strategies.”

Hsiao noted, however, that Trump was “unencumbered by past precedents and norms,” which could help him to strengthen the bilateral relationship by overcoming the self-imposed restrictions of the past that have limited U.S. involvement with Taiwan on the international stage.

As such, he said, asking for Taiwan to accept a larger share of the financial burden for its defense could be an opportunity for Taiwanese leaders to demonstrate their resolve and, in the process, garner renewed U.S. support through access to increased arms sales.

“President-elect Trump is expected to emphasize burden-sharing in security ties with allies and partners,” Hsiao said.

“While this may be generally seen in a negative light by most allies and partners, it should be noted that this could lead to it being more forward-leaning in providing a wider variety of arms to Taiwan suited to a range of potential contingencies.”

Trump Expected to Deliver Security—at a Price

Taiwanese leadership responded by saying the island was committed to taking on more responsibility and defending itself from CCP aggression.

Taiwanese leadership may consider making a substantial arms purchase early on in the second Trump administration as a sort of down payment to demonstrate its resolve to the administration.

John Mills, former cybersecurity chief in the Office of the Secretary of Defense, said that ensuring a robust defense budget would help Taiwan to make sure U.S. support did not flag and that military expenditure was “the primary metric” used by Trump to determine an ally’s willingness to defend itself.

“We have a very poor track record when we carry the burden for other countries,” Mills said.

“All that is being asked is at least 2 percent of GDP spent on defense and, in reality, 4 to 5 percent is the new 2 percent.”

At present, Taiwan spends about 2.4 percent of its GDP on defense, according to data compiled by the CIA.

Other U.S. allies in the region are more varied. South Korea spends about 2.7 percent of its GDP on defense, and the Philippines spends only about 1.5 percent. Japan is in a unique situation because it is currently spending 1.4 percent but is in the middle of a historic reform of its military policy and strategy, which will see that figure rise to at least 2 percent in the coming years.

Yet none of those numbers at their current levels are likely to please the incoming Trump administration if it is truly so set on encouraging the nation’s allies in the Indo–Pacific to take point on confronting the Chinese regime’s global expansion.

There may be some wiggle room, however, as the administration looks to use less traditional pathways to secure its international interests.

Sam Kessler, a geopolitical analyst at the North Star Support Group risk advisory company, said that a hallmark of the first Trump administration was its ability to think outside of the box, and that would likely only increase now, given Trump’s growing distance from the old guard of the Republican Party.

“The Trump administration in the first term was innovative, proactive, and resourceful in the deals and agreements they crafted, so expect something similar, as well as a little predicted unpredictability, too,” Kessler told The Epoch Times.

“This may be done in the form of trade deals, security arrangements, foreign investments, and policies that may help reduce the threat levels, too. It could be a wide range of things that could be utilized.”

On that note, Kessler suggests that Trump would revisit trade deals and strong economic measures when confronting China and might prove surprisingly willing to take a proactive stance in the bilateral relationship with China.

Such economic deals, he said, could have the secondary objective of smoothing out regional tensions and preserving allied security while holding the CCP accountable economically.

“We may end up witnessing a series of deals and agreements that may be related to multiple issues that are non-related to the original purpose of a negotiation in order to reduce tensions between multiple parties in other areas,” Kessler said.

In all, it is clear that U.S. allies in the Indo–Pacific will be expected to contribute more to the common defense in the region, and such efforts will not go unseen.

With that much in mind, Mills said that he believes the likelihood of an armed conflict would drop, as Trump’s expectations for all nations in the Indo–Pacific would be clear.

“The likelihood of conflict in the western Pacific decreases significantly under Trump,” Mills said.

“Why? Because he’s showing clarity and resolve at all times. Clarity and resolve help prevent war. Lack of clarity and resolve creates war.”

The American people are expressing joy about President-elect Trump’s selection of Tom Homan as the incoming “border czar” to combat Biden-Harris’ illegal alien invasion at the open southern border, which has been linked to thousands of armed Venezuela prison gang Tren de Aragua members storming communities nationwide.

Tennessee Bureau of Investigation Director David Rausch is the latest official to warn about TdA members taking over his cities. He said these illegal alien criminals have been spotted in all major cities in Tennessee. 

Local media outlet WVLT News quoted Rausch, who warned that TdA members have been involved in human trafficking within the state. 

“They are back in all of our major cities. They are running human trafficking operations, and that’s where they start,” said Rausch.

Rausch told Governor Bill Lee on Tuesday that the foreign prison gang was active across the state in 2023, but after a number of arrests, activity slumped. However, he said, in just the past few months, TdA activity has surged once again. 

The TBI director said TdA members were also involved in organized retail theft and drug crimes within the state. 

“They will not hesitate to attack their opponents in public or in broad daylight,” Rausch warned. 

A recently leaked US Army North Division report showed an estimated 5,000 TdA members running amok nationwide. 

TdA members have caused chaos in Aurora, Colorado to Texas to New York.

These disastrous globalist policies pushed by the far-left Biden-Harris admin neglected to uphold national security for citizens while ten-plus million unvetted illegal aliens stormed the nation. 

Tennessee voters shifted toward Trump in last week’s presidential election, signaling frustration with the globalist in the White House.

Months ago, Homan had a message to the illegals…

This is Tom Homan, President Trump’s Border Czar. His message to all the illegals who crossed the border will give you goosebumps, “You better start packing now… cause you’re going home.”

And to the cartels, he said, “Trump will wipe you off the face of the Earth! YOU’RE… pic.twitter.com/ygZICaVVJb

— George (@BehizyTweets) November 11, 2024

The restoration of national security is only months away.