Authored by Annemarie Ward via DailySceptic.org,

There are moments in public life when you read something and genuinely wonder if someone is having you on. 

The briefing on the supposed rise of far Right activity by the Educational Institute of Scotland (EIS), the leading teachers’ union in Scotland, is one of those moments. 

Scotland’s far Right is so tiny it could hold its AGM in the disabled toilet at Wetherspoons and still have room left for a flipchart. Yet here is the country’s largest and most influential union producing a 16-page political field manual that treats this microscopic fringe as if it is marching on Holyrood with flaming torches and matching armbands.

None of this resembles safeguarding. It is not professionalism. It is certainly not education. It is politics in fancy dress, and it insults the intelligence of teachers, parents and pupils alike.

The briefing begins with what looks like a perfectly sensible academic definition of the far Right. That lasts for all of two minutes.

Then the definition begins to stretch and swell until it covers almost anything that does not suit the worldview of whomever wrote the document. Real extremists do exist, and nobody sensible denies that. Every society has a small fringe of people who are vulnerable to rigid identities and destructive beliefs, usually because they are looking for certainty in a chaotic world.

But the EIS manages to take this small and unpleasant fringe and stretch it to breaking point.

Suddenly people who are pro-business, parents who worry about asylum hotels, anyone concerned about collapsing public services, women raising safeguarding issues, and every adult in the country who thinks biological sex corresponds to reality are all apparently drifting towards radicalisation.

And just to round things off, every Reform UK voter is thrown into the same pot.

By this logic, if you have ever eaten a Sunday roast or nodded politely to a small business owner, you may soon end up on a watch list.

The serious point here is that when everything is described as far Right, nothing is. Real extremism – the sort that harms communities – becomes blurred and unrecognisable when the definition has been inflated like a bouncy castle in a gale. And while all this stretching and redefining is going on, certain issues are conspicuously absent. There is no mention of the Iranian bot activity that the security services have warned about, which has been actively stoking constitutional division in Scotland. Apparently that does not merit 16 pages of alarm. No, the real danger, as framed by the EIS, is not organised extremism but the parent who simply asked whether a Gender Unicorn worksheet belonged in the classroom. This is not safeguarding. It is political hygiene dressed up as moral duty.

Meanwhile, teachers across Scotland are dealing with some of the most challenging conditions we have seen in decades. Violence in classrooms has become routine. Literacy is collapsing in large parts of the country. Additional support provision is drowning under impossible caseloads. Staffing is stretched to its limits. Burnout is everywhere. Yet the leadership of the EIS has decided the top priority is to turn a handful of Facebook loudmouths into an existential Reichstag fire.

It mirrors what David Chalmers highlighted in England only last month. University of Leicester students were shown lecture slides comparing Margaret Thatcher to Putin and Hitler. When higher education starts behaving like that, you know something has gone badly wrong. Several English schools have reportedly taught pupils that Reform UK sits on the same political spectrum as the BNP, despite having as much in common as a wet teabag and a nuclear reactor. Clarity and proportion always seem to be the first casualties of a good moral panic.

The real danger in all this is not the far Right. It is the collapse of democratic norms. Real extremists exist, but they are not the looming threat the EIS pretends they are. What should concern anyone serious about civic life is the way our democratic foundations are being eroded from above while everyone is busy scanning playgrounds for imaginary fascists. In recent years, trial by jury has been quietly pared back. Elections have been cancelled for millions of voters. 

Ordinary citizens have been arrested for social media posts that would not have raised an eyebrow a decade ago. Executive power has expanded to the point where abnormality now passes for routine. None of this is the work of shadowy extremists lurking on encrypted messaging channels. These decisions are being taken in broad daylight by governments who congratulate themselves on defending democracy while chipping away at its pillars.

Yet the EIS can spot authoritarianism in a parent’s Facebook comment but somehow miss the steady centralisation of state power. It is the political equivalent of opening the broom cupboard to check for ghosts while the roof quietly collapses from above. If we are genuinely serious about resisting authoritarian drift, we need to look at where authority is actually expanding, not where it is easiest to manufacture a scare.

If the EIS wants to teach pupils something useful about authoritarianism, it might start by explaining how such systems work in real life. They come from above, not below. They justify themselves through the language of safety rather than through overt threats. They arrive quietly through admin, layers of bureaucracy, policy and guidance rather than boots marching. Authoritarian drift does not look like online caricatures of flag-waving oddballs. It looks like officials wearing a badge promising one more policy for your own good. Danger seldom arrives banging on the door. It appears quietly, disguised as reassurance.

Scotland has made itself particularly vulnerable to this sort of drift because we have no statutory safeguards on political impartiality in education. In England, teachers operate under clear legal duties and detailed professional guidance. There is oversight. There is accountability. Parents have recourse. Scotland has none of that. Scots rely on vague non-binding guidance interpreted wildly differently from one local authority to the next. Into that vacuum walks the EIS, presenting an ideological blueprint as though it were a professional handbook.

Imagine the reaction if the biggest teaching union in England published a manual branding Reform UK voters as extremists, casting gender critical women as reactionaries and placing small business owners somewhere on the spectrum of political radicalism. 

The Department for Education would have called a press conference before breakfast. Yet in Scotland, the EIS has gone further still. In its own words, this briefing “could be a collective CPD offer for members”, as though a partisan political narrative were simply another piece of professional learning. When professional development is treated this casually, the line between education and indoctrination is not blurred, it is being erased.

The combination of moral panic and a complete absence of structural safeguards is not a small administrative quirk. It is precisely how politicisation slides into classrooms unnoticed while the public is preoccupied with other things.

At its heart, this is a story of mission drift. Trade unions exist to defend their members’ material interests. Bread and butter solidarity. Pay. Safety. Conditions. Professional dignity. The EIS seems to have wandered so far from that mission it can no longer see it. It now treats safeguarding questions as misogyny, political disagreement as radicalisation, parental concern as the first step towards fascism, and mainstream views as contamination. 

This is not professional support. When an organisation forgets why it exists, it stops helping and starts preaching. There is a simple moral truth at the centre of this. Political neutrality in education does not exist to spare the feelings of politicians. Most of them struggle to protect their own feelings on the best of days. Neutrality exists to protect the public. It protects the right to disagree. It protects children from having their moral world narrowed by ideology masquerading as virtue. 

Once a union decides that whole sections of the electorate are too dangerous to debate, it stops being a guardian of education and becomes something much darker. In addiction recovery I teach that no one is beyond redemption and that a person should not be defined by his or her worst day or worst idea. The EIS is running the opposite programme, treating ordinary people as pathologies rather than neighbours.

Teachers deserve better than this. Pupils deserve better. A school system rooted in the common good cannot survive when its leading union treats ordinary people as if they are beyond dialogue. The EIS claims to be fighting extremism, yet extremism always begins with the belief that some voices are unworthy of being heard. That is the seed of every authoritarian impulse.

Anyone who has watched a life unravel knows how that impulse grows. Harm does not begin with dramatic gestures. It begins with denial, the quiet conviction that the problem is always someone else. That is exactly where the EIS has positioned itself. If it truly wants to protect Scotland’s young people, it will need to rediscover humility, remember its purpose and step out of denial. Because authority without humility does not safeguard a community; it wounds it.

Strong winds swept across the Western U.S. last week, knocking out power to hundreds of thousands of customers across the Pacific Northwest, and even toppling a double-stacked freight train in Wyoming.

Wyoming-based media outlet Cowboy State Daily reported that a BNSF Railway train carrying dozens of double-stacked freight cars derailed early Friday morning northwest of Cheyenne due to extreme winds exceeding 144 mph.

This entire train was blown over this morning. Northwest of Cheyenne, Wyoming #wywx pic.twitter.com/NHib8Tixub

— brendon (@brendonme) December 19, 2025

Cowboy State Daily meteorologist Don Day said the peak wind gusts in the area of the derailment incident were as much as 78 mph.

“That’s a notoriously windy area,” Day said. “My grandfather used to work for the Union Pacific Railroad, and I was always spun yarns about what it was like getting through that route, whether it was blizzards or windstorms. It’s really nasty.”

Retired Union Pacific Railroad employee and former Wyoming legislator Stan Blake told the local outlet that wind speeds recorded between Cheyenne and Laramie could “definitely” derail a train.

“From what I saw, they were intermodal cars, which are overseas shipping containers they double stack,” Blake said. “It’s like a giant billboard going down the rails.”

Last week, widespread warnings for winter weather or high winds were in place for millions across the West and Midwest.

Hurricane-like winds…

A gust of 142 mph was reported in Coldwater Ridge, Washington, as a storm brought powerful winds to the Pacific Northwest, causing power outages across the region. pic.twitter.com/WHn5JtuWiV

— AccuWeather (@accuweather) December 17, 2025

#BREAKING Over half a million are waking up without power in the Pacific Northwest
The showers are pushing down some of the winds aloft, prompting Destructive Severe Thunderstorm Warnings at times pic.twitter.com/zCdXF8FK5Y

— WeatherNation (@WeatherNation) December 17, 2025

Residents of the Pacific Northwest can expect a long-duration atmospheric river to continue.

Long-duration atmospheric river pattern expected to continue across much of the West. https://t.co/UxC7DZQPmE https://t.co/1N4GaHhqwK https://t.co/ZyQxYYjJIo pic.twitter.com/DrVWfRwTfC

— NWS Climate Prediction Center (@NWSCPC) December 19, 2025

The rest of the Lower 48 can expect above-average temperatures through Christmas.

Authored by Steve Watson via Modernity.news,

The Trump administration has delivered a major blow to UK-US relations by suspending a massive $40 billion Tech Prosperity Deal, citing Britain’s aggressive censorship regime as a direct threat to American tech giants and their ability to operate freely.

This move underscores Trump’s zero-tolerance stance on foreign policies that undermine US interests, especially when they involve stifling free speech and handing advantages to global competitors like China.

The White House paused the tech prosperity deal amid concerns the UK government’s draconian Online Safety Act, which regulates online speech, will stifle American artificial intelligence companies, the Telegraph reports.

⏸️ Donald Trump suspended a landmark tech deal with the UK amid concerns the Online Safety Act will stifle American artificial intelligence companies, the Telegraph understands.

Read more here 👇https://t.co/c8LrpPDoY4 pic.twitter.com/sQzjZsr3L0

— The Telegraph (@Telegraph) December 16, 2025

The law allows the British government to levy large fines on tech giants it deems have facilitated ‘hate speech’.

After the rise of artificial intelligence, companies like OpenAI or xAI can face huge fines – harming their growth and giving China an edge in the AI race.

On Tuesday, it was revealed that the £31bn agreement has been suspended as the White House seeks to improve terms on a wider UK-US trade deal agreed in May.

BREAKING: President Trump has suspended the £31 billion ‘tech prosperity’ deal with Britain. GB News’ Political Editor Christopher Hope reacts, calling it ‘a disaster.’ pic.twitter.com/j0ZTCfvENb

— GB News (@GBNEWS) December 16, 2025

On Dec 3, Liz Kendall, the Technology Secretary, said the government planned to impose new restrictions on chatbots to ensure AI companies do not benefit from loopholes in the law.

“The perception is that Britain is way out there on attempting to police what is said online, and it’s caused real concern”, a source with knowledge of the decision to suspend the deal stated.

“Americans went into this deal thinking Britain were going to back off regulating American tech firms but realised it was going to restrict the speech of American chatbots,” the source added.

The deal, announced in September during Trump’s state visit to the UK, included pledges of £22bn from Microsoft and £5bn from Google to create an AI growth zone in north-east England, potentially generating £30bn in economic value and 5,000 jobs. 

Leftist UK Prime Minister Keir Starmer hailed it as “a generational stepchange in our relationship with the US,” while Trump described it as a path to “dominate” in AI and lead the technological revolution “side by side.”

Beyond censorship, Washington has raised issues with the UK’s digital services tax on US tech firms and food safety rules blocking certain agricultural exports, framing the pause as part of hard-nosed negotiations to eliminate trade barriers.

A British government source downplayed the suspension as “the usual bit of hardball negotiations by the Americans,” adding that US Commerce Secretary Howard Lutnick “is a tough guy. We understand that the Americans negotiate incredibly hard but we’ll stand our ground. They want what’s best for their country, we want what’s best for ours.” 

Another source labeled it “part of the shape of the negotiations” with Washington.

This latest escalation highlights the ongoing free speech crisis in the UK, where authorities have ramped up arrests for online expression. As we reported earlier, the latest insane case has seen a man jailed for 18 months over two anti-immigration tweets viewed just 33 times combined—a stark example of the regime’s overreach.

The broader pattern is alarming: nearly 10,000 arrests in 2024 alone for “grossly offensive” social media posts, equating to 30 per day, while violent crimes like knife attacks and burglaries are sidelined.

Trump has long been attuned to Britain’s erosion of rights, dispatching a “free speech squad” from the State Department in May to investigate cases of activists arrested for silent protests and online dissent. 

He’s even offered political asylum to UK “thought criminals,” including those prosecuted for gender-critical views or immigration criticism, positioning America as a haven for those fleeing authoritarian overreach.

With the US now leveraging economic deals to push back against censorship, this suspension sends a clear message: alliances come with strings attached when basic freedoms are at stake. As Britain doubles down on policing speech, Trump is ensuring American innovation—and expression—won’t pay the price.

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.

Via Remix News,

As the EU moves to crush protesting farmers demonstrating in Brussels, Hungarian Prime Minister Viktor Orbán offered full backing to the farmers and their efforts to stop the EU’s Mercosur free trade deal, which threatens to destroy food security in Europe.

“Farmers are 100 percent right,” said Orbán, who is currently in Brussels attending the EU Summit.

He added that the farmers have obvious issues with the Mercosur package, a free trade agreement with Latin American countries, because it “kills the farmers.”

“Hungary is one of the countries that does not support the Mercosur agreement. There were serious professional debates about this in Hungary, and the Hungarian position was that we do not support this,” said the prime minister.

🇧🇪JUST IN: Police fire tear gas at protesting farmers in Brussels.

10,000 farmers are in Brussels to protest the South American Mercosur free trade agreement, which will destroy food security in Europe and lead to harmful pesticides in EU supermarkets. pic.twitter.com/WA1MVDfQOt

— Remix News & Views (@RMXnews) December 18, 2025

Viktor Orbán reminded that the agreement would require a qualified majority, and according to his expectations, there is not enough support.

“Mercosur opponents make it impossible for this agreement to be signed. The plan is that the President of the European Commission wants to sign this later this week. I think this needs to be stopped here now, and we can prevent it,” he said.

He also said that another problem for farmers is the Green Deal, which leads to expensive overregulation in agricultural work in such a way that it represents a serious cost and competitive disadvantage for European food producers. 

“So I have to say that with the Mercosur agreement, they are shooting European farmers in the foot, but before that, they tie their legs together so that they have no chance in the global competition,” he stated.

“That is why the farmers are absolutely right, the Hungarian government is 100 percent with the farmers,” said the Hungarian leader.

Farmers met with force

The use of force against farmers in Brussels is drawing criticism from Hungarian journalists, including Dániel Deák, the senior analyst of the Század Institute.

He published a video report showing the European Commission building, or Ursula von der Leyen’s workplace, surrounded by barbed wire. 

According to him, with these measures, they are trying to prevent farmer protesters from getting close to the president of the European Commission. 

In the report, he also drew attention to the fact that if they tried to limit a demonstration in Hungary in a similar way, by placing barbed wire, it would provoke significant protests from the left, and the European Union would also talk about the use of “dictatorial means.”

In his opinion, all this once again points to the hypocrisy that is often used against Hungary. He also emphasized that demonstrations in Hungary can be held and that no attempt is made to make them impossible with barbed wire.

Read more here…

Voters are delivering Democrats in Congress a brutal verdict heading into the 2026 midterm cycle, with just 18 percent approving of their performance and a staggering 73 percent disapproving, the worst rating Quinnipiac has recorded for them since it began asking the question in 2009. 

Even Democrats themselves are in open revolt: only 42 percent of Democratic voters approve of how their own party’s members in Congress are doing, while 48 percent now disapprove, a sharp slide from October when approval stood at 58 percent.

Among independents, things descend from terrible to apocalyptic for the Democrats. The gap between approval and disapproval is a huge 61 points, leaving Democrats almost universally despised among this key demographic. But the more shocking revelation came from within their own ranks: for the first time in Quinnipiac’s history, even Democrats themselves are giving congressional Democrats a thumbs down. Support among party voters has cratered 28 points since October—swinging from a positive 22 to a negative 6 in just two months. 

“A family squabble spills over into the holidays. Democratic voters want their party to hold the reins of the House but are not the least bit happy about what they are doing at the moment,” Quinnipiac University Polling Analyst Tim Malloy said in a statement.

Meanwhile, Republican voters are much more satisfied with how their party’s members in Congress are doing, with 77 percent expressing approval, and only 18 percent expressing disapproval.

The numbers are so bad for the Democrats that CNN’s chief data analyst, Harry Enten, couldn’t favorably spin this for the party. 

 “Democrats, in the minds of the American public, are lower than the Dead Sea,” Enten put it, twisting the knife with a geological metaphor that unfortunately fits. According to new Quinnipiac polling data, congressional Democrats are languishing at a net approval rating of -55 points, an almost comical nosedive that marks their worst showing in over twenty years of tracking. “They have never found Democrats, at least those in Congress, in worse shape than they are right now.”

Enten tried to diagnose how it all went so wrong so fast. He pointed back to October’s government shutdown, when Democrats saw what turned out to be their last flicker of momentum. “I think during the shutdown, there was a bit of a boost for Democrats, right? There was a rallying around the flag effect going on,” he said. “But Democrats did not like how that shutdown turned out.” In short, they got the brief sugar high, then the crash—and now they’re nursing a severe case of political hangover.

The fallout is already reaching individual lawmakers.

“One of the reasons that Dan Goldman is in trouble right now and a potential primary against Brad Ladner is because at this point, the Democratic base is so upset with Democrats,” Enten explained, adding his parting shot: “So even if the Democrats take back Congress, don’t be surprised if Dan Goldman ain’t there because of numbers like this one.”

Translation: victory might come, but not without casualties.

Even the supposedly good news isn’t really all that good. Democrats currently hold a four-point lead on the generic congressional ballot with a Republican president in office, a figure Enten conceded was “pathetically weak” by historical standards. For example, when they won back control of Congress in 2008 and 2018, Democrats led by double digits. Now, their advantage is less than half the normal cushion they’ve enjoyed in similar cycles.

Enten, ever the numbers guy, encouraged some patience while gently deflating any premature triumphalism.

“Yes, you’re on your way to a congressional majority… but it’s still a long time,” he cautioned.

“And with numbers like this, considerably weaker than historically speaking, it might be a tougher road to hoe than normally you would think.”

The data paints an unflattering portrait: a party so strategically dependent on Donald Trump’s unpopularity that it’s ignoring its own. Democrats appear to be counting on Trump’s toxicity to do the heavy lifting, but if their own negatives stay this high, his may not be enough to carry them over the finish line in next year’s midterm elections.

Stocks look set toclose out a choppy week on a steady note, building on Thursday’s gains, spurred by cooler inflation that backs the case for lower borrowing costs. As of 8:00am, S&P 500 futures were 0.1% higher while Nasdaq 100 contracts were up 0.2% after the WSJ reported that OpenAI is set to raise $100BN in fresh capital (from sov wealth funds) removing near-term funding pressures across the AI sector. In premarket trading Oracle is up 6%, off session highs, with the rest of the Mag 7 complex mostly higher. In a risk-on set-up, bitcoin is also higher, while Treasuries are down. Gold is hovering near its highest ever, and a separate Goldman team reckons its record-setting rally still has legs, and could push the yellow metal above $5000. US economic calendar includes November existing home sales, December University of Michigan sentiment (10am), and Kansas City Fed services activity (11am). Fed’s Williams is scheduled to appear on CNBC at 8:30am.

In premarket trading, Mag 7 stocks are mostly higher (Nvidia +1%, Tesla +1%, Amazon +0.4%, Alphabet (GOOGL) +0.2%, Microsoft +0.1%, Apple -0.2%, Meta Platforms -0.1%). Cloud infrastructure stocks including CoreWeave (CRWV) are staging a rebound after the sector sold off on financing concerns in the AI supply chain. CoreWeave climbs 5%.

• AGCO (AGCO) slips 1% after Barclays cut the recommendation on the agriculture equipment company to underweight, saying that tariffs threaten its ability to meet margin estimates.
• Defense stocks remain in focus after European Union leaders reached an agreement to loan Ukraine €90b ($105b) for the next two years, aiming to strengthen Kyiv’s hand at the negotiating table and keep the war-torn country afloat. 
• KB Home (KBH) falls 5% after the company’s fiscal fourth-quarter profit missed analysts’ estimates. The mid-point of the outlook range for fiscal 2026 housing revenue also lagged expectations
• Nike (NKE) slumps 11% after the sportswear retailer’s third-quarter guidance disappointed investors, with its turnaround hampered by weak sales in China and the Converse brand.
• Oracle (ORCL) is 5.6% higher after TikTok told employees that its parent company, ByteDance, had signed binding agreements to create a US joint venture majority owned by American investors, led by the cloud computing giant. 
• WhiteFiber (WYFI) gains 20% following the announcement of a 10-year co-location agreement between its subsidiary Enovum Data Centers Corp. and Nscale Global Holdings.

As noted yesterday, individual stock prices could be erratic on Friday during the largest options expiry day ever, with $7.1 trillion of notional open interest rolling off across the US options market, according to data from Citigroup. Trading volumes may be inflated by index rebalances at the close. 

The December opex tomorrow will be the largest ever with over $7.1 trillion of notional options exposure expiring, including $5.0 trillion of SPX options and $880 billion notional of single stock options. pic.twitter.com/amb3HDbcwX

— zerohedge (@zerohedge) December 18, 2025

Oracle, which in recent months emerged as a fulcrum point of concerns that the AI rally had become overheated, rose more than 5% in premarket trading. The company is leading a group of investors that signed binding agreements to bring TikTok’s US operations under an American-controlled venture. It would also be a direct beneciciary of OpenAI tapping Abu Dhabi sovereign wealth funds. 

Stocks have swung in recent weeks as optimism over the outlook for Fed rate cuts and a robust economy have clashed with fears that the AI-driven rally is vulnerable to a correction. Some strategists warn that while the broader backdrop remains favorable, volatility may persist. “While the conditions for a Santa rally are broadly in place, markets may need a fresh catalyst,” said Francisco Simón, European head of strategy at Santander Asset Management. “In that context, a renewed positive trigger — potentially linked to encouraging news in the AI space — could help reignite momentum.”

Global stocks that rose higher than ever in 2025 are set for further gains next year, according to Goldman Sachs strategists; but don’t expect returns to be quite as strong. Company earnings should drive dollar returns of 13% from a broadening bull market in 2026, rising to 15% if you include dividends, according to a Goldman team led by Peter Oppenheimer. Fed rate cuts and positive growth should extend the economic cycle and support risk assets, though the rally’s next phase may be choppier.

Still, investors are showing little sign of losing their appetite for equities, with the US seeing a 14th week of inflows, at $77.9 billion, in the week ended Dec. 17, according to Bank of America. Tech contributed to inflows for the first time in three weeks, suggesting that fears over potentially overblown AI stock valuations have diminished. Michael Hartnett said investors are positioned for “run-it-hot” acceleration in PMIs and EPS on easing rates, drops in tariffs and tax cuts (more on that later). 

At the same time, gold is hovering near its highest ever, and a separate Goldman team reckons its record-setting rally still has legs. Commodities analysts including Daan Struyven and Samantha Dart also forecast weakness in oil prices to persist next year.

In the biggest central bank decision overnight, the BOJ lifted its key rate to the highest level in more than three decades – as expected – and signaled that further hikes could be in the offing. Japan’s 10-year yield climbed to the highest level since 1999, with the BOJ making clear that the tightening cycle will continue if the economy performs as expected. 

“The market had expected a hawkish hike from the BOJ, with the expectation of clarifying its stance on narrowing the neutral rate range and future rate hike path,” ING Bank’s Min Joo Kang and Chris Turner wrote in a note. “However, both the BOJ and Ueda remained quite vague on this matter, which likely caused disappointment in the market.”

European equities tread water, with the Stoxx 600 flat despite solid gains in Asia, including a 1% advance in the Nikkei. European markets hover near a record on Friday, as optimism around further monetary policy easing buoyed sentiment in the final full trading week of the year. Utilities stocks outperform while consumer stocks lag after US peer Nike warned of weak China sales. Here are some of the biggest movers on Friday:

• Semapa shares rises as much as 25%, the most in more than three years, after the Portuguese conglomerate agreed to sell its cement unit Secil to Spain’s Cementos Molins.
• DCC shares climb as much as 4%, the most since October, after the company said it successfully completed a £600 million tender offer.
• Puma shares dip as much as 3.5%, leading sportswear stocks lower, after US giant Nike warned sales will decline this quarter, partly due to weakness in China and its Converse brand.
• WH Smith shares drop as much as 6.2% after pretax profit guidance for 2026 came in below analysts’ expectations and the the travel retailer said it was under investigation in the UK over an accounting error in its North American business.
• Ipsen shares fall as much as 3.8% after the company said a mid-stage trial evaluating its experimental oral drug for an ultra-rare bone disease did not meet its primary endpoint.
• Computacenter shares tumble as much as 1.5% after the IT company was downgraded at Peel Hunt, with analysts saying the current valuation already bakes in much of the upside potential over the next 12 months.

Earlier in the session, Asian equities rose, paring weekly losses, as cooling US inflation data reinforced bets on Federal Reserve interest-rate cuts and lifted technology stocks. The MSCI Asia Pacific Index rose as much as 0.8% on Friday, on course for its biggest gain since Dec. 12, as markets across the region advanced. Tencent Holdings, SoftBank Group Corp. and Toyota Motor Corp. led the gains. For the week, the gauge was down 1.9%, marking its worst five-day period in a month. Meanwhile, the Bank of Japan hiked borrowing costs to 0.75%, the highest level since 1995, as expected. Stocks rose.

In FX, the yen slid to the bottom of the G-10, with dollar-yen at 157, as the BOJ’s 25-bps rate hike and Ueda’s presser failed to deliver the stronger tightening message traders expected. The Bloomberg Dollar index is up 0.2%.

Rates follow Japan, where the 10-year yield broke above 2% for the first time since 1999. US 10-year rates climb 3bps with the curve bear steepening, while gilts lag bunds after the BOE’s hawkish cut.  US yields cheaper by 1.5bp to 3bp across the curve in a bear steepening move, with 2s10s and 5s30s spreads wider by 1.2bp and 1bp on the day. US 10-year yields trade up to around 4.15%, with bunds and gilts cheaper by an additional 1.5bp and 2bp in the sector. Elsewhere, French 30-year yields hit their highest level since 2009 after budget talks were pushed into 2026. There were more losses seen across bunds and gilts after a flood of European data which included France and Germany PPIs and UK retail sales

In commodities, oil climbs on reports that Ukraine has hit a Russian shadow fleet oil tanker. Spot gold falls roughly $6 to near $4,327/oz. Silver climbs 0.8% to ~$66. Bitcoin ekes out more gains, up some 3.2% to around $88,000. 

US economic calendar includes November existing home sales, December University of Michigan sentiment (10am), and Kansas City Fed services activity (11am). Fed’s Williams is scheduled to appear on CNBC at 8:30am

Market Snapshot

• S&P 500 mini +0.3%
• Nasdaq 100 mini +0.5%
• Russell 2000 mini +0.3%
• Stoxx Europe 600 +0.1%
• DAX +0.2%
• CAC 40 +0.1%
• 10-year Treasury yield +2 basis points at 4.14%
• VIX -0.7 points at 16.17
• Bloomberg Dollar Index +0.2% at 1209.44
• euro little changed at $1.1715
• WTI crude -0.6% at $55.84/barrel

Top Overnight News

• What will 2026 bring? Goldman economists expect another year of 2.8% growth, above the Bloomberg consensus of 2.5% and with individual forecasts that are at or above consensus for most major economies. As has typically been the case since the pandemic, the bank is most optimistic (relative to consensus) in the US. Growth is likely to average 2.6% in 2026, well above the consensus of 2.0% and up from an estimated 2.1% in 2025. Just under 0.2pp of the pickup reflects the mechanical impact of the government shutdown, which depresses the level of GDP in 2025 Q4 and boosts 2026 Q1 growth. GS also expects a fundamental acceleration because of three forces: Reduced tariff drag, tax cuts, and easier financial conditions.
• Homeland Security Secretary Noem said at President Trump’s direction, she is immediately directing the USCIS to pause the DV1 program.
• Trump to make an announcement at 13:00ET on Friday and deliver remarks on the economy at 21:00ET.
• OpenAI is seeking up to $100 billion in new funding at a valuation as high as $830 billion, above earlier estimates. WSJ
• Trump’s administration has launched a review that could result in the first shipments to China of Nvidia’s second-most powerful AI chips. Trump this month said he would allow sales of Nvidia’s H200 chips to China, with the U.S. government collecting a 25% fee, and that the sales would help keep U.S. firms ahead of Chinese chipmakers by cutting demand for Chinese chips. RTRS
• The BOJ raised its benchmark rate to 0.75%, the highest in 30 years, and said more increases are in the pipeline if conditions allow. Former BOJ official Kazuo Momma said rates may hit 1.5% in 2027. Ten-year JGB touched their highest since 1999, and the yen weakened. BBG
• UK government borrowing fell in November, with the budget deficit standing at £11.7 billion — £1.9 billion less than a year earlier. Separately, retail sales fell for a second straight month. BBG
• EU leaders committed to lend Ukraine 90 billion euros, or around $105 billion, to help the country keep fighting Moscow’s invasion but failed to agree on a plan to use frozen Russian assets for the loan. WSJ
• Americans seeking jobs face another tough year in 2026, with unemployment staying high despite solid growth, according to economists’ predictions. The unusual mix probably reflects AI-driven investment that isn’t adding jobs. BBG
• The world is awash with oil, and prices are poised to keep falling. Producers are ramping up output, putting a record 1.3 billion barrels in open seas. The glut may push average WTI down to $52 next year. BBG
• TikTok’s long-delayed split from ByteDance is underway, with the company saying it signed binding deals to form a US joint venture controlled by American investors led by Oracle. ORCL +475bps premkt. BBG
• Nike shares slumped premarket (-10.5% premkt) after the company projected a sales decline this quarter amid persistent weakness in China and at its Converse brand. BBG

BOJ

• BoJ raised rates by 25bps to 0.75%, as expected, with the decision unanimous, while it stated interest rates are expected to remain at significantly low levels and will continue to raise policy rate if the economy and prices move in line with forecasts.
• BoJ Governor Ueda (post-policy press conference) said Japan’s economy is recovering moderately, albeit with some weakness. Will make a decision on rate hike after checking the impact on the economy. Will conduct market operations swiftly, under exceptional circumstances in market. Delaying a rate hike could force a significant hike later. There is still some distance to lower the limit of neutral rate estimate. Several BoJ members mentioned that recent JPY weakness may affect prices going forward, and warrants attention. Members suggested that the weak JPY is possibly affecting underlying inflation.
• Japanese Economy Minister Kiuchi said they respect the BoJ’s decision but they need to be mindful of economic outlook.
• Japanese Economy Minister Kiuchi said FX is affected by various factors, determined at markets. Important for currencies to move in stable manner reflecting fundamentals. Closely watching market moves with a high sense of urgency, including long-term yields.

Other Central Banks

• BoE Governor Bailey said he is confident that inflation will be close to target by late spring, giving a good reason to expect a bit more downward path on rates.
• ECB’s Escriva says there are no reasons for any change in interest rates in any direction.
• ECB’s Sleijpen says policy is in a good place but we must maintain a data-dependent and meeting-by-meeting approach.
• ECB’s Muller said it is too early to speculate what will happen in six months, imagines a scenario that weaker growth and further disinflation could justify more easing but the opposite could also be imagined, via Econostream.
• ECB’s Kocher said they have not decided what course to take on rates, when asked if there are no more rate cuts coming. Rates could be cut or raised, depending on developments.
• ECB’s Rehn said outlook for growth and inflation remains highly uncertain due to trade war and geopolitical tensions. Reiterates meeting-by-meeting approach and ECB maintains full freedom of action and optionality.
• ECB’s Kocher said there are many risks to growth and inflation to the up and downside. said they want to keep all options open to be able to react to the volatile situation. They are where they want to be on rates.
• ECB Wage tracker suggests lower wage growth and gradual normalisation of negotiated wage pressures in 2026. ECB wage tracker with unsmoothed one-off payments at 3.0% in 2025 and 2.7% in 2026.

Trade/Tariffs

• US President Trump told NBC “We’re making so much money with tariffs”, people would start getting the payments “very soon”. “Within the next few days, it’ll all be out”.
• US President Trump administration initiated multi-agency review of NVIDIA (NVDA) H200 licenses for sales to China, according to sources cited by Reuters.
• China’s Commerce Ministry urges India to correct wrong practice on Telecom tariffs. China files WTO case against India over ICT tariffs and Photovoltaic subsidies.
• China’s Commerce Ministry has launched an investigation into some rubber products from the US, South Korea and the EU. Adds to keep anti-dumping duty rate of up to 222%. Will terminate anti-dumping measures against UK rubber imports from December 20th.
• EU’s von der Leyen said “we have reached out to our Mercosur partners and agreed to postpone slightly the signature”, adds she is confident EU has sufficient majority to approve the Mercosur trade deal.
• French President Macron said work must continue on EU-Mercosur deal after delay, adds safeguards clause must be adopted by EU Parliament and accepted by Mercosur nations. He said, with new safeguard and mirror clauses to be implemented in January, it would be a “new” Mercosur-EU deal. France asked for CAP budget to be maintained.
• Chinese auto parts company Wangxiang agrees to pay USD 53mln to resolve US Justice Department lawsuit over imported components.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly higher as the region took impetus from the positive handover from Wall Street, where the major indices gained following softer CPI data and strong Micron earnings, while the attention overnight turned to the BoJ, which unsurprisingly hiked rates for the first time since January. ASX 200 was underpinned by outperformance in tech and financials, but with gains capped as mining, resources and materials sat at the other end of the spectrum. Nikkei 225 rallied amid tech strength and with some banks supported as yields gained amid the widely-expected BoJ rate hike, in which the central bank raised its key rate by 25bps to 0.75%, which is the highest in 30 years. Hang Seng and Shanghai Comp conformed to the upbeat mood amid tech strength, and after the PBoC continued to opt for a double-pronged liquidity operation, while it was also reported that TikTok signed a deal to sell its US entity to a joint venture controlled by American investors.

Top Asian News

• Japanese Finance Minister Katayama said will consider fiscal sustainability to some extent in compiling next fiscal year’s budget, adds aim to boost market confidence by lowering debt to GDP ratio.

European bourses (STOXX 600 U/C) opened around the unchanged mark, and have remained on either side of the mark since. European sectors hold a slight positive bias. Autos leads, followed by Insurance whilst Consumer Products lags; the latter pressured in tandem with post-earning losses in Nike (-10.5%).

Top European News

• Bundesbank cuts growth forecast for 2026 to 0.6% (prev. 0.7%) and raises 2026 inflation forecast for Germany to 2.2% (prev. 1.5%). Nagel: “Starting in the second quarter of 2026, economic growth will strengthen markedly, driven mainly by government spending and a resurgence in exports.” and adds that “….while progress will be subdued initially, it will then slowly pick up.”.
• French Prime Minister Lecornu said parliament will be unable to vote on a budget for France before the end of the year. Starting on Monday, he will meet with key political leaders to consult with them on the steps to be taken.
• Joint Committee from French National Assembly and Senate cannot reach compromise text on 2026 budget, according to a Committee member.
• Swedish Think Tank NIER sees 2025 GDP at 1.6% (sept. fcst. +0.9%), 2026 GDP 2.9% (sept. fcst. 2.6%).

FX

• DXY is mildly firmer and trades at the upper end of a 98.41 to 98.70 range. Really not much driving things for the USD this morning, and with the upside largely facilitated by the JPY weakness. On that note, the BoJ raised rates by 25bps to 0.75% as expected. The decision was unanimous, and it stated that interest rates are expected to remain at significantly low levels, and the bank will continue to raise the policy rate if the economy and prices move in line with forecasts. The presser thereafter, spurred another bout of pressure in the JPY where Ueda avoided explicitly guiding markets towards another rate hike. Though he did highlight that the BoJ will conduct market operations swiftly, under exceptional circumstances in market. Interesting comments from the Governor came as he stated that several BoJ members mentioned that recent JPY weakness may affect prices going forward, adding that this warrants attention, given some believe that it could be affecting inflation. This spurred some very slight strength in the JPY at the time, which later pared.
• EUR is essentially flat and trades within a 1.1704 to 1.1728 range. Markets have had a slew of ECB speakers to digest this morning, but really not adding much to the agenda. ECB’s Kocher suggested that they are where they want to be on rates, a comment reiterated by Sleijpen.
• GBP is also flat, within a 1.3364 to 1.3387 range. Traders seemingly taking breather following the upside seen in the prior session, following a hawkish cut at the BoE. Since, Governor Bailey has provided some commentary. On Thursday he said that he is “very” encouraged by the process in returning inflation to target; comments which were largely reiterated once again earlier this morning.

Fixed Income

• JGBs began the overnight session on a slightly firmer footing, but then came under marked pressure after the BoJ policy decision, where the Bank hiked rates by 25bps as expected. The decision was unanimous, with the accompanying commentary reiterating that it will continue to raise the policy rate if the economy and prices move in line with forecasts. Bond traders appear to be focused on the BoJ’s comments related to higher wages heading into the new year – and ultimately on remarks that the Bank will continue to raise rates in line with expectations. Perhaps focus for JGBs focus on the fiscal side of things, with the BoJ seemingly waiting for economic developments, which will be subject to volatility under PM Takachi’s cabinet.
• USTs traded rangebound throughout the overnight session and have continued to trade sideways throughout the European morning. Currently lower by a handful of ticks and within a 112-17+ to 112-23 range. Ahead, US President Trump is scheduled to make an announcement at 13:00EST/18:00GMT on Friday and will deliver remarks on the economy at 21:00EST/02:00GMT.
• Bunds and Gilt action has also been exceptionally lacklustre; currently holding a slight downward bias, within a 127.16 to 127.52 and 90.94 to 91.20 range, respectively. A few ECB speakers this morning, but not really any pertinent commentary thus far; Kocher reiterated that interest rates are at a good place. Back to the UK, Gilts mildly underperform – continuing the post-BoE hawkish move seen in the prior session. Some remarks from BoE Governor Bailey earlier who suggested that he is confident that inflation will be close to target by late spring, giving a good reason to expect a bit more downward path on rates. Ultimately, no move in Gilts on the remarks.

Commodities

• Crude benchmarks remain contained in tight ranges as the European session gets underway amid a lack of crude-specific newsflow. WTI oscillates in a USD 55.67-55.99/bbl range while Brent holds below USD 60/bbl comfortably as European trade continues. Recent comments via US President Trump, who said that “I do not rule out a war with Venezuela”, according to NBC, had little impact on the complex.
• Spot XAU saw initial downside at the start of the APAC session, continuing the reversal lower after failing to hold beyond USD 4350/oz during Thursday’s US session. XAU fell to a trough of USD 4310/oz and since, remains in a c.USD 40/oz band throughout the European morning.
• 3M LME Copper lead the gains across the metals complex as the risk tone stateside rebounded, which boosted Asia-Pac equities. The red metal opened unchanged but gradually rose, in line with APAC equities. This helped 3M LME Copper break Thursday’s high of USD 11.79k/t and continue to a peak of USD 11.83k/t as the European session gets underway.
• Phillips 66 (PSX) reported emissions event at Sweeney refinery and petrochemical complex in Texas on December 17th.

Geopolitics

• Russian President Putin said we do not see Ukraine being ready for talks, ready and want to end the conflict via peaceful means. Continue to create a safe zone on the border with Ukraine.
• Belarus said “We are preparing to start the combat shift of the Russian Oryshnik missile system”, via Al Arabiya.
• Russia’s Dmitriev said regarding EU summit decision that it was a ‘major blow to EU warmongers led by failed Ursula’ and voices of reason in the EU blocked the illegal use of Russian reserves to fund Ukraine.
• EU’s Costa said leaders agreed to roll over sanctions against Russia, adds Ukraine will only repay EU loan once Russia pays reparations and the EU reserves its right to make use of the immobilized assets to repay loan.
• German Chancellor Merz said Ukraine will receive an interest-free loan of EUR 90bln with these funds sufficient to cover military and budgetary needs for the next two years, and the EU will keep Russian assets frozen until Russia has compensated Ukraine. said: We expressly reserve the right to use Russian assets for repayment if Russia fails to pay compensation in full compliance with international law.
• EU’s Costa said we have a deal to finance Ukraine, and the decision to provide EUR 90bln of support to Ukraine for 2026-2027 was approved.
• EU official said it seems there is the possibility of unanimity to use headroom of EU budgets to provide funding for Ukraine. EU leaders want work to continue on the technical and legal aspects of the instruments establishing a reparations loan.
• EU considers using joint debt to loan up to USD 106bln dollars to Ukraine, according to Bloomberg.
• European Council President Costa proposed to EU leaders to address Ukraine’s immediate pressing financial needs through an EU borrowing solution, according to two EU diplomats.
• Russia’s President Putin says US President Trump is making frank efforts to end the conflict in Ukraine. Says Russia has been asked to make compromise on Ukraine, in which Russia agreed to. The ball is on the West and Ukraine’s court.
• Ukraine has hit Russian shadow fleet tanker in the Mediterranean sea for the first time, according to Reuters citing SBU source. SBU’s aerial drones hit the Qendil vessel, causing critical damage. However, vessel was empty at the time of the attack.
• Contacts between Israel and Syria have not made much progress, according to Al Arabiya quoting US sources.
• Germany’s Competition Authority approves the merger of Palo Alto (PANW) and Israel’s Cyberark software.
• US ambassador to Israel said the US is not considering supplying Turkey with F-35 jets (LMT), which is not on the table under current US laws, via Sky News Arabia.

US Event calendar

• 8:30 am: Fed’s Williams Appears on CNBC
• 10:00 am: Nov Existing Home Sales, est. 4.15m, prior 4.1m
• 10:00 am: Nov Existing Home Sales MoM, est. 1.22%, prior 1.2%
• 10:00 am: Dec F U. of Mich. Sentiment, est. 53.5, prior 53.3

DB’s Jim Reid concludes the overnight wrap

This is my last EMR of 2025, but Henry will keep it going for a couple of days next week. Thank you for reading and interacting this year and for all the votes in the Extel survey which went well for us again when results were published last week. See you in 2026 for another fun-packed ride through markets. As is tradition, I’ve listed my favourite TV shows of the year at the end alongside my film and album of the year. My wife and I try to watch an hour’s TV when I’m not travelling. It’s getting more difficult as the kids get older and have to be taxied around in the evening, a trend I fear will only get worse. I look forward to hearing your disagreements with the list! 

Before I sign off for the year, it’s fair to say that it’s been an incredibly eventful 24 hours in markets, and overnight there’s been no let-up as the Bank of Japan have just delivered a 25bp hike that’s taken rates to a 30-year high of 0.75%. That follows a decision from the ECB to hold rates yesterday, which cemented expectations that they’d finished cutting, along with a hawkish BoE cut that led investors to dial back the prospect of rapid rate cuts next year. But even as those central banks had various hawkish elements, it was a completely different story for the US, as the CPI print was beneath all expectations, leading to a decent Treasury rally as investors priced in faster rate cuts for 2026, even if there were huge doubts about the data’s validity given the shutdown. So it was a day of competing narratives, but for risk assets, the prospect of more Fed cuts and the reaction to Micron’s earnings helped the S&P 500 (+0.79%) rebound after 4 consecutive declines, whilst Europe’s STOXX 600 (+0.96%) hit a new record.

We’ll start with that overnight news from Japan, where the BoJ delivered the 25bp rate hike that was widely expected, and pointed to more ahead. For instance, their statement said that real interest rates were “at significantly low levels”, and if their outlook was realised, they would “continue to raise the policy interest rate”. So that’s pushed Japanese bond yields higher this morning, with the 10yr yield (+4.8bps) currently at 2.01%, which would be its highest closing level since 1999. Indeed, we also had the latest CPI print overnight for November, which showed headline CPI at 2.9% as expected, having now been above 2% consistently since April 2022. That landscape of above-target inflation has provided the BoJ the space to deliver multiple rate hikes now, and they said that “it is highly likely that the mechanism in which both wages and prices rise moderately will be maintained”.

Nevertheless, equities in Asia have still rallied overnight, given the BoJ hike was expected and investors think Fed cuts are more likely following the CPI print. So that’s supported gains across the major indices, including for the Nikkei (+1.11%), the KOSPI (+1.07%), the Hang Seng (+0.66%), the CSI 300 (+0.51%) and the Shanghai Comp (+0.50%). And looking forward, US equity futures are stable, with those on the S&P 500 down just -0.01%. 

All that follows a hugely eventful session yesterday, with a big boost thanks to that weak US CPI report, which featured the lowest year-on-year core CPI print since early 2021. However, it’s worth noting that there were several pieces of missing data because of the shutdown, and the methodological issues meant that investors treated it with some caution. For instance, a lot of people looked at the shelter numbers with serious doubt, as they saw a huge drop-off that’s more usually consistent with recessions. For instance, the 2-month annualised change for Owners’ Equivalent Rent (so accounting for the missing October report and this November print) came in at just +1.6%, the lowest since the Covid-19 pandemic. Similarly, the 2-month annualised change for rents of +0.8% was the weakest since the aftermath of the GFC in 2010. 

However, even with those data issues, the print was still viewed as soft enough to make Fed rate cuts more likely next year. Indeed, headline CPI was still down to +2.7% year-on-year (vs. +3.1% expected), whilst core CPI was at +2.6% (vs. +3.0% expected). The weak print meant investors priced in more Fed rate cuts, with the amount expected by the December 2026 meeting up +1.6bps on the day to 62bps. So that helped Treasuries to rally across the curve, with the 2yr yield (-2.3bps) down to 3.46%, whilst the 10yr yield (-3.1bps) fell to 4.12%.

Moreover, that offered a big support to equities, with a further boost from Micron (+10.21%) after its earnings announcement the previous day, making it the top performer in the S&P 500. So collectively, that saw the S&P 500 (+0.79%) bounce back from its recent selloff, alongside gains for the NASDAQ (+1.38%) and the small-cap Russell 2000 (+0.62%). Just over 50% of the S&P’s constituents traded higher on the day, with gains led by consumer cyclical subsectors like Autos (+3.2%), Media (+1.6%), and Consumer Discretionary Retail (+1.6%). The laggards were the more defensive names that had a bid in recent days like Consumer Products (-1.5%) and Staples (-0.7%). Finally, Energy (-1.4%) also saw a pullback as oil prices fell nearly -1.4% intraday to finish flat after opening higher on more Venezuela headlines. By the close, Brent crude was only slightly higher (+0.23%) at $59.82/bbl.

Earlier in Europe, the main headlines came from the ECB, who left their deposit rate at 2% as expected. Nevertheless, there was a hawkish tone, and the updated forecasts showed stronger growth and stickier core inflation (at 2.2% for 2026), so that was seen as outweighing the expected undershoot of headline inflation, which wasn’t mentioned at all by President Lagarde. Yet despite recent speculation around an ECB hike next year, this shifting macro tone didn’t translate into a more hawkish policy signal, with Lagarde repeating the line that they were keeping all policy options open. And later in the day, Bloomberg reported that ECB officials expected that the cycle of rate cuts was most likely done, with talk of rate hikes seen as premature. So the decision reaffirmed our economists’ view that the easing cycle is likely over, and they see the Governing Council as determined to retain a neutral policy signal for now. Looking forward, they maintain their view that the ECB’s next move will be a hike, but they don’t see that as likely to materialise in 2026

Against this backdrop, European bonds rallied across the continent, thanks to the soft US CPI print and the absence of more hawkish ECB rhetoric. So that helped yields on 10yr bunds (-1.4bps), OATs (-1.6bps) and BTPs (-2.9bps) move lower. And for equities there was also a strong performance, with both the STOXX 600 (+0.96%) and Spain’s IBEX 35 (+1.15%) at new records, alongside gains for the DAX (+1.00%) and the CAC 40 (+0.80%) as well.

Shortly before the ECB, the Bank of England delivered a 25bp cut as expected, taking their own policy rate down to 3.75%. Yet even though the decision was a cut, it was interpreted in a hawkish light by markets. First, because it was only passed on a narrow 5-4 vote, with the rest wanting to leave rates unchanged. And second, in the statement they added that “further policy easing will become a closer call.” So that suggested the bar was rising to further cuts, and front-end gilt yields sold off in response, with the 2yr gilt yield up +4.2bps, whilst the 10yr yield saw a smaller increase of +0.6bps. See our economist’s review here. 

To the day ahead now, and US data releases include existing home sales for November, and the University of Michigan’s final consumer sentiment index for December. Meanwhile in Europe, there’s UK retail sales for November, and the European Commission’s preliminary consumer confidence indicator for the Euro Area in December. Otherwise from central banks, we’ll hear from the Fed’s Williams, and the ECB’s Wunsch, Kocher, Rehn, Simkus, Kazaks, Sleijpen, Pereira, Cipollone and Lane.

Nike shares tumbled the most in eight months in premarket trading in New York after a mixed third quarter, reigniting concerns that turnaround efforts are being slowed by soft demand trends in China and ongoing problems at Converse.

North America was a bright spot in second-quarter earnings. Citi analyst Paul Lejuez noted that product liquidations contributed to the growth. As those actions expired, underlying sell-through trends softened.

China remained the most challenging sales market for the world’s largest sportswear company in the quarter. This prompted Piper Sandler analysts to cut their price target on the stock due to a lackluster recovery in the world’s second-largest economy.

Sales in China last quarter plunged 17%, while Converse sales imploded by 30%.

Key earnings in the quarter:

• Top line: Revenue of $12.43 billion rose .6% year over year, beating consensus. Nike brand revenue increased 1.5%, also ahead of expectations.

• Channel mix: Direct revenue declined 8%, missing estimates, while wholesale revenue rose 8.7% and exceeded consensus, underscoring the ongoing shift toward wholesale.

Here’s a snapshot of regional performance in the second quarter:

• North America was the standout, with revenue up 8.8% and EBIT slightly ahead of estimates.

• EMEA delivered modest growth but was roughly in line with expectations, with margins under pressure.

• China remained the largest drag, with revenue down 17% and EBIT nearly halved versus last year.

• Asia Pacific and Latin America also declined modestly and missed estimates.

Overall results in the second quarter at the headline level were driven by North America, wholesale, and apparel strength, but the weakness in China, direct-to-consumer, and Converse weighed heavily on the turnaround narrative.  

Nike has yet to issue longer-term guidance, which merely reflects its attempts to regain control of its turnaround plan and rebuild ties with retailers and sports teams.

Further Wall Street commentary on the earnings came from Goldman analysts led by Brooke Roach. She penned a note to clients outlining the good, the bad, her initial take on the results, and the key takeaways.

A mixed quarter amidst low expectations: NKE shares underperformed in the after-market session on Thursday, where a 2Q beat was offset by a weaker 3Q guide, softer China commentary, mixed channel trends in North America, and promotions in EMEA.

The good: NKE remained upbeat regarding progress made against its Win Now Strategy and its Sport Offense repositioning, highlighting strong results in Performance product. Running grew >20% for the second consecutive quarter (strength across wholesale, NIKE Direct, and owned stores). Training, Basketball, and Kids also contributed to growth. Order books into spring and summer are improving. Importantly, as the company looks to extend success in Running to other sports, we were encouraged to hear that NKE is seeing stronger growth in Global Football preorders ahead of the World Cup (+40% higher units vs. WC 2022). Franchise management actions are still set to moderate into F2H. On margins, gross margins came in at the high end of the company’s prior guidance range despite incremental obsolescence charges on Nike China inventory, meaning that underlying results were stronger, and SG&A was well-controlled as a result of operational efficiencies.

The bad: We believe this quarter’s results will fuel several key long-term bear concerns regarding the business. The most notable incremental is the significant outperformance in North America wholesale, with the gap vs. DTC widening meaningfully this quarter. While this is technically driven by NKE’s core strategy of putting product in front of the consumer, the magnitude of this outperformance will likely drive investor concerns that NKE could be oversupplying the channel ahead of brand momentum inflection and/or that NKE’s growth next year will need to step back as the company digests this year’s outperformance. In a backdrop where many turnarounds seek to limit distribution to build brand heat, NKE’s strategy is notably different for the total brand. Looking further across the world, Greater China remains the most challenged geography (-16% ex-FX), and management’s commentary here suggests that significant actions will be needed to improve long-term brand health in the region. Timing here is uncertain, though the company did guide F3Q similar to F2Q, and highlighted that they have cut both sell-in for spring and summer orders as a result, with further shifts ahead. EMEA and APAC were also mixed, with EMEA missing Factset consensus and management highlighting elevated promotional activity in Western Europe, while APLA is still undergoing pockets of inventory cleanup. Near-term, we highlight that F3Q was guided below consensus.

Our take: We step away from the quarter incrementally cautious on the timeline and cadence of recovery at NKE. We remain optimistic on the company’s Win Now actions and Sport Offense strategy, and continue to be upbeat on the strength emerging in NKE’s product assortment where actions have had more time to cure (particularly running, but also emerging signs of greenshoots in Global Football). That said, we acknowledge the updates today regarding Greater China are disappointing, and limited disclosure regarding the core drivers of North America wholesale outperformance provides fodder for debate. We believe that trends will remain choppy as the company executes its strategic plan, and thus patience will be needed, but that improvement is ahead. Additionally, we believe the underlying message of an uneven path to revenue and margin improvement is well-appreciated by investors.

The rest of the note is available in full in the usual place.

In markets, Nike shares fell sharply, down about 11% in premarket trading in New York. If those losses carry into the cash session and the stock closes near the lows, it would mark the worst decline since early April. Year to date, shares are down 13.3% as of Thursday’s close. The last time the stock traded in the low $60s was during the Covid crash.

How long until an activist investor leaks a headline to a major financial outlet? A headline yesterday in the WSJ said Elliott Investment Management had built a $1 billion position in another struggling clothing brand, Lululemon.

Authored by Charles Hugh Smith via OfTwoMinds blog,

Every nation is operating on models that are collapsing without those at the controls being aware that the implicit assumptions of their models no longer map reality.

A recent article lays out the collapse of the dominant geopolitical model of “rising powers generate conflict”: The Stagnant Order And the End of Rising Powers (Foreign Affairs, paywalled). The basic idea is that the foundations of “rising powers”–demographics and productivity gains–no longer support grandiose planetary dominance.

Rather, demographics is already baked in as a crushing liability to all existing powers, and despite endless claims that technology will jumpstart productivity, the reality is productivity gains have flatlined for decades. “Growth” is a function of expanding debt, not productivity gains.

This dynamic extends beyond geopolitical models: all the models being used to explain and control the world are all collapsing: economic, social, political, they’re all collapsing because they are all constructs assembled in eras that no longer map the present.

As I explained in The Entire Bubble Economy Is a Hallucination, models collapse because of two limitations that define all models:

1. All models are self-referential, as they “train” (i.e. generate current analysis) on a limited spectrum of metrics that are presumed to summarize the immensely complex “real world.” The model is blind to its own self-referential feedback loop and the limits of the metrics it bases its output on.

Over time, this self-referential “training” degrades the output–the analysis and the decisions based on that analysis–to the point of hallucination: the model is generating output of how the world works that has drifted to far from authentic understanding that it is a hallucination, one that is taken to be “real” by those controlling the model.

2. The metrics being measured leave out enormous fields of the real world, but what’s been left out isn’t explicit, as it’s all based on what is considered “knowable” and “known,” as I explained in What We “Know” Is More Dangerous Than the Unknown: these assumptions are hidden limitations of the model, as we only manage what we measure.

I break this down in my book Investing In Revolution.

The collapse of the dominant models is visible everywhere, but perhaps most painfully in economics, which has become the dominant model of how the world works due to the dominance of statistical models of finance and the policies those models generate.

I addressed this failure of economics to accurately predict outcomes back in 2013: Why Isn’t There a Demonstrably Correct Economic Theory? (August 16, 2013)

“This system is intrinsically unstable, as the financial claims of credit and fiat money on limited real-world resources and wealth eventually far exceed real-world resources, and the system of claims collapses in a heap.

Although economics doesn’t recognize it, the operative phrase here is systemic injustice.”

Why Economics Will Never Be a Legitimate Science (December 24, 2013)

All the extant economic models are artifacts of bygone eras. The economic models of the 19th century–all based on the implicit assumption that resources were endless–were modified in the 1930s into Keynesian hallucinations still based on endless resources: let’s just pay people with freshly printed “money” to dig holes and fill them. This presumes endless resources to squander on digging holes and filling them, as if that is a productive use of labor and resources.

This hallucination continues to be the dominant paradigm: resources are endless because we’re clever and there will always be a substitute for whatever is depleted, so the “solution” is just print “money” to pay people to dig holes and fill them.

The “problem” is “growth” of consumption, and so if we “solve” that problem by goosing consumption by any means available, we enter “Mouse Utopia,” an artificial world of never-ending abundance.

The book Money, Blood and Revolution: How Darwin and the Doctor of King Charles I Could Turn Economics into a Science takes a stab at turning economics into “science,” but that’s not actually “the problem.” The real problem is all models have intrinsic limits and end up hallucinating, but those controlling the gearing of the model depend on it to maintain their own power, so they are blind to the failure of their precious model to track the real world and generate authentic understanding.

So we’re told that all is well because GDP and the stock market are rising, and since we have lots of natural gas to power AI data centers, we’re entering a “Mouse Utopia” of endless abundance. That these are all hallucinations is lost on those clinging to collapsing models as the means of maintaining their power.

That the hallucinations are sustainable is itself a hallucination:

That the inhabitants of “Mouse Utopia” are not focused on how natty gas and AI are going to make Utopia even more utopian is lost in the current model collapse: antisocial behaviors are accelerating due to the the artificial nature and exploitive structure of our “Mouse Utopia,” but these realities aren’t measured and so they don’t exist in the current model’s self-referential hallucinations:

All the dominant models are collapsing at once, and no nation is immune to the consequences, as every nation is operating on models that are collapsing without those at the controls being aware that the implicit assumptions of their models no longer map reality.

*  *  *

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While the broader stock market has meandered both higher and lower in the subsequent two months, the Mag 7 trade peaked on Oct 31 and has been drifting sideways – and lower – ever since.

What happened on that date? That was the day of the infamous All Things podcast, in which Brad Gerstner (an OpenAi investor) pointed out that the emperor is, indeed, naked and asked Sam Altman how a company with $13BN in revenue can afford $1.4 Trillion in commitments. Altman’s non-reply? “Happy to find a buyer for your shares.” Translation: No answer… and how could Sam possibly answer: after all there is no way on earth that OpenAI could ever grow into its future obligations absent a miracle, an act of God… or uncle Sam.

A few days later, Altman delivered a far more troubling answer, and one which connected the mathematical dots for everyone, when it was reported that OpenAI was seeking a government guarantee, which would help “attract the enormous investment needed for AI computing and infrastructure.” But far more concerning was the other implication of the report: without a government guarantee, there was no way that OpenAI could satisfy the $1.4 trillion in commitments, which also meant that the entire AI bubble, which was built on circular deals where rehypothecated promises for capex investments among the hyperscalers were contingent on some nebulous future revenue stream, was about to burst.

Also, with OpenAI tacitly conceding the need for a government guarantee, the entire AI sector came under immediate and immense scrutiny, and as a result of analysts finally doing elementary math (which we had done months earlier) and realizing that the AI cycle would need trillions in debt, suddenly the weakest credits in the space like CoreWeave and Oracle (see “Oracle Is First AI Domino To Fall After Barclays Downgrades Its Debt To Sell“) saw not only their bond (and stock) prices tumble, but their odds of bankruptcy in just 5 years soar, pushing their CDS to record wides.

AI CDS refresh pic.twitter.com/bmQCFga7G7

— zerohedge (@zerohedge) December 17, 2025

And yet maybe the market, in its passion to punish the weakest AI links, had gone too far: we suggested as much last night when we showed just how much ORCL CDS has underperformed the company’s stock. After all, was it truly realistic that Oracle, one of the biggest tech giants in the world, would go bankrupt in the next 5 years?

ORCL CDS may have gone a bit too far pic.twitter.com/Pt7I7XVMRI

— zerohedge (@zerohedge) December 17, 2025

Well, if the company continued to lever up massively and invest its cash into dead end capex projects, while OpenAi and its peers failed to provide Oracle with the much needed cash the company needed to keep growing its market share and fund its growth (via capex), the answer apparently was a resounding yes. 

Unless… there was a miracle.

Well, late on Thursday a miracle may have finally arrived. Because in a time when it was increasingly unclear how OpenAI et al, would generate the required revenue to pay their hyperscaler partners for the data centers they needed to impress the world with their chatbot wares, while stable sources of private credit such as Blue Owl had suddenly closed shop when it comes to Oracle, a government guarantee appears to have finally emerged.

Only it wasn’t the US (at least not yet), but rather the emirate of Abu Dhabi that may have not only averted the bursting of the AI bubble, but also delivered the 2025 Christmas Rally in the last possible moment.

According to the WSJ, OpenAI – desperate to secure funding for its cash incinerating years which are expected to conclude around 2030 during which time more than $200 billion will be spent – is aiming to raise as much as $100 billion as it seeks to pay for ambitious growth plans in a market that has cooled recently on the artificial-intelligence boom.

The fundraising round could value the company at as much as $830 billion, if it raises the full amount it is targeting. Of course, the implied enterprise value is meaningless: it’s just a number; what is all too real, however, is the actual amount of cash Sam Altman would get (in exchange for a sizable chunk of equity, confirming just how problematic using far cheaper debt capital raising has become for OpenAI). And that’s a doozy: $100 billion should be more than enough to provide OpenAI with the cash it needs to bridge the period until it is profitable all the while rolling out increasingly more lifelike AI models (especially now that Google’s Gemini 3 has taken the lead from OpenAI). More importantly, the cash invested into OpenAI, and promptly spent on compute, will fund such clients as Oracle, Core Weave and others as it percolates across the entire budding AI industry.

Here, the WSJ adds the usual disclaimer, that the startup aims to complete the round by the end of the first quarter at the earliest, and that terms of the deal could still change; it is also unclear whether there will be sufficient investor demand to reach the goal.

The round will present one of the biggest tests the company has faced since the public market’s exuberance for AI spending waned. Chief Executive Sam Altman has already scoured the world to build the pool of OpenAI’s investors and the company is now weighing a potential initial public offering, The Wall Street Journal previously reported.

Of course, Sam Altman had already found some gullible investors to throw good money after bad, most notably Masa Son’s SoftBank, which agreed to invest $30 billion in OpenAI earlier this year and last month sold its Nvidia stake for $5.8 billion to fund the OpenAI bet. OpenAI is expected to secure the remaining $22.5 billion in planned financing from SoftBank by the end of the year. 

But that’s not nearly enough: after all, recall that we are talking a whopping $1.4 trillion in commitments in the next five years. 

So who is the next most gullible source of capital after SoftBank these days? Why Gulf cash of course. 

Which brings us to the source of the government guarantee: as we said, it’s not the US (just yet); instead it is the United Arab Emirates. 

As the WSJ reports, OpenAI is expected to recruit sovereign-wealth funds to invest in the financing, given the scale. The company has previously secured funding from United Arab Emirates-based MGX; it will likely get even more funding from the UAE because considering how much money has already been sunk into OpenAI, UAE companies don’t really have a choice to not keep investing – and risk the collapse of Altman’s venture. They have to keep throwing good money after bad; such is the curse of the Too Big To Fail, which was banks in 2008… and now it’s AI firms. 

The company has faced skepticism over computing deals it has forged that are worth hundreds of billions of dollars and issued a “code red” to beat back a growing threat from Google. While OpenAI is set to burn more than $200 billion in cash through 2030, Google has low levels of debt and robust profits, which could make it easier to invest further in AI. 

And since OpenAI is private, the market has instead turned its attention to such OpenAI partners as Oracle and CoreWeave, who have seen their market values plunge in recent months as shareholders soured on the possibility of capital shortfalls and bold plans for data-center build-outs that appear to face financing headwinds.

But now, the looming $100 billion equity investment from the likes of UAE sovereign wealth funds has changed all that, and with OpenAI set to prefund 2 years (or more) of growth (while materially diluting existing investors) not only are OpenAI’s chances to emerge as the ultimate AI victory suddenly much higher, but so are the odds of Oracle and CoreWeave to survive the next few years without filing for bankruptcy. 

Which is why not only has ORCL stock soared after hours…

… but why we expect that tomorrow ORCL CDS will plunge from its 16 year high of ~156bps, since not only will OpenAI have billions in cash to spend around on the likes of Oracle, but the cost of holding on to the negative carrying ORCL CDS will suddenly seem excessive, and we expect a short covering frenzy across all AI-linked credit default swaps.

Over/Under on ORCL CDS tomorrow at -20 https://t.co/erupObw6Zz

— zerohedge (@zerohedge) December 18, 2025

And now that the biggest risk factor for AI is suddenly no longer a near-term concern – courtesy of all that Abu Dhabi housing bubble cash which just has to be reinvested somewhere – it is possible that the UAE may have just delivered a broad market rally just in time for Santa.