Authored by Paul Sperry via RealClearInvestigations,

When Sen. Elizabeth A. Warren recently traveled to the Big Apple to endorse New York City mayoral candidate Zohran Mamdani, she was asked if overt socialism is really the best model for Democrats to adopt. “You bet,” she replied in her signature folksy style.

The Boston lawmaker wasn’t just jumping on the sudden trendiness of socialism three-and-a-half decades after its near-extinction. With fellow Senate traveler Bernie Sanders, Warren has been a catalyst for moving her party to the left since her first campaign in 2012. 

She and Sanders are, in many ways, the godparents of the self-avowed Democratic Socialists such as Mamdani and Alexandria Ocasio-Cortez, who are providing the youthful energy for the Democrats in the Trump era.

As Warren’s attacks on Wall Street and the wealthy are gaining even wider traction among liberals – a recent Gallup poll found 66% of Democrats have a positive view of socialism – the apparent contradictions between her public economic positions and private financial decisions are receiving new scrutiny, particularly as the one-time presidential candidate appears to be testing those waters again. 

Charity Doesn’t Begin at Home

Financial records examined by RealClearInvestigations show that Warren has hardly followed the path of socialism in her personal finances. Start with the redistribution of wealth. Warren tirelessly bashes the “selfish” and “greedy” rich for not paying their “fair share,” and demands the government step in and redistribute their income to the poor. But charity does not always begin in the Warren home.

While Warren hauls in nearly $1 million a year, she donated less than 3% of her household income to charity in 2024, according to her tax returns. This is much less than the charity of the Obamas, for instance, who typically donate more than 20% of their earnings to the needy and philanthropic causes, and low for the average American in her income bracket, studies show. The average millionaire donates more than twice her share.

It also appears that Warren opens her pocketbook wider when she’s running for national office and under a bigger media microscope. 

The $26,669 in charitable deductions Warren reported on her tax returns last year pales in comparison to the $81,858, or 9% of income, she reported as she launched her campaign for the White House in 2020.

And the outspoken Democratic leader keeps her own tax burden down while calling for higher taxes on “millionaires and billionaires.”

Records show Warren is not averse to taking maximum advantage of provisions in a tax code she denounces as unfair. She has, for example, written off used articles of clothing on her taxes and has had to correct past returns for inflating the value of those items. She’s also written off thousands of dollars in used books – and even in-flight WiFi to expense down business income. And she would exempt herself from her proposed “Ultra-Millionaire Tax,” which levies a surtax on those with a net worth above $50 million.

With a net worth of at least $8 million (with estimates as high as $12 million), Warren has benefited handsomely from free market capitalism – even as she has spent most of her career in the public and educational sectors.

Fat Cat Investments

Despite her frequent complaints that “the wealthiest 10% of U.S. households own 84% of American-held shares” of stock, she has invested the bulk of her money in stocks and bonds managed by Wall Street investment funds. These accounts are valued at between $1.9 million and $6.8 million, according to her most recent Senate financial disclosures, filed in April. (Values are given as ranges in the disclosure reports that members of Congress are required to file each year.) 

Although Warren has rarely traded individual stocks, records show the mutual funds where she has parked her millions – Vanguard and TIAA-CREF – hold a number of companies in industries that Warren has demonized, including Big Oil, Big Tech, and Big Pharma. Through these funds, for example, Warren has invested in Apple, Amazon, and NVIDIA; Exxon and Shell; Wells Fargo; Goldman Sachs; Monsanto; Johnson & Johnson; and even NewsCorp – the owner of conservative Fox News and the New York Post.

Nevertheless, Warren has ripped “fat cat bankers” at Wells Fargo for preying on minority homebuyers and customers with “predatory” rates and “junk” fees, and also for “screwing” their own employees. She even demanded the Federal Reserve revoke Wells Fargo’s status as a financial holding company over “abusive and unlawful” practices. 

Warren has called for regulators to break up tech giants Amazon and Apple, which she claims are running monopolies. “I’m sick of freeloading [tech] billionaires” who “roll over everyone,” she recently said. 

Warren has described Exxon as a “bad actor” that contributes to global warming. She’s even accused the energy giant of “corporate perjury” by publicly denying its alleged role in warming and producing “fake research” to “mislead the American people about climate change.”

The senator has also slammed Exxon for “imposing massive price increases on Americans [sic] families,” arguing “this corporate greed is inexcusable.”

Environmental activist groups have called on her chosen retirement fund, TIAA, to divest from Exxon, along with the rest of its more than $78 billion in oil, gas, and coal assets, according to a recent estimate by the Institute for Energy Economics and Financial Analysis. They argue the fund is using contributions from investors like Warren to “destroy communities and the environment.”

Last year, Warren bashed Donald Trump for capitulating to the oil industry. “Donald Trump has a deal for Big Oil: if they raise $1 billion and send him back to the White House, he’ll gut environmental protections and roll back Joe Biden’s progress in fighting climate change,” she asserted on X. “It’s corruption, pure and simple. And it would be a disaster for our planet.”

Exempting Some Millionaires

Slamming the president’s “Big Beautiful Bill” earlier this year, Warren complained, “Trump’s tax cuts stand to benefit (the) highest income earners.”

She would know – she’s one of them. The $919,583 in household income Warren reported on her 2024 tax return she filed jointly with her husband puts her in the top 1% of highest-earning Americans. The year before she entered the Senate, Warren reported earning $616,181.

The lawmaker’s base Senate salary of $174,000 accounts for just one-fifth of the total income she reported to the IRS. The rest comes from book royalties, dividends, capital gains, earned interest, retirement income, and her husband Bruce Mann’s salary as a tenured Harvard professor.

The Senate is often described as a Millionaire’s Club, and she fits right in: Her $8 million net worth would rank her as the 18th wealthiest member of the Senate, according to the Center for Responsive Politics. Warren’s net worth has risen each year since she was first elected to the Senate in 2012, while the median wealth of senators overall has declined, according to the think tank.

Although Warren is just one of many millionaires in Congress, government watchdogs note her wealth is at odds with the stridency of her class-warfare rhetoric.

“Elizabeth Warren poses as the champion of the underdog, but her policies strip middle- and lower-income Americans of opportunities to advance their lot and build wealth,” said John Berlau, director of finance policy at the Competitive Enterprise Institute in Washington, referring to her calls for more taxes and financial red tape. “By pursuing policies that keep others from moving up, Sen. Warren has emerged as an unlikely champion of the existing 1%.”

Warren did not reply to requests for comment.

Critics note that several of Warren’s former staff members have moved on to positions in the sectors she decries. In 2023, she declared, “The abuse of the revolving door is appalling,” particularly in the financial sector, which she claims is “rigged to help the wealthy and well-connected.”

But records show her own office has served as a revolving door for the banks. For example, Wally Adeyemo, who served as her chief of staff when she was standing up the Consumer Financial Protection Bureau, went on to work as a senior adviser at investment giant BlackRock. At least six other Warren staffers who worked in her Senate office have worked as lobbyists, records show. In addition, several of her senior campaign aides have worked on K Street.

“There is a history of a revolving door of Warren staffers and protégés at the Consumer Financial Protection Bureau taking jobs at big Wall Street firms, such as BlackRock,” Berlau said.

Restrictive Neighborhoods

Home ownership is also key to wealth-building, but zoning restrictions often price the working class out of homes. Warren has fought against so-called NIMBY (“not in my backyard”) rules and has fiercely advocated for building more affordable housing in cities.

She even backs Mamdani’s “social housing” proposal to let the New York state government seize private properties and convert them into public housing.

However, Warren has chosen to live in affluent neighborhoods in Boston and D.C. that are heavily zoned to exclude the construction of new housing units and price out the average homebuyer.

Public financial statements do not disclose the 76-year-old legislator’s real estate holdings, but other records show she owns at least two homes valued at more than $5 million. Her primary residence is located in the leafy Avon Hill section of Cambridge, Mass., which has enforced a century-old zoning system of minimum lot sizes, minimum parking requirements, floor area ratios, limits on units per building, and height restrictions.

The restrictions have yielded a housing shortage in the city that has driven up the value of existing homes – including Warren’s 1876 Victorian mansion, which has risen eightfold to an estimated $4 million since she bought it in 1995. Records show she and her husband owe no mortgage on their nearly 4,000-square-foot home, which features three stories, high ceilings, marble mantels, hardwood floors, and a four-car garage. 

The median price for a home in Cambridge now tops $2.2 million.

“The astronomical increase in the value of Warren’s home, and home prices in Cambridge more generally, has not happened in a vacuum,” said Scott Van Voorhis, a Boston real estate analyst. “The city’s special blend of upscale NIMBYism and restrictive zoning laws and regulations kept new house, condo and apartment construction to a trickle at best, even as demand for living in the city increased leaps and bounds.”

Though the Cambridge city council earlier this year loosened its zoning ordinances to permit more housing across the city, Warren’s neighborhood remains largely exempt from reforms.

That’s because Avon Hill is a conservation district further regulated by the Cambridge Historical Commission. Records show Warren’s street and home are located within the historic district, which protects old Victorians from being torn down for multifamily housing. That makes her neighborhood the ultimate safe NIMBY zone.

“Nothing has been built [in her neighborhood] for decades beyond the occasional mansion upgrade,” Van Voorhis noted.

Warren clearly understands there is a housing supply problem in Boston. In July, she helped shepherd the ROAD to Housing Act through the Senate, which, among other things, would provide grants to communities that change their land-use rules to make it easier to build new housing units.

“We have a real problem here in Massachusetts that we simply don’t have enough housing,” Warren explained to the Boston Globe, noting the state is about 200,000 units short of what is needed. “If we don’t start building more housing here, the housing crisis will continue to intensify.”

But when it comes to her own neighborhood – one of the least affordable in the state – she remains silent. Cambridge council members noted they didn’t hear “a peep” from Warren when they were recently debating zoning reforms to deal with the city’s growing housing affordability crisis.

In 2013, when Warren bought her home in Washington, D.C., she also happened to select an area of the capital city where zoning restrictions have entrenched the status quo. Valued at more than $1 million, her condo is in the trendy Penn Quarter section of D.C., which is a historic area protected by land-use rules.

Dubious Identity Politics

Most famously, Warren’s personal decisions seem at odds with the left’s leavening of traditional socialist positions with identity politics. Before moving to the Senate, Warren was a tenured professor at Harvard with a lucrative salary. Although the school denies that her claims to Native American ancestry influenced their decision to hire her, she and the administration trumpeted her diverse background.  

Warren also listed herself as a racial minority in a legal directory distributed by the Association of American Law Schools and was listed as a Native American in federal forms filed by Harvard Law School.

When she launched her political career in 2012 and released a memoir, “A Fighting Chance,” Warren described her alleged “Native American roots” as a Cherokee. Henry Holt & Company paid her a $525,000 advance for the book, which became a national bestseller that still earns her royalties.

She also helped publish a cookbook, “Pow Wow Chow,” exploiting the myth of her native American lineage.

Warren took in $430,000 a year as a tenured Harvard Law professor by claiming a Native American heritage – even as she has railed against whites appropriating minority culture or pretending to understand minority experiences. But, as she ramped up her run for the White House, Warren responded to persistent challenges of this claim by taking a DNA test. In late 2018, her campaign maintained it showed “strong evidence” of Native American ancestry dating back generations. 

When that failed to quiet her critics, Warren basically had to acknowledge that the test revealed that she is as little as 1/1024th Native American, making her less of that ancestry than the average white American. She also eventually apologized to the Cherokee Nation in 2019. The year before that admission, however, she lectured others during her Senate campaign about stolen valor: “It is wrong and cowardly for people to make fraudulent statements in order to receive distinctions that they have not earned. We need to ensure that no one can benefit from making false claims and steal the true valor of the courageous.”

“If there ever were a genuine case of cultural appropriation, Sen. Warren is guilty of it,” said Gad Saad, a business professor at Concordia University. “She literally appropriated Native American culture as her own by constructing a false narrative about her ancestry.”

“And yet,” he added, “she benefited for several decades from this false narrative both in her academic and political career.” 

Saad and others who have closely followed her career suggest the progressive senator appears to have a “good for me, but not for thee” ethic when it comes to her own personal ambitions. Though she’s carefully groomed a reputation as a fighter for the “have-nots” against the “haves,” the record shows that, outside the spotlight, she has often pursued her own interests and followed the path of the haves.

Update (1300ET): As we noted earlier, stocks jumped around the US cash open on optimistic headlines about possible tariff delays by Bessent and Greer: “*GREER: EXPECT CHINA RARE EARTHS MOVE DOESN’T GO INTO EFFECT,*BESSENT SUGGESTS POSSIBILITY OF LONGER CHINA TARIFF TRUCE”.

The realization that what they actually said was a nothing-burger took a while for the over-excited market to recognize and by the European close, stocks were fading once again. 

Gains then quickly faded as the good-cop/bad-cop routine fell apart after Greer and Bessent also noted China’s hostility in global trade (and blamed a lone wolf Chinese diplomat for the shitshow). 

“Perhaps the vice minister who showed up here with very incendiary language on August 28 has gone rogue,” Bessent said during the press conference at Treasury. “This individual was very disrespectful,” he said, after earlier calling him “unhinged” in the CNBC event.

Li had warned China would “cause global chaos” if the US went ahead with plans for port fees for Chinese ships, Bessent said.

“Maybe he thinks he’s a wolf warrior,” he said, referring to a term used for aggressive Chinese diplomats.

Bessent later added the following which did not help: 

“If China wants to be an unreliable partner to the world, then the world will have to decouple,” Bessent said.

“The world does not want to decouple; we want to derisk. But signals like this are signs of decoupling, which we don’t believe China wants. And again, we do not want to decouple. We should work together to derisk and diversify supply chains away from China as quickly as possible.”

Desk chatter was that the weakness was triggered by a WSJ article “China, Betting It Can Win a Trade War, Is Playing Hardball With Trump” that suggested Chinese leader Xi Jinping thinks president Trump will fold before launching new tariffs that would roil markets.

In other words, equity weakness is ‘required’ to stop Trump’s escalation and so the market tests that thesis.

Around 1300ET, stocks legged lower still as Fed’s Waller noted: “LAYOFFS, LOWER HIRING DUE TO AI EXPECTED TO INCREASE“.

All of which dragged stocks back down into the red…

*  *  *

US equity markets are surging again this morning following comments by Treasury Secretary Bessent (and USTR Greer) that appeared to suggest the possibility of a tariff truce with China.

U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent condemned China’s decision last week to step up curbs on its exports of rare-earth metals, calling the actions part of a broader plan by Beijing to control the world’s supply chains.

“China’s announcement is nothing more than a global supply chain power grab,” Greer said.

“This move is not proportional retaliation. It is an exercise in economic coercion on every country in the world.”

So that was Bad Cop.

And then Bessent played Good Cop…

But while Bessent said China’s “highly provocative move” comes after the U.S. has made significant efforts to de-escalate tensions, he said that the U.S. would rather not take action against Beijing.

“I believe China is open to discussion, and I am optimistic that this can be de-escalated ultimately.

We are confident in the strong relationship between President Trump and President Xi.

We’ve had substantial communication with the Chinese over the past few days, and we believe that there will be more forthcoming this week,” Bessent said.

It is possible that “we could go to a longer roll in return for a delay” on rare earths export controls, Bessent said when asked if US would delay implementation of additional 100% tariffs on China.

“All that’s going to be negotiated in the coming weeks” before Chinese and US leaders meet in South Korea, he says.

None of that sounded particularly new or different to us, but no matter the confusion, the market ran with it…

But US-listed rare earth stocks tumbled on the possible delay: Critical Metals -20.5%, USA Rare Earth -13.6%, MP Materials -7.3%, Ramaco Resources -9.5%

Will the market’s strength prompt a response from Trump, using that hubris to take another shot at Beijing?

Authored by Nate Kostar via CoinTelegraph.com,

Binance is launching a $400 million relief program for traders hurt by losses across its ecosystem during Friday’s crypto sell-off, despite saying it does not accept liability for user losses.

According to a Tuesday post by the exchange, the initiative will distribute $300 million worth of token vouchers, ranging in value from $4 to $6,000, to eligible users.

To qualify, traders must have incurred forced liquidations on futures or margin positions between Friday 00:00 UTC and Saturday 23:59 UTC. Users must have lost at least $50 in crypto, and those losses must account for at least 30% of their total net assets, based on a snapshot taken on Thursday at 23:59 UTC. The distribution is expected to be completed within 96 hours. 

Source: cz_binance

The plan will also establish a $100 million “low-interest loan fund” for ecosystem and institutional users impacted by the market turbulence, seeking to “alleviate liquidity pressures.”

Binance clarified that the exchange does not “accept liability for users’ losses,” saying the move is designed to “rebuild industry confidence.”

Source: Binance.com

The move comes after BNB Chain announced on Monday that it launched a $45 million “reload airdrop” to compensate users who lost money trading memecoins during Friday’s crash.

Binance reacts to crypto crash

Crypto markets slumped on Friday after US President Donald Trump threatened 100% tariffs on Chinese imports, with over $19 billion in leveraged positions liquidated in 24 hours — the largest single liquidation event in crypto history.

In the aftermath, Binance has been criticized on several fronts. 

Some traders reported technical glitches that prevented them from closing positions during the sell-off, while others pointed to discrepancies in stablecoin pricing.

Several altcoins, including Enjin, Cosmos, and IoTeX, temporarily showed prices of $0 on the exchange due to issues with data from oracles.

On Sunday, Binance published a statement addressing the concerns, saying that its core futures systems continued operating normally throughout the sell-off.

Source: Binance.com

Since Friday’s crash, Binance and BNB Chain have announced a combined $728 million in recovery measures, including $45 million in airdrops, $283 million in immediate post-crash compensation, and today’s newly launched $400 million industry fund.

Some users are not impressed 

Binance’s Tuesday announcement has received mixed reactions on X. While some users, like SeedliCapital, praised the exchange for rebuilding “confidence” by taking action, others were less charitable.

Source: SeedliCapital

In contrast, user Curb.sol wrote that Binance’s “mispriced internal price oracles are directly at fault for the $400 billion in liquidations and corresponding market crash.” Adding, “everyone needs to get their funds off Binance immediately.

Source: CryptoCurb

Others said the reimbursements were welcome but fell short of covering the weekend’s losses. “While better than nothing, a ‘voucher’ for $4 to $6k  on users who got wiped for everything is kinda a joke,” LeveragedDegen wrote.

Source: LeveragedDegen_

While House lawmakers remain largely absent from Washington’s high-stakes government-funding fight, the real political action this week is happening in statehouses and courtrooms across the country – where the battle over congressional maps is reshaping the 2026 midterm landscape in real time.

The redistricting wars have become the defining story of the next election cycle. From Springfield to Sacramento to Raleigh, both parties are scrambling to maximize their advantage, testing the limits of state and federal law – and patience – in the process.

The Supreme Court Steps In

All eyes are on the Supreme Court today as justices hear Louisiana v. Callais for the second time, a case that could determine the future of the 1965 Voting Rights Act.

The challenge centers on Louisiana’s 2024 decision to add a second black-majority district after courts found its previous map violated the Voting Rights Act. White voters sued, claiming that the new map itself was an unconstitutional racial gerrymander. Depending on how broadly the Court rules, as many as ten Democratic-held seats in Alabama, Mississippi, Louisiana, Texas, Georgia, and South Carolina could be on the chopping block. A broad ruling could effectively gut Section 2 of the VRA, limiting the use of race in drawing districts nationwide and reshaping how Congress represents minority voters for decades to come.

Republicans claim that the second black-majority district goes too far – turning race into the predominant factor in drawing lines and thus violating the Constitution’s equal protection clause – and that redistricting should be ‘race-neutral,’ and that continued reliance on racial targets entrenches identity politics and undermines a “colorblind” constitution. Many GOP officials see Callais as a chance to limit or even dismantle Section 2 of the Voting Rights Act, which they believe has outlived its original purpose and now forces racial engineering in maps.

Democrats are defending the new Louisiana map – calling it a remedy to decades of racial vote dilution in the South.They argue that Section 2 remains an important way to ensure black and minority voters can elect candidates of their choice, and that if the Supreme Court sides with the Republican view, it could reduce minority representation in Congress.

To wit, Justice Ketanji Brown Jackson just compared being a minority to being disabled.

‘The idea in section two is that we are responding to current day manifestations of past and present decisions that disadvantage minorities and make it so that they don’t have equal access to the voting system, right, they’re disabled…‘

Ketanji Brown Jackson literally and directly compares black people not electing their preferred candidates to disabled people not being able to enter buildings

“They don’t have equal access to the voting system. They’re disabled.” pic.twitter.com/aCJXeBwHTl

— Breitbart News (@BreitbartNews) October 15, 2025

The Congressional Black Caucus plans a press conference later today to underscore what members call an “existential test” for minority voting power. Still, timing may temper the impact – even a sweeping decision likely won’t come early enough to affect 2026 maps.

Illinois: Jeffries’ High-Stakes Power Play

House Minority Leader Hakeem Jeffries is pressing Illinois Democrats to approve a new congressional map that would draw out GOP Rep. Mary Miller and add a Democratic seat.

Gov. JB Pritzker is on board, but not everyone in the delegation is thrilled. Rep. Eric Sorensen (D-IL) summed up the anxiety: “I love the district that I serve in, and I don’t want to see my district change.”

With the filing deadline just weeks away on Nov. 3, lawmakers are running out of time – and risk alienating incumbents in the process. Illinois is already one of the most aggressively gerrymandered states in the country, and spreading blue votes too thin could backfire.

California: $40 Million and Counting

In California, Democrats are going all-in on Proposition 50, Gov. Gavin Newsom’s ballot initiative to pause redistricting – and, effectively, lock in a map that could yield up to five new Democratic seats.

Democrats have pumped $40 million into TV ads supporting the measure, while Republicans have gone dark on air. If Prop 50 passes, it could help offset GOP gains from Texas’s new map – a key piece of Democrats’ national midterm calculus.

North Carolina: A Familiar Story

North Carolina Republicans announced plans Monday to redraw their map – again – in a move aimed at eliminating one Democratic seat. After a decade of near-constant redistricting, the state’s congressional map could shift from 10–4 to 11–3 or even 12–2 in favor of the GOP. Sources say Rep. Don Davis (D) is the likely target.

Given the state’s history of litigation, another round of lawsuits is almost guaranteed before ballots are printed.

Indiana: JD Vance and the Hoosier Hustle

Vice President JD Vance’s visit to Indiana on Friday has injected new energy into GOP redistricting plans. Gov. Mike Braun is considering calling a special legislative session to push through a map that could add two Republican seats, according to insiders.

The White House has reportedly been closely involved – a sign of how strategically the administration views this state. But Braun faces resistance from some state senators, and he’ll need to act quickly if he wants a new map in place by November.

Maryland: The 8–0 Question

In deep-blue Maryland, Democrats are debating whether to erase the state’s lone Republican seat, currently held by Freedom Caucus Chair Andy Harris.

Gov. Wes Moore and House Speaker Adrienne Jones are open to the idea, but Senate President Bill Ferguson remains skeptical. Without a special session, the issue will have to wait until the legislature reconvenes in January – a delay that could doom the effort.

An 8–0 map might look good on paper, but Democrats risk sparking another round of lawsuits and public backlash.

Utah: Republicans Play Defense

In Utah, the GOP is fighting to block a court-ordered redraw that could give Democrats a rare foothold. Republican leaders are racing to gather tens of thousands of signatures by mid-November to place their preferred map on the ballot and delay implementation.

If successful, the existing map – drawn by the Republican legislature – would remain in place through 2026, blunting what could have been a Democratic breakthrough.

The Big Picture

The redistricting free-for-all underscores how much of modern politics is shaped not by campaigns or policy, but by lines on a map. With the Supreme Court poised to weigh in and multiple states sprinting to finalize new boundaries, control of the next Congress may be decided long before a single vote is cast.

As Congress spins its wheels in Washington, the real battle for power – and democracy’s balance – is being fought in statehouses and courtrooms nationwide.

Authored by Charles Hugh Smith via OfTwoMinds blog,

The pool of speculative fervor will be drained, as impossible as that seems in this moment in history.

2025 may go down as The Year When Everything Happened in No Particular Order, tracking William Gibson’s famous line that “The future is already here, it’s just not very evenly distributed.”

Those expecting inflation will find it, those expecting deflation will find it, those expecting a stock rally will get a rally, those expecting a crash will get a crash, and so on.

The forces that drove reliable trends have all weakened or reversed:

1. ever-lower interest rates lowered the cost of credit/capital to near-zero.

2. the deflationary forces of globalization: everything got cheaper and disposable.

3. expanding workforces increased income and consumption.

4. credit/asset bubbles created wealth without productivity improvements or sacrifice.

5. energy supply kept up with rising consumption.

6. the external costs of the “waste is growth” Landfill Economy (pollution, depletion, etc.) were ignored / not priced in.

These titanic forces still have the momentum of recency bias: most people expect the rest of the 2020s to be an extension of the 40+year Bull Market in Everything.

Feedback (doing more of what’s failed) and buffers (print more money and everything will be fixed) are working to maintain the status quo sand castles as the tide rises.

Those castles closest to the sea will dissolve first (the periphery I often refer to). Those with resources will be shoveling sand to build walls around their castles.

But the tide is relentless and so we’re in a period of flux where those benefiting from the status quo are fighting the erosion of all the forces that enabled the status quo to reach such heights.

As they lose ground, they redouble their policy efforts, pushing policies to new extremes–extremes which further destabilize the system.

The global economy is a complex self-organizing adaptive system, and so blunt-force policies intended to protect the status quo stability end up generating unintended consequences which have their own consequences (the second-order effects I often mention).

Those trying to control the system find their control is imperfect.

Long cycles are now in play. Interest rates fell for 40 years–the longest such run in recent history. Now interest rates will rise for some period of time, likely culminating in a financial crisis with no easy resolution, because printing money–the solution for the past 40 years–will be the problem, not the solution.

Demographics are also in play. Workforces are shrinking, retirees living off the earnings of the workforce are soaring.

The world desires ever greater quantities of energy and consumption, but the cheap, easy to exploit materials have already been exploited. Now everything will become more expensive, regardless of technological improvements.

Physical, chemical and cost limits will matter.

Whatever we seek, we can find–but that may prove ephemeral.

Everyone’s on the lookout for Black Swans, but that’s not the way Black Swans work.

Speaking of swans, the tremendous speculative fervor that has become the dominant force in global markets is now so taken for granted, perhaps it is a Gray Swan nobody recognizes.

Huge fortunes have been made by betting on speculative bubbles rising higher than prudence suggested was possible.

These gains fire the imaginations of speculators large and small, and so any rally in a speculative asset–which now includes every asset–will be chased with great confidence.

The desire to speculate on something, anything, is still immensely strong. That desire will manifest in one asset after another, inflating new rallies and pulling in punters far and wide.

But the tides are relentless and any such speculative frenzy is unlikely to last as long as the proponents expect.

Machiavelli’s wisdom applies here: “The wise man does at once what the fool does finally.”

In other words, perhaps there will be no sure things anywhere in the speculative universe.

It may take multiple crashes to whittle away at this speculative fervor. The forces building sand castles will gain the upper hand for a short while, and spectacular gains will be reaped, and then the tides will erode the sand castles and the valuations will fall.

The process of draining the pool of speculative fervor takes time. If there is anything that’s a sure thing, it’s that the pool of speculative fervor will be drained, as impossible as that seems in this moment in history.

*  *  *

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Pakistan and Afghanistan have been exchanging their deadliest fire in years, and border clashes are now threatening to enter the Taliban-ruled Afghan capital of Kabul.

A tense, temporary ceasefire has been reached but only after Pakistan launched apparent drone strikes on Kabul, as well as the border province of Paktika, where fighting has raged. Eastern Afghanistan has also seen airstrikes by Pakistani Air Force jets.

“Explosions were also heard in Kabul, according to city residents who spoke to Radio Azadi. Unverified footage on social media appeared to show plumes of smoke rising into the sky in the Afghan capital,” observes US stated-funded RadioFreeEurope/Radio Liberty. 

The fierce fighting stretches back to the weekend, which saw Taliban fighters and Pakistani security forces at several key border crossings, leaving dozens done, in what’s being described as the deadliest-ever fighting between the two sides, with many dozens killed and hundreds wounded.

“Many people on both sides of the border have vacated their houses and fled the area for safer locations fearing that the fighting may expand,” said one eyewitness of border clashes, which saw Pakistani helicopters firing down on settlements on the Afghan side.

Pakistan has owned up to the attacks inside Afghanistan, saying they were necessary for counter-terror operations:

Islamabad has not officially claimed responsibility for the attacks. But during a press briefing Friday, Lt. Gen Ahmed Sharif Chaudhry, a Pakistani military official, said there is “evidence” that “Afghanistan is being used as a base of operations for carrying out terrorism in Pakistan.”

Pakistan has long accused Kabul of harboring the militant group the Pakistani Taliban (known as the TTP), which Afghanistan’s Taliban denies. Pakistan has faced a surge in Islamist violence since the Taliban swept Kabul in 2021, emboldening militant groups.

This led to in some instances the Taliban retaliating against Pakistani positions along the some 2,600km border.

The Taliban does not have a real air force to speak of, nor does it have anti-air defenses, allowing Pakistani drones, jets, and helicopters to attack from the skies with impunity…

🚨🇦🇫🇵🇰KABUL ON FIRE – PAKISTANI AIRSTRIKES BATTER THE CAPITAL

Kabul is burning.

Pakistani warplanes have rained bombs on the city, turning streets into smoldering ruins, rupturing lives, and shifting the war’s gravity.

In Islamabad, this was billed as a cross-border strike on… https://t.co/72s5cpUmeW pic.twitter.com/79aWabeIpk

— Mario Nawfal (@MarioNawfal) October 15, 2025

The two sides have reportedly agreed to 48-hour ceasefire, which Pakistani officials said took effect from 13:00 GMT on Wednesday.

Richard Bennett, UN special rapporteur for human rights in Afghanistan, wrote on X that he was “deeply concerned” by reports of mounting civilian deaths and displacement. “I urge all parties to exercise maximum restraint, protect civilians, and abide by international law,” he said.

Friday’s sharp selloff dropped the S&P 500 more than 2.7% as we experienced one of the largest single-day declines of the quarter, as headlines spooked traders.

What made the drop especially remarkable is that it took place in an extremely complacent context, with realized vol at the lowest level in years. 

So, traders are asking, what’s next? 

The next major move can come this Friday with the October Options Expiration: See if the Market May Flip  

OPEX occurs on the third Friday of every month, when monthly options contracts expire for both major indices, ETFs, and single stocks. This expiration date acts as a “reset date” for markets, often causing volatility to spike or collapse.

And whether you know it or not: you are trading volatility, and you need to see how volatility shifts can drastically affect your PnL.

In conjunction with our partners at SpotGamma, we are offering free access to webinar on Wed, October 15th at 1pm ET, where SpotGamma Founder, Brent Kochuba, will unpack what’s happening in the options market and how it can drive your PnL.

Free Webinar:  Limited Seats Available

How to Track Volatility: The Hidden Force Behind Options Pricing

Whether we expect more chaos or calmer markets, options pricing can change dramatically based on trader sentiment — and these shifts don’t happen in plain view. You need a tool that will track IV for you and show you how your PnL changes as news rocks the markets. 

SpotGamma’s new Options Calculator lets you model new positions, track shifting volatility, and improve your trade setups for any environment featuring real-time pricing.

This new tool goes beyond what’s happening now — if you want to model a calmer period with reduced volatility, you can visualize how your PnL would shift:

In this example, the yellow line in the image above represents the previous PnL, while the green and red section shows what the return profile looks like in a calmer market.

Using the SpotGamma Options Calculator, you can see how setups like this put fly might appeal to traders betting that Friday’s panic fades and that volatility mean-reverts.

The Takeaway: Hidden Forces Impact Every Trade

Last Friday’s move reminded every options trader of one truth: If you are trading options, you are trading volatility. OPEX establishes a date each month to watch, so you can capitalize on shifts in volatility as options contracts expire and positioning resets.

That’s exactly what readers will explore during the OPEX webinar, a live session unveiling how you can use SpotGamma’s new options calculator to measure the impact of volatility on your trades. Sign up now and you’ll also get first access to five new SpotGamma tools built to help you discover the impact of the options market on your trades.

Save my spot

ZeroHedge Pro Subs are already well-familiarized with the “infinite money” circle-jerk deals powering the AI bubble – from endless chip announcements to vendor financing schemes to a wave of mega-data-center buildouts sweeping the nation. We’ve detailed the mechanics behind this boom and shared the latest Bank of America Fund Managers Survey to cut through the hype and capture what institutional desks are really saying about AI.

The headlines keep coming. The latest dropped on Wednesday morning: a new investment consortium has been revealed, featuring BlackRock, Nvidia, xAI, and Microsoft, and is reportedly buying one of the world’s largest data-center operators. 

Financial Times reports the investment consortium is purchasing Aligned Data Centers from Macquarie Asset Management for $40 billion. This deal marks the first major one under $100 billion pool of funds called “AI Infrastructure Partnership.” 

The partnership also includes Global Infrastructure Partners (GIP), Abu Dhabi’s MGX, Temasek, and the Kuwait Investment Authority and aims to underwrite and expand the infrastructure behind the boom. It combines investor heavyweights with top tech firms that fast-track land, energy, materials, and chips. This collaboration drastically reduces build times for clients like OpenAI, Google, and Meta, while also ensuring America leads the AI race against foreign adversaries, such as China. 

Here’s more from FT’s report:

The investment group has earmarked $30bn in equity and a further $70bn in debt financing to buy and build data centre companies. Its planned takeover of Aligned Data Centers is the first in what could be a series of large acquisitions and construction projects in the sector.

The consortium plans to expand Aligned quickly in the coming years, more than doubling its 50 data centre campuses in the U.S. and Latin America.

BlackRock CEO Larry Fink told the FT that the AI Infrastructure Partnership allows tech giants to lease rather than own their hyperscale facilities, keeping data centers off their balance sheets, which only supports higher valuations. He added that institutional investors and sovereign wealth funds are also financing these projects.

“Together, we can address critical questions: how to design the right data centres, how to solve water and energy challenges, and how to respond to customers’ needs. That’s what’s unique about the partnership – it hasn’t been replicated anywhere else,” Adebayo Ogunlesi, co-founder of GIP, told FT in an interview. 

Ahmed Yahia Al Idrissi, chief executive of MGX, noted, “We very much believe that the requirements for global capacity buildout – both from a cloud and AI perspective – are massive. We’re talking about roughly 20 gigawatts a year globally, and about half of that would be in the U.S.” 

There are two competing narratives about the AI investment cycle: one camp calls it a “bubble,” while the other insists it’s just beginning innings. The AI Infrastructure Partnership members, and separately, firms like Blue Owl, clearly believe this cycle has years of momentum left. Meanwhile, the latest Bank of America Fund Managers Survey (read here) shows institutional investors naming an “AI bubble” as the biggest tail risk in markets.

Which narrative prevails remains the trillion-dollar question, though we suspect the Trump administration will do everything possible to ensure this AI investment cycle continues well into his second term.

US equity futures are again higher due a combination of softening trade rhetoric, a dovish Powell who reassured markets that another rate cut was coming, and solid results from BofA and Morgan Stanley. While cooking oil has become the latest flashpoint between the US and China, there are enough positive themes to offset trade-war worries for now. As of 8:15am ET, S&P 500 futures were 0.8% higher with Nasdaq 100 contacts +1.0%. Pre-mkt, Mag7 and Semis are looking to rebound from yesterday’s losses where Equal-weighted indices outperformed Mkt-weighted indices by 90-100bp. Cyclicals are poised to see outperformance with Banks, Industrials (esp. AI plays), and Materials leading the factor higher. In Europe, ASML gave another boost to the AI story after orders for its chip-making machines beat expectations. Bond yields are lower and the USD is weaker. In commodities, crude is up but other Energy products are lower; precious metals are higher with gold rising to a new record high above $4200 while base are lower. Ags are lower ex-coffee. The data drought continues: today’s CPI report has been pushed to Oct 24, so we only get the Empire Manufacturing print at 8:30am. Morgan Stanley and Bank of America are among companies due to report today; the BKX has fallen 7.5% over the last 3 weeks, albeit from ATHs, and now is ~4% below that level. 

In premarket trarding, MAg 7 stocks are all higher (Nvidia +2%, Tesla +1.2%, Amazon +0.7%, Meta +0.6%, Alphabet +0.1%, Microsoft +0.1%, Apple +0.5%).

• Bank of America (BAC) rises 4% after third-quarter earnings beat estimates as investment-banking activity increased amid a long-awaited comeback in M&A.
• Bunge Global SA (BG) rises 5% after recasting its outlook.
• Dollar Tree Inc. (DLTR) climbs 6% after the US discount retailer projected earnings per share to gain as much as 10% annually over the next three years.
• Grindr (GRND) gains 5% after the company said its largest shareholders are exploring an acquisition that would take the company private at no less than $15 a share, confirming an earlier media report.
• Papa John’s (PZZA) shares jump 12% as Reuters reports Apollo Global Management submitted a bid within the last week to take the pizza chain operator private at $64 per share.
• Sable Offshore (SOC) falls 26% after the Santa Barbara Superior Court issued a tentative ruling indicating that it will deny the firm’s claims against the Coastal Commission for issuing cease and desist orders during Sable’s repair program on the Las Flores pipeline.

In corporate news, Apple is preparing to expand its manufacturing operations in Vietnam as part of a push into the smart home market and in an effort to lessen dependence on China. Data center developer Nscale agreed to build a site for Microsoft in Texas which will deploy around 104,000 of the latest Nvidia chips. Stellantis vowed to invest $13 billion in the US over the next four years as it seeks to reinvigorate its business in the critical market and mitigate tariff costs.

While the stocks meltup is back, there are mixed signals coming from the derivatives markets, with some pointing to a spike in near-term pricing as a signal froth had been blown out of the market. For others, the inverted VIX curve is a precursor of more pain for stock traders.

Citi’s chief global macro strategist says markets aren’t adequately pricing in risks of the latest round of trade tensions. Meanwhile, systematic investors have been maximum long, but with short-term trend dynamics being tested and volatility spiking, selling exposure is the clear next step. Goldman’s Cullen Morgan expects CTAs to be sellers under every scenario, potentially offloading as much as $232 billion across global stocks should a down market take hold over the next month.

On the monetary policy front, Powell, as well as Boston Fed’s Collins, suggested scope for further cuts this year in commentary on Tuesday. And Evercore founder Roger Altman said he doesn’t see inflation as a threatening factor amid solid economic growth.

Turning to earnings, while it’s still very early in the season, but of the 24 companies in the S&P that have reported so far, 71% have topped estimates. In Europe, ASML gave another boost to the AI story after orders for its chip-making machines beat expectations. 

“We’re going into this earnings season with the view that it probably will validate that the corporate sector is still in relatively good shape,” Goldman Sachs Group Inc. strategist Christian Mueller-Glissmann told Bloomberg TV. “There’s a lot of uncertainty on politics and geopolitics, as always, and you want to be careful about making too many shifts in your portfolio.”

Markets will hear from the Fed’s Christopher Waller, Jeff Schmid and Stephen Miran later today after Chair Jerome Powell reiterated concerns about labor-market weakness on Tuesday and signaled the central bank may stop shrinking its balance sheet in the coming months. Strategists warn that trade headlines will remain in focus as Washington and Beijing lay the groundwork for negotiations.

Meanwhile, trade tensions “continue to simmer in the background, of course,” said UniCredit equity strategist Christian Stocker. “But the news that we can now be certain, or almost certain, that the Fed will cut interest rates in October has already had a positive impact.”

In Europe, the Stoxx 600 rose 0.7% as investors welcomed better-than-expected earnings from LVMH and ASML as well as a reduction in French political uncertainty. Consumer products and media shares are leading gains, while healthcare and financial services shares are the biggest laggards. The CAC 40 outperforms its regional peers with a 2.7% gain.  Here are the biggest movers Wednesday:

• LVMH shares rise as much as 14%, the most since February 2009, after the luxury group reported an unexpected return to sales growth in the third quarter
• ASML shares rise as much as 3.8% after the chip equipment maker reported the highest bookings for its cutting-edge EUV tools since 4Q23, showing a boost from a rapid increase in AI investments
• TotalEnergies shares rise as much as 3.2%, the most since June, after the French energy company published a trading statement that showed improving refining margins
• Bouygues and Orange jump after the pair — along with Iliad — offered to buy SFR from billionaire Patrick Drahi’s Altice France in a €17 billion deal that would reduce the French telecom market to three operators from four
• Nibe gains as much as 4.8%, the most in two weeks, after Pareto Securities upgraded its view on the Swedish heat-pump company to buy from hold, noting heat pump sales are continuing to grow organically at 8% in 3Q thanks to a recovery in the Nordics and Europe
• Pets at Home shares climb as much as 4.9% while peer CVS Group soars as much as 18% after the UK Competition & Markets Authority outlined its plan to reform the veterinary services market
• Pagegroup shares rise as much as 5.9%, the most since April, after the recruitment company posted a milder drop in gross profit in the third quarter compared to what was seen in the first half
• Aurubis shares slid as much as 7.8%, its biggest drop since April, to €106.70 after shareholder Salzgitter placed €500 million of bonds exchangeable into the copper smelting company’s shares
• Renk Group shares plunge as much as 5.9% after the propulsion and drive-train technology company was downgraded at Citi, with analysts arguing the shares are too expensive following a rally in defense names
• Strabag shares slid as much as 11% to €73.50 in Vienna on Wednesday, after the Haselsteiner family sold 2.5 million shares in the construction company at a discount
• Rathbones Group shares decline as much as 3.7%, the most since May, as outflows continued for the investment management firm in 3Q

Shares of Europe’s chip giant ASML are up 4% in pre-mkt after reporting strong order intake and above consensus 4Q25 guide. ASML’s 3Q25 revenue was below cons but EBIT of c.€2.5bn was 2% ahead. Bookings figure in 3Q was €5.4bn, broadly flat qoq from a strong 2Q25 order intake of €5.5bn and in-line with cons of c.€5.4bn including €3.6bn of EUV orders which came in materially above cons at €2.2bn. ASML highlighted that it does not expect 2026 total net sales to be below 2025 and anticipates 4Q25 stronger than 3Q25 and in line with historical seasonality.

Earlier in the session, a sense of relief rippled through Asian stock markets on Wednesday, after Federal Reserve Chair Jerome Powell’s rate cut signals gave some good news to investors once again confronting the risk of a trade war. A regional gauge of shares gained 2%, rebounding from its three-day slide. South Korea’s Kospi Index was the stand-out performer, jumping 2.7% on buying from local funds. Stocks in mainland China, Hong Kong and Japan also advanced. The reversal in sentiment was largely prompted by Powell’s comments on Tuesday, which reinforced expectations of an interest-rate cut later this month. That gave investors a reason to look past escalating trade tensions between China and the US, after President Donald Trump threatened to halt trade in cooking oil with China in response to the country’s refusal to buy US soybeans. “While the rhetorical tit-for-tat between the US and China remains a main concern for market participants, Powell’s signals on the Fed’s rate cut and end of quantitative tightening are providing a meaningful relief this morning,” said Homin Lee, senior macro strategist at Lombard Odier Singapore. Attention will now turn to the first three-way meeting among Japan’s main opposition parties since the collapse of the ruling coalition. The discussion, taking place after Japan’s market close on Wednesday, will focus on whether the three parties can close policy gaps and pick a candidate of their own for the nation’s premiership. 

In FX, the Bloomberg Dollar Spot Index falls 0.3%. The Aussie dollar and Norwegian krone are leading gains against the greenback, rising 0.5% each. Asian currencies bounced back against the dollar following losses this week. The Bloomberg Asia Dollar Spot index rose 0.4%, its best performance in more than a month. 

In rates, treasuries climb, pushing US 10-year borrowing costs down 2 bps to 4.01% amid small, curve-flattening gains in early US trading with long-end yields richer by around 2bp on the day. Treasury yields are 1bp-2bp richer across the curve with 2s10s and 5s30s spreads about 1.5bp flatter; Bunds and gilts in the sector are outperforming by 1bp and 3bp. Gilts provide support, outperforming after Bank of England Governor Andrew Bailey flagged a weaker jobs market and heading for their biggest four-day gain since April. Three Fed officials are slated to speak.  

In commodities, spot gold rises $50 having notched another record earlier today. Silver is up over 2%. 

To the day ahead now, and central bank speakers include the Fed’s Miran, Waller and Schmid, the ECB’s de Guindos, Rehn and Villeroy, and the BoE’s Ramsden and Breeden. We’ll also get the Fed’s Beige Book, and the New York Fed’s Empire State manufacturing survey. Finally, earnings releases include Morgan Stanley and Bank of America.

Market Snapshot

• S&P 500 mini +0.5%
• Nasdaq 100 mini +0.7%
• Russell 2000 mini +0.9%
• Stoxx Europe 600 +0.7%
• DAX +0.2%
• CAC 40 +2.6%
• 10-year Treasury yield -2 basis points at 4.01%
• VIX -1.1 points at 19.71
• Bloomberg Dollar Index -0.2% at 1211.78
• euro +0.2% at $1.163
• WTI crude little changed at $58.68/barrel

Top Overnight News

• A menu of options is starting to emerge around what a compromise might look like for extending a suite of Affordable Care Act tax credits, which have become a focal point in the current government funding standoff. Behind the scenes, however, Republicans on Capitol Hill and inside the Trump administration are discussing potential pathways to prevent the tax credits from expiring at the end of the year. Politico
• The Fed’s Beige Book gains importance as delayed jobs data leaves policymakers relying on other indicators to assess September’s labor market. BBG
• In its trade standoff with Washington, Beijing thinks it has found America’s Achilles’ heel: President Trump’s fixation on the stock market. Xi Jinping is betting that the U.S. economy can’t absorb a prolonged trade conflict with the world’s second-largest economy, according to people close to Beijing’s decision-making. WSJ
• China’s downward price pressures eased slightly in September, but not quite as much as expected, as Beijing ramps up efforts to curb excess capacity and bolster domestic demand. China’s inflation numbers for Aug are largely inline, w/the PPI at -2.3% (vs. the Street -2.3% and vs. -2.9% in Aug) and the CPI at -0.3% (vs. the Street -0.2% and vs. -0.4% in Aug). WSJ
• Japan’s legislature will hold an extraordinary session on Oct 21, although it’s not clear when exactly a vote to elect the next PM will take place. Nikkei 
• Japan’s opposition leaders are to meet today to discuss uniting behind Yuichiro Tamaki as a PM candidate to challenge the LDP’s Sanae Takaichi.
• Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget, in her first interview since being briefed on the scale of the fiscal black hole she faces. Budget is set to be published on Nov 26. Sky News
• The ECB’s Gabriel Makhlouf said he’s more worried that inflation will come in above the 2% target than below it. Interest rates are probably in a “fine position.” BBG
• ASML shares gained (+~415 bps) after orders crushed estimates, fueled by investment in AI infrastructure. It expects sales next year to be not below those of 2025. China was ASML’s biggest market last quarter, accounting for 42% of sales. BBG

Trade/Tariffs

• Chinese Foreign Ministry Spokesperson Lin says the US and China should engage in talks.
• China files complaint to WTO over India’s EV and battery subsidies; vows resolute measures to protect domestic industry, says Indian measures hurt China’s interests.

A more detailed look at overnight markets courtesy of Newsquawk

A regional gauge of shares gained 2%, rebounding from its three-day slide. South Korea’s Kospi Index was the stand-out performer, jumping 2.7% on buying from local funds. Stocks in mainland China, Hong Kong and Japan also advanced. Asian currencies bounced back against the dollar following losses this week. The Bloomberg Asia Dollar Spot index rose 0.4%, its best performance in more than a month.

Top Asian News

• Japan Parliamentary Committee failed to agree on holding an election to choose the next PM on October 21st.
• Japan’s DPP Leader Tamaki suggested another party leader’s meeting on Monday if things can be sorted; still some distance with the CDP. Understood that LDP leader Takaichi is proposing to form coalition with DPP.
• RBA Assistant Governor Hunter said recent data has been a little stronger than expected and inflation is likely to be stronger than forecast in Q3, while she added the labour market and economic conditions might be tighter than assumed. Furthermore, she stated that employment growth has slowed by more than expected and uncertainty about the global outlook remains elevated, as well as noted that the Board will adjust policy as appropriate as new information comes to hand.
• RBNZ Chief Economist Conway said they do not expect to use additional monetary policy (AMP) tools again anytime soon, while he added they will continue to update their approach to remain as prepared as possible to help New Zealand weather whatever economic storms come their way. Conway also announced that the RBNZ reviewed the frequency of its monetary policy decision announcements and acknowledged the perception that the gap between the November MPS and February MPS is too long, while they are to reduce that gap over the 2026/2027 period.
• S&P affirms New Zealand at AA+ foreign currency rating.
• China’s state planner issues action plan for developing EV charging infrastructure; aiming to establish 28mln charging facilities nationwide by end-2027.
• RBI sees rupee under speculative attack and will intervene further, according to Bloomberg.

European equities opened higher, buoyed by strong updates from ASML and LVMH, with the CAC 40 (+2.4%) leading gains after LVMH (+13.4%) beat Q3 revenue forecasts and political stability improved in France. Most European sectors trade in the green, led by Consumer Products & Services (+5.9%) on strong luxury brand performance (LVMH, Kering, Hermes), while Healthcare (-0.3%) lags due to cyclical rotation; Media (+1.7%) and Technology (+1.6%) also firm, with ASML’s results and resilient Chinese demand underpinning sentiment.

Top European News

• UK Chancellor Reeves says she is looking at both tax rises and spending cuts in the budget, via Sky News. When asked if the economy is in a “doom loop”, says, “Nobody wants that cycle to end more than I do”.
• French Socialist Party (PS) Faure says the Zucman tax will be reintroduced.

FX

• After starting the week on the front foot, DXY was knocked lower yesterday by a combination of a pick-up in the EUR, US-China trade tensions and dovish comments from Fed Chair Powell. On the latter, the key takeaway was the ongoing acknowledgement of the softness in the labour market by the Fed Chair. Something which could be aggravated by the ongoing US shutdown and expectations of mass federal layoffs. One potential source will be today’s Fed Beige Book, which will provide anecdotal evidence on the performance of the US economy. ING argues that the Beige Book played a key role in the Fed’s 50bp cut in September 2024. Elsewhere, NY Fed Manufacturing and Cleveland CPI are due on deck, with the latter coming ahead of next week’s delayed BLS release. DXY has delved as low as 98.73 with the next target coming via the 9th October trough at 98.69.
• EUR remains buoyed following Tuesday’s French-induced bounce, which saw EUR/USD reclaim 1.16 to the upside. Markets took solace in the announcement by PM Lecornu to suspend pension reform. Whilst this itself is not seen as economically prudent, the move has been met with a positive response from the Socialists, who will not support any motion to censure the government. Elsewhere, the slew of ECB speak over the past 24 hours has failed to shift the dial for market pricing and that will likely remain the case with Villeroy, de Guindos, Lane & Lagarde due to give remarks. EUR/USD has ventured as high as 1.1644.
• The Yen’s gains vs. the USD have extended into a second session with the former underpinned by a broad haven appeal alongside US-China trade tensions. That being said, the domestic story remains a tricky one with political tensions front and centre. Following the recent collapse of the ruling coalition, opposition parties are scrambling to see if they can present a credible candidate as an alternative to Takaichi. Accordingly, Japan’s Parliamentary Committee failed to agree on holding an election to choose the next PM on October 21st, as proposed by the LDP. Comments from the DPFP leader suggested that there is still some distance with the CDP in talks, but if issues can be resolved, there could be another meeting on October 20th. USD/JPY briefly made its way onto a 150 handle, delving as low as 150.91 before reclaiming 151 status.
• After the Pound’s brief wobble vs. the USD yesterday in the wake of a dovish labour market report, the pound has since stabilised and briefly hit a new high for the week at 1.3373. Yesterday’s jobs report was followed up by remarks from BoE Governor Bailey, who noted that the data support his view of a softening labour market. Additionally, Taylor also stated that he now sees a “bumpy” landing as more likely than a soft landing. Additionally, the November 26th budget is a great source of uncertainty for the MPC. On which, in an interview today, UK Chancellor Reeves says she is looking at both tax rises and spending for next month. The next upside target for Cable comes via the 1.34 mark.
• Antipodeans are both on the front foot vs. the USD, albeit the AUD is slightly outperforming its antipodean peer following a strong Yuan fix by the PBoC and hawkish comments from RBA Assistant Governor Hunter, who said recent data has been a little stronger than expected and inflation is likely to be stronger than forecast in Q3.

Fixed Income

• USTs are marginally firmer (+1 tick at 113-14), extending Tuesday’s gains amid lingering haven demand and cautious sentiment following renewed US-China trade tensions after Trump threatened to end cooking oil business with China; support also comes from dovish Fed commentary, with Powell signalling rising job market risks, nearing the end of balance sheet runoff, and justification for a September rate cut, while today’s focus turns to Fed speakers and the Beige Book.
• Bunds trade higher (+17 ticks at 129.85) within a 129.68–129.95 range, supported by dovish ECB comments from Villeroy suggesting the next move is more likely a cut. A relatively poor 2050/2056 Bund auction sparked little move on price action. Elsewhere, OATs outperform after France’s Socialist Party backed PM Lecornu’s temporary pension reform suspension, tightening the OAT-Bund spread to 78.32 from Tuesday’s peak of 84.50.
• Gilts outperform global peers (+36 ticks at 92.31), holding near highs of 92.39 with potential to retest early-August levels (92.66), supported by reports that Chancellor Reeves may halve the annual tax-free ISA allowance to boost UK equity investment, while broader budget discussions point to potential tax rises and spending cuts ahead of remarks from BoE’s Breeden.
• UK sells GBP 1.5bln 0.125% 2031 I/L Gilt: b/c 3.49x, real yield 0.889%.
• Germany sells EUR 0.757bln vs exp. EUR 1bln 0.0% 2050 and EUR 1.182bln vs exp. EUR 1.5bln 2.90% 2056 Bund.

Commodities

• Crude benchmarks trade rangebound, oscillating in a c. USD 0.50/bbl band. WTI and Brent remain below USD 59/bbl and USD 62.50/bbl, respectively, as markets wait for delayed weekly Private Inventory data following the US holiday on Monday. Elsewhere, Russian Deputy PM Novak said the current oil price reflects the existing balance on the energy market, whilst Russia has the potential to raise oil production.
• Spot XAU has continued its historic rally, breaking beyond USD 4,200/oz, as Fed Chair Powell signals another cut this month. The yellow metal is currently trading at USD 4,218/oz, continuing with a broad consensus that XAU could reach USD 5,000/oz in 2026.
• Base metals remain choppy but paring back most of Tuesday’s losses as the dollar weakens on dovish Powell comments. 3M LME Copper peaked at USD 10.75k/t and is currently trading off its best levels despite a lack of newsflow.
• Russia’s Deputy Prime Minister Novak says the current oil price reflects the existing balance on the energy market. Russia has the potential to raise oil production. No plan for Russia to submit new oil output without a compensation plan to OPEC. Demand for global energy is growing, especially for electric power. Demand for oil is also rising and is on par with 2024.
• Russian Deputy PM Novak says Russian gas accounts for some 19% of European gas imports; Russia is ready for discussions on gas supplies to Europe.
• Russian Deputy PM Novak, regarding US President Trump’s remarks about gasoline shortages in Russia, says Russia has stable domestic market supply.

Geopolitics

• “Israel’s Channel 12: It is being investigated that one of the four bodies of the hostages handed over does not belong to an Israeli hostage”, according to Sky News Arabia.
• “Israeli Security: The Rafah Crossing will not be opened today for logistical reasons”, via Al Arabiya. “Technical checks before opening the Rafah crossing “take time”, Israeli security says.

US Event Calendar

• 7:00 am: Oct 10 MBA Mortgage Applications, prior -4.7%
• 8:30 am: Oct Empire Manufacturing 10.7, est. -1.8, prior -8.7

Central Banks Speakers

• 9:30 am: Fed’s Miran Speaks at Invest in America Forum
• 12:30 pm: Fed’s Miran at Nomura Research Forum
• 1:00 pm: Fed’s Waller Speaks on Artificial Intelligence
• 2:00 pm: Fed Releases Beige Book
• 2:30 pm: Fed’s Schmid Holds Townhall Event

DB’s Jim Reid concludes the overnight wrap

it’s certainly been quite a ride in markets since Friday’s trade escalation with many sentiment shifts in the subsequent 2-3 days. The last 24 hours has been a microcosm of that with the S&P 500 (-0.16%) only slightly lower after rallying hard from lows of around -1.5% just after the open and then bouncing off the highs of around +0.4% a couple of hours before the New York close. The rally back was caused by dovish comments from Fed Chair Powell after Europe went home, but a late social media post from President Trump reignited some fears of US-China escalations. S&P Financials (+1.12%) were among the outperformers after banks kicked off Q3 reporting season, joined by defensives like Consumer Staples (+3.04%).

In his post, President Trump said that he believed China was “purposefully not buying our Soybeans”, and that in response they were “considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution.” In turn, those comments revived Friday’s fears about a fresh escalation in the trade war, and it contrasted with some more emollient remarks from US Trade Representative Greer earlier in the day, who’d expressed confidence that tensions would ease in the coming weeks through ongoing trade talks. So risk assets have whipsawed over the last few sessions in response to the various headlines.

That backdrop meant the trade-exposed indices were the most impacted, especially after the late escalation. For instance, the NASDAQ Golden Dragon China index fell -1.95%, and that’s made up of companies publicly listed in the US who do most of their business in China. It did open over -3% lower though. Similarly, the Philadelphia Semiconductor index (-2.28%) struggled and closed near the lows of the day, given the importance of chips to the trade war. Indeed, it was tech stocks that lagged on a sectoral basis yesterday, with the NASDAQ (-0.76%) seeing a larger decline than the S&P 500 (-0.16%), with the Mag-7 (-1.33%) also lower, whereas small-cap stocks in the Russell 2000 turned round from a -1.74% early loss to a big +1.38% gain.

It was Fed Chair Powell who provided a big offset to the trade fears, as he struck a more dovish tone than expected. The main headline was a surprise discussion around ending the shrinking of its balance sheet in the coming months. While our rates strategists suggest this timeline could be deliberately vague, it puts December on the map in terms of a halt. Indeed, recent history suggests “coming months” with regards to balance sheet changes has resulted in action within 2-3 months. There wasn’t much new on rates and the economy but there was no pushback to a cut later this month and the labour market commentary leant in a dovish direction as well.

The combination of the trade fears and the dovish comments has led to a decent rally for US Treasuries. For instance, the 10yr yield was unchanged yesterday, but overnight it’s fallen -2.1bps to 4.01%, which would be its lowest closing level since early April around the Liberation Day turmoil. Another factor that’s helped to keep a lid on yields has been a fresh drop in oil prices. So Brent crude oil prices (-1.47%) fell to a five-month low of $62.39/bbl, and overnight they’ve seen a further drop to $62.12/bbl. So even as the tariff threats have escalated again, investor concerns about inflation have come down, with the US 5yr inflation swap (-2.1bps) closing at a 3-month low yesterday of 2.54%. Nevertheless, the ongoing decline in nominal and real yields has continued to push up gold prices (+0.79%), which hit a fresh record yesterday of $4,143/oz, and overnight they’re up another +0.91% to $4,180/oz.

Otherwise, we’re now on day 15 of the government shutdown, which means we’re very close to overtaking the third longest shutdown in 2013, which lasted for 16 days. Moreover, a record 35-day shutdown certainly doesn’t look implausible anymore. There are still no signs of compromise either, and the Office of Management and Budget posted yesterday that they were “making every preparation to batten down the hatches and ride out the Democrats’ intransigence”. So the rhetoric doesn’t sound at all like either side is preparing for a deal. If it weren’t for the shutdown, we’d have been writing about today’s CPI print for September, but that’s been delayed as well, so we’re flying blind on a growing amount of economic data right now. That said, this CPI print is one of the few things that will come out even if the shutdown continues, as it’s used in the social security calculations, so it’s currently scheduled for October 24. 

Back in Europe, there was a big rally for French OATs as investor hopes grew for some sort of budget compromise. The main catalyst was that PM Lecornu proposed suspending the 2023 pension reform until after the presidential election, meaning no increase in the retirement age between now and January 2028. The Socialist Party have now said they won’t vote to topple the government. The proposed 2026 draft budget would aim for a 4.7% deficit of GDP, which is broadly in-line with the previous outlook, and without the pension reform puts the trajectory of deficit/GDP closer to 5.0% over time. So even though that might read negatively from a debt sustainability point of view, markets were reassured because it was seen as raising the chances that Lecornu would remain as PM and a snap legislative election would be avoided. Polymarket now have the probability of an election being called by year-end at 36%, down from 72% on Monday afternoon. So that meant French assets outperformed, with 10yr yields down -7.4bps, which brought the Franco-German 10yr spread down to a four-week low of 78.3bps. Moreover, the CAC 40 (-0.18%) outperformed the Europe-wide STOXX 600 (-0.37%), with a strong performance for French banks including Société Générale (+2.42%), Crédit Agricole (+0.67%), and BNP Paribas (+0.41%). 

Meanwhile in the UK, gilts were another outperformer after the UK labour market data was weaker than expected, which in turn led investors to price in more rate cuts from the BoE. Specifically, the unemployment rate ticked up to 4.8% in the three months to August (vs. 4.7% expected), whilst private sector regular earnings growth fell to +4.4% (vs. +4.5% expected) at the same time, the weakest since December 2021. So that meant more rate cuts were priced in, with the amount expected by the June 2026 meeting up +5.9bps on the day. In turn, gilt yields fell across the curve, with the 10yr yield down -6.8bps, whilst sterling weakened -0.10% against the US Dollar. The weaker pound also supported the FTSE 100 (+0.10%), which was a relative outperformer on a day that most of the major global equity indices lost ground. 

Otherwise in Europe, markets put in a weaker performance, with the DAX (-0.62%) posting a stronger decline, even if they closed before Powell’s speech. That came as the latest ZEW survey for October was underwhelming, with the current situation component falling to a five-month low of -80.0 (vs. -74.2 expected). Indeed, sovereign bonds rallied across the continent, in line with the broader risk-off tone, with yields on 10yr bunds (-2.6bps) and BTPs (-4.1bps) both falling back.

In Asia, most equity markets are recovering this morning, as the effect of Fed Chair Powell’s dovish remarks has offered support. Plus they’d already reacted to some of the more negative trade headlines yesterday, so they’re now catching up with some of the more positive comments we’ve had since, unlike the S&P 500 which was reacting to both. So that’s seen gains across the region, with the Nikkei (+1.35%) rebounding, the KOSPI (+1.93%) at a record high, and the Hang Seng (+1.21%) increasing after a run of 7 consecutive declines. And looking forward, US and European equity futures are also pointing higher, with those on the S&P 500 (+0.24%) and the DAX (+0.32%) both rising. However, stocks in mainland China have been weaker, with the Shanghai Comp (+0.10%) and the CSI 300 (-0.03%) both seeing little change. That follows data this morning showing that Chinese CPI was weaker than expected, with a -0.3% decline in prices in September compared with the previous year (vs. -0.2% expected). Meanwhile, PPI inflation was at -2.3%, in line with expectations, marking a 36th consecutive month in deflationary territory.

To the day ahead now, and central bank speakers include the Fed’s Miran, Waller and Schmid, the ECB’s de Guindos, Rehn and Villeroy, and the BoE’s Ramsden and Breeden. We’ll also get the Fed’s Beige Book, and the New York Fed’s Empire State manufacturing survey. Finally, earnings releases include Morgan Stanley and Bank of America.

Amid the desert of macro data due to the shutdown, traders are reaching for anything to get a sense of the US economy and this morning’s Empire State Fed Manufacturing Survey offers hope for the future.

Specifically, the New York state factory activity unexpectedly expanded and the outlook climbed to the highest since the start of the year despite lingering price pressures.

October general business conditions index increased 19.4 points to 10.7 (its 3rd increase in the last 4 months) as orders and shipments picked up, and a gauge of the outlook over the next six months more than doubled to 30.3, reflecting greater optimism about orders and shipments.

Source: Bloomberg

Under the hood, the report showed a gauge of prices paid for materials rose, while a measure of prices received by state manufacturers increased to a six-month high. Additionally, there was growth in orders and shipments and a gauge of factory employment showed the fastest expansion in three months.

Source: Bloomberg

“Optimism about the outlook improved noticeably,” said Richard Deitz, Economic Research Advisor at the New York Fed.