At The Money: with Brandon Zick, Ceres Farmland Fund(October 8, 2025)

 

Full transcript below.

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About this week’s guest:

Brandon Zick is Chief Investment Officer of Ceres Farmland Fund (now part of Wisdom Tree); the fund owns and manages about $2 billion in agricultural land assets

For more info, see:

Professional Bio

Masters in Business (coming soon!)

LinkedIn

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Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. And find the entire musical playlist of all the songs I have used on At the Money on Spotify

 

 

 

TRANSCRIPT:

Barry Ritholtz:  Have you ever thought about investing in farmland? Real assets have become increasingly popular, primarily accessed through alternative investments. Like private equity funds. Farmland has seen broad, non-correlated gains, and they show little signs of slowing down. After all, they ain’t making any more land.

I’m Barry Ritholtz, and on today’s edition of At the Money, we’re gonna discuss investing in farmland. To help us unpack all of this and what it means for your portfolio, let’s speak with Brandon Zick. He’s Chief Investment Officer of Ceres Farmland Fund, managing about $2 billion in ag assets. By the time you hear this, Ceres will have closed their sale to Wisdom Tree, where they’re going continue operating as an independent agriculture investing firms. And full disclosure, I’m also an investor in CS through my own personal investing.

So, Brandon, let’s just start with a basic question. What makes farmland a compelling addition? To any investment portfolio compared to other real estate assets.

Brandon Zick: Thanks Barry and farmland. It provides a lot of, uh, a lot of different things that help in a portfolio. So farmland will generate a good amount of income. Uh, it’s positively correlated with inflation and it’s also non-correlated with other things in your portfolio and becomes a diversifier and it’s a capital appreciating asset. It’s not a depreciation play,

Barry Ritholtz: So yield capital appreciation. And an inflation hedge.

Brandon Zick: That’s correct. Yeah. And that’s why investors have been investing in farmland for a long time, but it’s now becoming more, uh, broad based to the public markets.

Barry Ritholtz: So let’s talk about that historical pattern. If, if there’s rent and yields, is this potentially, if. Fixed income substitute, do dividends get paid out to investors?

Brandon Zick: Yeah, that’s the way that a lot of people look at it. It’s uh, the annual income could be paid off as a dividend. So you do see some public REITs and private REITs that are structured that way that would force that dividend out. Uh, but you can also just continue to reinvest as well. And you have that capital appreciation.

And if you think back over the last 70 years and look at data from the Chicago Fed, you’ll see that long-term appreciations averaged about 6% annualized, and the components of that are really just inflation plus gains in productivity. Because farms, these are living beasts where they’re actually growing crops every year, and, improvements in technology can help crop yields and increase the bottom line, you see a number of those benefits fall to the landowner.

Barry Ritholtz: So you guys have scaled up to $2 billion in farmland investing. How do you identify and source attractive farmland opportunities? What’s the current market like?

Brandon Zick: So there’s a number of ways to buy farms. There are public auctions that exist. They’re very localized, and we’ll attend two to 300 of those a year. But the majority of farmland is done through private transactions. And, and these aren’t listings you don’t see for sale signs on farms?

Barry Ritholtz: There’s no Zillow for agriculture?

Brandon Zick: Not yet. At least. To, uh, there are people trying to do something like that, but there are, there are ways to source farms kind of off market. And we do all of that through our farm tenant network. Even though I grew up on a family farm, we’re not operating the farms ourselves, we’re renting the properties to active family farmers. All of those farmers own ground. They rent land from us, but they rent a real large preponderance of their acres from other people.

And those other people are usually not institutional investors. They’re estates, trusts, non-farming heirs, people who, after two or three generations, will likely sell the land. And so we use our tenant network or our farmer network to try to source some of those opportunities privately.

Barry Ritholtz: You guys mostly invest in the us What regions or sectors do you find most attractive?

Barry Ritholtz: We’re the US only. Uh, our mandate is really anywhere. We invest in 12 states, but about two thirds of our acres are located in Indiana and Michigan, and almost 90% of our acres are in the Great Lake States. Add in Illinois, Wisconsin, Kentucky, Ohio, and Western New York. We think that’s our sweet spot because there’s fantastic market for, rental with farmers. It’s highly competitive. It’s very high quality soils, which are great for growing crops. We also have a lot of water resources, both underground and at rains when you’re trying to grow a crop. And these are commodities, so low cost producer winds and being closer to the population centers of the East coast, where all of these crops generally move is a huge benefit as well.

Barry Ritholtz: You mentioned inflation earlier. How does inflation and just generally macroeconomic trends affect farmland, values and investor interest?

Brandon Zick: Farmland is positively correlated with inflation, and that comes from a few in a few different ways. So, um, you know, clearly crop prices can increase and you know, that’s one of the bigger things that can help drive revenue on farms is increase in crop prices, crop yields.

But over time, farmland has a number of different uses. So whether it’s for development or other types of things, on top of just your typical farmland, you’ll see that increased value over time. So even with a booming economy, you can see farmland value is increasing as well, even if the actual ag production on that farm is not increasing.

Barry Ritholtz: So let’s talk about those other opportunities briefly. Mineral rights easements. You mentioned hunting, uh, when we were chatting about this earlier. Um, even data warehouse and ais are looking for property in those spaces. How, how significant. Um, add-ons are those to basic value of farms?

Brandon Zick: There’s really two different groups I would put that in. You can have, some of the ancillary income, so like harvesting, select timber on farms. Typically, when you’re buying a property, it’s not a hundred percent tillable. And even if it were to be a hundred percent tillable. And growing crops, there are off seasons and you want to continue to manage those properties.

We lease out farms for hunting. We harvest select timber. We like oil and gas rights or other types of minerals that can be incremental. We’ve had wind turbines on properties and those are all kind of incremental to your farm value.

Then there are other things like solar, where you’re taking the majority of the farm to convert it, and in that case, you may have a 30-year lease inflation-hedged income, of course, but the income is going to be anywhere from three to five times the farm income. So you could be generating 15 to 20% a year in gross income off of your, over your cost basis for solar.

And then there are, uh, other opportunities when you own real estate. When you own dirt, there’s optionalities, to your point around concert or around easements. So easements can be conservation easements, which we don’t really do much of. But they can also be easements for running fiber, for running power. And there’s a lot of, um, natural gas. There’s a lot of opportunity there. And then you can see for manufacturing, you can sell properties for that, for multiples of farmland value.

And now in the Midwest, we’re seeing a huge demand for data center development. And that’s anywhere from 8 to 20 times farmland value. Because when they identify a site that has great power resources, great water, hopefully few neighbors; It has fiber there. There’s a lot of ways to be able to you know, build these things that then. They’re gonna be willing to pay a strong price.

Barry Ritholtz: And this administration has been urging the, uh, owners of these, or builders of these to focus in the us. They’re not comfortable with the servers overseas, even if it’s cheaper to operate.

Brandon Zick: That’s definitely an issue that’s out there, and you really need to be within the US in areas where there’s capacity on the grid. You certainly need, favorable admin or favorable government in all these areas to be able to do it as well.

You will see a saturation in certain spots that then they have to move to others. So, uh, some of the largest data center campuses in the US or outside of Chicago and Columbus, Ohio, you don’t see much new development going on there because of lack of power, oversaturation. So we’re seeing much more demand in places where we have a big footprint like Indiana, Michigan, parts of Kentucky, parts of upstate New York.

Barry Ritholtz: So what are the risks unique to farmland investing? How much of this is climate change and weather, water access, and just government regulation and, and NIMBYism. What, what do you have to think about when you’re considering a risky business.

Brandon Zick: When you think of the climate side, those are the traditional risks to farmland. So droughts and floods and things like that. So we prefer to invest in areas where you have that natural rainfall, you have strong soils, good drainage. You don’t buy farms right next to big rivers, because they can flood.

And then as you think over time, okay, there’s climate change. Is there a warming happening? Is the grain belt moving farther north? So our position around the Great Lakes, we think mutes a lot of that risk.

Barry Ritholtz: In other words, this is an area that’s only gonna become more attractive for farming, not less.

Brandon Zick: That’s right. If the Great Lakes region is running outta water, then everyone else already did. So it’s uh, it’s an interesting dynamic. And so that’s where we focus our investment. But there’s farmland all across the US that has all different types of values. Different ways to manage risk.

In farmland you can do that through implementation of drainage structures. You can do it through irrigation to try to be able to have water when others don’t. So there are ways to mitigate some risk there.

To your other point about regulation. I mean the history of the US is agriculture, so there are a lot of regions agriculture’s encouraged and, development always brings pressure.

So when you think about what are the issues in farmland that farmers face today, it’s development pressure, it’s labor pressure. Input cost and things that come in. So if you’re in areas like California, where we don’t invest, there is a lot more regulation around water, around labor that makes it more difficult to be an operator when you’re growing a commodity crop.

There are places that we move away from or we don’t invest in generally. I’m not saying we never would, but we haven’t yet because we just don’t think it’s an attractive area.

Brandon Zick: Let’s talk about California for a second. Every time I’m on the West Coast. I marvel at how local and fresh the food is. Avocados are everywhere. The tomatoes are wonderful. They have a lot of really, good local crops.

But what I’m hearing from you is California may not be an attractive. Um, agricultural investment area. Is that taxes, is that regulation, is that water availability? What are the challenges of farmland in California?

Brandon Zick: Those local crops that are going to local markets, the produce you can get in California is second to none. I would agree with that. That’s not a scalable, large business from our standpoint. Now, while there are some very large owners of farmland that produce the California cutie oranges, the big pistachio growers and almond growers, they’re all large corporate groups that this is the only spot to grow that – the avocado. That makes sense.

But from the row crop standpoint, there’s a lot of water being used to grow crops that you kind of have this misalignment of incentives longer term around use it or lose it. Strategies around water. So you’ll see a lot of cotton and rice grown in California, which I would probably say is not where you should be growing that and using that water.

We look at regulation, it’s coming everywhere around water, because water will be, the next big battle that’s out there. Restriction is gonna come right after regulation. As things get restricted, we think it’s more prudent to be in areas where there’s an abundance of water or an aquifer recharge, as opposed to California where you have no new, infrastructure being built to capture water. No new reservoirs.

Ritholtz: What about desalination? You would think there’s the Pacific Ocean adjacent. They should have all the water they want.

Brandon Zick: Well for municipal that actually might make sense at some point. I mean, the cost is significant. The energy costs are significant as those costs come down for the highest and best use of water municipal, that would be the right answer.

And industrial agriculture is a low value use of water. It doesn’t mean in areas like California that they don’t have senior water rights. Agriculture actually does have senior water rights in parts of California and Arizona because the farmers were the first to settle out there.

So they’re actually ahead of cities in Arizona. Farmers are ahead of cities like Phoenix in terms of where they stack

Barry Ritholtz: And hence the water. Issues in places like New Mexico and Arizona. That’s right.

Brandon Zick: And, then you just have this, the actual climate is not, it’s not recharging aquifers. And if you’re not gonna build infrastructure to, um, to take advantage of when it does rain, then that’s a, that’s an area that we don’t find an attractive investment opportunity.

Barry Ritholtz: Let, let me ask another, California investing. Farm and land question vineyards, are these an investible asset or is that essentially a sort of vanity project that all these separate vineyards are running?

Brandon Zick: That’s an interesting question because, um, you know, wine consumption’s gone way down. And the same for craft beer. People have moved a non-alcoholic, they’ve moved to seltzers, High Noons, etc. So from that standpoint, it’s a little challenged on the macro level

The idea of investing in vineyards. Actually one of my brothers went to Cornell and he ran vineyards in California and other parts of the country. And he would tell you it’s just very difficult with labor. You have to be able to sell the bottles for a very high price. If you’re just producing grapes and then selling ’em to someone else that’s selling the retail product, that’s a difficult business to be in. So we don’t get excited about investing in vineyards.

Although in Michigan we do have one juice grape farm, and I think Welch’s will continue to produce grape juice for a while.

Barry Ritholtz: As a investor in farmland, how do you balance the two different forms of,  gains – annual income from rent and crops versus just long-term appreciation of the underlying land?

Brandon Zick: That’s really the benefit of farmland. If we look at our return series over time in areas of strong commodity prices. You tend to have much higher land appreciation and then an area in cycles. The parts of the cycle with low commodity prices, income comprises a bigger portion of your return.

And that high income actually mutes volatility over time because you’re gonna generate that 4 or 5% income every year. And that can really across cycles dampen the volatility you might see from changes in commodity prices.

Now, you would think if commodity prices are changing, your rents are materially changing. All of our leases – we like multi-year leases that are negotiated kind of three years at a time. So even if commodity prices are moving down, our rents aren’t really moving down, or only a portion would be negotiated down. And then as they go up, we try to build a call option into the lease that we can benefit somewhat along the way.

Barry Ritholtz: Final question, what are the most significant challenges emerging in farmland investing looking forward?

Brandon Zick: I think there’s gonna be a lot more competition because historically there really hasn’t been much institutional investment in this space. Only about 3% of US farmland is institutionally owned. And some of that is weighted much more heavily toward permanent crops like vineyards or orchards, areas of the country where you can put larger, dollar amounts to work. So the southeast or the west.

But I think a lot of people are identifying farmland as a great asset, especially for long term oriented investors. This is an asset you can hold for 30, 40, 50 years with some of that optionality around Solar, Wind, timber, even selling into manufacturing or data center construction. Infrastructure funds should have a lot of interest in this because it’s a long-term asset you can pair with these long-term goals and liabilities.

Barry Ritholtz: Really, really fascinating.

So to wrap up, if you’re looking for a non-correlated investment class, an alternative that’s a little different than. Multifamily or office space or other traditional real estate investing, consider farmland. You get regular income appreciation of the underlying land, and you’re somewhat hedged against rising prices and inflation.

I’m Barry Ritholtz, you’ve been listening to At the Money On Bloomberg Radio.

 

 

 

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The post At the Money: Farmland investing appeared first on The Big Picture.

FOMC Minutes Signal Dovish Policy Tilt, But 'Majority' Fear Inflation Upside Risks

Since the last FOMC meeting (when The fed cut rates by 25bps with one dissent for 50bps on Sept 17th), gold has gone to the moon, stocks are higher (as is the dollar) while bonds are down modestly...

Source: Bloomberg

As a reminder, at his post-meeting press conference, Chair Powell characterized the rate cut as a risk management decision, responding to meaningful downside risks to the labor market, but stressed that he does not feel the need to move quickly on rates.

Despite the lack of data (due to the government shutdown), the labor market is cooling, and now policymakers are turning their attention to that side of the mandate (though we note that housing data saw a huge upside surprise while soft survey data since the FOMC meeting has weakened)...

Powell said that moving rates down slightly supports a more neutral policy stance and balances risks to employment and inflation. 

The government shutdown is seen as complicating the Fed's data-dependent policy approach, with key employment and inflation releases (including weekly jobless claims, September payrolls, and CPI reports) delayed; analysts say this could cloud judgment for the October FOMC meeting, increasing uncertainty over further rate cuts amid the Committee's divided views on inflation, GDP growth, and labor market resilience.

Interestingly, the odds of a 25bps cut in Oct (29th) has risen from 75% to 95% since the last FOMC meeting while the odds of an additional cut in December has slipped to just above 80%...

Source: Bloomberg

The Fed Chair emphasized a meeting-by-meeting approach, guided by incoming data, and noted that markets are pricing in a path of cuts, but the Fed is focused on the data rather than market expectations. Current market expectations are for 44bps of cuts in 2025 (unchanged since the meeting) and 63bps of cuts in 2026 (hawkishly lower than the 73bps at the meeting).

Powell has spoken again after the FOMC meeting and said the Committee will continue balancing high inflation risks against a slowing job market in upcoming rate decisions, maintaining flexibility rather than a preset path.

So, what does The Fed want us to know it was thinking during the meeting?

Almost all participants supported 25bps cut to Fed funds rate at the September meeting.

“Most judged that it likely would be appropriate to ease policy further over the remainder of this year,” according to minutes of the Federal Open Market Committee’s Sept. 16-17 meeting.

One participant preferred a 50bps rate cut at last month’s meeting.

Some noted financial conditions suggested policy may not be particularly restrictive, those participants judged a cautious approach to future policy was warranted.

“A few participants stated there was merit in keeping the federal funds rate unchanged at this meeting or that they could have supported such a decision,” the minutes said.

"Around half" of Fed officials saw another two interest rate cuts by the end of 2025 (which we already knew from the Dot Plot).

Most participants judged the downside risks to employment had increased, upside risks to inflation had either diminished or not increased.

The record of the meeting also showed “a majority of participants emphasized upside risks to their outlooks for inflation.”

A few participants noted the standing Repo facility would help keep the Fed funds rate in the target range and ensure money market pressures would not disrupt ongoing quantitative tightening.

Fed staff revised up the GDP growth projection for 2025 through 2028.

Equity prices continued to rise over the intermeeting period and stood very close to record highs despite the recent weaker-than-expected employment reports.

A few participants commented that the agricultural sector continued to face headwinds because of low crop prices and high input costs.

Read the full minutes below:

Tyler Durden Wed, 10/08/2025 - 13:46

Yields Jump After Ugly 10Y Auction Tails, Foreign Demand Tumbles

After yesterday's ugly 3Y auction, moments ago the Treasury sold $39 billion in 10Y paper (technically a 9 Year, 10 Month reopening of cusip NT4), and the reception was again rather disappointing. 

The note priced at a high yield of 4.117%, up from 4.033% in Sept, but except for that one month, it was the lowest since Oct 2024. The auction also tailed the 4.114% When Issued by 0.3bps, following last month's stop and was the 2nd tail in the last 8 auctions.

The bid to cover dropped from 2.65% to 2.478%, which while not the worst in the past year wasn't too far off, and was well below the 2.57 six-auction average. 

The internals were also ugly, with Indirects (aka foreign bidders) plunging from 83.1% to 66.8%, which also was below the six-auction average of 73.7%. And with Directs taking down 24.1%, or the highest in 11 years...

... Dealers were left with a modest 9.1%, below the recent average of 10.0%, but above last month's record low of 4.2%.

Overall, this was a subpar and disappointing 10Y auction, but it could have been worse, which is why while yields moved by 1-2bps higher across the curve, pushing the 10Y to 4.125%, they are well off yesterday's session highs.

Tyler Durden Wed, 10/08/2025 - 13:31

DHS Highlights Slew Of September Immigration Arrests In Portland

Authored by Naveen Athrappully via The Epoch Times,

The Immigration and Customs Enforcement (ICE) arrested several “worst of the worst criminal illegal aliens” in Portland, Oregon, last month, the Department of Homeland Security (DHS) said in an Oct. 7 statement.

The announcement comes amid a tussle between the Trump administration and officials in Portland and Oregon over the deployment of National Guard troops to protect federal agents carrying out immigration operations.

“We are not allowing domestic terrorists to slow us down from removing the worst of the worst,” DHS Assistant Secretary for Public Affairs Tricia McLaughlin said.

“President Trump has deployed a SURGE of federal resources to Portland. Enhanced CBP, ICE, FBI, DOJ and DEA resources are arresting rioters and Antifa domestic terrorists.”

Among those arrested was a Honduran national convicted of distributing fentanyl; a Canadian national convicted of two counts of sexual abuse in the first degree; a Mexican national who was previously arrested for possessing dangerous weapons; a Peruvian national convicted of luring a minor; and another Mexican national convicted of possessing heroin with the intent to distribute it, the statement said.

On Sept. 28, War Secretary Pete Hegseth issued a memo at the request of President Donald Trump, informing the leader of the Oregon National Guard that 200 members would be called up for federal service. The same day, Oregon filed a lawsuit seeking to block the move, arguing that Trump exceeded his executive authority.

On Oct. 4, Judge Karin J. Immergut, of the U.S. District Court for the District of Oregon, ruled that Trump violated the 10th Amendment and that Oregon would “suffer an injury to its sovereignty” once the federalized National Guards are deployed in Portland. She issued a temporary restraining order against such deployment, valid until Oct. 18.

On Saturday, ICE’s offices in Portland saw demonstrations, with some protestors using megaphones to chant “ICE out of Portland!”

During protests the previous day, some protesters also threatened federal agents.

National Guard Deployment

On Tuesday, Oregon Governor Tina Kotek’s office said she directed the Northern Command to take swift action to send the National Guard members back home.

“Judge Karin J. Immergut’s orders are a clear and forceful rebuttal to President Trump’s misuse of states’ National Guard. Thus, I am directing Northern Command to send Oregon’s citizen-soldiers home from Camp Rilea immediately,” Kotek said.

“Let’s remember that these Oregonians are our neighbors and friends, who have been unlawfully uprooted from their family and careers—they deserve better than this.”

In an Oct. 7 statement, Portland Mayor Keith Wilson raised concerns about federal agents in the city.

“I continue to maintain that the tactics used by federal agents at the ICE facility are troubling and likely unconstitutional,” he said.

“I intend to explore options to protect our community and our right to free expression.”

Speaking to reporters at the Oval Office on Monday, Trump suggested he may consider invoking the Insurrection Act if required.

The Insurrection Act is an emergency power allowing the president to authorize the deployment of military forces within the country to suppress acts of domestic violence or rebellion.

“So far, it hasn’t been necessary. But we have an Insurrection Act for a reason,” Trump said.

“If I had to enact it, I‘d do that. If people were being killed, and courts were holding us up, or governors and mayors were holding us up, sure, I’d do that. I mean, I want to make sure that people aren’t killed. We have to make sure that our cities are safe.”

The DHS said on Tuesday that fiscal year 2025 closed out with the lowest Border Patrol apprehensions at the southwest border since 1970. The department said there were 237,565 apprehensions for fiscal year 2025, 87 percent below the average of the last four fiscal years, which was 1.86 million.

“We have had the most secure border in American history and our end of year numbers prove it. We have shattered multiple records this year and once again we have broken a new record with the lowest number of Southwest border apprehensions in 55 years,” Secretary of Homeland Security Kristi Noem said.

“Under President Trump, we have empowered and supported our law enforcement to do their job and they have delivered.”

Tyler Durden Wed, 10/08/2025 - 13:25

White House Will Use Tariffs To Fund Low-Income Food Aid Program During Shutdown

How's your shutdown going so far? 

Illustration via Politico

So far, no mass firings. The sky is intact. Cats are not sleeping with dogs. And low-income food aid isn't at risk, after the White House found funding to keep the Special Supplemental Nutrition Program for Women, Infants and Children (also known as WIC) afloat using tariff revenues "for the foreseeable future," a White House official tells Axios. 

The program — which provides vouchers for healthy food, breastfeeding assistance and nutritional education — was in danger of running out of funding within weeks amid the government shutdown. 

The tariff money infusion was described as a temporary fix by a White House official, who said that the Office of Management and Budget had worked to find a "creative solution" to preserve WIC. 

In 2024, the federal government spent over $7 billion to fund the program, which benefits over 6 million people in the United States. 

"President Trump and the White House have identified a creative solution to transfer resources from Section 232 tariff revenue to this critical program," White House spox Karoline Leavitt told the outlet. "The Trump White House will not allow impoverished mothers and their babies to go hungry because of the Democrats' political games." 

Said creative solution came one day after CNN and other outlets 'sounded the alarm' over 'Millions of moms and young kids' who could 'lose WIC food assistance within two weeks.' 

Tyler Durden Wed, 10/08/2025 - 13:05

Florida Man Charged In Deadly Pacific Palisades Inferno

A former Los Angeles resident turned Florida man has been arrested and charged with starting one of the most devastating wildfires in city history - a blaze that ripped through Pacific Palisades in January 2025, killing a dozen residents and reducing multimillion-dollar homes to ash, federal authorities announced Wednesday.

Prosecutors say Jonathan Rinderknecht, 29 - who also went by "Jonathan Rinder" and "Jon Rinder" - maliciously set the fire that became the Palisades Fire, igniting a catastrophe that scorched some of LA’s wealthiest hillside neighborhoods.

Today we are announcing the arrest of 29-year-old Jonathan Rinderknecht on a criminal complaint charging him with maliciously starting what became the Palisades Fire in January.
⁰The complaint alleges that Rinderknecht's started a fire in Pacific Palisades on New Year's Day --… pic.twitter.com/UzrFa0Lmrz

— Acting U.S. Attorney Bill Essayli (@USAttyEssayli) October 8, 2025

The Melbourne, Florida, resident was arrested Tuesday and charged with destruction of property by means of fire, a federal felony that carries a mandatory minimum of five years and up to 20 years behind bars if convicted.

According to journalist Matt Foldi, Rinderknecht donated to the Biden campaign.

NEWS:

Jonathan Rinderknecht is a Joe Biden for President donor https://t.co/iM9pGKCKhZ pic.twitter.com/QkRVr8kh1P

— Matthew Foldi (@MatthewFoldi) October 8, 2025

“The complaint alleges that a single person’s recklessness caused one of the worst fires Los Angeles has ever seen,” said Acting U.S. Attorney Bill Essayli, vowing justice for victims who “lost everything.”

He had also allegedly used ChatGPT last July to create a "dystopian" image of a forest burning.

BREAKING: Federal investigators say the man responsible for the catastrophic Palisades fire, Jonathan Rinderknecht, asked Chat GPT last July to create this “dystopian” image that shows a forest burning on the left and people running from it. In the middle, people in “poverty.”… pic.twitter.com/8VKCFn6d48

— Matt Finn (@MattFinnFNC) October 8, 2025

According to a federal affidavit, the inferno traces back to an earlier blaze - the Lachman Fire - that broke out just after midnight on New Year’s Day 2025 near Skull Rock Trailhead.

Authorities say Rinderknecht, then driving for Uber on New Year’s Eve, appeared “agitated and angry” to passengers he picked up between 10:15 and 11:15 p.m. After his last drop-off in Pacific Palisades, he allegedly drove toward his old neighborhood, parked near the trail, and walked into the hills.

Investigators say cellphone data and surveillance footage place him at the scene as the initial fire ignited. Rinderknecht reportedly recorded videos on his iPhone, listened to a rap song whose music video showed things being lit on fire - and, minutes later, the Lachman Fire erupted.

The Fire That Wouldn’t Die

Though firefighters knocked it down that morning, the blaze smoldered underground, feeding on roots and dry vegetation. A week later, on January 7, fierce winds reignited it above ground, birthing the Palisades Fire - which tore through hundreds of acres, burned federal land, and destroyed homes worth tens of millions.

Officials say Rinderknecht called 911 multiple times that night but initially couldn’t connect because of poor cell service. When he finally did, he was already leaving the area - and even passed fire engines rushing toward the scene before doubling back to film the chaos.

Caught in His Own Lies

Weeks later, when questioned by investigators, Rinderknecht allegedly lied about his location during the fire’s start. Phone records showed he was standing within 30 feet of the blaze when it began - far closer than he claimed.

ATF Special Agent in Charge Kenny Cooper said his agency led the complex probe “to provide answers to this community” after “the horrific loss of life and property” that followed.

Rinderknecht made his first court appearance Wednesday in the Middle District of Florida. Federal prosecutors said the case underscores how a single act of malice can unleash catastrophic destruction - and vowed to hold the suspect accountable.

As for Pacific Palisades, residents are still rebuilding nearly a year later - haunted by the memory of a fire that started with one man, a spark, and a night gone horribly wrong.

*  *  * LIBIDO // ENERGY // STAMINA *  *  *

Tyler Durden Wed, 10/08/2025 - 12:47

Waste Of The Day: Illinois Corrections Employees Exploit Vacation-Overtime Loophole

Authored by Jeremy Portnoy via RealClearInvestigations,

Topline: Overtime pay is meant for employees working more than eight hours per day, but the Illinois Department of Corrections has found a way to circumvent that rule. Employees are using paid time off to stay home during work hours and then coming in later the same day to work overtime, according to a report from the state auditor released on Sept. 23. 

Key facts: Employees are more than happy to gain extra overtime hours and earn 1.5 times their regular salary, but the practice of “shift swapping” violates the Department of Corrections’ training manual, in the opinion of the state auditor. The department gets billed for overtime twice: first to pay an officer to cover for the employee on paid leave, and then again when the employee on leave returns later in the day. 

Auditors reviewed the 20 highest overtime earners from two of Illinois’ largest prisons. They found 150 times where an employee used an entire days’ worth of paid leave and also worked overtime the same day. 

The audit says that the Department of Corrections spent $151.7 million paying for nearly 3 million hours of overtime in 2024, but it’s unknown how much money individual employees earned in overtime. The audit does not specify, and the Illinois Comptroller did not separate base salary from overtime earnings in response to Open the Books’ open records request for employee compensation. 

Open the Books’ records do show that the highest-paid employee in the Corrections Department last year was Jermiagh Daly, who made $360,790. Another 107 people made more than $200,000. 

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com.  

Supporting quote: The Department of Corrections disagreed that shift swapping violates state policy because they are required to find volunteers for overtime hours before forcing any other employee to work overtime.  Otherwise, it would be a “violation of the collective bargaining agreement and would result in a higher cost to the State,” the department claimed in its response to the audit. 

Summary: Private companies can pay their employees however they like, but the government has a responsibility to field a workforce that is the most efficient for the taxpayers it serves. 

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com 

*  *  * Handy filter tested to remove up to 99.99% of contaminants, including Radon

Tyler Durden Wed, 10/08/2025 - 12:10

Procrastination pays!

I don’t know how these Amazon Prime sales work, but there is apparently 14 hours left to purchase the hardcover edition of “How Not to Invest: The ideas, numbers, and behaviors that destroy wealth―and how to avoid them,” at a 36% savings for $21.19.

I have been pushing the book these months because 1) I am really proud of it; and 2) I know it will make anyone who reads it a better investor.

Tick tock! You have half a day to not only save a few bucks but become a much better steward of your own capital!

 

 

 

The post “How Not to Invest:” Amazon Prime Sale 36% Off appeared first on The Big Picture.

50's Nostalgia Ain't What It Used To Be

By Michael Every of Rabobank

The RBNZ cut the OCR 50bps to 2.50% vs. 25bps expectations but in-line with our forecast. Notably, the RBNZ said they are “open to further reductions as required” and we are now forecasting a further 25bp cut to 2.25% in November. Some of the Bank’s comments also raise an eyebrow: “Domestic inflationary pressures have continued to moderate as projected, giving the Committee more confidence that inflationary pressures are contained. Global inflation has continued to decline through 2025. Inflation is especially low throughout Asia, and negative in China. Headline inflation in the US has increased, but evidence suggests that pass-through of tariffs to consumer prices has so far been weaker than expected. To date, there is little evidence of a material impact of tariffs on the prices of New Zealand’s imports or exports.” They’re right on Asia, if one overlooks food prices; the jury is out on the US, but they are echoing Fed new-boy Miran; and NZ hasn’t imposed any tariffs and a tariff on its exports couldn’t be inflationary for them anyway.

The EU raised steel tariffs to a Trumpian 50% level over a sharply reduced quota threshold as Bloomberg notes “The EU is trying to convince the US to lower its rate for EU steel and jointly target China instead, with the EU industry commissioner saying the EU shares the same industrial agenda as the US.” Yet does the US care as long as Europe already echoes its tariffs vs China?

In broader geoeconomics, US lawmakers are pushing to expanded chip export curbs on China, where a bipartisan Congressional panel just urged widened controls on chip tools and tighter coordination with US allies amid fears that the Trump White House is easing tech limits (SCMP). Will Europe belatedly follow suite on that front too in the areas it contributes to chipmaking?

It’s argued the US, in allowing preferential tariff access for some African countries to expire, is “pushing Africa further into China’s orbit’ (SCMP) - albeit as importers from it not exporters to it, at least not of textiles anyway.

Moreover, the Business Standard notes ‘From oil to pistachios: How barter trade is reshaping global commerce.’ That’s a dollar-priced but dollar-dodging scheme referred to here for years now, and underlined by recent Bloomberg exposes on how China is buying oil and metals from Iran in exchange for construction contracts and cars. Sanctions can’t do anything about it: stronger economic, or non-economic, statecraft tools would be required from the US. Relatedly, China is adding 11 new oil reserve sites in 2025 and 2026 - “because markets” obviously.

That’s as Congress also urged the White House to preserve stability in the Indo-Pacific and to “curb China’s Taiwan game plan”; the New York Times reports that Washington law firm Williams & Connolly was hacked by China as part of a larger campaign aimed at US law firms; Ukraine said it expects to get a slow drip of US Tomahawk missiles that won’t be used for deep strikes yet, but the longer Russia refuses to come to the table, the more they will get and the further into Russia they will be allowed to hit; National review warns ‘Brazil’s Leftist President Is Giving China a Foothold in America’s Backyard’; and Indian PM Modi praises Putin at the start of UK PM Starmer’s state visit, which Bloomberg describes as an “awkward note.”

50-50 is one way to read the news from the Middle East, where the Israeli PM’s office reports progress in cautious optimism over talks with Hamas, but some sources have it that the group is refusing to release hostages first as per the deal’s terms, insisting on Israeli withdrawal beforehand, and has named prisoners it demands released in exchange which Israel can’t accept.

Regardless, the Financial Times’ op-ed from Martin Wolf, based on somebody else’s work, argues ‘Trump’s tariffs won’t deliver many jobs’ as “Nostalgia is not a strategy: the past cannot return.” Ironically, as national security concerns soar, it’s the recent free trade past that likely can’t return for neoliberal/neoclassical thinkers who can ‘prove’ how few jobs balance on the head of any policy pin that pricks their ideological bubble.

Indeed, the op-ed ignores key arguments in a contested intellectual space: there are second and third order effects static models don’t capture; onshoring via automation (as with US firm Sharpie) is an economic benefit; and countries who successfully employed neomercantilism (not all, to be clear) gained jobs. Yet nostalgia for “because markets!” in the FT op-ed page lingers given it promised, but months later still can’t deliver, an alternative way to structure the global economy that doesn’t have what it admits are vast, destabilising imbalances in trade and capital flows, and in equality.

On which note, in the US, there is still no light at the end of the tunnel regarding the government shutdown, but Congress seems united against Trump's shutdown back-pay threat that nobody will get the cash for days work missed so far.

As even a former French prime minister calls on President Macron to quit to end France’s crisis, which would trigger a presidential election that opposition leader Le Pen currently couldn’t contest as she is still in a court battle on that front, a possible way out being floated is France abandoning its planned pension reforms to placate socialists in parliament. Yet would that risk swapping a political crisis for a financial one? ‘What is happening in France may not stay in France, from Mohammad El-Erian, again in the FT, argues “Bond markets are losing patience with political paralysis.”

Yet ECB President Lagarde just re-upped her June argument that the Euro must become a key global reserve currency - right as Europe hits a major political crisis; is in a geopolitical one; is debating using Russia’s frozen FX reserves for Ukraine, scaring off Global South capital; sees whispers of (further) ECB intervention in bond markets; and has adopted a 50% steel tariff. "We are innocent bystanders of policy decisions made in Washington and of portfolio allocation decisions made worldwide, which we don’t have much influence over," Lagarde said in Paris. "It is not a sustainable position. We cannot remain a passive safe haven, absorbing the shocks created elsewhere. We need to be a currency that shapes its own destiny." There would be global agreement on the “bystanders” part, not so much on the rest - or at least not without actions that run counter to all Europe’s liberal world order instincts. What odds will the market give of Lagarde succeeding in making a European currency matter globally again in a contested geopolitical environment: 50-1?

Over the Channel, Tory party Shadow Justice Secretary Jenrick is “accused of fuelling ‘toxic nationalism’ with Birmingham claims”, says the Guardian; yet ‘Grassroots Tories want pact with Reform, poll finds’, claims the Telegraph. Ceteris paribus, that would deliver around 50% of the UK vote, all but guaranteeing a Farage-led government with a large working majority. Then what? That’s still a hypothetical for now, but one markets may start to take more seriously ahead.

In the meantime, Adam Tooze is arguing ‘Britain needs a ‘whatever it takes’ moment’. Yet if the BOE goes MMT with markets in this mood, and with the UK running a vast trade deficit, how does that pan out for Sterling and the long end of the curve? Or, if the whole yield curve is ‘whatever it taken’ by the BOE, just for Sterling? Indeed, how does such a radical policy step work without a matching UK industrial policy and tariffs, which in turn requires an energy policy and an overarching geopolitical strategy re: trade blocs, etc? One sees why Martin Wolf prefers his own patent brand of nostalgia – it’s far easier to digest.

Tyler Durden Wed, 10/08/2025 - 11:30

Could AI's Growing Thirst For Water Usher In Localized Resource Wars 

In the era of artificial intelligence, water availability is poised to become a top concern for developers, just as low-cost, reliable electricity and grid connection delays have become significant issues. These data centers consume massive quantities of water daily to cool next-generation AI servers that, with each new chatbot iteration, demand increasing amounts of power. This rising energy demand has rendered open-air cooling systems obsolete, pushing liquid cooling technologies to the forefront.

We first identified the stunning water consumption problem of data centers at the start of the year, as well as penned a note over the summer about a "chilling opportunity" in data center liquid cooling after UBS forecasted that thermal loads could exceed 200kW to 1,000 kW per rack by the end of the decade. This means air cooling is quickly becoming obsolete as new chatbots demand higher compute power, and therefore more advanced AI chips, driving higher demand for liquid cooling technologies.

The pace of data center development is accelerating, as we previously pointed out in our discussion of the "circular economy" of AI, calling it, quite aptly, a stunning "circle jerk"... 

... that has ushered in an unprecedented era of Big Tech CapEx to build out AI infrastructure. 

Notably, data centers are surpassing office construction spending and are coming under increased scrutiny for their impact on power grids and rising electricity costs.

Now that the backdrop has been explained, and data center buildouts are set to continue for years to come, ZeroHedge readers have already been well-informed about the urgent need for power grid upgrades. The other critical resource needed to keep these data centers running is the availability of fresh water for cooling.

Already, many data center developers tend to choose sites with low energy costs, even in drought-prone regions, intensifying stress on local water tables. 

Stanford hydrologist Newsha Ajami told The New York Times that "water is an afterthought" for Big Tech firms building out data centers, which rely on local governments to solve shortages later.

As we mentioned earlier, every new iteration of a chatbot involves the need for more and more compute, that forces data centers to source the latest and greatest AI chips, in turn, means server racks demand higher and higher power consumption, with air cool technoligies no longer able to do the job, liquid cooling is in high demand and will be well into the 2030s. 

This growing demand for water has already strained local water tables across various communities nationwide, like in Texas, Arizona, and Colorado. The NYT noted that data center expansion has been linked to localized droughts and new battles over water rights. 

NYT interviewed Beverly Morris in Newton County, Ga, whose well ran dry after Meta broke ground on a $750 million data center. Morris' home is located about 1,000 feet from the new data center. 

This leaves us with a Morgan Stanley report that forecasts AI data centers will consume around 1,068 billion liters of water annually by 2028, an 11 times increase from 2024 levels. 

Stunning. 

"Water is as critical to AI as power - and while solutions to manage water consumption are already emerging, this remains an underappreciated theme," a team of MS analysts led by Ehsernta Fu wrote to clients early last month. 

Where are the data centers?

The key takeaways of the report reveal that water consumption and its impact on local water tables will become a major point of debate. If people are already up in arms over soaring utility bills, just give it a few more years and water shortages will almost certainly be the next issue everyone is talking about:

AI's Expanding Water Consumption Footprint. We expect AI data centers to drive annual water consumption for cooling and electricity generation to approximately 1,068 billion liters by 2028 (our base case) – an 11x increase from 2024 estimates (which equates to a more than eightfold increase in power demand). While the water consumption by data center cooling is well-recognized, its indirect consumption via electricity generation is significant but underappreciated. Beyond direct operations, AI's' scope 3' water footprint includes semiconductor manufacturing, where facilities can consume up to five million gallons of ultrapure water daily, underscoring the industry's reliance on water-intensive processes.

Water consumption is an evolving topic, whereas our estimates depend on assumptions around water consumption factors, water intensity, penetration of cooling technologies, and regional energy mix, etc., all of which may shift as operations adopt more efficient solutions in future. To account for this uncertainty, we present three scenarios factoring in different levels of assumptions. Under these scenarios, AI's water consumption could range between 637bn liters to 1,485bn liters per annum by 2028e.

Water Stress is a Localized Risk. While AI's total water use may appear modest on a global scale, its impact is highly localized. Over half of the world's leading data center hubs are situated in regions already facing 'medium basin physical risk'. These vulnerabilities are mirrored in secondary markets and growth pipelines. The recent example of Tucson, Arizona's rejection of Amazon-backed Project Blue shows that governments at all levels are intervening to safeguard water resources.

Regulatory Landscape: From Restrictions to Incentives. The regulatory landscape is evolving from reactive restrictions to proactive incentives and standards. Jurisdictions such as California, Singapore, and the EU are introducing tax credits, disclosure mandates, and performance benchmarks to promote water-efficient technologies

Investment Framework for AI Water Consumption. For investors, this underappreciated theme presents three strategic avenues:

1. Investing in Enablers: This includes liquid cooling solutions for AI hardware, as well as water recycling and treatment technologies. We identify 17 stocks (of which 9 are OW-rated), including AVC, Vertiv, Johnson Controls and Toray Industries.

2. Renewable Energy Players: These offer indirect exposure to the reduction of off- site water consumption via electricity generation. We screened 54 stocks with ≥50% revenue/capex exposure (of which 21 are OW-rated).

3. Companies with Strong Water Stewardship: We identify key indicators by hyperscalers or semiconductor foundries to assist investors in gauging companies' water stewardship.

Already, data center electricity consumption on outdated and fragile grids has sent power bills soaring, especially across the Mid-Atlantic area. What residents in these areas must also understand is that these resource-hungry AI server racks powering chatbots are now coming for the fresh water beneath their land. 

Developers are already reporting that water availability is slowing down buildouts. At the top of the list is local power constraints. 

This might usher in an era of localized resource wars. 

ZeroHedge Pro Subs can access the full Morgan Stanley note - complete with over 40 detailed exhibits and charts - in the usual place.

*  *  *

Tyler Durden Wed, 10/08/2025 - 11:10

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 4.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 3, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 18 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 14 percent higher than the same week one year ago.

“With mortgage rates on fixed-rate loans little changed last week, refinance application activity generally declined, with the exception of a modest increase for FHA refinance applications,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Refinance volume remains somewhat elevated relative to levels of a month ago. Purchase activity declined by about 1 percent for the week but continues to show moderate growth on an annual basis, and stronger growth for FHA loans, favored by first-time homebuyers.

Added Fratantoni, “The ARM share increased to 9.5 percent last week from 8.4 percent the prior week. Our survey shows 5/1 ARM rates are averaging almost a percentage point below 30-year fixed rates, and this differential is leading more purchase and refinance applicants to consider ARMs."

on the road, no graphs this week!

Momentum From Trump-Putin Talks In Alaska Has Run Out: Kremlin

The Kremlin has expressed its view Wednesday that the positive momentum created in the wake of the August 15 meeting in Alaska between Presidents Trump and Putin has waned and come to an end.

Deputy Foreign Minister Sergey Ryabkov has stated bluntly that this momentum has now run out. His fresh words indicated Moscow's point of view that positive advancement toward peace and good-will was "largely exhausted".

According to Ryabkov, the "strong drive" to reach a resolution to the Ukraine conflict was undermined by Russia's adversaries especially in Europe, which are currently "pushing for a war to the last Ukrainian."

The talks in Anchorage did not produce a major breakthrough; however, both leaders at the time described them as productive with the White House saying the meeting offered "a glimmer of hope for lasting peace."

Ryabkov Wednesday continued by saying "This is the result of the destructive actions primarily by Europeans, which we speak about openly and directly."

Newsweek draws the following observation, calling this a significant blow for Trump:

The remarks are a blow for Trump, who has tried mostly through diplomatic means to bring an end to Russia's ongoing invasion. He has directly engaged with Putin, despite concerns from Kyiv and NATO allies about perceptions that Moscow was being rewarded for its aggression after its years-long isolation by the West. Most of Europe wants to take a hard line on Russia.

But the Kremlin has also put some blame on Washington as well, particularly in the wake of the White House indicating it's actually mulling the approval of long-range Tomahawk missiles for Ukraine.

Trump has said he has "sort of made a decision" while decrying escalation - seen by many as an indicator that he's leaning against sending the missiles.

Russian Foreign Ministry: The possibility of ending the war in Ukraine, which emerged after the meeting between Trump and Putin, has been exhausted. pic.twitter.com/QznJ18P1Fq

— Polymarket Intel (@PolymarketIntel) October 8, 2025

Ryabkov said of this matter in his comments that such a move "would mark a significant, one might even say qualitative, change in the situation," but still asserted that this wouldn't impact Russia's "determination to achieve our stated goals."

"I hope that those who are pushing Washington toward such decisions fully understand the gravity and depth of the potential consequences," the deputy foreign minister told state media. "We, of course, call on the US leadership and the American military to approach this situation soberly, sensibly and responsibly."

Tyler Durden Wed, 10/08/2025 - 10:50

WTI Holds Gains After US Crude Production Hits Record High

Oil prices are higher this morning as investors brushed off oversupply fears, having digested a decision earlier by OPEC+ to restrain production increases next month.

“The disconnect continues between paper pricing and the predicted glut in global balances,” said Keshav Lohiya, founder of consultant Oilytics.

“We are back to an oil trading world where flat price is firmly in the $65 to $70 world.”

Additionally, prices shrugged off the crude build reported by API overnight.

API

• Crude +2.8mm

• Cushing -1.2mm

• Gasoline -1.2mm

• Distillates -1.8mm

DOE

• Crude +3.715mm

• Cushing -763k

• Gasoline -1.6mm

• Distillates -2.018mm - biggest draw since June

The official data confirmed API's sizable crude build (second week in a row) but products and stocks at Cushing saw inventory drawdowns...

Source: Bloomberg

With the addition of 285k barrels to the SPR, total crude stocks rose by the most in a month

Source: Bloomberg

US crude production rose once again, back to record highs, despite the trend lower in rig counts...

Source: Bloomberg

WTI prices held gains after the official data

Goldman Sachs reaffirmed its bearish outlook on oil, saying the global market faces an average daily surplus of about 2 million barrels from this quarter through next year. That will drag prices lower, with Brent expected to average $56 a barrel in 2026, analysts including Yulia Grigsby said in a note.

"The market is in price limbo, with one side bent towards a possible supply glut and the other believing the ramp-up will not be as fast as anticipated," said Emril Jamil, a senior analyst at LSEG Oil Research.

Price gains are however capped as fears of Russian supply disruption eased, with crude oil shipments holding close to a 16-month high over the past four weeks, the ANZ analysts said.

Tyler Durden Wed, 10/08/2025 - 10:42

Homeland Security: Arrests At Southern Border Hit 55-Year Low

Authored by T.J.Muscaro via The Epoch Times,

The 2025 fiscal year had the lowest number of arrests of illegal immigrants made on the U.S. southern border in 55 years, according to the Department of Homeland Security and Customs and Border Protection (CBP).

“We have had the most secure border in American history, and our end-of-year numbers prove it,” Homeland Security Secretary Kristi Noem said in an Oct. 7 statement.

“We have shattered multiple records this year, and once again we have broken a new record.”

The United States’ 2025 fiscal year ran from Oct. 1, 2024, through Sept. 30, 2025. During that time, authorities made 237,565 arrests along the southern border with Mexico. That total represented an 84 percent drop from the previous year—which had more than 1.5 million illegal immigrants apprehensions—and the lowest number recorded since 1970, which had 201,780 arrests.

“The latest number includes nearly four months of the Biden administration,” the Department of Homeland Security (DHS) said in the statement.

”Arrests fell sharply after the Biden administration imposed severe asylum restrictions in June 2024.

“They plummeted more after the Trump administration virtually eliminated asylum access and dispatched thousands of military troops to the border.”

According to the department, 72 percent of the total arrests occurred during the first 111 days of the fiscal year, which took place in the final months of the Biden administration, totaling 172,026 of the 237,565 arrests.

The year ended with authorities averaging 279 arrests a day in the month of September. While that number was up from the 204 arrests per day recorded in August, it was still down considerably from the nearly 1,800 border arrests per day recorded in September 2024.

That number is also 95 percent lower than the daily average maintained by the Biden administration, which was 5,110 from February 2021 through December 2024.

The previous four fiscal years averaged 1.86 million arrests.

During the Biden administration, thousands of those arrested ended up being released into the United States, including 9,144 releases in September 2024.

DHS touted in its statement that September 2025 was the fifth consecutive month with zero releases by Border Patrol.

These low arrest numbers are being accompanied by increased deportation figures. Just before the fiscal year came to a close, DHS announced that more than 2 million illegal immigrants had been deported, or had self-deported, since President Donald Trump began his second term. As of Sept. 23, an estimated 1.6 million voluntarily self-deported using the CBP Home App, and more than 400,000 were removed.

Tyler Durden Wed, 10/08/2025 - 09:40

The post Weakening Patent Monopolies: The Most Effective Wealth Tax appeared first on CEPR.

Signal, AfD Slam EU Chat Control As End Of Privacy In Europe

Via Remix News,

After Germany dropped its long-standing opposition to EU chat control, leading encrypted messenger Signal issued a dire warning about privacy in Europe, with the post going viral.

However, now European parties such as the Alternative for Germany (AfD) have joined in the criticism, with the party warning just before the EU Council vote that so-called “chat control” could end privacy entirely in Europe.

The protest from the AfD comes after Signal threatened to pull out entirely from Europe if the EU implements its surveillance plans. If Signal went through with such a move, it would be a major black eye for the EU, putting it on par with surveillance states like China.

Ruben Rupp, the digital policy spokesperson for the AfD parliamentary group, warned against “total surveillance under the guise of child protection.”

“What is being sold here is, in reality, a frontal attack on the fundamental rights of all citizens. Such a measure places the entire population under general suspicion,” Rupp said. He added that millions of innocent users would be spied on, and instead, the focus should be on harsher punishments for those who hurt or abuse children, not mass surveillance.

AfD politician Rupp wants Berlin to turn against the new spying powers that would be granted to the EU.

He said that “Germany can no longer duck away, but must vote against this surveillance madness together with freedom-oriented states like Poland and Austria. Freedom and privacy are not negotiable goods.”

The upcoming vote, scheduled for Oct. 14, would see the EU Council vote on the “Regulation on the Prevention and Combating of Child Sexual Abuse,” also known as the CSAM regulation for short.

One of the major countries long opposed to such a measure has been Germany. What the law would actually do would allow automated searches of all private messages across the entire EU, including messages, photos, and videos, in order for the EU to look for child abuse or child pornography materials. Most importantly, these messages would be accessible to the EU even if they were encrypted.

On the surface, the EU says this is necessary to view all data flow in the European Union, including all end-to-end encrypted communications. However, data protection advocates indicate that the move would lead to digital mass surveillance on par with China.

“Under the guise of protecting children, the latest Chat Control proposals would require mass scanning of every message, photo, and video on a person’s device, assessing these via a government-mandated database or AI model to determine whether they are permissible content or not,” writes Signal in a call to action.

Signal wrote a press release opposing the EU chat control plan, which gained 4 million views on X alone.

“We are alarmed by reports that Germany is on the verge of a catastrophic about-face, reversing its longstanding and principled opposition to the EU’s Chat Control proposal which, if passed, could spell the end of the right to privacy in Europe,” wrote the messaging app non-profit, which is used by hundreds of millions of people.

We are alarmed by reports that Germany is on the verge of a catastrophic about-face, reversing its longstanding and principled opposition to the EU’s Chat Control proposal which, if passed, could spell the end of the right to privacy in Europe. https://t.co/015qmQnIS2

— Signal (@signalapp) October 3, 2025

Signal further warned in its press release that the EU’s proposal “is a horrifying idea for many reasons. First, the technical consensus is clear. Scanning every message–whether you do it before, or after these messages are encrypted–negates the very premise of end-to-end encryption. Instead of having to break the gold-standard Signal encryption protocol to access someone’s Signal messages, hackers and hostile nation states only need to piggyback on the access granted to the scanning system. This threat is so severe that even intelligence agencies agree it would be catastrophic for national security.”

There are further fears that the program could be rolled out to protect children, but over time, it could be expanded to censor political speech and arrest or punish political opponents of the ruling liberal establishment in Europe. Notably, users have been prosecuted for sharing memes, political content, and “off-color” jokes, oftentimes in private groups, such as the case of Dries Van Langenhove in Belgium.

Read more here...

Tyler Durden Wed, 10/08/2025 - 09:15

Futures Rise As Global Debasement Trade Sends Gold Over $4000

Futures are higher again, reversing Tuesday's modest Oracle-led decline, and are led by small caps despite additional multi billion tech investment headlines. As of 8:00am ET, S&P 500 futures were 0.1% higher, set for their 8th gain in the past 9 days, with Nasdaq 100 contacts +0.2% with Mag7, Semis, and AI-themed plays all rallying off the investment news. In premarket trading, AMD extended gains after an explosive rally following its multibillion-dollar AI deal with OpenAI. Tesla advanced after it unveiled a cheaper version of its top-selling electric vehicle. Cyclicals poised to outperform Defensive even as Ray Dalio warned that the AI-driven market rally “feels frothy.” Of course, it is all now just a debasement trade with everyone and their mother dumping fiat and buying hard currencies, sending gold above $4,000 an ounce for the first time, and silver above $49. The dollar gained for a third day against major peers and is now 2.5% off its 52-wk low as 96.00, while Treasury yields dipped. In commodities, Energy and Precious metals are the stand outs as gold breaks above $4k. The Administration said ~$13bn in farming aid may be rolled out soon. Today we get the FOMC minutes at 2pm; the Federal Budget Balance will likely be delayed due to the government shutdown. 

In premarket trading, Mag 7 stocks are mixed (Tesla +0.3%, Nvidia +0.6%, Amazon +0.4%, Microsoft +0.1%, Meta Platforms -0.1%, Alphabet -0.1%, Apple -0.1%).

• Precious metals miners climb after spot gold rallied past $4,000 an ounce for the first time amid concerns over the US economy and a government shutdown.
• AST SpaceMobile (ASTS) rises 9% after announcing a pact with Verizon to provide direct-to-cellular AST SpaceMobile service when needed for Verizon customers starting in 2026.
• CervoMed (CRVO) soars 16% after announcing that its Phase 2b trial demonstrated neflamapimod’s potential as a treatment for dementia with Lewy bodies.
• Confluent (CFLT) gains 17% as Reuters reports that the data-infrastructure company is exploring a sale after receiving acquisition interest.
• Fair Isaac Corp. (FICO) falls 3% after Equifax said its VantageScore 4.0 service will offer mortgage credit scores at $4.50 through the end of 2027.
• Jefferies Financial Group (JEF) slips nearly 2% after it said it’s in communication with First Brands Group’s advisers to determine the impact of First Brands’ bankruptcy on Leucadia Asset Management’s Point Bonita Capital. Leucadia Asset Management is owned by Jefferies.
• Joby Aviation (JOBY) is down 10% after offering $500 million in shares via Morgan Stanley.
• Lantheus Holdings (LNTH) slips 2% following a downgrade to neutral at Goldman Sachs, which sees less certainty regarding the medical-equipment company’s outlook.
• Penguin Solutions (PENG) shares drop 23% after the company’s FY26 sales guidance range fell short of the consensus of analyst estimates. The company, which helps enterprises to build out AI infrastructure, said the guidance range is wider than usual to “reflect a broader set of potential outcomes.”
• QuantumScape (QS) rises 5% after the maker of lithium-metal batteries entered a joint-development agreement with Murata Manufacturing Co.
• Rocket Lab (RKLB) rises 6% after the company said it signed a contract with iQPS to launch three more satellites for the Japanese compan

In corporate news, Salesforce told customers it won’t pay a ransom demand from a hacker who claimed to have stolen a large amount of client data and threatened to publish it. xAI is raising more financing than initially planned, tapping backers including Nvidia to lift its ongoing funding round to $20 billion, according to people with knowledge of the matter.

Concerns have been growing that $16 trillion surge in the S&P 500 from its April lows had gone too far. Tuesday’s drop came amid mounting chatter about lofty valuations around artificial intelligence, with some market participants seeing an echo of the excesses that led to the dot-com crash 25 years ago. On Tuesday, investors turned cautious after the Information reported that Oracle may post a disappointing profit margin for the latest quarter, spurring a selloff in tech shares.  Still, many investors fear missing out on further gains, with the upcoming earnings season set to provide clues on the rally’s sustainability.

“There are worrying signals on the AI rally, which reminds me of 1997 when I started my career,” said Gilles Guibout, head of European equities at Axa Investment Managers. “The bubble burst in 2000 but those managers who had refused to follow the rally, rightfully expecting it to go pop, lost a lot of money for their clients. There’s a real risk to get out of the AI trade too early; what you need to do is stay invested but with your finger on the exit button and stay diversified.”

And with nobody willing to sell first, equity volatility remains deeply subdued, despite a growing list of potential cracks beneath the surface. According to Bank of America, S&P 500 three-month realized vol sits near 8.5%, its lowest decile since 1990. 

Catching up to our discussion on the massive AI circle jerk, Bloomberg’s Big Take today highlights how a wave of deals involving Nvidia and OpenAI are escalating concerns that an increasingly complex and interconnected web of business transactions is artificially propping up the AI boom. Still, Goldman strategist Peter Oppenheimer said it’s too early to be worried about a bubble. The rally in tech has been accompanied by robust earnings growth, while previous bubbles were driven mainly by speculation. And Jamie Dimon said that JPMorgan’s investments in AI are paying off, with cost savings matching the $2 billion annual spend on developing the technology.

As noted last night, the global currency debasement trade pushed Gold above $4,000 an ounce for the first time ever, with silver rising above $49 for the first time since 2011 and on pace for a new record high.

Europe’s Stoxx 600 benchmark climbed 0.6%, on track for another record close, as the basic resources sector jumped more than 1%. The French CAC 40 outperformed most of its regional peers after the outgoing PM expressed optimism that an accord can be reached to allow the formation of a new government. Lloyds Banking Group Plc led banks higher after a favorable ruling on the cost of disputed car loans. European stocks were also buoyed by moves to resolve France’s budget impasse. The country’s CAC 40 equity index rose as much as 0.8% and bond yields fell. The European technology sub-index, however, underperformed. BMW AG slumped, dragging peers lower, after the German luxury-car maker cut its financial guidance on weak sales in China and tariff-related costs. Here are some of the biggest European movers today:

• Umicore shares rise as much as 8%, to their highest since June 2024, after the company announced it will sell permanently tied-up gold inventories, strengthening its balance sheet
• Marston shares advance as much as 11%, the most in a year, following a trading update from the UK pub company which prompts Peel Hunt to increase its pretax profit estimates
• Addnode gains as much as 13% following an upgrade to buy from hold at Pareto Securities, with the Swedish IT group now deemed to be trading back at attractive levels
• BMW shares decline as much as 7.4% after cutting its guidance for the full year due to weak volume growth in China and costs related to the implementation of tariffs
• Aryzta shares fall as much as 7.9%, the most in three years, after the Swiss baker issued a profit warning and said it replaced CEO Michael Schai with immediate effect
• Aurubis shares drop as much as 5.7%, retreating from Tuesday’s record high close, after the copper smelting company released an update ahead of its capital markets day
• Aixtron shares fall as much as 8.9%, the most since April, as analysts at JPMorgan forecast that a slower recovery in the firm’s core markets will add near-term risk to estimates
• Serica Energy shares fall as much as 14% after the company said an issue with the flare system on Dana Petroleum-operated Triton FPSO resulted in a temporary suspension of production from Sept. 30
• Unite Group shares fall as much as 6.1%, to the lowest in more than five years, after Morgan Stanley called the latest trading update of the student accommodation provider disappointing

Meanwhile, the US / EU trade deal is being questioned by the EU as the US makes new demands, calling into question the Trump / Van Der Leyen agreement. 

Earlier in the session, Asian stocks declined, driven by losses in technology shares on fresh concerns over the justification for the artificial intelligence boom. The MSCI Asia Pacific Index fell as much 0.8%, the most since Sept. 26, with TSMC, Alibaba and SoftBank among the biggest drags. Hong Kong led losses as the market reopened after a holiday, while Taiwan, Singapore and Malaysia also saw declines. Vietnam’s benchmark briefly surged as much as 3% before paring much of the gain, after FTSE Russell upgraded it to emerging market status from frontier. Elsewhere, New Zealand’s key stock index extended gains after the central bank cut interest rates more aggressively than expected and said it’s open to further reductions. Traders also await a decision in Thailand, where the central bank is expected to deliver its fourth interest rate cut of the year.

In FX, the euro falls 0.3% amid a broad dollar rally. The kiwi is one of the weakest of the G-10 currencies, falling 0.6% after the RBNZ cut interest rates by 50 bps.

In rates, Treasuries bull-flattened in the early US session with long-end yields richer by around 2.5bp on the day, following similar price action in European bonds. With US front-end yields little changed, 2s10s and 5s30s spreads are flatter by 2bp-3bp; 10-year near 4.1% is 2bp lower on the day, with UK’s keeping pace and Germany’s outperforming after auctions in both markets. French bonds advanced during London morning after caretaker prime minister struck a note of optimism on the budget before starting a final day of talks to form a government, narrowing the 10-year French yield spread with Germany by 3 bps to around 83 bps. US session includes 10-year note auction and minutes of September FOMC meeting. 

In commodities, gold is up over $50, having crossed $4,000/oz for the first time earlier today. WTI crude futures rise 1% to $62.30 a barrel. 

The US economic calendar calendar, still subject to delays from the ongoing government shutdown, includes FOMC meetings minutes release at 2pm. Fed speaker slate includes Musalem (9:20am), Barr (9:30am, 5:45pm), Goolsbee (10am, 7:15pm) and Kashkari (3:15pm, 4:30pm)

Market Snapshot

• S&P 500 mini +0.1%
• Nasdaq 100 mini +0.2%
• Russell 2000 mini +0.4%
• Stoxx Europe 600 +0.6%
• DAX +0.4%, CAC 40 +0.7%
• 10-year Treasury yield -1 basis point at 4.11%
• VIX -0.3 points at 16.97
• Bloomberg Dollar Index +0.2% at 1211.81
• euro -0.4% at $1.1613
• WTI crude +1.4% at $62.6/barrel

Top Overnight News

• Trump’s farm aid plan (which is expected to be $12-13B initially and potentially as large as $50B over time) is delayed by the shutdown. officials were said to have readied nearly USD 13bln from an internal USDA fund, although there is no final decision on how much will be used for farm aid, or when: Politico
• American farmers are in “panic” mode as Chinese soybean buyers stay on the sidelines (“we’ll see the bottom drop out if we don’t get a deal with China soon”). WSJ
• US Senate leaders were reportedly trying to lock in votes on Tuesday evening with a variety of options, including the noms bloc, privileged resolutions (maybe Canada tariff disapproval), and the duelling CRs again: Punchbowl.
• More than 250,000 federal workers missed paychecks as the shutdown entered the second week, with 2 million more at risk. Meanwhile, bond traders are hedging against a wider range of Fed outcomes amid a data blackout. BBG
• Elon Musk’s xAI is raising $20 billion, including $2 billion from Nvidia, to finance AI chips for its Colossus 2 project, people familiar said. The deal will be split between equity and debt, allowing xAI to rent Nvidia processors for five years. BBG
• China saw a spike in travel over the Golden Week holiday, but consumer spending was fairly muted. FT
• Japan's likely next premier Sanae Takaichi is already facing criticism from her ruling party's long-time coalition partner, a rift that could delay or, in an extreme scenario, jeopardize her premiership. RTRS
• EU officials see new US trade demands as potentially threatening a recent deal and risking renewed conflict, people familiar said. Washington wants talks on the EU’s legislation, raising concerns over regulatory autonomy. BBG
• Caretaker French Prime Minister Sebastien Lecornu struck a cautiously optimistic tone on Wednesday, saying a deal could potentially be reached on the country's budget by year-end, making the risk of a snap election more remote. RTRS
• Prolonged funding pressures in US money markets, just as bank reserves held at the Federal Reserve are dwindling, suggest the central bank may be getting closer to ending the unwinding of its massive portfolio of securities. BBG

Trade/Tariffs

• EU sees new US trade demands hollowing out deal struck by US President Trump, according to Bloomberg citing sources. Earlier in the month, Trump admin reportedly sent the EU a fresh proposal for implementing “reciprocal, fair and balanced” trade.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed with demand hampered following the negative handover from the US, where stocks snapped a 7-day win streak as small caps underperformed and with sentiment weighed on by AI-profitability concerns. ASX 200 was rangebound as gains in healthcare and the top-weighted financial industry were offset by underperformance in Tech and Consumer sectors. Nikkei 225 lacked conviction and oscillated around the 48,000 level amid a weaker currency and soft wages data. Hang Seng retreated on return from the holiday closure with tech stocks heavily represented in the list of worst performers, while mainland participants were still away but are set to return from the National Day Golden Week celebrations tomorrow.

Top Asian News

• RBNZ cut the OCR by 50bps to 2.50% vs mixed views between a 25bps and 50bps cut, while the committee remains open to further reductions in the OCR as required for inflation to settle sustainably near the 2% target mid-point in the medium term. RBNZ said higher near-term inflation could prove to be more persistent and that with spare capacity in the economy, inflation is expected to return to around the 2% target mid-point over the first half of 2026, but noted upside and downside risks to the inflation outlook. RBNZ Minutes revealed that the committee discussed the options of reducing the OCR by 25bps or by 50bps at the meeting, while it stated that the case for reducing the OCR by 50 basis points emphasised prolonged spare capacity and the associated downside risk to medium-term activity and inflation.
• Oxford Economics has brought forward their timing of the next BoJ 25bps rate hike to December from next year and have added another 25bps hike in mid-2026.
• Japanese Economy Minister Akazawa is expected to depart from his position, according to local reports via Mainichi newspaper.

Top European News

• French PM Lecornu to speak again at 19:00 BST
• French PM Lecornu said will present his findings to President Macron later this evening; said France must get a budget by year-end; talks so far showing a willingness to get this budget through by year-end. Sees possibility of dissolution of parliament as becoming more remote.
• French Socialist Leader Faure says the party cannot back the current budget plan, no guarantee that pension reforms will be suspended.
• UK ONS said there's an error in public finances data between Jan-Aug, citing HMRC error; VAT data error means public sector net borrowing in current and prior FY is a combined GBP 3bln lower. UK borrowing in the past five months of FY was GBP 2bln lower than previously thought.
• ECB's Rehn has warned there is a risk that inflation slows below the ECB's 2% inflation target, according to Bloomberg, citing the Karon Grilli podcast. There are downside inflation risks in sight over the next couple of years; cites EUR strength, stabilisation of wages and services inflation.
• ECB's Nagel said current monetary policy is appropriate; euro zone inflation close to 2% target, via Greek newspaper.
• ECB's Escriva said he cannot pre-empt direction of future policy move; inflation expectations are very much anchored ECB needs to be cautious. Outlook remains uncertain going forward. Wouldn't overemphasise a strong euro as a risk factor, European economy showing great deal of resilience. Trade disruptions from US are potentially inflationary. Inflation risks are very much balanced. Spanish housing supply lagging very much.
• BoE FPC Minutes: FPC decided to maintain the UK countercyclical capital buffer (CCyB) rate at 2% Risks associated with geopolitical tensions, global fragmentation of trade and financial markets, and pressures on sovereign debt markets remain elevated. Despite persistent material uncertainty around the global macroeconomic outlook, risky asset valuations have increased and credit spreads have compressed. There have been some notable credit defaults in the US automotive sector since the last meeting. A sudden or significant change in perceptions of Federal Reserve credibility could result in a sharp re-pricing of US dollar assets, including in US sovereign debt markets, with the potential for increased volatility, risk premia, and global spillovers.

FX

• DXY is up for a third session in a row with WTD gains thus far of 1.1%. It remains the case that the price action is not being driven by outright bullish calls on the USD but more a case of weakness elsewhere, mainly JPY and EUR, with NZD the latest of its major counterparts to take a stumble. If anything, the macro narrative surrounding the US remains a downbeat one as the government shutdown continues to drag on, delaying economic data releases and threatening a hit to domestic growth. DXY has ventured as high as 98.97 with focus on a test of the 99.0 mark; not breached since 5th August.
• EUR remains pressured vs. the USD and is just about holding onto a 1.16 handle after delving as low as 1.1607. French political turmoil remains a key part of the Eurozone macro narrative with PM Lecornu (also due to speak @ 19:00BST) set to meet with socialists, greens and communists in an attempt to form a coalition government. The likely price for Macron will be a left-wing PM, which could make the parliamentary arithmetic easier for passing a budget, given that the Socialist Party holds the most seats in the National Assembly. Aside from France, Germany saw further woeful data earlier in the session with German Industrial Orders falling well short of consensus and subsequently stoking concerns over a contraction in the domestic economy. In terms of price action, if 1.16 gives way in EUR/USD the next target comes via the 27th August low at 1.1573.
• JPY remains very much on the backfoot against the USD with USD/JPY having risen five handles since Takaichi's victory in the LDP leadership race. The move has been relentless this week given the market's view that the fallout of Takaichi will leader to a mix of looser monetary and fiscal policy. Subsequently, markets only assign a circa 25% chance of a cut this month vs. roughly 70% last week. Further reason for caution in expecting additional tightening from the BoJ was presented overnight via the August real cash earnings data, which printed a deeper-than-expected contraction. USD/JPY has climbed as high as 152.96 with focus now on a test of 153; not breached since February. If the pair begins to approach 155, given the velocity of the move, expectations of potential intervention will likely increase.
• GBP is a touch weaker vs. the USD but stronger vs. the EUR. At the risk of sounding like a broken record, in the absence of any tier 1 UK data, the macro narrative has failed to evolve beyond ongoing angst ahead of the November 26th Budget. BoE Chief Economist Pill is due to give remarks at 16:00BST. GBP/USD briefly tripped below Tuesday's low at 1.3391 before returning to a 1.34 handle.
• NZD is the laggard across the majors after the RBNZ's decision to opt for a deeper 50bps rate cut (views heading into the meeting were split between 25bps and 50bps). Additionally, the committee noted that it remains open to additional reductions. The minutes stated that the case for reducing the OCR by 50 basis points emphasised prolonged spare capacity and the associated downside risk to medium-term activity and inflation. Subsequently, has extended its descent on a 0.57 handle and hit its lowest level since April 11th.

Fixed Income

• USTs are trading firmer by a few ticks, following the positivity seen across global peers. Currently trading at the upper end of a 112-19+ to 112-25+ range. Nothing really driving sentiment today from a US perspective, but upside, which comes after the safe-haven related upside seen in the prior session. Now traders await a 10yr outing; as a reminder, the last sale was strong, receiving strong demand and a 1.3bps stop-through. FOMC Minutes (Sept) and a slew of Fed speakers will also be in focus, in a day which is void of key US data.
• Bunds are firmer today, in-fitting with the upside seen across peers. Upside today began into German data, before taking another leg higher on the release itself – an upward bias which has held throughout the morning thus far. To recap that German data in brief, Industrial Output printed well below expectations at -4.5% (exp. -1%), though the accompanying release highlighted some caveats; "The marked decrease may be explained, at least in part, by the combination of annual plant closures for holidays and production changeovers”. The upswing seen earlier in the year looks increasingly associated with US-tariff related front loading – following the data, ING suggests that there is now an increasing likelihood of another quarter of contraction for the German economy. Thereafter, the German auction was poor, but ultimately had little follow-through to price action.
• OATs are the relative outperformer today, as outgoing PM Lecornu aims to hold last-minute talks with opposition parties. To recap the situation in France, President Macron asked the PM to hold talks with the opposition parties, giving him a deadline until Wednesday evening. In a presser today, Lecornu said he will present his findings to Macron later this evening; overall, his comments leaned more positively, suggesting that the talks so far show a willingness to get this budget through by year-end. Moreover, Lecornu has suggested suspending President Macron’s pension reforms, which would be welcomed by those on the left. The outgoing PM will be speaking again at 19:00 BST. On the presser itself, some very marginal upticks were in OATs; the OAT-Bund 10yr spread has tightened from recent highs, currently trading around 83.6bps vs previous close at 86.15bps.
• Gilts are in the green alongside peers. Currently trading in a 90.69 to 90.83 range. UK press remains heavily focused on the looming Autumn Budget; most recently, the FT reported that Pimco and BlackRock have called Chancellor Reeves to build a larger buffer in the UK public finances in the November Budget to avoid years of uncertainty over tax and spending decisions. However, a factor boosting sentiment is the ONS revising down UK Government borrowing by GBP 2bln after a recent data error - which may alleviate some of the borrowing-related pressure the Chancellor faces. Today a strong 2029 auction, which saw a b/c of 2.92x had little impact on prices.

Commodities

• Crude benchmarks are trading slightly higher, extending on the prior day's high, despite worries of oversupply in the market with OPEC+ hiked production at its last meeting (albeit by a smaller than expected magnitude) and amid forecasts in the US that point to a record domestic oil output. WTI and Brent continued the late bid from yesterday’s session to form a peak at USD 62.45/bbl and USD 66.15/bbl, respectively, at the time of writing, before a dip towards USD 62.12/bbl and USD 65.88/bbl, respectively, as commentary from the Egypt talks remains positive. Note: EIA is continuing normal publication schedules and data collection.
• Spot gold has broken the USD 4k/oz mark, extending to a peak of USD 4039/oz and thus far remaining near ATHs. The surge in precious metals also comes as investors look to safe havens away from the dollar to protect against rising government debt burdens, geopolitical tensions and expectations of the dollar to continue lower.
• Base metals remain rangebound as China re-enters the market tomorrow. 3M LME Copper dipped to a trough of USD 10.68k/t before reversing to a peak of USD 10.78k/t as copper consolidates after a record weekly gain. Amid copper consolidation, there continues to be a growing consensus that copper still has further to go, with forecasts being revised higher towards USD 11.5-12k/t by the first half of next year due to supply disruptions and a continuing weaker dollar.
• US Private Energy Inventories Data (bbls) Crude +2.8mln (exp. +1.9mln), Distillate -1.8mln (exp. -1.2mln), Gasoline -1.2mln (exp. -0.9mln), Cushing -1.2mln.

Geopolitics: Middle East

• "There are outstanding issues among the negotiators in Egypt", according to Al Arabiya sources.
• Hamas said group positivity is needed to reach a deal, said list of hostages' names exchanged on Wednesday according to agreed numbers, according to a statement.
• "An Israeli security source told Sky News Arabia: Israel insists on not accepting any ideas outside the Trump plan", according to Sky News Arabia
• The atmosphere in the Sharm el-Sheikh negotiations appears to be "very positive", according to a correspondent at Sky News Arabia.
• Hamas leader tells AFP: "Optimism" dominates Gaza talks, via Sky News Arabia.
• Iran's Foreign Minister Araghchi denies reports that he's been in direct contact with US Envoy Witkoff including secret meetings in Doha or Muscat.

Geopolitics: Ukraine

• Russian Foreign Minister says maintaining Russia's obligations under the plutonium agreement with the US is no longer acceptable, via Tass.

US Event Calendar

• 7:00 am: Oct 3 MBA Mortgage Applications, prior -12.7%
• 2:00 pm: Sep 17 FOMC Meeting Minutes
• 2:00 pm: Sep Federal Budget Balance, est. 50b, prior -344.79b

Central Banks 

• 9:20 am: Fed’s Musalem Gives Welcoming Remarks
• 9:30 am: Fed’s Barr Keynote at Community Banking Research Conference
• 10:00 am: Fed’s Goolsbee Gives Opening Remarks
• 3:15 pm: Fed’s Kashkari Speaks at Center for Indian Country Development
• 4:30 pm: Fed’s Kashkari Hosts Fireside Chat with Senator Tina Smith
• 5:45 pm: Fed’s Barr Speaks on Community Development
• 7:15 pm: Fed’s Goolsbee Speaks at Payments Conference

DB's Jim Reid concludes the overnight wrap

Markets struggled to gain traction yesterday, posting a risk-off move as investors grappled with political uncertainty in France and the US government shutdown. So the S&P 500 (-0.38%) lost ground from its record high on Monday, and 10yr Treasury yields (-2.9bps) also fell back. That concern was clear on several fronts, and investor jitters about France’s debt trajectory pushed the Franco-German 10yr spread to 86bps, the biggest gap since January. Moreover,  spot gold prices have just risen above the $4,000/oz mark for the first time overnight, continuing its relentless rally that’s seen it rise more than 50% so far this year.

In terms of the latest from France, there’s been little sign of any progress being made following PM Lecornu’s resignation on Monday. As a reminder, President Macron gave Lecornu a deadline of tonight to reach agreement among the different political groups, but so far at least there’s been no compromise emerging. Indeed, yesterday there was mounting speculation about another legislative election being called. For instance on Polymarket, it’s suggesting there’s a 67% chance of another election being called, rather than a new PM being appointed, which is up from 49% as we went to press yesterday. And at one point yesterday evening, it even rose as high as 85%.

When it comes to the market reaction, French bonds have continued to underperform, pushing the 10yr spread over bunds up to 86bps. So that’s very close to its peak of 88bps last December when it became clear that former PM Michel Barnier was likely to lose the confidence vote. Indeed, that 88bps level hasn’t been exceeded since 2012, back when then-ECB President Mario Draghi pledged to do “whatever it takes” to save the euro, leading to a big confidence boost that helped spreads come down. To be fair, French equities fared relatively better yesterday, and France’s CAC 40 (+0.04%) stabilised after its Monday slump. However, banks continued to lose ground, including Société Générale (-1.88%), BNP Paribas (-1.15%) Crédit Agricole (-0.21%).

Of course, politics are very much in the spotlight elsewhere, as the US government shutdown shows no sign of ending. In terms of the latest, House Democratic leader Hakeem Jeffries said that proposals to extend the Affordable Care Act tax credits for a year were “a non-starter”. Meanwhile, Republican Senator Susan Collins of Maine told reporters on Monday that she was working on a plan to reopen the government, at least partially, in exchange for a deadline for a discussion on ACA subsidies. But the bigger picture is still concern about an extended shutdown that starts to have a more meaningful economic impact, and on Polymarket, there’s only a 25% chance given to the shutdown ending before October 15.

US equities struggled against that backdrop, and the S&P 500 (-0.38%) fell back after a run of 7 consecutive gains. In part, that was driven by a decline for Oracle (-2.52%), after a report from The Information said that their profit margins for cloud computing were lower than analysts’ estimates. So tech stocks struggled, and the Magnificent 7 (-1.25%) and the NASDAQ (-0.67%) also saw a decent decline. Autos (-4.37%) were the biggest laggard in the S&P, as Tesla (-4.45%) fell after their announcement of a less expensive version of their model Y car and Ford fell -6.1% after the WSJ reported that a plant fire in a New York state aluminum plant will increase costs and cause delivery disruptions. Meanwhile, the outperformers were among the more defensive sectors, with consumer staples (+0.86%) and utilities (+0.42%) both advancing.

As that was happening, Treasury yields fell across the curve, with the 10yr yield coming down -2.9bps on the day to 4.12%. That came as investors slightly dialled up the pace of Fed rate cuts over the months ahead, with 111bps priced in by December 2026, up +2.0bps on the day. Meanwhile, Fed speakers continued to strike a divergent tone. For instance, Fed Governor Miran remained dovish, saying that he was “more sanguine on the inflation outlook than a lot of other people are”. But Minneapolis Fed President Kashkari warned that “Some of the data that we’re looking at is sending some stagflationary signals”.

On that theme, the New York Fed’s latest Survey of Consumer Expectations found that near-term inflation expectations ticked higher in September. So 1yr inflation expectations ticked up to 3.4%, which is their highest since April, and 5yr expectations moved up to 3.0%, which is their highest since February. However, it’s still an open question what will happen with the US CPI report itself on October 15, as it’s a release that will also be affected by the ongoing government shutdown, just like payrolls was last Friday.

Back in Europe, there wasn’t too much happening outside of France, with most assets seeing little change. So the STOXX 600 (-0.17%) only posted a modest decline, alongside steady moves for the DAX (+0.03%) and the FTSE 100 (+0.05%). Similarly for bond yields, there wasn’t too much movement in absolute terms, with yields on 10yr bunds (-1.0bps), OATs (+0.3bps) and BTPs (-0.4bps) seeing little change. There also wasn’t much data, although German factory orders underwhelmed with a -0.8% decline in August (vs. +1.2% expected).

Overnight in Asia, things have been a bit more eventful this morning, with continued movements in Japanese markets after Sanae Takaichi’s election as LDP leader. For instance, the 10yr government bond yield (+1.4bps) has reached a post-2008 high of 1.69%, whilst the yen (-0.30%) has weakened overnight to 152.36 per dollar, its weakest level since February. Meanwhile, the Nikkei (-0.11%) has also lost ground after a run of 4 consecutive gains. That comes as data showed wage growth was softer than expected in August, with nominal wages up +1.5% year-on-year in August (vs. +2.7% expected). And in real terms, wage growth remains negative as it has throughout 2025, at -1.4% (vs. -0.5% expected). Otherwise, there’s been a mixed equity performance in Asia, with the Hang Seng (-1.07%) losing ground, alongside gains for the CSI 300 (+0.45%), the Shanghai Comp (+0.52%) and the KOSPI (+2.70%).

Elsewhere, the main surprise has come from New Zealand overnight, where the Reserve Bank of New Zealand delivered a surprise 50bp cut, larger than the 25bp move expected, which takes their Official Cash rate down to 2.5%. So that’s led to a depreciation in the New Zealand dollar, which has weakened by -0.96% against the US dollar overnight, making it the worst-performing G10 currency. The statement said that the committee “remains open to further reductions”, and New Zealand’s 10yr yield (-4.6bps) has fallen to a 12-month low in response.

Finally, the other big headline overnight has been that spot gold prices have risen through the $4,000/oz mark for the first time. The latest moves come with treasury yields moving lower and the ongoing shutdown, but gold prices have been moving higher throughout the year, having risen by more than +50% since the end of 2024. So as it stands, it remains well on track for its strong annual increase since 1979, when the oil shock that year led to a huge surge in inflation. As a reminder, Marion on our team published an update yesterday (link here) on the future of central banks holding both gold and Bitcoin in their balance sheets by 2030.

Tyler Durden Wed, 10/08/2025 - 08:44

Note: CR is on vacation until Oct 21st.
This is the 21st year I've been writing this blog!
Starting in January 2005, I was very bearish on housing - and in early 2007, I predicted a recession.

However in 2009 I became more optimistic. For example, in February 2009, I wrote: Looking for the Sun (Note: that post shocked many readers since I had been very bearish).

A few years later, in early 2012, when many people were still bearish on housing, I called the bottom for housing: The Housing Bottom is Here

Then I spent a number of years arguing against the recession callers, and the new housing bubble calls. A few examples:
In 2015, I wrote The Endless Parade of Recession Calls

For the last 6+ years, there have been an endless parade of incorrect recession calls. The most reported was probably the multiple recession calls from ECRI in 2011 and 2012.
...
I disagreed with that call in 2011; I wasn't even on recession watch!

And I updated that post several times.
And on housing, over seven years ago, in January 2018, I was quoted in a Bloomberg article:

Bill McBride, who runs the Calculated Risk blog and also called the crash, doesn’t think home prices are inflated this time around. Unlike in 2005, lenders are acting responsibly and the Wild West of real estate speculation hasn’t returned, he said. There is less to speculate on, too. Compared with the overbuilding that preceded the bust, today’s pace of construction isn’t fast enough, he said.

“Lending standards are still pretty good,” McBride said, and he doesn’t expect mortgage rates to “take off” in the short term.

And in December 2018, I disagreed with Professor Shiller A comment on Professor Shiller's "The Housing Boom Is Already Gigantic. How Long Can It Last?". My conclusion:

No big deal, and definitely not a "gigantic" boom in house prices.

In 2021, I wrote: Is there a New Housing Bubble?

The lack of wild speculation doesn't mean house prices can't decline, but it means that we won't see cascading declines in prices like what happened when the housing bubble burst.
...
From a historical perspective, house prices are high. But lending standards have been solid, and we haven't seen significant speculation - so I wouldn't call this a bubble.

Also in 2021, I started my real estate newsletter.  
Note: for $25 you can read the entire archive and one month of daily posts - but make sure you cancel or substack will bill you every month! For $100, you will usually receive 4 to 6 articles per week for a year, you can read the archive and comment on all the posts.
A few key articles:
Housing and Demographics: The Next Big Shift
Housing: Don't Compare the Current Housing Boom to the Bubble and Bust
Household Formation Drives Housing Demand
The Long-Term Housing and Population Shift
Stay tuned!

BMW Shares Post Sharpest Drop In Year After Profit Warning; Citi Flags China Troubles As Potentially "Irreversible"

BMW shares in Germany plunged the most in a year after the company issued a profit warning, citing weaker-than-expected sales in China and ongoing trade uncertainty between the U.S. and the European Union.

The German producer of luxury cars now forecasts its automotive margin for 2025 will be in the range of 5% to 6%, down from its previous forecast of 5% to 7%. 

Here's the snapshot of BMW's new guidance (courtesy of Bloomberg):

• Sees automotive Ebit margin 5% to 6%, saw 5% to 7%, estimate 5.7% (Bloomberg Consensus)

• Sees Automotive return on capital employed 8% to 10%, saw 9% to 13%

• Sees Group Earnings Before Tax Down Slightly, Saw Flat

• Sees Automotive FCF Above €2.5B, Saw Above €5B

Analysts at Bernstein said the downgraded guidance aligns with the consensus of 5.6% but called the update on soft sales in China and tariff-related costs disappointing. 

Other commentary from Wall Street analysts (courtesy of Bloomberg):

Morgan Stanley (overweight)

• Analyst Javier Martinez de Olcoz Cerdan says lowering of volume and margins had been expected, as BMW was the only European auto OEM not to issue a profit warning during 2Q releases

• However, free cash flow is below expectations and could have an impact on dividends

JPMorgan (overweight)

• Narrowing of auto margins appears to be impacted equally by China volume and pricing momentum, Chinese dealer compensation, and higher global tariffs, analyst Jose Asumendi writes

• Sees most of the flagged impacts to earnings and cash flow as temporary, and BMW should be able to claw these back between 4Q25 and 1H26, which maintains confidence in buyback and dividend

• Ability to stabilize volume momentum and pricing power in China in FY26 is seen more important than tariffs in protecting the firm's longer-term competitiveness

Citi (neutral)

• Analyst Harald Hendrikse says China exposure had been a concern, and BMW China issues may be "irreversible"

• BMW, as with many other auto OEMs, appears to be guilty of providing overly optimistic guidance and seemingly has "managed to snatch defeat from the jaws of victory"

• While free cash flow has been cut by 50%, cash return remains solid

Jefferies (buy)

• Pace of China recovery and the timing of tariff implementation had been well flagged, and have now come to pass, analyst Philippe Houchois writes

• Auto margin consensus already in the lower part of the range, with some modest downside risk

It is important to note that BMW's exposure to China is concerning, as FactSet data show it is the automaker's largest market by revenue, at 22%, compared with 19% from the U.S.

In markets, BMW shares in Germany are flat on the year, as the European auto sector sputters in the second half amid numerous issues, such as waning sales in China and an influx of Chinese brands (BYD) entering Europe, which is squeezing market share. 

The Stoxx 600 Autos & Parts Index is down 2% today. Shares are well below the 2024 peak. 

This is concerning...

. . 

Tyler Durden Wed, 10/08/2025 - 08:05

Surveillance Money: The European Central Bank Accelerates The Digital Euro

Authored by Daniel Lacalle,

Many market participants have built long positions on euro-denominated assets, expecting a positive outcome from the German stimulus plan and Rearm Europe projects. However, betting on a stronger euro may be optimistic considering the poor track record of these government plans, the rising fiscal challenges of France and other nations, the elevated debt and enormous unfunded liabilities, as well as the imminent implementation of a central bank digital currency. There are undoubted fiscal and deficit problems in the United States, but the relative position against the euro is undeniably stronger considering all the previously mentioned factors.

The European Central Bank (ECB) has accelerated its plan for a digital euro and recently hired the top global tech companies to create the architecture. However, European banks are rightly concerned, as a central bank digital currency poses significant privacy risks as well as a grave erosion of the capacity of the banking sector to lend and perform adequately.

Central bank digital currencies (CBDCs) can be a dangerous tool for their potential risks to privacy, financial stability, and the concentration of monetary power. In the United States, the Trump administration has issued an executive order banning the use of these instruments, labelling them as “monetary tyranny”.

A CBDC is not the same as electronic money. A digital euro would give unprecedented surveillance capabilities to the central bank. Unlike current electronic payments, a central bank digital currency (CBDC) gives monetary authorities full and direct access to every transaction and savings account, eliminating financial privacy for citizens. This could allow for monitoring, controlling, or even penalising financial behaviours that central authorities may consider undesirable. Furthermore, a CBDC would eliminate the current limits in the financial system that prevent excessive money printing. Bypassing commercial banks and credit mechanisms allows central banks to instantly increase the money supply and finance government spending, eroding traditional budget controls. Removing commercial banks from the monetary system’s transmission mechanism destabilises credit creation and increases the risk of crowding out the private sector.

The main arguments in favour of a digital euro, such as efficiency and enhanced monetary policy transmission, do not withstand scrutiny. None of those benefits require a centralised currency, much less a central bank-controlled monetary monopoly. If those were the real objectives, policymakers would encourage more decentralisation and competition instead of more central planning. The goal is more state control and rapid monetary financing of government spending, not real improvements for consumers or savers.

A CBDC is the evidence that the central bank does not want to strengthen the currency by making it attractive for investors but to impose its use.

In October 2025, the ECB signed framework agreements with ten of the largest technology companies to provide the primary operational and infrastructural components for the planned digital euro, valued at over €1.1 billion. They include companies like Giesecke+Devrient (which makes offline payment solutions), Feedzai (which uses AI to find fraud), Almaviva and Fabrick (which make mobile wallet apps), and Senacor FCS (which makes it safe to share payment information). The framework agreements set the eurozone up for a possible launch of the digital euro by 2029. They cover software development, security, and fraud management.

The ECB says that these agreements are only for planning and that the currency won’t be issued until laws are passed and the next phases of the project are approved. The technology providers will help design and test several technical requirements, such as real-time fraud monitoring and offline use. None of these elements are reducing the widespread concern about privacy, control and erosion of the credit mechanisms as they exist.

European commercial banks are distressed that a digital euro could hurt their main business models, and they are right. Lawmakers in the European Parliament are worried that a retail digital euro could force people to move a lot of money from commercial banks to central bank accounts, which would hurt the sector’s private sector credit origination. The central bank would have access to all citizens’ financial data, raising privacy concerns, even if they “promise” not to use it.

Banks say that a digital euro that is legally deemed free of risk would take funds out of the private financial system, making it harder for financial institutions to lend and prioritising credit to governments over loans to families and businesses. Furthermore, compliance and infrastructure costs are enormous, regulations are unclear and vague, and privacy protections are, at best, undefined.

A CBDC could let central banks watch almost all transactions and financial decisions by citizens, taking away the privacy that comes with cash and giving the government the power to investigate, limit, or even punish users’ financial activities. Central banks can also quickly increase the money supply with a direct digital euro, without the usual limits that come from demand for credit in the banking sector. This eliminates essential limits to inflation and makes monetary policy directly subordinate to political expenditure priorities.

The CBDC will inevitably push commercial banks into a marginal role, creating a dangerous concentration of financial power in the hands of policymakers and technocrats.

The central bank’s independence and the laws guaranteeing privacy provide vague answers to all these concerns. However, centralisation is always a threat, and those laws and their alleged independence are widely questioned when the central bank has consistently bowed down to political pressure to use expansionary monetary tools for government financing. The digital euro is likely to become another tool for rapid, unrestricted fiscal expansion and the subsequent loss of the purchasing power of the currency as the limits offered by banking intermediation are eliminated.

If governments want more efficiency, technology, and a stronger currency that is globally valued, they should encourage decentralisation and competition, not the opposite.

Contracts between the ECB and major tech companies are laying the technical groundwork for a digital euro. Regrettably, privacy and independence receive no priority. The digital euro has serious systemic, economic, and ethical issues and can be used by governments with unsustainable spending and debt problems to debase the currency and use it to finance bloated government projects. European banks are concerned and rightly so. The risk of excessively loosening monetary policy and resulting in complete monetary financing of government spending is significant.

A digital euro is surveillance disguised as money, and governments will do all they can to use it as a tool for direct monetary financing of deficits. If you believe that the same policymakers and governments that have done nothing to control debt accumulation and excessive spending are going to defend the purchasing power of the currency, you are dreaming.

Tyler Durden Wed, 10/08/2025 - 07:45