Zero Hedge

Maduro Secretly Offered US Vast Resources To Avoid War, But Nobel Winner Maria Machado Vows To Go Bigger

Maduro Secretly Offered US Vast Resources To Avoid War, But Nobel Winner Maria Machado Vows To Go Bigger

Venezuelan President Nicolas Maduro has condemned Washington placing Caracas in its crosshairs for a newly resurrected 'war on drugs' - which Maduro has said is really all about pursuing regime change.

At a moment of the Pentagon's largest build-up of forces ever off Venezuela's coast, Maduro is calling for an emergency UN Security Council meeting to convene, in order to condemn these "mounting threats" from the United States. This has resulted in diplomats indicating that a meeting is indeed set to take place Friday afternoon in New York.

Venezuela's foreign ministry has said that the US military build-up, and recent strikes against at least four alleged drug-smuggling boats, endangers "peace, security and international and regional stability."

Maduro wants the security council to hold a formal debate on the crisis and "make recommendations to curb any plans of aggression" on Washington's part.

So far, there have been at least 21 deaths reported from the US military intervention in the southern Caribbean, and interestingly Colombia has said at least one of the boats was operated by its own traffickers.

The UN council is likely to pay special attention to the fact that President Trump informed Congress last week in a letter that the US is currently in "armed conflict" with the drug cartels.

The Trump administration has said that in reality Maduro is the de facto leader of these cartels, and so he's not the legitimate leader of resource-rich Venezuela. On this point, the NY Times is out with the following bombshell on Friday:

Venezuelan officials, hoping to end their country’s clash with the United States, offered the Trump administration a dominant stake in Venezuela’s oil and other mineral wealth in discussions that lasted for months, according to multiple people close to the talks.

The far-reaching offer remained on the table as the Trump administration called the government of President Nicolás Maduro of Venezuela a “narco-terror cartel,” amassed warships in the Caribbean and began blowing up boats that American officials say were carrying drugs from Venezuela.

Under a deal discussed between a senior U.S. official and Mr. Maduro’s top aides, the Venezuelan strongman offered to open up all existing and future oil and gold projects to American companies, give preferential contracts to American businesses, reverse the flow of Venezuelan oil exports from China to the United States, and slash his country’s energy and mining contracts with Chinese, Iranian and Russian firms.

However, the report says that President Trump still rebuffed this offer. The consensus is that Secretary of State Marco Rubio's hard anti-Maduro line has prevailed, also in favor of oppositive activist and leader María Corina Machado, who was just awarded the Nobel Peace Price on Friday. The Nobel was awarded, supposedly, as she has kept "the flame of democracy burning".

"Behind the scenes, however, Venezuela’s senior officials, with Mr. Maduro’s blessing, have offered Washington far-reaching concessions that would essentially eliminate the vestiges of resource nationalism at the core of Mr. Chávez’s movement," NY Times continues.

Apparently the US administration is currently more enticed by her own economic pitch. She has argued that only democracy, rule of law, and openness to the international community can truly allow foreign access to Venezuela's resources, and that Maduro will not deliver:

"She argued that even greater economic wealth — $1.7 trillion in 15 years — awaited U.S. companies in Venezuela if her movement launched a political transition. (Ms. Machado was awarded the Nobel Peace Prize on Friday for what the Norwegian Nobel Committee described as “her tireless work promoting democratic rights for the people of Venezuela.”)

It is indeed curious that the Nobel Committee while denying Trump, has chosen to award a person potentially at the center of US regime change policies in Venezuela.

Celebrating "Peace" regime change according to Norway's Nobel committee...

Machado's economic adviser, Sary Levy, argued to the Trump White House that "What Maduro offers investors is not stability, it's control — control maintained through terror." She told the Times, "The Trump Administration has shown a clear intention to not fall for these offers of easy solutions."

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Tyler Durden Fri, 10/10/2025 - 12:00

German Mayor Tortured For Hours In Basement By Her Own Adopted Daughter, Leaked Police Docs Show

German Mayor Tortured For Hours In Basement By Her Own Adopted Daughter, Leaked Police Docs Show

Via Remix News,

The story of the Social Democrat (SPD) mayor from Herdecke, Iris Stalzer, has taken yet another incredible turn.

New information now reveals that her 17-year-old adopted daughter reportedly tortured Stalzer for hours, nearly killing her own mother. Despite these details, the daughter still has not been arrested.

Stalzer has spoken to the police about what transpired during her ordeal, and now, the details have been leaked to Bild newspaper.

On Oct. 7, at 12:05 p.m., Stalzer’s daughter called emergency services saying her mother had been attacked by several men, was severely injured and was barely conscious.

A witness off the street found the politician bleeding in her armchair in the living room. Later, the adopted daughter told police that was also how she found her mother.

However, despite claims of “several men” torturing the mother, it turns out this was reportedly an orchestrated lie to cover up the horror that had occurred inside the house. Police have since learned that the mother was subjected to grueling torture for hours in the basement of the house.

The suspect attacked Stalzer with deodorant spray and a lighter, trying to set her hair and clothes on fire. The adopted daughter said she wanted revenge; however, it is still remains unclear what she wanted to take revenge for.

The adopted daughter also had two kitchen knives, which she used to stab and slice the politician’s body. Stazler faced critical injuries, including 13 stab wounds.

One of the bloody knives was also found in the 15-year-old adopted son’s backpack, along with bloody clothing from the daughter. The other knife was also found in his room.

Police investigators also found that large traces of blood were scrubbed from the scene, which were later revealed by the police forensics team.

Stalzer nearly lost her life and was transported to a hospital in Bochum via rescue helicopter.

Bild wrote that police sources believe the mother was sitting in her armchair for a long time, bleeding out, while the two alleged suspects cleaned the house of crime scene evidence.

Numerous German media outlets, including Spiegel, also reported that police were called to the house not so long before this latest attack during the summer. In that case, the daughter was accused of domestic violence and threatening the mother with a knife.

The case is not only unbelievable due to the details, but also due to the prosecutor’s response to the entire affair.

Instead of an attempted murder charge or charges for evidence tampering or even torture, which is also illegal in Germany, there is no arrest warrant being issued at all.

The prosecutor alleges that because the daughter called the police, it is clear that she did not want to commit murder. Instead, they are only investigating the case as “bodily harm.”

As Remix News detailed yesterday, this claim raises several doubts, including the fact that the daughter attempted to mislead police about who was responsible for the crime, as well as the fact that the two allegedly scrubbed the crime scene of blood traces. Those are clearly not the actions of actors who were attempting to save their mother’s life, but instead the actions of two suspects attempting to mislead investigators, which is also a crime in and of itself.

As Remix News reported yesterday, the public prosecutor in the case offered numerous excuses as to why the two teens are not being charged despite the severity of the crime.

Across X, commentators, influencers, and users are speculating about the case, pointing out the extreme double standard in modern Germany. Austrian right-wing political activist Martin Sellner wrote that Germans are being imprisoned for memes, while the daughter in this case will never appear before a court for her alleged heinous crimes. He wrote that it is clearly a case of “two-tier” justice.

The daughter and the son were transferred to the Youth Welfare Office instead of prison. When asked why the two suspects were not being transferred to the father, the prosecutor remarkably said that the father has also been the victim of violence by the daughter in the past. In other words, this is a pattern, and presumably even more reason to charge her for the hours-long torture of her mother.

Is there a cover-up going on? Is the prosecutor trying to make the entire case go away? It remains unclear and speculation is running rife, but the details of the case are extraordinary, and the public prosecutor’s reaction to one of the most gruesome cases of attempted murder and torture in Germany is also astonishing.

Read more here...

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Tyler Durden Fri, 10/10/2025 - 11:45

Iraq Inks Major Oil Development Deal With ExxonMobil

Iraq Inks Major Oil Development Deal With ExxonMobil

Via The Cradle

Iraq will sign an agreement with Texas oil major, ExxonMobil, to manage, develop, and operate the Majnoon oil field in the country’s south, three Iraqi officials familiar with the matter told Reuters on Thursday.

The deal will also cover upgrades to Iraq’s oil export infrastructure in the south and include a profit-sharing arrangement for crude and refined products. Iraq's State Organization for Marketing of Oil (SOMO) is expected to formalize the agreement alongside ExxonMobil and the state-owned Basra Oil Company.

Via Reuters

According to Bloomberg, the US-based energy giant has reached a non-binding heads of agreement with Baghdad to re-enter Iraq two years after its withdrawal.

Iraqi Prime Minister Mohammed Shia al-Sudani confirmed the preliminary deal but did not disclose details. An Exxon spokesperson told Reuters, “We are pleased to have signed an HoA with the Iraqi Oil Ministry to evaluate exploration, development, and oil marketing opportunities in Iraq.”

The Majnoon field, located around 60 kilometers from Basra, is among the largest in the world with an estimated 38 billion barrels of oil in place. The agreement is meant to secure storage capacity in Asian markets, potentially through Exxon’s facilities in Singapore.

Former Basra Oil Company operations manager and analyst Muwafaq Abbas said the deal reflects Iraq’s push to modernize its energy sector and recalibrate ties with Washington. 

“The deals carry political weight, signalling Baghdad’s intent to rebalance regional ties and deepen its integration with western markets,” he said.

ExxonMobil was one of the first western companies to return to Iraq after the 2003 US invasion, but exited the West Qurna-1 project in 2024, citing unsatisfactory returns and political complications. The agreement coincides with a surge of Chinese-led projects reshaping Iraq’s southern oil hub. 

In September, China Petroleum Pipeline Engineering (CPP) signed a $2.5-billion deal to build a 950-kilometer seawater distribution system supplying Majnoon and other fields, designed to sustain production by maintaining reservoir pressure. 

In July, PowerChina secured a $4 billion contract for Iraq’s first major seawater desalination plant in Basra, a project that will feed industrial and energy operations across the region.

At the same time, Chinese private oil companies plan to double their collective output in Iraq to 500,000 barrels per day (bpd) by 2030, reflecting Beijing’s expanding control of mid and downstream infrastructure.

Iraq, which holds some of the world’s largest oil and gas reserves, aims to raise production from around 4 million bpd to more than 6 million by 2029.

Tyler Durden Fri, 10/10/2025 - 11:40

UMich Survey Shows Inflation Fears Fading

UMich Survey Shows Inflation Fears Fading

Amid a barren landscape of macro data due to the shutdown, the fact that many are strongly focused on the incredibly noisy and historically dismissed University of Michigan sentiment survey for any signals on inflation expectations or job hopes is in itself noteworthy.

So, with a big pinch of salt we dig in and see that the preliminary October headline sentiment index dropped very marginally (but was better than expected - 55.0 vs 54.0 exp vs 55.1 prior) with Current Conditions rising (from 60.4 to 61.0) and Expectations falling (from 51.7 to 51.2)...

Source: Bloomberg

On the inflation side, 1Yr expectations fell to 4.6% from 4.7% (while 5-10Y expectations were flat at 3.7%)...

Source: Bloomberg

Democrats continue to dominate the upside angst for medium-term inflation expectations while the market and other surveys remain unmoved...

On the unemployment side, the balance of respondents who expect a rise in unemployment rose modestly (but remain near multi-year lows)...

Source: Bloomberg

Under the hood, Republicans' confidence is at cycle highs while Democrats' confidence fell to Trump term lows, smashing the spread between the two to a record high...

Source: Bloomberg

UMich Surveys of Consumers Director, Joanne Hsu, noted that "improvements this month in current personal finances and year-ahead business conditions were offset by declines in expectations for future personal finances as well as current buying conditions for durables. Overall, consumers perceive very few changes in the outlook for the economy from last month. Pocketbook issues like high prices and weakening job prospects remain at the forefront of consumers’ minds."

Meanwhile, Hsu notes that "interviews reveal little evidence that the ongoing federal government shutdown has moved consumers’ views of the economy thus far."

credittrader Fri, 10/10/2025 - 10:08

Political Chaos In Japan: LDP Partner Exits Ruling Coalition In Shock Blow To Takaichi, What Happens Next

Political Chaos In Japan: LDP Partner Exits Ruling Coalition In Shock Blow To Takaichi, What Happens Next

Komeito, the long-standing political partner of Japan's powerful Liberal Democratic Party, shocked Japan watchers on Friday when it said it was withdrawing from the ruling coalition following last weekend's election of Sanae Takaichi as the LDP's leader, citing policy differences on tightening political fundraising rules.

Sanae Takaichi, Japan's new Liberal Democratic Party leader, and Tetsuo Saito, head of Japan's Komeito.

Komeito leader Tetsuo Saito told Takaichi of the party's decision at a meeting in parliament. "We are scrapping the coalition agreement with the LDP and bringing an end to our relationship," Saito said at a news conference after the meeting, saying the LDP had failed to work with his party to deal with political funding issues.

According to the Nikkei, the exit of its ally is a major blow to Takaichi and the LDP, which already lacks a majority in both houses of the parliament, although it remains the largest party.

For Takaichi to become Japan's first female prime minister, she must be appointed by the Diet, Japan's parliament. But Saito said Komeito will not vote for Takaichi in the Diet session to choose the country's new leader. "We cannot write the name of Sanae Takaichi in a vote for a new prime minister," he said. Instead, the party's lawmakers will vote for Saito.

He denied a confidence and supply agreement with the LDP, in which a party supports others for crucial decision-making in parliament.

Takaichi said after the meeting: "We were unilaterally informed by Komeito of its withdrawal from the coalition government." She said Komeito brought its proposal for strengthening regulations on corporate and group donations, and asked Takaichi to decide whether or not to accept it on the spot. She said she told Saito that she needed to consult with other LDP officials. Takaichi quoted Komeito leaders as saying, "That's not a concrete enough answer."

"The LDP has always said that they would consider [Komeito's proposal]," said Saito. "They have been saying for a year that they must listen to the opinions of local assembly members, yet the reality is that nothing has been done."

Komeito's withdrawal increases the chances that opposition parties will unite around an alternative candidate.

"Understanding among parties is deepening," Yoshihiko Noda, president of the main opposition Constitutional Democratic Party of Japan (CDP), told reporters on Friday. "We want to call carefully for a united front."

Jun Azumi, secretary-general of the CDP, on Wednesday said in a meeting with his counterpart from the Democratic Party for the People (DPFP) that DPFP leader Yuichiro Tamaki is a "strong candidate" to represent a unified opposition.

"The possibility of a change in government has certainly emerged," Azumi said after the ruling coalition's split. "I would very much like to hear the opinions of Komeito and engage in an exchange of views."

Still, as Nikkei notes, it is unclear whether the opposition parties can coordinate their policies. "I'm prepared to serve as prime minister," DPFP's Tamaki posted on X on Friday. He added, "We urge the CDP to conduct internal coordination and make institutional decisions to ensure its members can act in unity and solidarity with the DPFP's policies."

For those wondering how to trade this, Goldman's Takayuki Ishibashi has written up his thoughts on the shock development as well as the market implications (full note here). We excerpt below:

This week's Japanese political headlines were complex, even for citizens, making their intricacies challenging to grasp. Let me offer my/our interpretation as a reference.

The week began with the October 4 LDP leadership race, where Sanae Takaichi delivered a surprise victory, contrary to market predictions favoring Koizumi. This, alongside Ishiba’s September 2024 win, underscores the LDP’s opaque internal power dynamics, often misread by seasoned observers. The market reacted swiftly and forcefully; with the Nikkei already at all-time highs, Monday saw a 4.8% surge, the fourth-largest point gain on record, mirroring the 4.8% drawdown after Ishiba’s victory a year prior.

However, the political landscape remains tricky. While the LDP presidency usually translates into the premiership, the LDP–Komeito bloc no longer commands an outright majority, having lost it in both the 2024 general election and the 2025 House of Councillors election. This leaves two challenging paths: securing issue-by-issue opposition support or forming a broader coalition. The fiscally expansionary Democratic Party for the People (DPP) under Tamaki was seen as a workable partner for a Takaichi cabinet. However, Komeito bristled at Takaichi’s hard-right posture, hinting at withdrawal from their two-decade alliance and tightening her political room. A tail risk exists if opposition parties coalesce behind Tamaki for the premiership in the Diet’s designation vote.

The overall setup remains tricky. Our Government Affairs lead, Ueki, suggests LDP Vice President Taro Aso, 85, played a kingmaker role in the leadership race. His substantial behind the scenes influence argues against sweeping changes and large scale fiscal expansion the market may anticipate.

As of this writing, Komeito officially announced its withdrawal from the coalition government, as reported by NHK. This headline, released after the close of Japanese cash equities, triggered a panic-driven Nikkei futures sell-off of 130 basis points, a reaction deemed excessive. Other assets, including JGB futures and the Yen, reacted more moderately with slight rebounds. 
 
What happens next?

The immediate next step in Japanese politics is the appointment of a new prime minister, now anticipated to be delayed until October 20 or later. This follows the withdrawal of Komeito from its coalition with the Liberal Democratic Party (LDP). The prime minister is chosen through a multi-round vote in both the House of Representatives and the House of Councillors. In the initial round, each party is expected to vote for its own leader, including Komeito, making it unlikely any candidate will secure a majority. This will lead to a run-off vote, most likely between LDP President Sanae Takaichi and Constitutional Democratic Party (CDP) leader Yoshihiko Noda, based on their parties' seat counts. Despite the need for opposition cooperation in a minority government, the current lack of unity among opposition parties suggests that Sanae Takaichi is poised to be nominated as prime minister in both houses due to the LDP's numerical strength. Takaichi's victory in the LDP leadership election has already influenced markets, with analysts predicting short-term yen selling. She is expected to become Japan's first female prime minister. 

Markets often initially underestimate significant regime shifts.

For instance, during the first six months of Abenomics (November 2012-May 2013), foreign investors were the dominant net buyers of Japanese equities, contributing +¥10 trillion.In contrast, corporates were flat, financial institutions sold -¥5.5 trillion, and retail investors were net sellers of cash equities by -¥5 trillion, though they bought via margin accounts. This suggested short-term players capitalized on the rally, while long-term individual holders sold legacy positions at breakeven. 
 
Looking at the post-Takaichi flow picture for 2025, the dynamics differ. Governance-reformed Japan expects corporates to be steady net buyers, around +¥1 trillion monthly or +¥6 trillion over six months. Retail supply appears contained, even after recent market surges. The retail psyche has shifted, with fewer underwater positions and more day-trader behavior, making a repeat of the -¥5 trillion household net sell unlikely, especially with the introduction of the new NISA program in 2024 boosting investments in risk assets. While financial institutions might again be net sellers into strength, the improved corporate and household buying means foreigners don't need to deploy another ¥10 trillion to sustain upside momentum. Unlike 2013's weaker balance sheets and frequent primary issuance, today's buybacks have made Japan a net "share-shrinking" market, retiring over 1% of market cap annually, providing a mechanical tailwind similar to the U.S. 

Finally, here are some chart highlights: 
 
Nikkei vs. TOPIX: The movement of the Nikkei 225 and TOPIX over the past month has been quite significant within their 5-year ranges.

SoftBank Group (SBG): Physical AI became this week's theme, driven by SBG's Stargate initiative with OpenAI and its acquisition of ABB's robotics division. SoftBank's stock price has more than doubled over the past year. This surge in SBG's stock is one of the driving forces behind the movements observed in the Nikkei vs TOPIX.

GSXAJATO: This refers to a basket of Japanese Physical AI-related stocks, including Yaskawa, HDS, Nabtesco, Fanuc, and SMC.  

Japanese Stock Factor Returns: There appears to be a trend reversal in factor returns for Japanese stocks on a quarterly basis. This raises the question of what the next quarter will bring. 

More in the full Goldman note available to pro subs.

Tyler Durden Fri, 10/10/2025 - 09:58

Political Chaos In Japan: LDP Partner Exits Ruling Coalition In Shock Blow To Takaichi, What Happens Next

Political Chaos In Japan: LDP Partner Exits Ruling Coalition In Shock Blow To Takaichi, What Happens Next

Komeito, the long-standing political partner of Japan's powerful Liberal Democratic Party, shocked Japan watchers on Friday when it said it was withdrawing from the ruling coalition following last weekend's election of Sanae Takaichi as the LDP's leader, citing policy differences on tightening political fundraising rules.

Sanae Takaichi, Japan's new Liberal Democratic Party leader, and Tetsuo Saito, head of Japan's Komeito.

Komeito leader Tetsuo Saito told Takaichi of the party's decision at a meeting in parliament. "We are scrapping the coalition agreement with the LDP and bringing an end to our relationship," Saito said at a news conference after the meeting, saying the LDP had failed to work with his party to deal with political funding issues.

According to the Nikkei, the exit of its ally is a major blow to Takaichi and the LDP, which already lacks a majority in both houses of the parliament, although it remains the largest party.

For Takaichi to become Japan's first female prime minister, she must be appointed by the Diet, Japan's parliament. But Saito said Komeito will not vote for Takaichi in the Diet session to choose the country's new leader. "We cannot write the name of Sanae Takaichi in a vote for a new prime minister," he said. Instead, the party's lawmakers will vote for Saito.

He denied a confidence and supply agreement with the LDP, in which a party supports others for crucial decision-making in parliament.

Takaichi said after the meeting: "We were unilaterally informed by Komeito of its withdrawal from the coalition government." She said Komeito brought its proposal for strengthening regulations on corporate and group donations, and asked Takaichi to decide whether or not to accept it on the spot. She said she told Saito that she needed to consult with other LDP officials. Takaichi quoted Komeito leaders as saying, "That's not a concrete enough answer."

"The LDP has always said that they would consider [Komeito's proposal]," said Saito. "They have been saying for a year that they must listen to the opinions of local assembly members, yet the reality is that nothing has been done."

Komeito's withdrawal increases the chances that opposition parties will unite around an alternative candidate.

"Understanding among parties is deepening," Yoshihiko Noda, president of the main opposition Constitutional Democratic Party of Japan (CDP), told reporters on Friday. "We want to call carefully for a united front."

Jun Azumi, secretary-general of the CDP, on Wednesday said in a meeting with his counterpart from the Democratic Party for the People (DPFP) that DPFP leader Yuichiro Tamaki is a "strong candidate" to represent a unified opposition.

"The possibility of a change in government has certainly emerged," Azumi said after the ruling coalition's split. "I would very much like to hear the opinions of Komeito and engage in an exchange of views."

Still, as Nikkei notes, it is unclear whether the opposition parties can coordinate their policies. "I'm prepared to serve as prime minister," DPFP's Tamaki posted on X on Friday. He added, "We urge the CDP to conduct internal coordination and make institutional decisions to ensure its members can act in unity and solidarity with the DPFP's policies."

For those wondering how to trade this, Goldman's Takayuki Ishibashi has written up his thoughts on the shock development as well as the market implications (full note here). We excerpt below:

This week's Japanese political headlines were complex, even for citizens, making their intricacies challenging to grasp. Let me offer my/our interpretation as a reference.

The week began with the October 4 LDP leadership race, where Sanae Takaichi delivered a surprise victory, contrary to market predictions favoring Koizumi. This, alongside Ishiba’s September 2024 win, underscores the LDP’s opaque internal power dynamics, often misread by seasoned observers. The market reacted swiftly and forcefully; with the Nikkei already at all-time highs, Monday saw a 4.8% surge, the fourth-largest point gain on record, mirroring the 4.8% drawdown after Ishiba’s victory a year prior.

However, the political landscape remains tricky. While the LDP presidency usually translates into the premiership, the LDP–Komeito bloc no longer commands an outright majority, having lost it in both the 2024 general election and the 2025 House of Councillors election. This leaves two challenging paths: securing issue-by-issue opposition support or forming a broader coalition. The fiscally expansionary Democratic Party for the People (DPP) under Tamaki was seen as a workable partner for a Takaichi cabinet. However, Komeito bristled at Takaichi’s hard-right posture, hinting at withdrawal from their two-decade alliance and tightening her political room. A tail risk exists if opposition parties coalesce behind Tamaki for the premiership in the Diet’s designation vote.

The overall setup remains tricky. Our Government Affairs lead, Ueki, suggests LDP Vice President Taro Aso, 85, played a kingmaker role in the leadership race. His substantial behind the scenes influence argues against sweeping changes and large scale fiscal expansion the market may anticipate.

As of this writing, Komeito officially announced its withdrawal from the coalition government, as reported by NHK. This headline, released after the close of Japanese cash equities, triggered a panic-driven Nikkei futures sell-off of 130 basis points, a reaction deemed excessive. Other assets, including JGB futures and the Yen, reacted more moderately with slight rebounds. 
 
What happens next?

The immediate next step in Japanese politics is the appointment of a new prime minister, now anticipated to be delayed until October 20 or later. This follows the withdrawal of Komeito from its coalition with the Liberal Democratic Party (LDP). The prime minister is chosen through a multi-round vote in both the House of Representatives and the House of Councillors. In the initial round, each party is expected to vote for its own leader, including Komeito, making it unlikely any candidate will secure a majority. This will lead to a run-off vote, most likely between LDP President Sanae Takaichi and Constitutional Democratic Party (CDP) leader Yoshihiko Noda, based on their parties' seat counts. Despite the need for opposition cooperation in a minority government, the current lack of unity among opposition parties suggests that Sanae Takaichi is poised to be nominated as prime minister in both houses due to the LDP's numerical strength. Takaichi's victory in the LDP leadership election has already influenced markets, with analysts predicting short-term yen selling. She is expected to become Japan's first female prime minister. 

Markets often initially underestimate significant regime shifts.

For instance, during the first six months of Abenomics (November 2012-May 2013), foreign investors were the dominant net buyers of Japanese equities, contributing +¥10 trillion.In contrast, corporates were flat, financial institutions sold -¥5.5 trillion, and retail investors were net sellers of cash equities by -¥5 trillion, though they bought via margin accounts. This suggested short-term players capitalized on the rally, while long-term individual holders sold legacy positions at breakeven. 
 
Looking at the post-Takaichi flow picture for 2025, the dynamics differ. Governance-reformed Japan expects corporates to be steady net buyers, around +¥1 trillion monthly or +¥6 trillion over six months. Retail supply appears contained, even after recent market surges. The retail psyche has shifted, with fewer underwater positions and more day-trader behavior, making a repeat of the -¥5 trillion household net sell unlikely, especially with the introduction of the new NISA program in 2024 boosting investments in risk assets. While financial institutions might again be net sellers into strength, the improved corporate and household buying means foreigners don't need to deploy another ¥10 trillion to sustain upside momentum. Unlike 2013's weaker balance sheets and frequent primary issuance, today's buybacks have made Japan a net "share-shrinking" market, retiring over 1% of market cap annually, providing a mechanical tailwind similar to the U.S. 

Finally, here are some chart highlights: 
 
Nikkei vs. TOPIX: The movement of the Nikkei 225 and TOPIX over the past month has been quite significant within their 5-year ranges.

SoftBank Group (SBG): Physical AI became this week's theme, driven by SBG's Stargate initiative with OpenAI and its acquisition of ABB's robotics division. SoftBank's stock price has more than doubled over the past year. This surge in SBG's stock is one of the driving forces behind the movements observed in the Nikkei vs TOPIX.

GSXAJATO: This refers to a basket of Japanese Physical AI-related stocks, including Yaskawa, HDS, Nabtesco, Fanuc, and SMC.  

Japanese Stock Factor Returns: There appears to be a trend reversal in factor returns for Japanese stocks on a quarterly basis. This raises the question of what the next quarter will bring. 

More in the full Goldman note available to pro subs.

Tyler Durden Fri, 10/10/2025 - 09:58

Oil Tumbles To 5-Month Lows As Gaza Ceasefire Holds

Oil Tumbles To 5-Month Lows As Gaza Ceasefire Holds

WTI is trading back below $60 for the first time since early May on cautious optimism about easing tensions in the Middle East and the outlook for a global supply surplus.

Source: Bloomberg

The drop comes as Middle East tensions calm with Israel and the Hamas militant group agreeing to a ceasefire in their two-year war in Gaza, easing concerns over a widening conflict in the region that could cut into oil supplies from the Persian Gulf.

"Oil steadied near recent lows, holding the week's sharpest drop amid cautious optimism over easing Middle East tensions and improved supply prospects ... Israel's approval of a peace framework, including hostage and prisoner exchanges, supported sentiment," Saxo Bank noted.

Meanwhile, oil markets are heading for a significant surplus fueled by rising output from both outside and within the OPEC+ alliance, which agreed to raise production quotas to reclaim market share over the weekend.

The broad mood remains bearish, though there are discrepancies about how gloomy crude’s prospects are, according to Citigroup Inc., which summarized views from clients.

“We are heading for a challenging weekly close below $65 which is likely to attract some attention from short sellers,” said Ole Hansen, head of commodities strategy at Saxo Bank, adding that the losses are driven by the peace agreement between Israel and Hamas.

Bloomberg also reports that traders were also on alert after the US sanctioned a key crude-import terminal and a privately-owned Chinese refinery for involvement in the trade of Iranian oil. It’s the latest in a series of penalties this year that have targeted companies in the Asian nation.

Tyler Durden Fri, 10/10/2025 - 09:37

Oil Tumbles To 5-Month Lows As Gaza Ceasefire Holds

Oil Tumbles To 5-Month Lows As Gaza Ceasefire Holds

WTI is trading back below $60 for the first time since early May on cautious optimism about easing tensions in the Middle East and the outlook for a global supply surplus.

Source: Bloomberg

The drop comes as Middle East tensions calm with Israel and the Hamas militant group agreeing to a ceasefire in their two-year war in Gaza, easing concerns over a widening conflict in the region that could cut into oil supplies from the Persian Gulf.

"Oil steadied near recent lows, holding the week's sharpest drop amid cautious optimism over easing Middle East tensions and improved supply prospects ... Israel's approval of a peace framework, including hostage and prisoner exchanges, supported sentiment," Saxo Bank noted.

Meanwhile, oil markets are heading for a significant surplus fueled by rising output from both outside and within the OPEC+ alliance, which agreed to raise production quotas to reclaim market share over the weekend.

The broad mood remains bearish, though there are discrepancies about how gloomy crude’s prospects are, according to Citigroup Inc., which summarized views from clients.

“We are heading for a challenging weekly close below $65 which is likely to attract some attention from short sellers,” said Ole Hansen, head of commodities strategy at Saxo Bank, adding that the losses are driven by the peace agreement between Israel and Hamas.

Bloomberg also reports that traders were also on alert after the US sanctioned a key crude-import terminal and a privately-owned Chinese refinery for involvement in the trade of Iranian oil. It’s the latest in a series of penalties this year that have targeted companies in the Asian nation.

Tyler Durden Fri, 10/10/2025 - 09:37

Kiev, Nine Other Regions, Plunged Into Darkness As Russian Air War Escalates

Kiev, Nine Other Regions, Plunged Into Darkness As Russian Air War Escalates

Rare blackouts have impacted the Ukrainian capital overnight and into Friday, along with some nine other regions plunged into darkness. While blackouts have been frequent in the eastern half of the country since the war began, they occur less commonly in Kiev.

But this is a sign of the escalating air campaign, also at a moment Ukrainian cross-border drone attacks keep wreaking havoc on Russian oil facilities.

Prior file image of Kiev in darkness, AP.

"Energy workers are working to restore stable electricity supply as soon as possible," Ukraine's energy ministry said, noting that widespread outages have been reported in the east and central regions of the country.

Russia's RIA-Novosti also mentioned damage done to power plants in Kiev with the headline, "Russian Armed Forces Conducted Massive Strikes on Power Facilities in Ukraine" - while RT overnight described, "Lights go out in Kiev after mass strikes knock out power." It detailed:

In the early hours of Friday, Kiev Mayor Vitaly Klitschko claimed that the Ukrainian capital came under a “massive attack,” adding that the left bank of Kiev was “currently without power” and that there were also problems with water distribution. He said nine people were injured, with five of them taken to the hospital. “The situation is difficult.”

Klitschko also reported several fires in the city, urging citizens to “stay in shelters,” adding that work is underway to restore power.

Multiple drones reportedly targeted the capital city's Thermal Power Plant No. 6, a key power generating site.

AFP journalists cited eyewitnesses for the capital area's "several powerful explosions overnight and experienced blackouts and water supply disruptions in various parts of the city."

President Zelensky in an address estimated that over 450 drones and more than 30 missiles were involved in the nationwide attack which hit several regions mostly across the east but also unleashed devastation in Kiev.

The reported moment a key power generating site for the capital was hit:

Zelensky further called it a "cynical and calculated attack" and there are reports that a seven-year old boy was killed.

In all, Ukraine's military still claimed to have downed 405 drones of the drones and and 15 missiles of the 30 inbound missiles, and so presumably the attack could have been much worse.

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Tyler Durden Fri, 10/10/2025 - 09:25

Kiev, Nine Other Regions, Plunged Into Darkness As Russian Air War Escalates

Kiev, Nine Other Regions, Plunged Into Darkness As Russian Air War Escalates

Rare blackouts have impacted the Ukrainian capital overnight and into Friday, along with some nine other regions plunged into darkness. While blackouts have been frequent in the eastern half of the country since the war began, they occur less commonly in Kiev.

But this is a sign of the escalating air campaign, also at a moment Ukrainian cross-border drone attacks keep wreaking havoc on Russian oil facilities.

Prior file image of Kiev in darkness, AP.

"Energy workers are working to restore stable electricity supply as soon as possible," Ukraine's energy ministry said, noting that widespread outages have been reported in the east and central regions of the country.

Russia's RIA-Novosti also mentioned damage done to power plants in Kiev with the headline, "Russian Armed Forces Conducted Massive Strikes on Power Facilities in Ukraine" - while RT overnight described, "Lights go out in Kiev after mass strikes knock out power." It detailed:

In the early hours of Friday, Kiev Mayor Vitaly Klitschko claimed that the Ukrainian capital came under a “massive attack,” adding that the left bank of Kiev was “currently without power” and that there were also problems with water distribution. He said nine people were injured, with five of them taken to the hospital. “The situation is difficult.”

Klitschko also reported several fires in the city, urging citizens to “stay in shelters,” adding that work is underway to restore power.

Multiple drones reportedly targeted the capital city's Thermal Power Plant No. 6, a key power generating site.

AFP journalists cited eyewitnesses for the capital area's "several powerful explosions overnight and experienced blackouts and water supply disruptions in various parts of the city."

President Zelensky in an address estimated that over 450 drones and more than 30 missiles were involved in the nationwide attack which hit several regions mostly across the east but also unleashed devastation in Kiev.

The reported moment a key power generating site for the capital was hit:

Zelensky further called it a "cynical and calculated attack" and there are reports that a seven-year old boy was killed.

In all, Ukraine's military still claimed to have downed 405 drones of the drones and and 15 missiles of the 30 inbound missiles, and so presumably the attack could have been much worse.

*  *  * Our Top Sellers This Week

Steak Lover's Bundle (order before Sunday midnight PST)

ZeroHedge Multitool

ZeroHedge Waxed Canvas Hat

IQ Biologix Male Enhancement (up to 20% off with volume / subscription)

Waterdrop 2.25 Gallong Gravity Water Filter System

Tyler Durden Fri, 10/10/2025 - 09:25

Black Horse Socialist Offers Big Odds In French PM Pick Decision

Black Horse Socialist Offers Big Odds In French PM Pick Decision

After a week of political chaos and a rollercoaster ride in French stocks, French President Emmanuel Macron is expected to appoint a new prime minister on Friday in a last-ditch effort to end more than a year of political paralysis and economic turmoil, marked by surging debt, rising poverty, and deeply divided parliament - all of which have pushed his second term to the brink of collapse.

To start the week, outgoing Prime Minister Sébastien Lecornu abruptly resigned on Monday, shortly after unveiling a new Cabinet, fueling a political crisis and turmoil in regional markets. The move triggered a surge in calls for Macron's resignation or new elections. In response to save face, Macron has vowed to name a successor by the end of today. 

According to AFP News sources, Macron is expected to meet with leaders from the right-leaning National Rally (RN) and the radical left France Unbowed party at the presidential palace. Those sources confirmed that Macron will announce a new prime minister by evening. 

Neither Macron nor Lecornu has offered any color or clues over who is in the running to be the next premier. 

However, cryptocurrency-based prediction market Polymarket has socialist prime minister Bernard Cazeneuve at 30% odds, with Jean-Louis Borloo at 22.9%, and Pierre Moscovici at 13.3%. 

In an interesting twist, Bloomberg reports that the country’s business elite is courting the head of the Socialist party, Olivier Faure, whose party holds a pivotal swing vote in parliament.

On Wednesday, Faure attended a dinner with France’s powerful business lobby AFEP, according to people familiar with the matter.

Faure told the business leaders that the political instability that would result from another snap election would be much more damaging to the economy than any of the policy measures backed by the Socialists, such as pausing President Emmanuel Macron’s pension reform that raised the retirement age, said one of the people, who spoke on the condition of anonymity.

According to Polymarket, Faure remains a long-shot... but with a 25x return if he is picked, it's worth a shot to bet that the French will appoint a socialist.

 

Macron faces a massive fork in the road: appoint either a leftist or a technocratic leader to break the impasse of a deeply divided parliament. Either option will require compromises to avoid a no-confidence vote and could force the abandonment of Macron's unpopular pension reform. 

Macron's 2024 snap election bet ultimately failed and produced a hung parliament and shattered his centrist bloc's dominance. Repeated government collapses, along with failed budget negotiations and internal rivalries, have left France's political system gridlocked and its economy in turmoil.

France's public debt has surged to 114% of GDP, while poverty reached 15.4% in 2023, marking the highest rate since records began - all suggest Macron is a horrible globalist leader. The European Commission and ratings agencies warned Paris to dial back spending and align with EU debt rules... 

In markets, the CAC 40, the benchmark French stock market index, initially dropped 2% on the political turmoil earlier this week but has since clawed back those losses. 

Marine Le Pen, a prominent figure on the nationalist right and a three-time presidential contender, said earlier this week that she would thwart all action by any new government and would "vote against everything." 

Headline from FT...

We'll end the note with commentary from UBS analyst Simon Penn, who has been covering developments out of France all week.

Penn told clients earlier that political and economic turbulence facing France and the UK this year echoes Britain's 1970s struggles, an era defined by populist backlash, failed reform attempts... 

In the 1970s, Britain went through a period of political turmoil and industrial unrest. The economic policies the government attempted to implement at the beginning of the decade were rejected by voters. It took almost a decade for the country to realise "there was no alternative". Today, both the French and British governments find themselves in circumstances where voters are rejecting their ideas and are instead being lured by populist policies that appear to have all the gain with none of the pain.

This is about political sequencing rather than direct economic parallels. The economies and markets of 2025 are very different from those of fifty or so years ago. But voter demands and political responses are similar. In 1979, new British Conservative Prime Minister Margaret Thatcher stood for election on a series of economic policies that were very similar to those proposed by the previous Conservative PM Edward Health in 1970. In between, the UK endured general strikes, a three-day week and an IMF bailout.

A very senior minister in that first Thatcher government once said that many of the economic policies introduced by Thatcher weren't actually original, mostly they were inspired by those of Heath nine years earlier. His point was that the country hadn't been ready for those policies earlier in the decade and needed to learn what the alternative route looked like before being willing to accept them.

What unites the 1970s UK to the UK of today, and also current French and British politics, is a statement and a question. In the wake of the Global Financial Crisis, then Luxembourg PM Jean-Claude Juncker said "We all know what to do, but we don't know how to get re-elected once we have done it." In 1974, having faced a backlash from voters, PM Heath asked the UK in the run up to a general election "Who governs Britain?" – the answer being a choice between government (his) or the unions (the allies of his Labour opponents).  He lost and the country opted for a new Labour government. Margret Thatcher essentially asked the same question in 1979, and won. Applying Juncker's phrase to that period in the 1970s, to get elected afterwards voters have to experience the alternative for themselves.

President Macron is facing Juncker's statement and grappling with the decision as to whether to ask the country, as Heath did, and risk the consequences of the answer. What Macron needs his government to find is a policy route out of a near 114% debt/GDP ratio (on course for 125% in five years time); and a projected 5.4% of GDP budget deficit this year. The budget plans of his last three PM's have all been similar:  departmental spending cuts, higher taxes, pension reform; and recently a proposal to abolish two public holidays.

Heath favoured free markets. He wanted to curb the power of the unions and end prior policies of state intervention in failing businesses and industries.  During his first two years, from 1970 to 1972 he struggled to achieve his policy objectives and in 1972 he performed a U-turn. His Chancellor Anthony Barber cut taxes, increased spending and recommitted to assisting failing industry.  By late 1973 Heath had been unable to appease the unions and in the midst of general strikes, the power workers walked out. The problems were exacerbated by the 1973 OPEC oil crisis and Heath ordered the country into a three-day week in an effort to reduce energy usage. In February 1974 he called an election, lost swathes of seats, failed to create a governing coalition, and eventually handed the administration over to a minority Labour government. Initially Labour were able to make some compromises with the unions, but as time passed the unions pushed their demands further and further. By the late 1970s the country was again on strike and had been forced to apply to the IMF for financial assistance.

What's interesting looking back at the UK towards the end of the 1970s was that two Labour governments, run by prime ministers that were sympathetic to unions, were unable to work with them. To overlay a present day term on the politics of 50 years ago, the public came to see that that the extreme demands of "populists" could not be satisfied.

The Conservative campaign of 1979 borrowed very heavily from Heath's manifesto of a decade earlier. It sought to curb union power, reduce taxes, reduce government borrowing, encourage free-markets and also self-reliance. Margret Thatcher had many other ideas and also employed aggressive marketing, but at the heart of her manifesto were the same policies Heath had attempted to deliver.

France and the UK face familiar political pressures then. For Macron the circumstances might be more acute than for Starmer, but even in the UK there is plenty of talk as to how he could be ousted and who could take over. A pivot by either Macron or Starmer, to either swing policy to placate voters with "easy" policy or in the case of France roll the dice with an election, could go very wrong.

What the IMF was to the UK in 1976, could become the ECB to France if voters reject Macron and the policies that are needed. The UK's next election isn't due until 2028, but the circumstances look similar. The unfortunate lesson from the UK in the 1970s is that the required policies are right there. It's just a question of time and pain until they are accepted.

. . .

Tyler Durden Fri, 10/10/2025 - 09:05

Black Horse Socialist Offers Big Odds In French PM Pick Decision

Black Horse Socialist Offers Big Odds In French PM Pick Decision

After a week of political chaos and a rollercoaster ride in French stocks, French President Emmanuel Macron is expected to appoint a new prime minister on Friday in a last-ditch effort to end more than a year of political paralysis and economic turmoil, marked by surging debt, rising poverty, and deeply divided parliament - all of which have pushed his second term to the brink of collapse.

To start the week, outgoing Prime Minister Sébastien Lecornu abruptly resigned on Monday, shortly after unveiling a new Cabinet, fueling a political crisis and turmoil in regional markets. The move triggered a surge in calls for Macron's resignation or new elections. In response to save face, Macron has vowed to name a successor by the end of today. 

According to AFP News sources, Macron is expected to meet with leaders from the right-leaning National Rally (RN) and the radical left France Unbowed party at the presidential palace. Those sources confirmed that Macron will announce a new prime minister by evening. 

Neither Macron nor Lecornu has offered any color or clues over who is in the running to be the next premier. 

However, cryptocurrency-based prediction market Polymarket has socialist prime minister Bernard Cazeneuve at 30% odds, with Jean-Louis Borloo at 22.9%, and Pierre Moscovici at 13.3%. 

In an interesting twist, Bloomberg reports that the country’s business elite is courting the head of the Socialist party, Olivier Faure, whose party holds a pivotal swing vote in parliament.

On Wednesday, Faure attended a dinner with France’s powerful business lobby AFEP, according to people familiar with the matter.

Faure told the business leaders that the political instability that would result from another snap election would be much more damaging to the economy than any of the policy measures backed by the Socialists, such as pausing President Emmanuel Macron’s pension reform that raised the retirement age, said one of the people, who spoke on the condition of anonymity.

According to Polymarket, Faure remains a long-shot... but with a 25x return if he is picked, it's worth a shot to bet that the French will appoint a socialist.

 

Macron faces a massive fork in the road: appoint either a leftist or a technocratic leader to break the impasse of a deeply divided parliament. Either option will require compromises to avoid a no-confidence vote and could force the abandonment of Macron's unpopular pension reform. 

Macron's 2024 snap election bet ultimately failed and produced a hung parliament and shattered his centrist bloc's dominance. Repeated government collapses, along with failed budget negotiations and internal rivalries, have left France's political system gridlocked and its economy in turmoil.

France's public debt has surged to 114% of GDP, while poverty reached 15.4% in 2023, marking the highest rate since records began - all suggest Macron is a horrible globalist leader. The European Commission and ratings agencies warned Paris to dial back spending and align with EU debt rules... 

In markets, the CAC 40, the benchmark French stock market index, initially dropped 2% on the political turmoil earlier this week but has since clawed back those losses. 

Marine Le Pen, a prominent figure on the nationalist right and a three-time presidential contender, said earlier this week that she would thwart all action by any new government and would "vote against everything." 

Headline from FT...

We'll end the note with commentary from UBS analyst Simon Penn, who has been covering developments out of France all week.

Penn told clients earlier that political and economic turbulence facing France and the UK this year echoes Britain's 1970s struggles, an era defined by populist backlash, failed reform attempts... 

In the 1970s, Britain went through a period of political turmoil and industrial unrest. The economic policies the government attempted to implement at the beginning of the decade were rejected by voters. It took almost a decade for the country to realise "there was no alternative". Today, both the French and British governments find themselves in circumstances where voters are rejecting their ideas and are instead being lured by populist policies that appear to have all the gain with none of the pain.

This is about political sequencing rather than direct economic parallels. The economies and markets of 2025 are very different from those of fifty or so years ago. But voter demands and political responses are similar. In 1979, new British Conservative Prime Minister Margaret Thatcher stood for election on a series of economic policies that were very similar to those proposed by the previous Conservative PM Edward Health in 1970. In between, the UK endured general strikes, a three-day week and an IMF bailout.

A very senior minister in that first Thatcher government once said that many of the economic policies introduced by Thatcher weren't actually original, mostly they were inspired by those of Heath nine years earlier. His point was that the country hadn't been ready for those policies earlier in the decade and needed to learn what the alternative route looked like before being willing to accept them.

What unites the 1970s UK to the UK of today, and also current French and British politics, is a statement and a question. In the wake of the Global Financial Crisis, then Luxembourg PM Jean-Claude Juncker said "We all know what to do, but we don't know how to get re-elected once we have done it." In 1974, having faced a backlash from voters, PM Heath asked the UK in the run up to a general election "Who governs Britain?" – the answer being a choice between government (his) or the unions (the allies of his Labour opponents).  He lost and the country opted for a new Labour government. Margret Thatcher essentially asked the same question in 1979, and won. Applying Juncker's phrase to that period in the 1970s, to get elected afterwards voters have to experience the alternative for themselves.

President Macron is facing Juncker's statement and grappling with the decision as to whether to ask the country, as Heath did, and risk the consequences of the answer. What Macron needs his government to find is a policy route out of a near 114% debt/GDP ratio (on course for 125% in five years time); and a projected 5.4% of GDP budget deficit this year. The budget plans of his last three PM's have all been similar:  departmental spending cuts, higher taxes, pension reform; and recently a proposal to abolish two public holidays.

Heath favoured free markets. He wanted to curb the power of the unions and end prior policies of state intervention in failing businesses and industries.  During his first two years, from 1970 to 1972 he struggled to achieve his policy objectives and in 1972 he performed a U-turn. His Chancellor Anthony Barber cut taxes, increased spending and recommitted to assisting failing industry.  By late 1973 Heath had been unable to appease the unions and in the midst of general strikes, the power workers walked out. The problems were exacerbated by the 1973 OPEC oil crisis and Heath ordered the country into a three-day week in an effort to reduce energy usage. In February 1974 he called an election, lost swathes of seats, failed to create a governing coalition, and eventually handed the administration over to a minority Labour government. Initially Labour were able to make some compromises with the unions, but as time passed the unions pushed their demands further and further. By the late 1970s the country was again on strike and had been forced to apply to the IMF for financial assistance.

What's interesting looking back at the UK towards the end of the 1970s was that two Labour governments, run by prime ministers that were sympathetic to unions, were unable to work with them. To overlay a present day term on the politics of 50 years ago, the public came to see that that the extreme demands of "populists" could not be satisfied.

The Conservative campaign of 1979 borrowed very heavily from Heath's manifesto of a decade earlier. It sought to curb union power, reduce taxes, reduce government borrowing, encourage free-markets and also self-reliance. Margret Thatcher had many other ideas and also employed aggressive marketing, but at the heart of her manifesto were the same policies Heath had attempted to deliver.

France and the UK face familiar political pressures then. For Macron the circumstances might be more acute than for Starmer, but even in the UK there is plenty of talk as to how he could be ousted and who could take over. A pivot by either Macron or Starmer, to either swing policy to placate voters with "easy" policy or in the case of France roll the dice with an election, could go very wrong.

What the IMF was to the UK in 1976, could become the ECB to France if voters reject Macron and the policies that are needed. The UK's next election isn't due until 2028, but the circumstances look similar. The unfortunate lesson from the UK in the 1970s is that the required policies are right there. It's just a question of time and pain until they are accepted.

. . .

Tyler Durden Fri, 10/10/2025 - 09:05

Rise Of The Conservatives- "The EU's Worst Nightmare Has Never Looked So Real"

Rise Of The Conservatives- "The EU's Worst Nightmare Has Never Looked So Real"

Authored by Liz Heflin via Remix News,

After the election of Donald Trump, conservatives in Hungary were rejoicing, but nobody could have predicted the recent wave of subsequent wins: Nawrocki in Poland, Babis in Czechia, of course, we already have Fico in Slovakia, and now perhaps even Macron in France.

In the words of Politico, “victory for Marine Le Pen’s National Rally is now distinctly possible.”

On no. 

In their article aptly titled “The EU’s worst nightmare has never looked so real,” a National Rally win would mean “a Euroskeptic, far-right figure might soon speak for France in the EU’s core institutions, adding to a growing chorus of populist, right-wing voices.”

“We are used to continuing to function with a lot of shocks,” boasted a European Commission official. Said “shocks” rightfully included war in Ukraine and Covid-19 lockdowns, but this official made sure to also include “a kind of light dictatorship in Budapest.”

Because dealing with Orbán is allegedly on par with Russian aggression and a global epidemic…

But somehow, the EU has bravely functioned… so far.

Because now, a win for Le Pen (her party) would destroy everything, so the ruling autocrats in Brussels maintain. 

At stake are sanctions against Putin, support for Ukraine, NATO integrity and EU-wide defense policy, and—sacred to the EU—climate regulations and green energy. Oddly, the article fails to mention anything about illegal migration and the EU’s migrant quota scheme. 

On the topic of Ukraine, peace seems far off. Zelensky has extended martial law and canceled elections this month, Moscow is threatening “consequences” for the use of U.S. Tomahawks, and former Kremlin chief Dmitry Medvedev was in North Korea, where he ominously stated: “The friends are together. The enemies are getting nervous,” reports Welt. 

For many, a change in tack in Brussels couldn’t come soon enough. 

Read more here...

Tyler Durden Fri, 10/10/2025 - 09:05

Futures Flat As Global AI Frenzy Pauses

Futures Flat As Global AI Frenzy Pauses

US equity futures are flat as markets took a breather at the end of another "buy-everything" week dominated by speculation about the sustainability of the blistering global equity rally. As of 8:00am ET, S&P 500 were unchanged, with the gauge on track for a modest weekly gain to a new record high despite yesterday's pullback and with the US government shutdown in its second week with no end in sight and the economic data drought depriving investors of guidance (which appears to be bullish). Intel rose in premarket trading after the US government-backed chipmaker introduced new products. Pre-market, Mag 7 are mostly lower; AMZN, TSLA and AAPL are among the major underperformers. Qualcomm declined as China started an antitrust probe into its acquisition of a connected-vehicle technology firm. Overnight headlines/developments in the US were mostly muted as investors continue to watch the US government shutdown, US-China negotiations (China opens antitrust probe into Qualcomm) and Japan’s political developments (Komeito quits ruling coalition; decades-old ruling coalition collapses). Bond yields are 1-4bp lower; USD is lower. Oil is lower; base metals are higher. Gold prices slipped below $4,000/oz, and silver is flirting with $50. The US economic calendar calendar includes October preliminary University of Michigan sentiment (10am) and September federal budget balance (2pm), the latter subject to postponement by government shutdown. Fed speaker slate includes Goolsbee (9:45am) and Musalem (1pm)

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

  • Alliance Laundry Holdings is down 2.1%, set to pare gains after the washer and dryer maker’s stock jumped 13% in its debut session).
  • Applied Digital (APLD) rallies 25% after the firm said it’s now in advanced discussions with a hyperscaler client for its second data center campus in North Dakota. First-quarter revenue was well ahead of estimates due to one-time income from tenant fit-out services.
  • Centrus Energy (LEU) rises 2.4% after Evercore ISI raised its price target on the uranium company to a Street-high $452 from $252 as it sees uranium demand for nuclear energy growing.
  • Elastic (ESTC) is up 9.1% after the software firm boosted its full-year 2026 sales forecast for a second time in two months and announced a $500 million buyback program.
  • Levi Strauss (LEVI) falls 6.3% after the apparel maker’s upgraded earnings guidance still fell short of higher investor expectations following the stock’s 42% rally this year. One key disappointment, according to analysts, is earnings growth failing to match the pace of sales expansion due to tariff and distribution costs.
  • Mosaic (MOS) falls 10% after the fertilizer company said that third-quarter phosphate production fell below what management expected, citing mechanical issues at one plant and utility interruptions at another. Preliminary sales volumes for phosphates fell short of what analysts expected.
  • nCino Inc. (NCNO) rises 2.9% after William Blair upgraded the cloud-banking company to outperform from market perform.
  • Qualcomm (QCOM) drops 1.4% on an antitrust investigation in China over the takeover of connected-vehicle technology provider Autotalks.
  • Venture Global Inc. (VG) is down 18% as the company potentially faces multibillion-dollar damages over disputed liquefied natural gas shipments, after an unexpected loss in a landmark BP Plc arbitration that could pave the way for additional claims.

Investors have flocked into everything from stocks to bonds and cryptocurrencies, underscoring resilient risk appetite and pushing global stocks more than 30% from their April lows, leading investors to reassess stretched valuations in the tech sector against the backdrop of easier Federal Reserve policy and a resilient economy. Traders are looking to the upcoming earnings season to gauge whether share prices have run ahead of fundamentals. Equity funds drew $20 billion for the week ended Oct. 8 according to BofA citing EPFR data, with US stocks posting a 4th week of inflows at $14.2 billion. Tech’s significance in index weightings was highlighted by Apollo’s Chief Economist Torsten Slok, who says each worker in the US is putting $2,300 into Mag-7 stocks each year through their 401(k) accounts, on average. Separately Bloomberg echoes what MS warned last week, namely that a surge in trading volume is raising fears that retail’s favorite positions are getting dangerously crowded.

While tech has led the way in the S&P 500’s rebound, other sectors such as electrical equipment makers and construction firms have also benefited from AI spending, broadening the rally, according to Wolf von Rotberg, an equity strategist at Bank J Safra Sarasin. But with the benchmark now at its most expensive in almost 25 years, based on the estimated price-to-earnings ratio, valuations are looking too rich for comfort, he said.

“Even though the AI narrative has been undisrupted lately, we would caution against chasing the market after such a strong rally and at these valuations,” Von Rotberg said.

Meanwhile, as Trump’s standoff with Congress stretches into its second week there’s some hope on the data front: the Bureau of Labor Statistics has recalled staff to compile a key inflation report by month’s end that could help guide the Fed’s next move. 

Overnight, Japan’s governing coalition collapsed Friday, delivering a major blow to new ruling party leader Sanae Takaichi and jolting markets as a key partnership that has contributed to stability in politics for the past quarter century fell apart.

In trade, Trump and Xi Jinping are maneuvering for leverage ahead of their upcoming meeting. China has unveiled sweeping new curbs on its exports of rare earths and other critical materials, and will start collecting port fees on ships owned by American companies and individuals, as well as vessels made in the US.

Next week Q3 earnings begins, and the upcoming earnings season will be keenly watched for validation of the surge in AI-focused technology companies, which has fueled a debate over whether prices are running ahead of fundamentals. In terms of AI, focus will be on ASML’s bookings on Wednesday. 

European stocks are little changed, led by energy companies and miners. France’s CAC 40 index fluctuated as President Emmanuel Macron continued his search for a new prime minister capable of holding together a fragile budget accord among rival lawmakers.  Auto and consumer products shares outperformed, while energy and mining sectors were among the biggest laggards. Stoxx 600 is steady at 571.15 with 233 members down, 347 up, and 20 little changed. Among individual movers in Europe, Stellantis NV gained after the carmaker reported that third-quarter deliveries climbed 13% on surging sales in North America. Here are some of the biggest European movers today:

  • Mercedes-Benz shares rise as much as 3.3%, the most since July, as Jefferies analysts say free cash flow for the third quarter will be above the carmaker’s prior expectations
  • Jyske Bank shares gain as much as 4.8% to a fresh record high after the Danish lender upgraded its FY outlook
  • Hays shares rise 4% after the recruitment company posted a drop in net fees that was in-line with guidance, a performance that’s proving enough to sustain the rebound
  • Atrium Ljungberg shares gain as much as 5.9% after the Swedish property firm reported rental income for the third quarter that beat the average analyst estimate
  • Moneta Money Bank shares climb as much as 4.3%, hitting an all-time high, after the company proposed paying an extraordinary dividend late on Thursday
  • DNB Bank shares gain as much as 2.8%, the most since May, as Kepler Cheuvreux raised its price target on the Norwegian lender ahead of its third-quarter report
  • Brenntag shares decline as much as 3.1% following a downgrade to sell from neutral at UBS, which expects end markets to remain weak
  • Energiekontor shares plunge as much as 21%, the most since 2020, after the onshore wind and solar developer slashed its earnings outlook for the financial year
  • Endomines Finland shares fall much as 13% after the mining company said Chief Financial Officer Minni Lempinen had resigned
  • Ibstock shares fall as much as 15% to the lowest since 2016, as the brickmaker cautions that uncertainty in its core construction markets led to weaker-than-expected demand
  • Idorsia shares fell as much as 15% to CHF3.9 per share, after the company sold 16.4 million shares for CHF4 apiece in an overnight placing
  • Mycronic shares fall as much as 8.9% after Bank of America initiated coverage of the Swedish electronics manufacturing equipment maker with an underperform rating

Earlier in the session, Asian stocks slid, putting the regional benchmark on track for a weekly loss, with Japanese equities leading the declines amid concerns over high valuations in the tech sector. The MSCI Asia Pacific Index fell as much as 0.9%, heading for its third drop in four sessions. Japan’s Topix was the region’s biggest loser, slipping 1.9% after closing at a record on Thursday. Investors are also keenly awaiting the outcome of talks between the ruling party and Komeito regarding the formation of a coalition government. The yen extended gains against the dollar after Japan’s ruling coalition collapsed Friday. Nikkei 225 futures in Singapore fell and Japanese bond futures rose. Chinese equities on the mainland and in Hong Kong also declined, with the chip sector being among the top losers. The CSI 300 Index lost almost 2%, more than erasing its advance from Thursday, when local markets reopened after a week-long break. Meanwhile, South Korean stocks rallied as trading resumed after a string of public holidays, propelling the benchmark Kospi to a record high and taking its advance for this year to more than 50%. Shares of technology heavyweights Samsung Electronics and SK Hynix surged.

In FX, the Bloomberg Dollar Spot Index is down 0.1% after a four-day gain. The yen rises 0.2% against the dollar, pulling USD/JPY back below 153 after talks between LDP chief Takaichi and junior partner Komeito leader Saito collapsed. Elsewhere, the Argentine peso rebounded after the US rushed to stabilize the country’s economy, offering $20 billion in financing and carrying out a rare intervention in currency markets after weeks of sharp declines.

In rates, treasuries hold long-end-led gains in early US session, underpinned by a bigger curve-flattening advance in UK bond market. French bonds also gain, with President Emmanuel Macron expected to name a new prime minister by end of day.  US yields are 1.5bp-3.5bp richer across the curve with 2s10s flatter by nearly 2bp, 5s30s by about 1bp; 10-year is lower by 3bp near 4.11% with gilts outperforming by an additional 1bp in the sector. Also supporting Treasuries, WTI crude oil futures are down 1.2% on cautious optimism about easing tensions in the Middle East and the outlook for supply. European government bonds also advance with another slight narrowing of the OAT-bund spread. Still, the MSCI Asia Pacific is down 0.6% this week. It climbed in four of the previous five weeks. Indian stocks extended gains, with the NSE Nifty 50 index on track for its best week since June, as foreign investors turned net buyers of local shares in recent sessions.

In commodities, spot gold rises back to around $4,000/oz while silver jumps 2.5% and above $50/oz. WTI crude futures fall 0.7% to $61 a barrel.

Today's US economic calendar includes October preliminary University of Michigan sentiment (10am) and September federal budget balance (2pm), the latter subject to postponement by government shutdown. Fed speaker slate includes Goolsbee (9:45am) and Musalem (1pm)

Market Snapshot

  • S&P 500 mini little changed
  • Nasdaq 100 mini little changed
  • Russell 2000 mini +0.3%
  • Stoxx Europe 600 little changed
  • DAX little changed
  • CAC 40 +0.2%
  • 10-year Treasury yield -3 basis points at 4.11%
  • VIX +0.1 points at 16.48
  • Bloomberg Dollar Index little changed at 1215.1
  • euro little changed at $1.1572
  • WTI crude -0.7% at $61.07/barrel

Top overnight news

  • Bessent is finalizing the first round of interviews for the next Fed Chair this week, according to FBN citing sources. It was also reported that Former Fed governor Larry Lindsey withdraws name from consideration for US Fed Chair position: BBG 
  • NYAG Letitia James was indicted by the US Department of Justice, while she stated that the indictment is nothing more than a continuation of the President's desperate weaponization of the justice system, and she will fight these charges aggressively.
  • Trump said some Democrats are calling him to reopen the government, and he will be making permanent cuts to Democratic programmes in the shutdown.
  • House Speaker Johnson said the House remains on a 48-hour notice to return to Washington, while it was noted that "This is a sign that the House does not plan to come back next week -- as of now": Punchbowl
  • US Bureau of Labor Statistics is preparing to release a September CPI report despite the shutdown. Staff have been recalled for the preparation of the publication of the report by the end of the month. US CPI was scheduled to be released on October 15th: BBG
  • Vessels owned or operated by U.S. firms and individuals - or those built in the United States or that fly the U.S. flag - will be charged additional port fees per voyage starting on October 14, China's transport ministry said. The fees are a counter-measure against upcoming U.S. port fees on Chinese ships, the ministry said on Friday. RTRS
  • Japan’s ruling coalition collapsed after Komeito withdrew its support for Sanae Takaichi’s Liberal Democratic Party, in a major setback for the new LDP leader before even securing the role of PM. The yen gained and Japanese bond futures rose. BBG
  • Nvidia and AMD would have to ensure US companies get priority access to their AI chips before China, under a bill passed by the Senate. Additionally, China launched a customs crackdown on Nvidia chips. BBG
  • China slapped new port fees on US ships and started an antitrust investigation into Qualcomm Inc., the latest in a string of tit-for-tat moves as Presidents Xi Jinping and Donald Trump jockey for leverage before a key meeting to discuss trade and other issues. BBG
  • Israel’s government approved a deal to free the remaining hostages held in Gaza in exchange for over 2,000 prisoners, a key step toward a broader peace accord. Donald Trump plans to visit Israel to welcome their return. Gazans are questioning if a ceasefire, in effect since noon local time, will hold and who’ll administer the territory. BBG
  • Russia hit Kyiv with a drone and missile attack that left parts of the capital without power and disrupted water supply. BBG
  • Insurers are preparing for  a wave of potential claims relating to First Brand Group’s bankruptcy, as one of Wall Street’s biggest debacles in years ripples through the financial system. FT
  • Atlanta Fed President Bostic is shifting his views and isn’t as hawkish (worried about inflation) as before given softening employment dynamics. Barron’s
  • The BLS recalled staff to finish the September CPI report by month’s end, a person familiar said. Originally set for release on Oct. 15, the data may now be ready in time for the Fed’s Oct. 28-29 meeting. BBG
  • Federal Reserve Board announces expanded operating days of two large-value payments services, Fedwire® Funds Service and the National Settlement Service (NSS), to include Sundays and weekday holidays.

Trade/Tariffs

  • China reportedly launched a customs crackdown on NVIDIA (NVDA) AI chips, according to FT, which reported that China stepped up enforcement of its controls on chip imports, as Beijing seeks to wean the country’s tech companies away from US products such as NVIDIA's AI processors.
  • US President Trump said maybe they will have to stop importing massive amounts from China, and he wants to discuss soybeans with Chinese President Xi, while he said regarding China export controls, that Commerce Secretary Lutnick and Treasury Secretary Bessent will sort out.
  • US President Trump said tariffs are only good if you want your country to be rich, influential, and powerful, while he added that if you want your country to be a third-world country, you should vote against tariffs.
  • US Treasury Secretary Bessent said he believes the Chinese will come back at the end of the season and buy soybeans, while Bessent said India is going to start rebalancing over the next few weeks and months, in favour of US oil and will buy less Russian oil.
  • US President Trump's administration said the US and Saudi Arabia are making progress on an agreement to allow US chip companies to export semiconductors to Saudi Arabia and could finalise a deal soon, according to WSJ.
  • US Commerce Department reportedly probes Singapore company Megaspeed over chip export rules to see if it helped China companies avoid chip rules, according to NYT, which noted that Megaspeed is set to purchase USD 2bln of NVIDIA (NVDA) AI technology in the next year.
  • Japan's government said tariff negotiator Akazawa spoke with US Commerce Secretary Lutnick by phone, and they confirmed to smooth the implementation of the trade agreement to further strengthen ties.
  • Indian PM Modi said he spoke with US President Trump and reviewed the good progress achieved in trade negotiations, while they agreed to stay in close touch over the coming weeks.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly lower following the negative handover from Wall Street, where the stock market and gold prices pulled back from record levels, while the KOSPI outperformed against its regional counterparts on return from its extended holiday. ASX 200 lacked direction amid quiet catalysts and as weakness in the mining and materials sectors offset the strength in tech and financials. Nikkei 225 retreated following the firmer-than-expected PPI data, although participants also digested earnings updates, including from index heavyweight Fast Retailing, which was the biggest gainer after it reported a double-digit percentage increase in 6-month net. Hang Seng and Shanghai Comp conformed to the downbeat mood as trade frictions resurfaced following China's announcement of export controls on rare earth and items related to lithium batteries, while US President Trump commented that maybe they will have to stop importing massive amounts from China. US equity futures eked marginal gains in a frail attempt to nurse some of the  prior day's losses. European equity futures indicate an uneventful/subdued cash market open with Euro Stoxx 50 futures -0.1% after the cash market closed with losses of 0.4% on Thursday.

Top Asian News

  • Japanese Finance Minister Kato said they are recently seeing one-sided, rapid moves, and it is important for currencies to move in a stable manner reflecting fundamentals, while he added they will thoroughly monitor for excessive fluctuations and disorderly movements in the forex market.

FX

  • DXY traded flat overnight and took a pause from the recent strengthening trend, with comments from Fed officials doing little to spur price action in which Barr argued for a cautious approach and stated that recent spending data suggested GDP growth remained strong in Q3, while Daly said inflation has come in much less than had feared and the labour market is at a point where softening looks like it could be more worrisome if they don't risk manage it. Furthermore, there is a continued lack of progress regarding the government shutdown impasse, although it was reported that the Bureau of Labor Statistics is preparing to release the September CPI report despite the shutdown.
  • EUR/USD marginally rebounded off the prior day's lows but with the recovery limited by a lack of bullish drivers, with the single currency loitering in sub-1.1600 territory, while the prior day's ECB minutes lacked fireworks and reiterated that there was no immediate pressure to change rates at the meeting.
  • GBP/USD nursed some losses and just about returned to the 1.3300 handle but with upside capped in quiet newsflow.
  • USD/JPY gradually retreated beneath 153.00 following firmer-than-expected PPI data and a rehash of jawboning from Japanese Finance Minister Kato.
  • Antipodeans clawed back some of the prior day's losses after the PBoC strengthened the yuan reference rate setting, but with gains contained amid the mostly subdued risk sentiment and a lack of notable data releases.
  • US Treasury Secretary Bessent said they directly purchased Argentine Pesos (ARS) and have finalised a USD 20bln currency swap framework with Argentina’s central bank.

Fixed Income

  • 10yr UST futures rebounded off the prior day's trough, albeit with upside capped following an average 30yr US auction.
  • Bund futures nursed some losses in quiet trade amid a lack of pertinent catalysts and tier-1 releases scheduled for the bloc.
  • 10yr JGB futures kept afloat but lacked conviction following the firmer-than-expected PPI data from Japan.

Commodities

  • Crude futures were lacklustre after trimming some of their weekly gains yesterday amid a rising dollar and Gaza agreement.
  • Saudi crude oil supply to China is set to fall to about 40mln barrels in November vs 51mln barrels in October, according to sources cited by Reuters.
  • US President Trump said gasoline is to be below USD 2 in the near future.
  • Spot gold remained subdued after pulling back from record highs to beneath the USD 4,000/oz level.
  • Copper futures declined amid the mostly downbeat mood, including in its largest buyer, China, as trade tensions resurfaced.

Geopolitics: Middle East

  • Israeli PM Netanyahu's office said Israel's government approved the Gaza plan for the release of all hostages. It was earlier reported that the Israeli PM's office said forces will not leave Gaza unless they are guaranteed there is no threat posed, while it added the mission in Gaza is not over.
  • Hamas chief said they declared an end to the war today and the start of a permanent ceasefire, while the agreement includes opening the Rafah crossing in both directions and will see the release of all jailed Palestinians. Furthermore, the group received guarantees from mediators and the US administration confirming that the war has completely ended.
  • US President Trump said they ended the war in Gaza and thinks there will be lasting peace, while he said hostages will be released on Monday or Tuesday. Furthermore, he will try to go to the Middle East and will have a signing in Egypt.
  • US President Trump said Iran wants to work on peace and that he will work with Iran.
  • US President Trump's special Envoy Kushner said "We’ve made a deal here that isolates Hamas and encourages actors in the Arab world to pursue peace. This agreement ensures Israel’s security. If we need to act with force, we will. It will either happen the easy way or the hard way."
  • US senior official said, hopefully, the Gaza deal will lead to an opportunity to expand the Abraham Accords. It was also stated that there will be 200 US troops deployed for Gaza as part of a joint task force which will include troops from Egypt and Qatar.
  • Yemen's Houthi leader said the group is to monitor Israel's compliance with the Gaza ceasefire agreement and will resume support for Gaza if Israel breaches the agreement.

Geopolitics: Ukraine

  • US President Trump said the Russia-Ukraine war will be solved and that he might impose more sanctions on Russia.
  • Ukrainian Energy Ministry said Russian forces launched mass attacks on Ukrainian energy targets, while a Ukrainian official later stated that electricity was cut off in the entire eastern Ukraine following the Russian attack, according to Sky News Arabia.

Geopolitics: Other

  • UN Security Council will meet on Friday regarding tensions between the US and Venezuela, according to diplomats.
  • Taiwan's President said they will accelerate their building of the T-Dome and establish a rigorous air defence system in Taiwan with multi-layered defence, high-level detection, and effective interception.

US Event Calendar

  • 10:00 am: Oct P U. of Mich. Sentiment, est. 54, prior 55.1
  • 2:00 pm: Sep Federal Budget Balance, est. 60b, prior -344.79b

Central Banks (All Times ET):

  • 9:45 am: Fed’s Goolsbee Gives Opening Remarks
  • 1:00 pm: Fed’s Musalem Speaking at Springfield Area Chamber of Commerce

DB's Jim Reid concludes the overnight wrap

Markets have struggled for momentum over the last 24 hours, as investors question how long this rally can persist, whilst concern grew about an extended government shutdown in the US. So that’s meant equities saw a modest pullback, with the S&P 500 (-0.28%) and Europe’s STOXX 600 (-0.43%) both coming off their record highs, alongside even bigger declines in Asia overnight. This pattern was clear across multiple asset classes, as 10yr Treasury yields (+2.1bps) moved up to 4.138%, and US HY spreads (+9bps) saw their biggest daily jump in over a month, which signalled a bit more caution after the relentless run in recent weeks. Even gold prices (-1.61%) lost ground after their own surge recently, slipping back beneath the $4,000/oz mark to close at $3,977/oz.

Of course, the mood music hasn’t been helped by the government shutdown, which is now entering its 10th day. And the fear is that the longer it lasts, the worse the economic impact will be, as increasing numbers of workers miss paychecks from here. So even if they end up getting back pay like in previous shutdowns, there’s still a near-term impact. In terms of the latest, there are no signs yet of a compromise emerging between Republicans and Democrats, and expectations for a near-term resolution are continuing to decline. Indeed, the Polymarket odds of the shutdown ending before October 15 are down to just 8%.

If the shutdown does persist into next week, we won’t get the CPI release on Wednesday, which will leave us increasingly uncertain about the US economy. Interestingly though, Bloomberg reported yesterday that the Bureau of Labor Statistics had recalled staff in the shutdown to prepare the September CPI release, according to a Labor Department official who knew about the matter. The report said they were directed to complete it for release by the end of the month. So if it were released, that would mean it could be used for the annual cost-of-living adjustment (COLA) for recipients of Social Security, which takes the Q3 CPI numbers. Another important date is the Fed’s next decision on October 29, so depending on the timing of any release and the shutdown’s progress, this could mean the CPI might be available then too.

For now at least, this lack of data means we’re flying blind to some extent on the US economy, and we still don’t have the September payrolls report that was meant to come out a week ago. However, one release to keep an eye on today will be the University of Michigan’s preliminary consumer sentiment index for October. It’s historically seen a meaningful drop around government shutdowns, and our US economists expect a meaningful five-point decline this month to 50.1. Remember that the last shutdown in 2018-19 went on for a record 35 days, and it’s clear from Polymarket that even if people think an October conclusion is still the most likely, the prospect of it rolling into November is being considered a serious one now.

This backdrop saw US equities slip back from their record high on Wednesday, with the S&P 500 (-0.28%) and the NASDAQ (-0.08%) both posting modest declines. 74% of S&P 500 constituents were down on the day as the selloff was relatively widespread. To be fair, it wasn’t all bad news, and the Magnificent 7 (+0.05%) moved up a little thanks to advances from Meta (+2.18%) and Nvidia (+1.83%). However, it would have been an even worse day without that support from the Mag 7, and the equal-weighted S&P 500 fell -0.42%, which is its worst performance in two weeks. Meanwhile, US Treasuries struggled to gain traction across the curve, with the 2yr yield (+1.2bps) rising to 3.59%, whilst the 10yr yield (+2.1bps) reached 4.138%. And this was seen in credit too, with US HY spreads (+9bps) and IG spreads (+2bps) seeing their biggest jump in over a month.

Over in Europe, French assets continued to stabilise yesterday from their losses at the start of the week, and President Macron is set to appoint a new PM by the end of today. Clearly, that new PM is still going to face a National Assembly that’s fractured between divergent political groups, just as the recent PMs have also faced. However, the speculation about a fresh legislative election has abated, which has helped to remove one potential source of near-term uncertainty for investors. In turn, that meant the Franco-German 10yr spread tightened for a second day to 82bps. And that’s been echoed for equities too, where the CAC 40 (-0.23%) outpaced the Europe-wide STOXX 600 (-0.43%) for a third day running. Indeed, it was a contrast with the more negative mood elsewhere, and Italy’s FTSE MIB (-1.59%) posted its biggest fall in a month after Ferrari (-15.41%) plunged following its forecast that disappointed investors.

Otherwise in Europe, we did get the ECB’s accounts from its September meeting, which cemented investors’ conviction that the ECB is now done with rate cuts. So that helped yields to move higher across the continent, with an increase for 10yr bunds (+2.5bps), OATs (+1.0bps) and BTPs (+3.2bps). That also came amidst a fresh package of reforms from the German coalition government, which includes tighter restrictions on social welfare payments, changes to the pension system, and purchase incentives for electric cars.

Elsewhere, Brent crude oil prices (-1.55%) fell back to $65.22/bbl yesterday. In part, that was down to the broader risk-off tone, but the prospect of lower tensions in the Middle East also helped. Overnight, that trend has continued as well, with Brent crude down another -0.40% to $64.96/bbl, which comes as Israeli PM Netanyahu’s office said that the cabinet had approved the framework of the hostage deal. Interestingly, gold prices (-1.61%) also fell back from the previous day’s record to $3,977/oz, losing ground after a +4% run over Monday-Wednesday, and that trend has similarly continued overnight, with a further -0.42% decline.

This more negative theme has continued into Asia this morning, with equity losses across the region, including for the Nikkei (-1.01%), the Hang Seng (-1.14%), the CSI 300 (-1.25%) and the Shanghai Comp (-0.51%). Over in Japan, we also got the news that PPI inflation was stronger than expected in September, remaining at +2.7% (vs. +2.5% expected). So that’s seen 10yr government bond yields (+0.7bps) rise to another post-2008 high of 1.69%, whilst the yen has strengthened a bit to 152.78 per dollar. That came as the new LDP leader Sanae Takaichi said in an interview that “I have no intention of triggering an excessively weak yen.” However, there have been some brighter spots overnight, with South Korea’s KOSPI (+1.35%) on track for a new record, whilst futures on the S&P 500 are up +0.11%.

To the day ahead now, and in the US we’ll get the University of Michigan’s October survey, along with Italy’s industrial production for August and Canada’s employment report for September. Otherwise, Fed speakers today include Goolsbee and Musalem.

Tyler Durden Fri, 10/10/2025 - 08:53

Futures Flat As Global AI Frenzy Pauses

Futures Flat As Global AI Frenzy Pauses

US equity futures are flat as markets took a breather at the end of another "buy-everything" week dominated by speculation about the sustainability of the blistering global equity rally. As of 8:00am ET, S&P 500 were unchanged, with the gauge on track for a modest weekly gain to a new record high despite yesterday's pullback and with the US government shutdown in its second week with no end in sight and the economic data drought depriving investors of guidance (which appears to be bullish). Intel rose in premarket trading after the US government-backed chipmaker introduced new products. Pre-market, Mag 7 are mostly lower; AMZN, TSLA and AAPL are among the major underperformers. Qualcomm declined as China started an antitrust probe into its acquisition of a connected-vehicle technology firm. Overnight headlines/developments in the US were mostly muted as investors continue to watch the US government shutdown, US-China negotiations (China opens antitrust probe into Qualcomm) and Japan’s political developments (Komeito quits ruling coalition; decades-old ruling coalition collapses). Bond yields are 1-4bp lower; USD is lower. Oil is lower; base metals are higher. Gold prices slipped below $4,000/oz, and silver is flirting with $50. The US economic calendar calendar includes October preliminary University of Michigan sentiment (10am) and September federal budget balance (2pm), the latter subject to postponement by government shutdown. Fed speaker slate includes Goolsbee (9:45am) and Musalem (1pm)

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

  • Alliance Laundry Holdings is down 2.1%, set to pare gains after the washer and dryer maker’s stock jumped 13% in its debut session).
  • Applied Digital (APLD) rallies 25% after the firm said it’s now in advanced discussions with a hyperscaler client for its second data center campus in North Dakota. First-quarter revenue was well ahead of estimates due to one-time income from tenant fit-out services.
  • Centrus Energy (LEU) rises 2.4% after Evercore ISI raised its price target on the uranium company to a Street-high $452 from $252 as it sees uranium demand for nuclear energy growing.
  • Elastic (ESTC) is up 9.1% after the software firm boosted its full-year 2026 sales forecast for a second time in two months and announced a $500 million buyback program.
  • Levi Strauss (LEVI) falls 6.3% after the apparel maker’s upgraded earnings guidance still fell short of higher investor expectations following the stock’s 42% rally this year. One key disappointment, according to analysts, is earnings growth failing to match the pace of sales expansion due to tariff and distribution costs.
  • Mosaic (MOS) falls 10% after the fertilizer company said that third-quarter phosphate production fell below what management expected, citing mechanical issues at one plant and utility interruptions at another. Preliminary sales volumes for phosphates fell short of what analysts expected.
  • nCino Inc. (NCNO) rises 2.9% after William Blair upgraded the cloud-banking company to outperform from market perform.
  • Qualcomm (QCOM) drops 1.4% on an antitrust investigation in China over the takeover of connected-vehicle technology provider Autotalks.
  • Venture Global Inc. (VG) is down 18% as the company potentially faces multibillion-dollar damages over disputed liquefied natural gas shipments, after an unexpected loss in a landmark BP Plc arbitration that could pave the way for additional claims.

Investors have flocked into everything from stocks to bonds and cryptocurrencies, underscoring resilient risk appetite and pushing global stocks more than 30% from their April lows, leading investors to reassess stretched valuations in the tech sector against the backdrop of easier Federal Reserve policy and a resilient economy. Traders are looking to the upcoming earnings season to gauge whether share prices have run ahead of fundamentals. Equity funds drew $20 billion for the week ended Oct. 8 according to BofA citing EPFR data, with US stocks posting a 4th week of inflows at $14.2 billion. Tech’s significance in index weightings was highlighted by Apollo’s Chief Economist Torsten Slok, who says each worker in the US is putting $2,300 into Mag-7 stocks each year through their 401(k) accounts, on average. Separately Bloomberg echoes what MS warned last week, namely that a surge in trading volume is raising fears that retail’s favorite positions are getting dangerously crowded.

While tech has led the way in the S&P 500’s rebound, other sectors such as electrical equipment makers and construction firms have also benefited from AI spending, broadening the rally, according to Wolf von Rotberg, an equity strategist at Bank J Safra Sarasin. But with the benchmark now at its most expensive in almost 25 years, based on the estimated price-to-earnings ratio, valuations are looking too rich for comfort, he said.

“Even though the AI narrative has been undisrupted lately, we would caution against chasing the market after such a strong rally and at these valuations,” Von Rotberg said.

Meanwhile, as Trump’s standoff with Congress stretches into its second week there’s some hope on the data front: the Bureau of Labor Statistics has recalled staff to compile a key inflation report by month’s end that could help guide the Fed’s next move. 

Overnight, Japan’s governing coalition collapsed Friday, delivering a major blow to new ruling party leader Sanae Takaichi and jolting markets as a key partnership that has contributed to stability in politics for the past quarter century fell apart.

In trade, Trump and Xi Jinping are maneuvering for leverage ahead of their upcoming meeting. China has unveiled sweeping new curbs on its exports of rare earths and other critical materials, and will start collecting port fees on ships owned by American companies and individuals, as well as vessels made in the US.

Next week Q3 earnings begins, and the upcoming earnings season will be keenly watched for validation of the surge in AI-focused technology companies, which has fueled a debate over whether prices are running ahead of fundamentals. In terms of AI, focus will be on ASML’s bookings on Wednesday. 

European stocks are little changed, led by energy companies and miners. France’s CAC 40 index fluctuated as President Emmanuel Macron continued his search for a new prime minister capable of holding together a fragile budget accord among rival lawmakers.  Auto and consumer products shares outperformed, while energy and mining sectors were among the biggest laggards. Stoxx 600 is steady at 571.15 with 233 members down, 347 up, and 20 little changed. Among individual movers in Europe, Stellantis NV gained after the carmaker reported that third-quarter deliveries climbed 13% on surging sales in North America. Here are some of the biggest European movers today:

  • Mercedes-Benz shares rise as much as 3.3%, the most since July, as Jefferies analysts say free cash flow for the third quarter will be above the carmaker’s prior expectations
  • Jyske Bank shares gain as much as 4.8% to a fresh record high after the Danish lender upgraded its FY outlook
  • Hays shares rise 4% after the recruitment company posted a drop in net fees that was in-line with guidance, a performance that’s proving enough to sustain the rebound
  • Atrium Ljungberg shares gain as much as 5.9% after the Swedish property firm reported rental income for the third quarter that beat the average analyst estimate
  • Moneta Money Bank shares climb as much as 4.3%, hitting an all-time high, after the company proposed paying an extraordinary dividend late on Thursday
  • DNB Bank shares gain as much as 2.8%, the most since May, as Kepler Cheuvreux raised its price target on the Norwegian lender ahead of its third-quarter report
  • Brenntag shares decline as much as 3.1% following a downgrade to sell from neutral at UBS, which expects end markets to remain weak
  • Energiekontor shares plunge as much as 21%, the most since 2020, after the onshore wind and solar developer slashed its earnings outlook for the financial year
  • Endomines Finland shares fall much as 13% after the mining company said Chief Financial Officer Minni Lempinen had resigned
  • Ibstock shares fall as much as 15% to the lowest since 2016, as the brickmaker cautions that uncertainty in its core construction markets led to weaker-than-expected demand
  • Idorsia shares fell as much as 15% to CHF3.9 per share, after the company sold 16.4 million shares for CHF4 apiece in an overnight placing
  • Mycronic shares fall as much as 8.9% after Bank of America initiated coverage of the Swedish electronics manufacturing equipment maker with an underperform rating

Earlier in the session, Asian stocks slid, putting the regional benchmark on track for a weekly loss, with Japanese equities leading the declines amid concerns over high valuations in the tech sector. The MSCI Asia Pacific Index fell as much as 0.9%, heading for its third drop in four sessions. Japan’s Topix was the region’s biggest loser, slipping 1.9% after closing at a record on Thursday. Investors are also keenly awaiting the outcome of talks between the ruling party and Komeito regarding the formation of a coalition government. The yen extended gains against the dollar after Japan’s ruling coalition collapsed Friday. Nikkei 225 futures in Singapore fell and Japanese bond futures rose. Chinese equities on the mainland and in Hong Kong also declined, with the chip sector being among the top losers. The CSI 300 Index lost almost 2%, more than erasing its advance from Thursday, when local markets reopened after a week-long break. Meanwhile, South Korean stocks rallied as trading resumed after a string of public holidays, propelling the benchmark Kospi to a record high and taking its advance for this year to more than 50%. Shares of technology heavyweights Samsung Electronics and SK Hynix surged.

In FX, the Bloomberg Dollar Spot Index is down 0.1% after a four-day gain. The yen rises 0.2% against the dollar, pulling USD/JPY back below 153 after talks between LDP chief Takaichi and junior partner Komeito leader Saito collapsed. Elsewhere, the Argentine peso rebounded after the US rushed to stabilize the country’s economy, offering $20 billion in financing and carrying out a rare intervention in currency markets after weeks of sharp declines.

In rates, treasuries hold long-end-led gains in early US session, underpinned by a bigger curve-flattening advance in UK bond market. French bonds also gain, with President Emmanuel Macron expected to name a new prime minister by end of day.  US yields are 1.5bp-3.5bp richer across the curve with 2s10s flatter by nearly 2bp, 5s30s by about 1bp; 10-year is lower by 3bp near 4.11% with gilts outperforming by an additional 1bp in the sector. Also supporting Treasuries, WTI crude oil futures are down 1.2% on cautious optimism about easing tensions in the Middle East and the outlook for supply. European government bonds also advance with another slight narrowing of the OAT-bund spread. Still, the MSCI Asia Pacific is down 0.6% this week. It climbed in four of the previous five weeks. Indian stocks extended gains, with the NSE Nifty 50 index on track for its best week since June, as foreign investors turned net buyers of local shares in recent sessions.

In commodities, spot gold rises back to around $4,000/oz while silver jumps 2.5% and above $50/oz. WTI crude futures fall 0.7% to $61 a barrel.

Today's US economic calendar includes October preliminary University of Michigan sentiment (10am) and September federal budget balance (2pm), the latter subject to postponement by government shutdown. Fed speaker slate includes Goolsbee (9:45am) and Musalem (1pm)

Market Snapshot

  • S&P 500 mini little changed
  • Nasdaq 100 mini little changed
  • Russell 2000 mini +0.3%
  • Stoxx Europe 600 little changed
  • DAX little changed
  • CAC 40 +0.2%
  • 10-year Treasury yield -3 basis points at 4.11%
  • VIX +0.1 points at 16.48
  • Bloomberg Dollar Index little changed at 1215.1
  • euro little changed at $1.1572
  • WTI crude -0.7% at $61.07/barrel

Top overnight news

  • Bessent is finalizing the first round of interviews for the next Fed Chair this week, according to FBN citing sources. It was also reported that Former Fed governor Larry Lindsey withdraws name from consideration for US Fed Chair position: BBG 
  • NYAG Letitia James was indicted by the US Department of Justice, while she stated that the indictment is nothing more than a continuation of the President's desperate weaponization of the justice system, and she will fight these charges aggressively.
  • Trump said some Democrats are calling him to reopen the government, and he will be making permanent cuts to Democratic programmes in the shutdown.
  • House Speaker Johnson said the House remains on a 48-hour notice to return to Washington, while it was noted that "This is a sign that the House does not plan to come back next week -- as of now": Punchbowl
  • US Bureau of Labor Statistics is preparing to release a September CPI report despite the shutdown. Staff have been recalled for the preparation of the publication of the report by the end of the month. US CPI was scheduled to be released on October 15th: BBG
  • Vessels owned or operated by U.S. firms and individuals - or those built in the United States or that fly the U.S. flag - will be charged additional port fees per voyage starting on October 14, China's transport ministry said. The fees are a counter-measure against upcoming U.S. port fees on Chinese ships, the ministry said on Friday. RTRS
  • Japan’s ruling coalition collapsed after Komeito withdrew its support for Sanae Takaichi’s Liberal Democratic Party, in a major setback for the new LDP leader before even securing the role of PM. The yen gained and Japanese bond futures rose. BBG
  • Nvidia and AMD would have to ensure US companies get priority access to their AI chips before China, under a bill passed by the Senate. Additionally, China launched a customs crackdown on Nvidia chips. BBG
  • China slapped new port fees on US ships and started an antitrust investigation into Qualcomm Inc., the latest in a string of tit-for-tat moves as Presidents Xi Jinping and Donald Trump jockey for leverage before a key meeting to discuss trade and other issues. BBG
  • Israel’s government approved a deal to free the remaining hostages held in Gaza in exchange for over 2,000 prisoners, a key step toward a broader peace accord. Donald Trump plans to visit Israel to welcome their return. Gazans are questioning if a ceasefire, in effect since noon local time, will hold and who’ll administer the territory. BBG
  • Russia hit Kyiv with a drone and missile attack that left parts of the capital without power and disrupted water supply. BBG
  • Insurers are preparing for  a wave of potential claims relating to First Brand Group’s bankruptcy, as one of Wall Street’s biggest debacles in years ripples through the financial system. FT
  • Atlanta Fed President Bostic is shifting his views and isn’t as hawkish (worried about inflation) as before given softening employment dynamics. Barron’s
  • The BLS recalled staff to finish the September CPI report by month’s end, a person familiar said. Originally set for release on Oct. 15, the data may now be ready in time for the Fed’s Oct. 28-29 meeting. BBG
  • Federal Reserve Board announces expanded operating days of two large-value payments services, Fedwire® Funds Service and the National Settlement Service (NSS), to include Sundays and weekday holidays.

Trade/Tariffs

  • China reportedly launched a customs crackdown on NVIDIA (NVDA) AI chips, according to FT, which reported that China stepped up enforcement of its controls on chip imports, as Beijing seeks to wean the country’s tech companies away from US products such as NVIDIA's AI processors.
  • US President Trump said maybe they will have to stop importing massive amounts from China, and he wants to discuss soybeans with Chinese President Xi, while he said regarding China export controls, that Commerce Secretary Lutnick and Treasury Secretary Bessent will sort out.
  • US President Trump said tariffs are only good if you want your country to be rich, influential, and powerful, while he added that if you want your country to be a third-world country, you should vote against tariffs.
  • US Treasury Secretary Bessent said he believes the Chinese will come back at the end of the season and buy soybeans, while Bessent said India is going to start rebalancing over the next few weeks and months, in favour of US oil and will buy less Russian oil.
  • US President Trump's administration said the US and Saudi Arabia are making progress on an agreement to allow US chip companies to export semiconductors to Saudi Arabia and could finalise a deal soon, according to WSJ.
  • US Commerce Department reportedly probes Singapore company Megaspeed over chip export rules to see if it helped China companies avoid chip rules, according to NYT, which noted that Megaspeed is set to purchase USD 2bln of NVIDIA (NVDA) AI technology in the next year.
  • Japan's government said tariff negotiator Akazawa spoke with US Commerce Secretary Lutnick by phone, and they confirmed to smooth the implementation of the trade agreement to further strengthen ties.
  • Indian PM Modi said he spoke with US President Trump and reviewed the good progress achieved in trade negotiations, while they agreed to stay in close touch over the coming weeks.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly lower following the negative handover from Wall Street, where the stock market and gold prices pulled back from record levels, while the KOSPI outperformed against its regional counterparts on return from its extended holiday. ASX 200 lacked direction amid quiet catalysts and as weakness in the mining and materials sectors offset the strength in tech and financials. Nikkei 225 retreated following the firmer-than-expected PPI data, although participants also digested earnings updates, including from index heavyweight Fast Retailing, which was the biggest gainer after it reported a double-digit percentage increase in 6-month net. Hang Seng and Shanghai Comp conformed to the downbeat mood as trade frictions resurfaced following China's announcement of export controls on rare earth and items related to lithium batteries, while US President Trump commented that maybe they will have to stop importing massive amounts from China. US equity futures eked marginal gains in a frail attempt to nurse some of the  prior day's losses. European equity futures indicate an uneventful/subdued cash market open with Euro Stoxx 50 futures -0.1% after the cash market closed with losses of 0.4% on Thursday.

Top Asian News

  • Japanese Finance Minister Kato said they are recently seeing one-sided, rapid moves, and it is important for currencies to move in a stable manner reflecting fundamentals, while he added they will thoroughly monitor for excessive fluctuations and disorderly movements in the forex market.

FX

  • DXY traded flat overnight and took a pause from the recent strengthening trend, with comments from Fed officials doing little to spur price action in which Barr argued for a cautious approach and stated that recent spending data suggested GDP growth remained strong in Q3, while Daly said inflation has come in much less than had feared and the labour market is at a point where softening looks like it could be more worrisome if they don't risk manage it. Furthermore, there is a continued lack of progress regarding the government shutdown impasse, although it was reported that the Bureau of Labor Statistics is preparing to release the September CPI report despite the shutdown.
  • EUR/USD marginally rebounded off the prior day's lows but with the recovery limited by a lack of bullish drivers, with the single currency loitering in sub-1.1600 territory, while the prior day's ECB minutes lacked fireworks and reiterated that there was no immediate pressure to change rates at the meeting.
  • GBP/USD nursed some losses and just about returned to the 1.3300 handle but with upside capped in quiet newsflow.
  • USD/JPY gradually retreated beneath 153.00 following firmer-than-expected PPI data and a rehash of jawboning from Japanese Finance Minister Kato.
  • Antipodeans clawed back some of the prior day's losses after the PBoC strengthened the yuan reference rate setting, but with gains contained amid the mostly subdued risk sentiment and a lack of notable data releases.
  • US Treasury Secretary Bessent said they directly purchased Argentine Pesos (ARS) and have finalised a USD 20bln currency swap framework with Argentina’s central bank.

Fixed Income

  • 10yr UST futures rebounded off the prior day's trough, albeit with upside capped following an average 30yr US auction.
  • Bund futures nursed some losses in quiet trade amid a lack of pertinent catalysts and tier-1 releases scheduled for the bloc.
  • 10yr JGB futures kept afloat but lacked conviction following the firmer-than-expected PPI data from Japan.

Commodities

  • Crude futures were lacklustre after trimming some of their weekly gains yesterday amid a rising dollar and Gaza agreement.
  • Saudi crude oil supply to China is set to fall to about 40mln barrels in November vs 51mln barrels in October, according to sources cited by Reuters.
  • US President Trump said gasoline is to be below USD 2 in the near future.
  • Spot gold remained subdued after pulling back from record highs to beneath the USD 4,000/oz level.
  • Copper futures declined amid the mostly downbeat mood, including in its largest buyer, China, as trade tensions resurfaced.

Geopolitics: Middle East

  • Israeli PM Netanyahu's office said Israel's government approved the Gaza plan for the release of all hostages. It was earlier reported that the Israeli PM's office said forces will not leave Gaza unless they are guaranteed there is no threat posed, while it added the mission in Gaza is not over.
  • Hamas chief said they declared an end to the war today and the start of a permanent ceasefire, while the agreement includes opening the Rafah crossing in both directions and will see the release of all jailed Palestinians. Furthermore, the group received guarantees from mediators and the US administration confirming that the war has completely ended.
  • US President Trump said they ended the war in Gaza and thinks there will be lasting peace, while he said hostages will be released on Monday or Tuesday. Furthermore, he will try to go to the Middle East and will have a signing in Egypt.
  • US President Trump said Iran wants to work on peace and that he will work with Iran.
  • US President Trump's special Envoy Kushner said "We’ve made a deal here that isolates Hamas and encourages actors in the Arab world to pursue peace. This agreement ensures Israel’s security. If we need to act with force, we will. It will either happen the easy way or the hard way."
  • US senior official said, hopefully, the Gaza deal will lead to an opportunity to expand the Abraham Accords. It was also stated that there will be 200 US troops deployed for Gaza as part of a joint task force which will include troops from Egypt and Qatar.
  • Yemen's Houthi leader said the group is to monitor Israel's compliance with the Gaza ceasefire agreement and will resume support for Gaza if Israel breaches the agreement.

Geopolitics: Ukraine

  • US President Trump said the Russia-Ukraine war will be solved and that he might impose more sanctions on Russia.
  • Ukrainian Energy Ministry said Russian forces launched mass attacks on Ukrainian energy targets, while a Ukrainian official later stated that electricity was cut off in the entire eastern Ukraine following the Russian attack, according to Sky News Arabia.

Geopolitics: Other

  • UN Security Council will meet on Friday regarding tensions between the US and Venezuela, according to diplomats.
  • Taiwan's President said they will accelerate their building of the T-Dome and establish a rigorous air defence system in Taiwan with multi-layered defence, high-level detection, and effective interception.

US Event Calendar

  • 10:00 am: Oct P U. of Mich. Sentiment, est. 54, prior 55.1
  • 2:00 pm: Sep Federal Budget Balance, est. 60b, prior -344.79b

Central Banks (All Times ET):

  • 9:45 am: Fed’s Goolsbee Gives Opening Remarks
  • 1:00 pm: Fed’s Musalem Speaking at Springfield Area Chamber of Commerce

DB's Jim Reid concludes the overnight wrap

Markets have struggled for momentum over the last 24 hours, as investors question how long this rally can persist, whilst concern grew about an extended government shutdown in the US. So that’s meant equities saw a modest pullback, with the S&P 500 (-0.28%) and Europe’s STOXX 600 (-0.43%) both coming off their record highs, alongside even bigger declines in Asia overnight. This pattern was clear across multiple asset classes, as 10yr Treasury yields (+2.1bps) moved up to 4.138%, and US HY spreads (+9bps) saw their biggest daily jump in over a month, which signalled a bit more caution after the relentless run in recent weeks. Even gold prices (-1.61%) lost ground after their own surge recently, slipping back beneath the $4,000/oz mark to close at $3,977/oz.

Of course, the mood music hasn’t been helped by the government shutdown, which is now entering its 10th day. And the fear is that the longer it lasts, the worse the economic impact will be, as increasing numbers of workers miss paychecks from here. So even if they end up getting back pay like in previous shutdowns, there’s still a near-term impact. In terms of the latest, there are no signs yet of a compromise emerging between Republicans and Democrats, and expectations for a near-term resolution are continuing to decline. Indeed, the Polymarket odds of the shutdown ending before October 15 are down to just 8%.

If the shutdown does persist into next week, we won’t get the CPI release on Wednesday, which will leave us increasingly uncertain about the US economy. Interestingly though, Bloomberg reported yesterday that the Bureau of Labor Statistics had recalled staff in the shutdown to prepare the September CPI release, according to a Labor Department official who knew about the matter. The report said they were directed to complete it for release by the end of the month. So if it were released, that would mean it could be used for the annual cost-of-living adjustment (COLA) for recipients of Social Security, which takes the Q3 CPI numbers. Another important date is the Fed’s next decision on October 29, so depending on the timing of any release and the shutdown’s progress, this could mean the CPI might be available then too.

For now at least, this lack of data means we’re flying blind to some extent on the US economy, and we still don’t have the September payrolls report that was meant to come out a week ago. However, one release to keep an eye on today will be the University of Michigan’s preliminary consumer sentiment index for October. It’s historically seen a meaningful drop around government shutdowns, and our US economists expect a meaningful five-point decline this month to 50.1. Remember that the last shutdown in 2018-19 went on for a record 35 days, and it’s clear from Polymarket that even if people think an October conclusion is still the most likely, the prospect of it rolling into November is being considered a serious one now.

This backdrop saw US equities slip back from their record high on Wednesday, with the S&P 500 (-0.28%) and the NASDAQ (-0.08%) both posting modest declines. 74% of S&P 500 constituents were down on the day as the selloff was relatively widespread. To be fair, it wasn’t all bad news, and the Magnificent 7 (+0.05%) moved up a little thanks to advances from Meta (+2.18%) and Nvidia (+1.83%). However, it would have been an even worse day without that support from the Mag 7, and the equal-weighted S&P 500 fell -0.42%, which is its worst performance in two weeks. Meanwhile, US Treasuries struggled to gain traction across the curve, with the 2yr yield (+1.2bps) rising to 3.59%, whilst the 10yr yield (+2.1bps) reached 4.138%. And this was seen in credit too, with US HY spreads (+9bps) and IG spreads (+2bps) seeing their biggest jump in over a month.

Over in Europe, French assets continued to stabilise yesterday from their losses at the start of the week, and President Macron is set to appoint a new PM by the end of today. Clearly, that new PM is still going to face a National Assembly that’s fractured between divergent political groups, just as the recent PMs have also faced. However, the speculation about a fresh legislative election has abated, which has helped to remove one potential source of near-term uncertainty for investors. In turn, that meant the Franco-German 10yr spread tightened for a second day to 82bps. And that’s been echoed for equities too, where the CAC 40 (-0.23%) outpaced the Europe-wide STOXX 600 (-0.43%) for a third day running. Indeed, it was a contrast with the more negative mood elsewhere, and Italy’s FTSE MIB (-1.59%) posted its biggest fall in a month after Ferrari (-15.41%) plunged following its forecast that disappointed investors.

Otherwise in Europe, we did get the ECB’s accounts from its September meeting, which cemented investors’ conviction that the ECB is now done with rate cuts. So that helped yields to move higher across the continent, with an increase for 10yr bunds (+2.5bps), OATs (+1.0bps) and BTPs (+3.2bps). That also came amidst a fresh package of reforms from the German coalition government, which includes tighter restrictions on social welfare payments, changes to the pension system, and purchase incentives for electric cars.

Elsewhere, Brent crude oil prices (-1.55%) fell back to $65.22/bbl yesterday. In part, that was down to the broader risk-off tone, but the prospect of lower tensions in the Middle East also helped. Overnight, that trend has continued as well, with Brent crude down another -0.40% to $64.96/bbl, which comes as Israeli PM Netanyahu’s office said that the cabinet had approved the framework of the hostage deal. Interestingly, gold prices (-1.61%) also fell back from the previous day’s record to $3,977/oz, losing ground after a +4% run over Monday-Wednesday, and that trend has similarly continued overnight, with a further -0.42% decline.

This more negative theme has continued into Asia this morning, with equity losses across the region, including for the Nikkei (-1.01%), the Hang Seng (-1.14%), the CSI 300 (-1.25%) and the Shanghai Comp (-0.51%). Over in Japan, we also got the news that PPI inflation was stronger than expected in September, remaining at +2.7% (vs. +2.5% expected). So that’s seen 10yr government bond yields (+0.7bps) rise to another post-2008 high of 1.69%, whilst the yen has strengthened a bit to 152.78 per dollar. That came as the new LDP leader Sanae Takaichi said in an interview that “I have no intention of triggering an excessively weak yen.” However, there have been some brighter spots overnight, with South Korea’s KOSPI (+1.35%) on track for a new record, whilst futures on the S&P 500 are up +0.11%.

To the day ahead now, and in the US we’ll get the University of Michigan’s October survey, along with Italy’s industrial production for August and Canada’s employment report for September. Otherwise, Fed speakers today include Goolsbee and Musalem.

Tyler Durden Fri, 10/10/2025 - 08:53

DOJ Opens Probe Into First Brands' Shocking Bankruptcy

DOJ Opens Probe Into First Brands' Shocking Bankruptcy

Earlier today, when following up on what is the biggest story of the week, if not year, we said that the First Brands bankruptcy, where a historical meltdown of rehypothecated, off-balance sheet debt...

... means that at least $1.9 billion in cash has disappeared, has been completely ignored by virtually everyone due to the far shinier daily AI circle jerk, which helps melt stocks up every single day and serves as a wonderful distraction to everything else.

But we were wrong, because someone was paying attention: the Trump DOJ.

Citing "people familiar", the FT reports that the Department of Justice has opened an inquiry into the collapse of the bankrupt First Brands Group, as federal prosecutors look to untangle how investors and creditors have been left with billions of dollars in potential losses, in what may be very bad news for the company's banker, Jefferies, which in August was preparing to do a $6 billion refi of the company only to see it slide in bankruptcy a month later. No surprise Jefferies stocks has plunged 30% in the past 3 weeks. 

The probe is being led by the US attorney’s office for the Southern District of New York, the Manhattan unit that handles large, complex white-collar cases. The inquiry, which is in its earliest stage, has been described as a fact-finding mission given the company filed for bankruptcy protection less than two weeks ago, and many of the details about First Brands’ finances remain unclear.

To be sure, it is not unusual for prosecutors to open investigations when there are public reports of large financial losses stemming from alleged irregularities, and the bar for doing so is low. While the FT notes, that such probes do not necessarily mean any wrongdoing has occurred and may not lead to charges being filed or cases being brought, in this case - where over $2 billion appears to be definitively missing - wrongdoing is all but certain.

As we reported yesterday, on Wednesday one of the largest creditors to First Brands alleged that as much as $2.3bn had “simply vanished” as part of the company’s abrupt failure. That lender, one of several who had provided off-balance sheet financing relying on that collateral, is now pushing for an external investigation into the company’s actions leading up to the bankruptcy.

“The debtors should not be permitted to appoint the very parties that will investigate their own potential misconduct,” the counsel for Raistone, one of the companies that helped arrange off-balance sheet financings for First Brands, wrote in an emergency petition last night.

Separately, First Brands appointed two independent directors to probe how the company financed itself through these opaque off-balance sheet vehicles, summarized in the charts below. The company, which makes windshield wipers and fuel tank pumps for cars, had relied on a web of financiers to fund its operations and a wave of acquisitions.

Asked at a bankruptcy hearing this month where roughly $2bn raised by First Brands through “factoring” - a type of off-balance sheet invoice financing using receivables and inventories - was held, a lawyer for the company said, “we don’t have it”, and “there’s $12mn in the bank account today. That’s it. There’s nothing else.”

As we detailed yesterday, some of the biggest names on Wall Street have been drawn into the debacle, including hedge fund Millennium Management, Swiss banking giant UBS, but most notably investment bank Jefferies, whose actions will be closely scrutinized by the DOJ in the coming days. 

Tyler Durden Fri, 10/10/2025 - 08:33

DOJ Opens Probe Into First Brands' Shocking Bankruptcy

DOJ Opens Probe Into First Brands' Shocking Bankruptcy

Earlier today, when following up on what is the biggest story of the week, if not year, we said that the First Brands bankruptcy, where a historical meltdown of rehypothecated, off-balance sheet debt...

... means that at least $1.9 billion in cash has disappeared, has been completely ignored by virtually everyone due to the far shinier daily AI circle jerk, which helps melt stocks up every single day and serves as a wonderful distraction to everything else.

But we were wrong, because someone was paying attention: the Trump DOJ.

Citing "people familiar", the FT reports that the Department of Justice has opened an inquiry into the collapse of the bankrupt First Brands Group, as federal prosecutors look to untangle how investors and creditors have been left with billions of dollars in potential losses, in what may be very bad news for the company's banker, Jefferies, which in August was preparing to do a $6 billion refi of the company only to see it slide in bankruptcy a month later. No surprise Jefferies stocks has plunged 30% in the past 3 weeks. 

The probe is being led by the US attorney’s office for the Southern District of New York, the Manhattan unit that handles large, complex white-collar cases. The inquiry, which is in its earliest stage, has been described as a fact-finding mission given the company filed for bankruptcy protection less than two weeks ago, and many of the details about First Brands’ finances remain unclear.

To be sure, it is not unusual for prosecutors to open investigations when there are public reports of large financial losses stemming from alleged irregularities, and the bar for doing so is low. While the FT notes, that such probes do not necessarily mean any wrongdoing has occurred and may not lead to charges being filed or cases being brought, in this case - where over $2 billion appears to be definitively missing - wrongdoing is all but certain.

As we reported yesterday, on Wednesday one of the largest creditors to First Brands alleged that as much as $2.3bn had “simply vanished” as part of the company’s abrupt failure. That lender, one of several who had provided off-balance sheet financing relying on that collateral, is now pushing for an external investigation into the company’s actions leading up to the bankruptcy.

“The debtors should not be permitted to appoint the very parties that will investigate their own potential misconduct,” the counsel for Raistone, one of the companies that helped arrange off-balance sheet financings for First Brands, wrote in an emergency petition last night.

Separately, First Brands appointed two independent directors to probe how the company financed itself through these opaque off-balance sheet vehicles, summarized in the charts below. The company, which makes windshield wipers and fuel tank pumps for cars, had relied on a web of financiers to fund its operations and a wave of acquisitions.

Asked at a bankruptcy hearing this month where roughly $2bn raised by First Brands through “factoring” - a type of off-balance sheet invoice financing using receivables and inventories - was held, a lawyer for the company said, “we don’t have it”, and “there’s $12mn in the bank account today. That’s it. There’s nothing else.”

As we detailed yesterday, some of the biggest names on Wall Street have been drawn into the debacle, including hedge fund Millennium Management, Swiss banking giant UBS, but most notably investment bank Jefferies, whose actions will be closely scrutinized by the DOJ in the coming days. 

Tyler Durden Fri, 10/10/2025 - 08:33

US Farmers Are Facing The Worst Economic Downturn In At Least 50 Years

US Farmers Are Facing The Worst Economic Downturn In At Least 50 Years

Authored by Michael Snyder via The Economic Collapse blog,

The agriculture industry in the United States is deeply broken. Farmers are the foundation of it all, but they are being financially squeezed from every direction. They are being squeezed by the giant monopolies that control the seeds, fertilizer and machinery that they need. And they are also being squeezed by the giant monopolies that purchase most of what they produce. Meanwhile, demand from overseas has dried up thanks to the global trade war. U.S. farmers really are facing a “perfect storm”, and as a result most farms are losing money and bankruptcies are surging.

Most Americans have absolutely no idea how bad it has gotten.

According to the president of the Nebraska Farmers Union, this is the worst economic downturn for farmers in at least 50 years…

“We’re in the middle of the worst economic downturn that I’ve seen in my 50 years,” John Hansen, the president of the Nebraska Farmers Union, said at a regional meeting in Beatrice, Nebraska, last week.

“Agriculture is our foundation here in Nebraska and many states in the Midwest,” Don Schuller, a corn and soybean farmer, told ABC News. “If agriculture is failing here everything is going to fail.”

I wish that I could tell you that he is exaggerating.

But I can’t.

A sobering article that was recently published by AGWEB that was just shared with me is warning that our farmers are facing a “generational collapse”…

Farmers are not crying wolf. The wolf is real and right outside the door in the form of generational collapse.

The inescapable crop math of sustained crippling commodity prices and high input costs has many growers screaming for immediate relief, potentially via aid payments in late 2025 or early 2026. However, bailouts are Band-Aids over bullet holes.

The giant monopolies that provide the things that our farmers need increase their profits by squeezing farmers, and the giant monopolies that purchase what our farmers produce increase their profits by squeezing farmers.

For a while, many farms could still at least break even, but now conditions have gotten so bad that many farmers are losing hundreds of dollars per acre…

Yes, says Bailey Buffalo, 40, owner of Buffalo Grain Systems in Jonesboro, and president of Farm Protection Alliance.

“Horror stories. The pain is unreal. Worst farming situation I’ve seen in my life,” Buffalo says. “Look at Extension [University of Arkansas] numbers — corn growers losing $240 per acre; soybeans losing $144 per acre; and rice losing $380 per acre. The cotton growers may be worst of all.”

This is what I mean when I say that the agriculture industry is broken.

So what is going to happen as vast numbers of our farmers simply go bankrupt?

According to the chairman of the Arkansas Rice Growers Association, banks are projecting “farm bankruptcies at 25% to 40%”…

Graves, chairman of the Arkansas Rice Growers Association, understands severe hardship. He farmed through the anemic ag crisis of the 1980s. However, the current unrest is a “coming disaster” unlike anything he’s witnessed across a 50-year career: “I’ve never seen this kinda look in farmers’ eyes. It’s fear. And it’s based in undeniable facts.”

In August 2025, Graves sent an open letter to media and politicians, pleading for attention to eye-popping numbers. “My letter told what things are like right now. In our geography, it looks like you need to yield 100-300-300 to stay ahead,” Graves describes. “That’s 100-bushel beans, 300-bushel rice and 300-bushel corn. Basic Arkansas averages are 56-bushel beans, 166-bushel rice and 175-bushel corn. In a nutshell, we are going over a cliff. Banks are forecasting farm bankruptcies at 25% to 40%, and the dirty secret is out. Everyone knows it; everyone feels it.”

A handful of companies control the seed market, a handful of companies control the fertilizer market, and a handful of companies control the farm machinery market.

Those giant monopolies are raking in huge amounts of cash while our small farmers are being ruthlessly crushed.

And when it comes time to sell what they produce, our farmers are at the mercy of the giant food monopolies.

On top of everything else, export demand has evaporated as a result of the global trade war.  Things are particularly bad for soybean farmers…

For American farmers who export their harvests directly to Asia, the evaporation of Chinese demand for soybeans — at a time when fertilizer and other inputs have become more expensive — could potentially be devastating, and lead to bankruptcies and foreclosures.

“It’s just a massive shock to our markets,” Cory Walters, a professor in the Department of Agricultural Economics at the University of Nebraska, told ABC News.

We have seen agriculture shocks before, but never anything quite like this.

The White House is acknowledging that our farmers are facing a major crisis, and there are plans to introduce an aid package…

“Soybean, corn, wheat, sorghum, cotton farmers are facing very difficult times,” Secretary of Agriculture Brooke Rollins told reporters at the White House on Wednesday. “We are currently in conversations here at the White House, across the government, on a farmer aid package.”

Will that fix anything?

Not really.

The structural issues will still exist, but perhaps if the aid checks are big enough they will help some farmers avoid bankruptcy for another year.

What we really need is to do something about the monopolies so that our farmers can have a chance to scrape out a living.

But that isn’t going to happen, because the monopolies have lots of lobbyists and they contribute vast amounts of money to political campaigns.

Of course it isn’t just the agriculture industry that is facing a crisis.

All over the country, we are witnessing signs of a major economic slowdown.  For example, this year Hollywood “has seen tourism numbers fall off a cliff”…

Los Angeles’s iconic Hollywood district has seen tourism numbers fall off a cliff, sparking fears for the future of the beleaguered City of Angels.

Visit California revealed tourist numbers slumped by 10 percent this summer, compared to the same period of 2024.

And businesses on Hollywood boulevard said customer numbers had plunged by up to 50 percent, raising the prospect of the neighborhood that is a byword for movies and showbusiness entering into a terminal decline.

A dramatic economic shift is taking place right now.

I expect this to be clearly reflected in the economic numbers in the coming months.

But this is just the beginning.  The pain that we are experiencing now will get a whole lot worse.

At the beginning of this article, I stated that the agriculture industry is deeply broken.

Nobody can deny that.

But the truth is that our entire society is deeply broken, and now a time of reckoning has arrived.

*  *  *

Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

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

US Farmers Are Facing The Worst Economic Downturn In At Least 50 Years

US Farmers Are Facing The Worst Economic Downturn In At Least 50 Years

Authored by Michael Snyder via The Economic Collapse blog,

The agriculture industry in the United States is deeply broken. Farmers are the foundation of it all, but they are being financially squeezed from every direction. They are being squeezed by the giant monopolies that control the seeds, fertilizer and machinery that they need. And they are also being squeezed by the giant monopolies that purchase most of what they produce. Meanwhile, demand from overseas has dried up thanks to the global trade war. U.S. farmers really are facing a “perfect storm”, and as a result most farms are losing money and bankruptcies are surging.

Most Americans have absolutely no idea how bad it has gotten.

According to the president of the Nebraska Farmers Union, this is the worst economic downturn for farmers in at least 50 years…

“We’re in the middle of the worst economic downturn that I’ve seen in my 50 years,” John Hansen, the president of the Nebraska Farmers Union, said at a regional meeting in Beatrice, Nebraska, last week.

“Agriculture is our foundation here in Nebraska and many states in the Midwest,” Don Schuller, a corn and soybean farmer, told ABC News. “If agriculture is failing here everything is going to fail.”

I wish that I could tell you that he is exaggerating.

But I can’t.

A sobering article that was recently published by AGWEB that was just shared with me is warning that our farmers are facing a “generational collapse”…

Farmers are not crying wolf. The wolf is real and right outside the door in the form of generational collapse.

The inescapable crop math of sustained crippling commodity prices and high input costs has many growers screaming for immediate relief, potentially via aid payments in late 2025 or early 2026. However, bailouts are Band-Aids over bullet holes.

The giant monopolies that provide the things that our farmers need increase their profits by squeezing farmers, and the giant monopolies that purchase what our farmers produce increase their profits by squeezing farmers.

For a while, many farms could still at least break even, but now conditions have gotten so bad that many farmers are losing hundreds of dollars per acre…

Yes, says Bailey Buffalo, 40, owner of Buffalo Grain Systems in Jonesboro, and president of Farm Protection Alliance.

“Horror stories. The pain is unreal. Worst farming situation I’ve seen in my life,” Buffalo says. “Look at Extension [University of Arkansas] numbers — corn growers losing $240 per acre; soybeans losing $144 per acre; and rice losing $380 per acre. The cotton growers may be worst of all.”

This is what I mean when I say that the agriculture industry is broken.

So what is going to happen as vast numbers of our farmers simply go bankrupt?

According to the chairman of the Arkansas Rice Growers Association, banks are projecting “farm bankruptcies at 25% to 40%”…

Graves, chairman of the Arkansas Rice Growers Association, understands severe hardship. He farmed through the anemic ag crisis of the 1980s. However, the current unrest is a “coming disaster” unlike anything he’s witnessed across a 50-year career: “I’ve never seen this kinda look in farmers’ eyes. It’s fear. And it’s based in undeniable facts.”

In August 2025, Graves sent an open letter to media and politicians, pleading for attention to eye-popping numbers. “My letter told what things are like right now. In our geography, it looks like you need to yield 100-300-300 to stay ahead,” Graves describes. “That’s 100-bushel beans, 300-bushel rice and 300-bushel corn. Basic Arkansas averages are 56-bushel beans, 166-bushel rice and 175-bushel corn. In a nutshell, we are going over a cliff. Banks are forecasting farm bankruptcies at 25% to 40%, and the dirty secret is out. Everyone knows it; everyone feels it.”

A handful of companies control the seed market, a handful of companies control the fertilizer market, and a handful of companies control the farm machinery market.

Those giant monopolies are raking in huge amounts of cash while our small farmers are being ruthlessly crushed.

And when it comes time to sell what they produce, our farmers are at the mercy of the giant food monopolies.

On top of everything else, export demand has evaporated as a result of the global trade war.  Things are particularly bad for soybean farmers…

For American farmers who export their harvests directly to Asia, the evaporation of Chinese demand for soybeans — at a time when fertilizer and other inputs have become more expensive — could potentially be devastating, and lead to bankruptcies and foreclosures.

“It’s just a massive shock to our markets,” Cory Walters, a professor in the Department of Agricultural Economics at the University of Nebraska, told ABC News.

We have seen agriculture shocks before, but never anything quite like this.

The White House is acknowledging that our farmers are facing a major crisis, and there are plans to introduce an aid package…

“Soybean, corn, wheat, sorghum, cotton farmers are facing very difficult times,” Secretary of Agriculture Brooke Rollins told reporters at the White House on Wednesday. “We are currently in conversations here at the White House, across the government, on a farmer aid package.”

Will that fix anything?

Not really.

The structural issues will still exist, but perhaps if the aid checks are big enough they will help some farmers avoid bankruptcy for another year.

What we really need is to do something about the monopolies so that our farmers can have a chance to scrape out a living.

But that isn’t going to happen, because the monopolies have lots of lobbyists and they contribute vast amounts of money to political campaigns.

Of course it isn’t just the agriculture industry that is facing a crisis.

All over the country, we are witnessing signs of a major economic slowdown.  For example, this year Hollywood “has seen tourism numbers fall off a cliff”…

Los Angeles’s iconic Hollywood district has seen tourism numbers fall off a cliff, sparking fears for the future of the beleaguered City of Angels.

Visit California revealed tourist numbers slumped by 10 percent this summer, compared to the same period of 2024.

And businesses on Hollywood boulevard said customer numbers had plunged by up to 50 percent, raising the prospect of the neighborhood that is a byword for movies and showbusiness entering into a terminal decline.

A dramatic economic shift is taking place right now.

I expect this to be clearly reflected in the economic numbers in the coming months.

But this is just the beginning.  The pain that we are experiencing now will get a whole lot worse.

At the beginning of this article, I stated that the agriculture industry is deeply broken.

Nobody can deny that.

But the truth is that our entire society is deeply broken, and now a time of reckoning has arrived.

*  *  *

Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

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

These Are The Five States Leading America's Data Center Boom

These Are The Five States Leading America's Data Center Boom

Most of the rapid growth in new data center capacity is happening in established ("incumbent") markets - places like Virginia, Texas, Oregon, Ohio, and Iowa, while new or smaller states ("emerging markets") are starting to attract data center development, though on a smaller scale so far.

Goldman analysts, led by Hongcen Wei, cited new current project schedules from Aterio data that showed US data center capacity is projected to reach 46 GW by October 2025, marking a 37% year-over-year increase. He found that most of this increase comes from incumbent markets. 

Here are the key takeaways from the report:

  • Top states (Virginia, Texas, Oregon, Ohio, Iowa) account for 7.6 GW of the 12.4 GW added year-to-date.

  • Virginia remains dominant with 33% yoy growth, while Texas and Georgia lead in acceleration, each up 57% yoy.

  • 31 states have added capacity in 2025 (versus 22 in 2024), highlighting broader national expansion, though most new entrants remain modest in scale.

  • PJM (Mid-Atlantic), ERCOT (Texas), and the Southeast (mainly Georgia) together account for 64% of new US capacity.

  • TVA (Tennessee Valley Authority) is the least competitive region due to power constraints.

Looking ahead:

  • Another 4 GW of capacity is expected by year-end 2025, primarily from top markets.

  • Beyond that, 63 GW in new projects are announced for the next few years.

  • Rapid growth in data centers is expected to push major US power markets - CAISO, MISO, and PJM - toward critical tightness in coming years.

Data center buildouts are entering hypergrowth (read "circle jerk").

The top five states where data center development is surging the most - also, these states, if their grids are fragile, could send, if not already, power bills higher, which would be terrible for local officials ahead of the midterms. 

What regional grids are best suited for data centers?  

In August, Wei warned, "We find that 9 out of 13 US regional power markets have already reached critical tightness this summer, while expecting all but one to reach critical tightness by 2030." 

And what could derail the AI bubble is what the Bank of England warned on Wednesday of "material bottlenecks to AI progress" if that's "power, data, or commodity supply chains." 

Tyler Durden Fri, 10/10/2025 - 07:45

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