Zero Hedge

Gold Is Saying The Fiat Currency Experiment Is Ending Globally; Rubino

Gold Is Saying The Fiat Currency Experiment Is Ending Globally; Rubino

Via Greg Hunter’s USAWatchdog.com 

Analyst and financial writer John Rubino has been warning of a currency crisis for the last few years, but it’s not just the US dollar, euro or the yen. 

Almost every country has exploding unpayable debt, and there is not a fiat currency that is going to survive.  Rubino explains, “If you watch the financial press, they are noting that the price of gold is going up, but they are treating it like any other asset.  

"Gold is humanity’s oldest form of money.  So, when it goes up in price, that means the currencies against we are measuring it are going down in value. 

What we are seeing all around the world is fiat currencies declining in value dramatically . . . especially against gold.  Gold, just in the last couple of weeks, pierced not just its all-time nominal high, but its all-time inflation adjusted high. 

This is a much bigger deal because we have had so much inflation in the last 30 or 40 years. 

Basically, gold is saying that the fiat currency experiment is ending. 

In other words, the monetary system that we set up in 1971 when we went off the gold standard . . . this led countries to create way too much debt, increase their spending dramatically and basically make all the mistakes that a human makes when you give them an unlimited credit card. 

Now, we are burdened with debt we cannot pay off, and people expect to be taken care of, and France is a good example of this.”

Almost every nation is facing the same crisis and same currency outcome.  Rubino contends:

“Governments around the world are forced to borrow more and more money to cover the obligations they have taken on and to cover the interest costs on their debts.  That requires them to print more money, and that is lowering the value of the currencies even more quickly.  This basically will lead to a currency death spiral.  That’s where we are right now.”

Rubino likes physical gold, silver and mining stocks.  Rubino says, “The silver price will begin to outperform gold on a percentage basis.”  Rubino also says:

“. . .In order (for gold) to serve as the foundation for the next monetary system . . . as we did it in the classical gold standard that was in place up until WWI, if we went back to that, you would need a gold price at around $20,000 per ounce.  You would need this to back all the currencies that are out there now. . . . If we keep doing what we are doing now, the fiat currencies would go to zero, which means gold would go to infinity.  My guess on the future gold price is somewhere between $20,000 (per ounce) and infinity.”

Rubino also thinks artificial intelligence (AI) is both inflationary and deflationary.  He explains in the interview.

There is more in the 49-minute interview.

Join Greg Hunter as he goes One-on-One with financial writer John Rubino of the popular site called Rubino.Substack.com for 10.7.25.

Tyler Durden Thu, 10/09/2025 - 14:20

Putin Issues Rare Apology, Compensation For Azerbaijan Airline Disaster

Putin Issues Rare Apology, Compensation For Azerbaijan Airline Disaster

Russian President Vladimir Putin has issued a rare statement of regret after acknowledging Russia's role in the downing of an Azerbaijani Airlines flight traveling from Baku to Grozny on December 25, 2024.

Putin informed Azerbaijani President Ilham Aliyev during meeting in Dushanbe, Tajikistan that Moscow will compensate Azerbaijan for its role in accidentally shooting down an Azerbaijani passenger plane. The incident brought relations between the two countries to a low-point.

Via Associated Press

After being struck by a Russian missile, the pilots attempted an emergency landing in western Kazakhstan, but the plane went down, killing 38 of the 67 people on board.

Putin had previously apologized for the "tragic incident" - but this marks the first time he is saying formally that Russia takes responsibility, and is seeking to mend ties with Baku.

Azerbaijani officials had accused Russia of refusing the aircraft permission to land on its territory after it was hit, forcing the badly damaged aircraft to extend its time in the air further.

"Of course, everything that is required in such tragic cases will be done by the Russian side on compensation and a legal assessment of all official things will be given," Putin told Aliyev in a face-to-face meeting, which was the first in a year since the incident happened. "It is our duty, I repeat once again … to give an objective assessment of everything that happened and to identify the true causes."

According to a summary of Putin's explanation of the crash:

The Russian president informed Aliyev that an incursion of three Ukrainian drones was the root cause of the tragedy, with one of them still in the air when the AZAL flight 8243 was damaged. According to Putin, the plane was “most likely hit by debris” from a missile that self-destructed in the air.

The incident took place near Grozny, Russia. The crew tried to divert the flight, but the plane eventually crash-landed in Kazakhstan.

So essentially among the causes Putin blamed a cross-border Ukrainian drone incursion in the context of the war in Ukraine.

The Azerbaijani president then thanked Putin, expressing "gratitude for the extensive information on the last year’s December tragedy."

"You are personally keeping the investigation process under control and we have no doubt that it will establish all the facts in an unbiased manner," he told Putin. Both countries appear eager to put the tragedy behind them, and advance relations further.

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Tyler Durden Thu, 10/09/2025 - 14:00

America's Growing Pushback Against Data Centers

America's Growing Pushback Against Data Centers

Authored by Kay Rubacek via The Epoch Times (emphasis ours),

We are told daily that America is hopelessly divided. That every issue is red versus blue, left versus right, and that there is no longer common ground. But last month in Franklin Township, Indiana, something happened that doesn’t fit that story and it may hold a lesson far bigger than one rezoning fight.

A data center near single-family homes in Stone Ridge, Va., on July 17, 2024. Nathan Howard/Getty Images

Google had planned to rezone nearly 500 acres for a massive hyper scale data-center campus that representatives said would consume about millions of gallons of water a day, place heavy loads on electricity infrastructure, disrupt quiet neighborhoods with noise and lighting, and receive generous tax breaks while providing minimal permanent local jobs. It looked inevitable. Corporate lawyers had filed the paperwork, local officials had the vote on the calendar, and residents were already bracing for the outcome.

But in the weeks leading up to that vote, Franklin Township neighbors began to organize. Neighbors of all backgrounds—farmers, homeowners, parents, retirees—organized across political lines. They put up yard signs, and launched a Facebook group that quickly drew hundreds of members and launched a resident petition that gathered 7,600+ signatures. They wrote and called their council representatives, and word spread through churches, schools, and community meetings. By the time of the final hearing, the chamber was packed wall to wall with residents, standing shoulder to shoulder in opposition. They had packed City Hall so tightly that the chamber was standing-room only.

District Councilor, Michael-Paul Hart told reporters for More Perfect Union who were present on the night of the vote, “In my six years on the council, I’ve never seen all the rooms filled to the max with people waiting in the lobby. I’m overjoyed by the amount of community support that came out for this.” One local resident said: “This was do or die. We came prepared to fight with everything we have against this data center.” “I’ve been hoping that something would bring us together,” said a community organizer. “And it looks like data centers are.”

Minutes before the vote, Google abruptly withdrew its petition. The room erupted in cheers. For once, global power bent to local power.

A local business and farm owner who was concerned about water shortages or contamination that cold potentially be caused by the proposed data center commented after the win, “In a world where we are constantly being divided, everyone showed up tonight with a common goal and we won. For a long time we felt like we were four people with cardboard swords fighting a monster, but tonight it shows that people power still rings.”

This wasn’t just a feel-good moment for one Indiana township. It was part of a growing national pattern.

In Peculiar, Missouri, more than 1,000 residents joined a Facebook group called Don’t Dump Data on Peculiar. They put signs in their yards, attended council meetings. Many held prayer circles on the proposed site. Eventually their city leaders reversed an earlier zoning approval.

In Chesterton, Indiana, Provident Realty Advisors withdrew a $1.3 billion data center proposal after facing organized opposition from residents and town officials. In College Station, Texas, the city council unanimously rejected the sale of public land for a data center that would have required 600 megawatts of power, after thousands signed petitions and raised concerns about water, noise, and community impact. In San Marcos, Texas, a proposed facility was halted following public pressure over water and energy use. And in Tucson, Arizona, the city council unanimously rejected a proposed data center after residents pressed concerns about water consumption in the drought-stricken region.

Their battles are not yet over, but each of these towns acted early. They had seen what happened in Loudoun County, Virginia, which has become the data center capital of the world. Loudoun now relies on the industry for more than 30 percent of its county revenue. That money comes at a cost: endless construction, new high-voltage transmission lines, rising noise complaints, and neighborhoods that feel powerless to stop further expansion. Franklin Township and others decided they didn’t want to end up like Loudoun. They fought before the concrete was poured, and they won.

A report by Data Center Watch, a research group tracking grassroots efforts to oppose data centers states that $18 billion worth of data center projects were blocked, and another $46 billion of projects were delayed over the last two years in the face of opposition from residents and activist groups.

Why are data centers sparking such resistance? On the surface it is many things—water consumption and noise pollution among others, but the biggest complaint is about a lack of transparency which causes distrust between residents and the plans that are most often obfuscated from their sight. Residents are going to great lengths to conduct their own research by comparing promises of “jobs and investment” in their town with actual results from towns elsewhere, where locals have experienced land swallowed up, excessive water consumed, taxes diverted, and only a handful of permanent jobs left behind after construction is completed. They are finding multinational corporations arriving with lawyers often before neighbors know what’s planned for their backyards. They are sometimes finding conflicts of interest or undisclosed financial incentives between local officials and corporations. That kind of secrecy doesn’t inspire confidence and they are sharing their findings by word of mouth, from community to community, across the nation.

The effort is not against technology but against a lack of trust and the feeling of being treated as expendable. Communities are told they should sacrifice peace, land, and resources for the sake of “progress.” And those burdens are not small. Once construction crews leave, a billion-dollar facility may leave behind only a few dozen permanent jobs. The tax incentives that lured the project in are often paid up front, while the costs, such as higher utility bills, industrial traffic, or noise, linger for years, and property prices lower. Residents see the imbalance: their community bears the disruption while the profits flow elsewhere. So they are right to question: progress for whom? When the benefits are global and the burdens are local, and when facts are hidden from those who will live next door to the data behemoths it is only natural that people begin to push back and take a stand for their property, their neighbors, their local businesses and community.

It is this imbalance that has made data centers the new flashpoint in America. In the past, local opposition to projects was often dismissed under the label “NIMBY”—short for Not In My Backyard. The term was coined in the 1980s as a way to portray citizens who resisted new highways, landfills, prisons, or factories and they were often labeled as such for being hypocritical or selfish. Over time, that phrase became shorthand for narrow-minded resistance, the opposite of civic duty. It has roots in communist and socialist ideologies which seek to eliminate private property and cast a shadow on those who seek to stand up to what is most often defined as progress but is pushed upon citizens without any openness in communication. Our Founding Fathers envisioned the opposite: the right of people to own and defend their property, to steward their land, and to resist government overreach. Protecting your backyard is not selfish. It is one of the deepest American instincts, a defense of independence that preserves the possibility of community itself.

And there’s a hard truth to face: with the trajectory of the current global AI arms race, data centers are going to be built whether we like it or not. They are the infrastructure of the AI age that we cannot hide from. Every AI model, every cloud service, every video stream runs on servers in these facilities.

But that doesn’t mean they must be planned in stealth or built within earshot of people’s homes. They can be placed further out, away from dense neighborhoods. Yes, it costs more to run transmission lines and build infrastructure further afield. But the cost of harmony is worth it. Local residents shouldn’t have to bear the heaviest burdens of a global competition they never chose.

The lesson is straightforward. If citizens want to protect their communities, they must act early before rezoning makes resistance nearly impossible. They must use social media not to doomscroll, but to connect and learn and to organize. They must ask hard questions, demand real numbers, and, above all, talk to one another. And they must step beyond the narratives that divide us. Franklin, Peculiar, Chesterton, College Station, and San Marcos show what happens when communities refuse the narrative of division and link arms instead: they prove that local voices still have power in America.

What has led to seemingly impossible wins wasn’t money or lawyers, but neighbors refusing to be divided. Farmers, parents, retirees, and young families rallying together to defend the ground beneath their feet. The win in Franklin Township this wasn’t just a win for one Indiana community. It was a case study in what America can still be, when we choose to act in civic duty, stand with our neighbors and choose harmony and open communication over secrecy and division.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Thu, 10/09/2025 - 13:40

Bear Market Losses – A Dangerous Illusion

Bear Market Losses – A Dangerous Illusion

Authored by Lance Roberts via RealInvestmentAdvice.com,

When bear market losses occur, headlines talk in percentages: “The market dropped 20 %.” Investors nod. A 20 % decline sounds manageable, historical, and expected. As Ben Carlson recently penned:

“Bear markets have some symmetry to them, at least in the short-term. In the long term, bull markets versus bear markets are asymmetric. Things are not balanced.

Look at the gains versus losses. The bear markets are blips. To be fair, those losses don’t feel like blips when you’re in them. Bear markets can be brutal. Losing money is not fun. Seeing a large portion of your portfolio get vaporized can cause you to question your sanity as an investor. And yet…the bull markets completely overwhelm the bear markets. It’s not even close.

This certainly seems to be true when looking at a chart of “percentage returns. “ The chart below uses monthly, inflation-adjusted returns for $1000 invested in the S&P 500 index (data via Robert Shiller, Yale University)

However, looking at the markets this way and assuming that “bull markets” have dwarfed “bear markets” throughout history creates an “illusion of safety.” This is why such mainstream and mundane analysis is only used to deter concerns about market downturns and suggest that investors remain fully invested at all times.

But ask yourself these two simple questions:

  • If true, why does no legendary investor “buy and hold” the market?

  • Why does every legendary investor have one rule in common: “to buy low and sell high” in some form? From Warren Buffett to Paul Tudor Jones, the investing greats warned about the peril of market drawdowns and the risk to investment capital.

While Ben is correct in the overall analysis, the framing is misleading. As we will discuss in detail, the chart, originally put out by First Trust, hides the real damage to your portfolio, goals, and timeline. As noted, bear market losses, when displayed in percentages, obscure what it takes to recover. Furthermore, it ignores the most critical commodity of all investors: the “time” lost and the destruction of the “compounding effect.”

A 20 % or more bear market loss is not just a dip. It’s a reset. It drags down the current value of your investments and your future wealth. The more profound the loss, the more ground you need to make up, and the longer it takes. Investors think they can ride it out. However, many behavioral studies show this is not the case, and that investors eventually “sell” as the “loss avoidance” kicks in. That is when the real damage is done.

Most market commentary glosses over that. It speaks in long-term averages and smooth recoveries, assumes you stay the course and never sell, and that you’re not withdrawing funds. Those assumptions rarely hold up under pressure. Markets don’t move in straight lines. Neither do portfolios. Understanding the real cost of a bear market means looking beyond percentages.

Let’s explore the math.

The Math of Loss

Losses hurt more than they appear because recovery isn’t symmetrical. If your portfolio drops 20 %, you need a 25 % gain to get back to even. Drop 30 %, and you need nearly 43 %. A 50 % loss? That takes a 100 % rebound. These aren’t abstract numbers; they’re the reality of compounding in reverse.

Let’s assume that an index goes from 1000 to 8000.

  • 1000 to 2000 = 100% return

  • The index rises to 3000 = 200% return

  • Going on to 4000 = 300% return

  • …

  • And continues to 8000 = 700% return

If an investor bought the index and generated a 700% return on their money, why worry about a 50% correction?

Here is the problem with percentages.

A 50% correction does NOT leave you with a 650% gain.

A 50% correction subtracts 4000 points, reducing your 700% gain to 300%.

Source: St. Louis Federal Reserve Chart by: www.RealInvestmentAdvice.com

As shown in the example, the small drawdown seems innocuous until you realize it clipped 4000 points from the index. The problem now becomes the issue of regaining those 4000 lost points to break even.

Understanding the math of loss is incredibly important.

Real life works the same. From 2007 to 2009, the S&P 500 lost over 56 %. To recover that, investors needed more than 113 % in gains. The market didn’t break even again until 2013. That’s six years to claw back losses. And that assumes no withdrawals and full participation in the rebound. Most investors didn’t make it. They panicked, went to cash, and missed the recovery.

Let’s reconstruct the chart above from the percentage gain and loss chart into actual point changes. In this form, we see that most of the advances in bull markets get subsequently destroyed in bear markets.

As of this analysis, the market was trading at 6700. A 50% correction would result in a loss of 3350 points, wiping out most of the gains from the October 2022 lows.

No, that would not just be a blip. That is because volatility compounds the damage.

When looking at things in percentages, gains and losses of equal size do not cancel out. A 10 % gain and a 10 % loss still leaves you down. If you start with $100,000, gain 10 % to $110,000, then lose 10 %, you’re at $99,000. The sequence matters. High volatility drags on returns even if long-term averages look fine. That’s called volatility drag, and it eats away at portfolios quietly.

Drawdowns are more than temporary events. They are mathematical traps. The deeper the fall, the more challenging the climb. And every investor who ignores this does so at their own risk.

The Fallacy of Compounding and the Math of Time

Bear markets don’t just reduce your portfolio value. They rob you of time. Time is also the most valuable resource when investing. You can recover money. You can’t recover time.

Let’s assume that an investor wants an “average” rate of return over a five-year horizon. Since markets have volatility, we can inject a minor correction to see the impact of losses.

After three straight years of 10% returns, a bear market loss of just 10% cuts the average annual compound growth rate by 50%. Furthermore, it then requires a 30% return to regain the required average rate of return. 

There is a significant difference between AVERAGE and ACTUAL returns. The impact of losses destroys the annualized “compounding” effect of money.

To prove that, the purple shaded area shows the “average” return of 7% annually. However, the differential between the promised and “actual return” is the return gap. See the problem?

The differential between what investors were promised (and a critical flaw in financial planning) and actual returns is substantial over the long term.

Secondly, and most importantly, you DIED long before you realized the long-term average rate of return.

The chart box below shows a $1000 investment for various starting periods. The total return holding period is from 35 years until death using actuarial tables. There are no withdrawals. The orange sloping line represents the “promise” of 6% annualized compound returns. The black line represents what occurred. The bottom bar chart shows the surplus, or shortfall, of the 6% annualized return goal.

At the point of death, the invested capital is short of the promised goal in every case except the current cycle starting in 2009. However, that cycle is yet to be complete, and the subsequent bear market loss will likely reverse most, if not all, of those gains.

As such, if your plan is based on compounding returns over 20 or 30 years, even a short disruption can have long-term effects. This effect is worse for those nearing retirement. If a bear market hits five years before retirement, you don’t have time to wait. You may need to delay retirement, reduce your spending goals, or work longer. Worse, the damage is permanent if you’re already retired and drawing down funds during a bear market as every withdrawal during a downturn locks in a loss. Even if the market recovers, your portfolio doesn’t, because you pulled money out when prices were low.

This is the sequence-of-returns problem. If your first years of retirement coincide with a bear market, your odds of running out of money rise sharply. Studies show that retirees who withdraw 4 % per year and face a 30–40 % loss early in retirement have a much higher failure rate. The order of returns matters far more than average returns.

If someone suggests that you ignore bear market corrections, ask them if they have ever been through one.

Investors often plan as if markets will deliver average returns smoothly. They don’t. Bear markets distort the timeline, and time lost compounds into permanent gaps in your financial plan.

Strategies That Work When Markets Don’t

Understanding the real cost of bear markets is the first step. What matters is acting on that knowledge. Here are six strategies that help protect your portfolio and your plan when markets break down.

  • Limit the downside. Avoiding significant losses matters more than capturing every bit of upside. A portfolio that loses less in bear markets recovers faster and compounds more. Risk management is return management. Limiting losses to 10 % instead of 30 % requires less time and less risk to recover.

  • Maintain a cash buffer. Have two to three years of living expenses in cash or short-term bonds. This prevents you from selling assets at a loss during a downturn. A cash reserve acts as dry powder and protects your long-term investments.

  • Rebalance with discipline. When markets fall, your equity allocation shrinks. A disciplined rebalancing schedule forces you to buy low and sell high. But only if you are disciplined to follow through when fear is high.

  • Use tactical risk shifts. Reduce equity exposure when valuations are stretched. Add exposure when risk premiums are higher. Avoid going all-in or all-out. Stay flexible, but don’t chase trends. Focus on risk-adjusted outcomes.

  • Protect in retirement. If you’re near or in retirement, reduce sequence risk. Lower your withdrawal rate during market stress. Delay big spending. Hold more conservative allocations. The early years of retirement are fragile. One significant drawdown can break the plan.

  • Respect the cycle. Bear markets are part of investing. But they are not harmless. Don’t buy the narrative that “you’ll always recover.” That’s true for the index over decades. It’s not always true for you. Your time horizon is finite. Your goals are tangible. Respect that.

Don’t let the numbers fool you. A 20 % loss is not a bump in the road. It’s a reset. It costs you capital. It costs you time. And it drags your plan off course. The damage runs deeper than the headlines suggest.

Savvy investors don’t think in terms of percentages but rather in dollars. They think in years and goals rather than days and gains. Focusing on what matters, protecting your downside, managing risk, and preserving time keep you on track.

Bear markets will come. They always do. Your job is to survive them without losing the one thing you can’t get back: time.

“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham.

Tyler Durden Thu, 10/09/2025 - 13:00

Bear Market Losses – A Dangerous Illusion

Bear Market Losses – A Dangerous Illusion

Authored by Lance Roberts via RealInvestmentAdvice.com,

When bear market losses occur, headlines talk in percentages: “The market dropped 20 %.” Investors nod. A 20 % decline sounds manageable, historical, and expected. As Ben Carlson recently penned:

“Bear markets have some symmetry to them, at least in the short-term. In the long term, bull markets versus bear markets are asymmetric. Things are not balanced.

Look at the gains versus losses. The bear markets are blips. To be fair, those losses don’t feel like blips when you’re in them. Bear markets can be brutal. Losing money is not fun. Seeing a large portion of your portfolio get vaporized can cause you to question your sanity as an investor. And yet…the bull markets completely overwhelm the bear markets. It’s not even close.

This certainly seems to be true when looking at a chart of “percentage returns. “ The chart below uses monthly, inflation-adjusted returns for $1000 invested in the S&P 500 index (data via Robert Shiller, Yale University)

However, looking at the markets this way and assuming that “bull markets” have dwarfed “bear markets” throughout history creates an “illusion of safety.” This is why such mainstream and mundane analysis is only used to deter concerns about market downturns and suggest that investors remain fully invested at all times.

But ask yourself these two simple questions:

  • If true, why does no legendary investor “buy and hold” the market?

  • Why does every legendary investor have one rule in common: “to buy low and sell high” in some form? From Warren Buffett to Paul Tudor Jones, the investing greats warned about the peril of market drawdowns and the risk to investment capital.

While Ben is correct in the overall analysis, the framing is misleading. As we will discuss in detail, the chart, originally put out by First Trust, hides the real damage to your portfolio, goals, and timeline. As noted, bear market losses, when displayed in percentages, obscure what it takes to recover. Furthermore, it ignores the most critical commodity of all investors: the “time” lost and the destruction of the “compounding effect.”

A 20 % or more bear market loss is not just a dip. It’s a reset. It drags down the current value of your investments and your future wealth. The more profound the loss, the more ground you need to make up, and the longer it takes. Investors think they can ride it out. However, many behavioral studies show this is not the case, and that investors eventually “sell” as the “loss avoidance” kicks in. That is when the real damage is done.

Most market commentary glosses over that. It speaks in long-term averages and smooth recoveries, assumes you stay the course and never sell, and that you’re not withdrawing funds. Those assumptions rarely hold up under pressure. Markets don’t move in straight lines. Neither do portfolios. Understanding the real cost of a bear market means looking beyond percentages.

Let’s explore the math.

The Math of Loss

Losses hurt more than they appear because recovery isn’t symmetrical. If your portfolio drops 20 %, you need a 25 % gain to get back to even. Drop 30 %, and you need nearly 43 %. A 50 % loss? That takes a 100 % rebound. These aren’t abstract numbers; they’re the reality of compounding in reverse.

Let’s assume that an index goes from 1000 to 8000.

  • 1000 to 2000 = 100% return

  • The index rises to 3000 = 200% return

  • Going on to 4000 = 300% return

  • …

  • And continues to 8000 = 700% return

If an investor bought the index and generated a 700% return on their money, why worry about a 50% correction?

Here is the problem with percentages.

A 50% correction does NOT leave you with a 650% gain.

A 50% correction subtracts 4000 points, reducing your 700% gain to 300%.

Source: St. Louis Federal Reserve Chart by: www.RealInvestmentAdvice.com

As shown in the example, the small drawdown seems innocuous until you realize it clipped 4000 points from the index. The problem now becomes the issue of regaining those 4000 lost points to break even.

Understanding the math of loss is incredibly important.

Real life works the same. From 2007 to 2009, the S&P 500 lost over 56 %. To recover that, investors needed more than 113 % in gains. The market didn’t break even again until 2013. That’s six years to claw back losses. And that assumes no withdrawals and full participation in the rebound. Most investors didn’t make it. They panicked, went to cash, and missed the recovery.

Let’s reconstruct the chart above from the percentage gain and loss chart into actual point changes. In this form, we see that most of the advances in bull markets get subsequently destroyed in bear markets.

As of this analysis, the market was trading at 6700. A 50% correction would result in a loss of 3350 points, wiping out most of the gains from the October 2022 lows.

No, that would not just be a blip. That is because volatility compounds the damage.

When looking at things in percentages, gains and losses of equal size do not cancel out. A 10 % gain and a 10 % loss still leaves you down. If you start with $100,000, gain 10 % to $110,000, then lose 10 %, you’re at $99,000. The sequence matters. High volatility drags on returns even if long-term averages look fine. That’s called volatility drag, and it eats away at portfolios quietly.

Drawdowns are more than temporary events. They are mathematical traps. The deeper the fall, the more challenging the climb. And every investor who ignores this does so at their own risk.

The Fallacy of Compounding and the Math of Time

Bear markets don’t just reduce your portfolio value. They rob you of time. Time is also the most valuable resource when investing. You can recover money. You can’t recover time.

Let’s assume that an investor wants an “average” rate of return over a five-year horizon. Since markets have volatility, we can inject a minor correction to see the impact of losses.

After three straight years of 10% returns, a bear market loss of just 10% cuts the average annual compound growth rate by 50%. Furthermore, it then requires a 30% return to regain the required average rate of return. 

There is a significant difference between AVERAGE and ACTUAL returns. The impact of losses destroys the annualized “compounding” effect of money.

To prove that, the purple shaded area shows the “average” return of 7% annually. However, the differential between the promised and “actual return” is the return gap. See the problem?

The differential between what investors were promised (and a critical flaw in financial planning) and actual returns is substantial over the long term.

Secondly, and most importantly, you DIED long before you realized the long-term average rate of return.

The chart box below shows a $1000 investment for various starting periods. The total return holding period is from 35 years until death using actuarial tables. There are no withdrawals. The orange sloping line represents the “promise” of 6% annualized compound returns. The black line represents what occurred. The bottom bar chart shows the surplus, or shortfall, of the 6% annualized return goal.

At the point of death, the invested capital is short of the promised goal in every case except the current cycle starting in 2009. However, that cycle is yet to be complete, and the subsequent bear market loss will likely reverse most, if not all, of those gains.

As such, if your plan is based on compounding returns over 20 or 30 years, even a short disruption can have long-term effects. This effect is worse for those nearing retirement. If a bear market hits five years before retirement, you don’t have time to wait. You may need to delay retirement, reduce your spending goals, or work longer. Worse, the damage is permanent if you’re already retired and drawing down funds during a bear market as every withdrawal during a downturn locks in a loss. Even if the market recovers, your portfolio doesn’t, because you pulled money out when prices were low.

This is the sequence-of-returns problem. If your first years of retirement coincide with a bear market, your odds of running out of money rise sharply. Studies show that retirees who withdraw 4 % per year and face a 30–40 % loss early in retirement have a much higher failure rate. The order of returns matters far more than average returns.

If someone suggests that you ignore bear market corrections, ask them if they have ever been through one.

Investors often plan as if markets will deliver average returns smoothly. They don’t. Bear markets distort the timeline, and time lost compounds into permanent gaps in your financial plan.

Strategies That Work When Markets Don’t

Understanding the real cost of bear markets is the first step. What matters is acting on that knowledge. Here are six strategies that help protect your portfolio and your plan when markets break down.

  • Limit the downside. Avoiding significant losses matters more than capturing every bit of upside. A portfolio that loses less in bear markets recovers faster and compounds more. Risk management is return management. Limiting losses to 10 % instead of 30 % requires less time and less risk to recover.

  • Maintain a cash buffer. Have two to three years of living expenses in cash or short-term bonds. This prevents you from selling assets at a loss during a downturn. A cash reserve acts as dry powder and protects your long-term investments.

  • Rebalance with discipline. When markets fall, your equity allocation shrinks. A disciplined rebalancing schedule forces you to buy low and sell high. But only if you are disciplined to follow through when fear is high.

  • Use tactical risk shifts. Reduce equity exposure when valuations are stretched. Add exposure when risk premiums are higher. Avoid going all-in or all-out. Stay flexible, but don’t chase trends. Focus on risk-adjusted outcomes.

  • Protect in retirement. If you’re near or in retirement, reduce sequence risk. Lower your withdrawal rate during market stress. Delay big spending. Hold more conservative allocations. The early years of retirement are fragile. One significant drawdown can break the plan.

  • Respect the cycle. Bear markets are part of investing. But they are not harmless. Don’t buy the narrative that “you’ll always recover.” That’s true for the index over decades. It’s not always true for you. Your time horizon is finite. Your goals are tangible. Respect that.

Don’t let the numbers fool you. A 20 % loss is not a bump in the road. It’s a reset. It costs you capital. It costs you time. And it drags your plan off course. The damage runs deeper than the headlines suggest.

Savvy investors don’t think in terms of percentages but rather in dollars. They think in years and goals rather than days and gains. Focusing on what matters, protecting your downside, managing risk, and preserving time keep you on track.

Bear markets will come. They always do. Your job is to survive them without losing the one thing you can’t get back: time.

“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham.

Tyler Durden Thu, 10/09/2025 - 13:00

Trump Vows Military Will Be Paid; IRS Furloughs Half Of Staff As Shutdown Enters Day 9

Trump Vows Military Will Be Paid; IRS Furloughs Half Of Staff As Shutdown Enters Day 9

With day nine of the federal government shutdown upon us and no end in sight after the Senate rejected both Republican and Democratic plans to reopen (their 6th failed vote), President Donald Trump doubled down on threats to block some furloughed federal workers from receiving back pay once the shutdown is over - but insisted that members of the military don't have to worry about missing their next paychecks - signaling support for standalone legislation to ensure they're paid. 

Republican Rep. Ken Calvert - who's in charge of defense funding, has also thrown his weight behind the bill, which was introduced by Rep. Jen Kiggans (R-VA) in mid-September, and has been gaining steam since the shutdown began Oct. 1. 

House Democratic leadership supports the standalone bill to ensure military troop payments. 

In a Thursday morning C-SPAN interview, meanwhile, House Speaker Mike Johnson (R-LA) took several calls from unhappy Americans - one of whom was a military wife from Virginia, who pleaded with him to reopen the government or pass funding so her family doesn't miss a paycheck on Oct 15. 

"As a Republican, I'm very disappointed in my party, and I'm very disappointed in you, because you have the power to call the House back," she said. "You refuse to do that, just for a show."

Johnson replied that situations like hers keep him up at night (lol sure), and that the House already tried to vote to pay the troops when it passed a short-term government funding extension that the Senate refuses to pass.

"The Democrats are the ones that are preventing you from getting a check," Johnson said. 

Meanwhile, the IRS on Wednesday announced that it would furlough some 34,000 employees - nearly half the agency's staff, adding to the approximately 750,000 furloughed workers government-wide. 

Payday Looms

On Friday, federal employees should expect smaller paychecks, which covers work between Sept. 21 and Oct. 4, so they'll only be paid for work between Sept. 21 and Oct. 1. 

Under the 2019 Government Employee Fair Treatment Act, federal workers should receive retroactive pay after the shutdown - however a leaked internal memo revealed that the Trump administration interpreted the Act to place the responsibility on Congress to authorize payments. 

Tyler Durden Thu, 10/09/2025 - 11:20

NHTSA Probing Tesla Full Self-Driving After Reports Of Red-Light Runs, Collisions

NHTSA Probing Tesla Full Self-Driving After Reports Of Red-Light Runs, Collisions

The U.S. National Highway Traffic Safety Administration (NHTSA) has launched an investigation into 2.88 million Tesla vehicles equipped with its Full Self-Driving (FSD) system after more than 50 reports of traffic-safety violations and crashes, according to Reuters.

NHTSA said FSD, which requires driver supervision, has “induced vehicle behavior that violated traffic safety laws.”

Reports include Teslas running red lights and making lane changes against oncoming traffic. The agency is reviewing 58 cases, including 14 crashes and 23 injuries. Six involved vehicles driving through red lights and colliding at intersections; four crashes caused injuries.

A driver in Houston told NHTSA that FSD “is not recognizing traffic signals. This results in the vehicle proceeding through red lights, and stopping at green lights.”

The complaint added: “Tesla doesn’t want to fix it, or even acknowledge the problem, even though they’ve done a test drive with me and seen the issue with their own eyes.”

Reuters writes that the probe, a preliminary evaluation, could lead to a recall if regulators find an unreasonable safety risk. It will also review FSD behavior at railroad crossings. Tesla, which issued a software update to FSD this week, did not respond to requests for comment.

The investigation comes amid mounting scrutiny of Tesla’s driver-assistance features.

In October 2024, NHTSA opened a separate inquiry into 2.4 million Teslas after crashes in poor visibility, including a 2023 fatal accident. In January, regulators began probing 2.6 million vehicles over a remote-movement feature, and they are also reviewing Tesla’s self-driving robotaxis in Austin.

On August 1, 2025 a Florida jury ordered Tesla to pay $329 million in damages after finding the company partially liable in a 2019 crash that killed 22-year-old Naibel Benavides Leon and seriously injured her boyfriend.

The jury ruled that Tesla’s Autopilot driver-assistance system failed to prevent the collision, even though the driver admitted being distracted at the time. The verdict marks a rare instance of Tesla being held responsible for a fatal accident and could set an important precedent for the legal risks facing automated driving technology. Tesla disputes the ruling and plans to appeal.

Tyler Durden Thu, 10/09/2025 - 11:00

Futures Flat At All Time High, As Silver Tops $50

Futures Flat At All Time High, As Silver Tops $50

US equity futures are flat, as the main indexes closed at fresh record highs overnight amid a melt-up that shows no signs of abating, with every small dip being bought and volatility staying low. While plenty of investors have doubts about the AI-driven rally and the tense geopolitical backdrop, the year-end FOMO is the only driver for now. As of 8:30am, S&P futures are flat, while Nasdaq futures trade fractionally in the red, although we are confident the dip-buying algos will promptly pounce on the opportunity. In premarket trading, Delta Air Lines climbed more than 5% after reporting profits that beat estimates. PepsiCo gained on stronger-than-expected revenue and flagged a turnaround at its US beverage unit. Nvidia rose after the US approved several billion dollars worth of its chip exports to the United Arab Emirates. Shares of other Mag 7 names were mixed. Bond yields are higher by 1-2bp across the curve ahead of today's 30Y auction, with USD flat following a 1.2% move WTD. Ahead of Trump / Xi meeting later this month China expanded its rare earths curbs. In commodities, Energy is mixed with distillates higher and crude/natgas lower. Oil slipped and gold stalled near a record high above $4,000 as traders focused on cooling tensions in the Middle East; Silver topped $50 for the first time and PGMs are stronger. Today's session has seven Fed speakers and a 30Y bond auction; yesterday's 10Y auction required a concession. Macro data is delayed again due to the government shutdown.

In premarket trading, Mag 7 stocks are mixed (Microsoft little changed, Alphabet -0.2%, Meta little changed, Apple -0.1%, Amazon -0.2%)

  • Tesla (TSLA) falls 1.1% as US auto safety regulators opened a probe into the company over incidents in which its vehicles ran through red lights and violated other traffic laws while using the driver-assistance system known as Full Self-Driving.
  • Nvidia (NVDA) rises 1.7% after the US approved several billion dollars worth of Nvidia chip exports to the UAE, an initial step in implementing a controversial deal that could serve as a blueprint for American AI statecraft. Separately Cantor Fitzgerald raised its price target to a Street-high, seeing more growth potential for the chipmaker on the back of AI-related growth.
  • Rare earth stocks climb after China unveiled new restrictions on exports ahead of a meeting this month between Donald Trump and Xi Jinping.
  • Akero Therapeutics (AKRO) jumps 18% after Novo Nordisk agreed to buy the drug developer for $54 per share in cash at closing, with a contingent value right of $6 per share
  • Apogee Therapeutics (APGE) is down 6% after the company offered shares.
  • AZZ Inc. (AZZ) falls 7% after the provider of metal-finishing services reported second-quarter sales that missed estimates.
  • Costco (COST) is up 1% after the warehouse club reported comparable sales growth that beat analyst estimates for September, helped by a rise in both foot traffic and amount spent per customer.
  • Delta Air (DAL) climbs 6% after the carrier updated its adjusted earnings per share forecast for the full year, with the new guidance beating the average analyst estimate.

In corporate news, Warner Music Group is said to be close to an agreement with Netflix to create a slate of movies and documentaries based on the label’s artists and songs. Jefferies has come under scrutiny for its relationship with First Brands.

As we said yesterday, and the day before, and the day before that, and so on, stocks around the world have soared to a fresh record as traders looked past worries of a potential bubble in high-profile tech names and instead focused on corporate resilience and the possibility of further US interest-rate cuts. The optimism now faces another test as earnings season gets underway, with Wall Street banks Goldman Sachs and Citigroup due to report next week. Tesla is the first of the Magnificent Seven set to report on Oct. 22, followed by Alphabet, Microsoft and Meta Platforms Inc. on October 29.

“A liquidity glut and the AI boom keep the party going for equities,” said Barclays strategist Emmanuel Cau. Still, the reluctant bulls driving the rally have plenty of lingering worries, such as Nassim Taleb’s warning that investors should insure against a stock-market crash due to structural issues such as the US debt burden.

“Given how lopsided the expectations have become, given how lofty the valuations have become, I think investors are laser focused on earnings,” Aidan Yao, a strategist at Amundi Investment Institute, said on Bloomberg TV. “They are trying to see if earnings are really catching up into the valuations.”

Elsewhere, the Fed minutes revealed that many members have expressed caution — driven by concerns over percolating US inflation. And traders have been slowly backing away from bets on the trajectory of rate cuts. Gold is taking a breather from its record run, while silver just topped $50 for the first time

In geopolitical news, Trump said Israel and Hamas have signed off on the first phase of a peace plan. A ceasefire in Gaza has gone into effect, Israel Deputy Foreign Affairs Minister Sharren Haskel said subsequently. If the agreement holds, it would mark a major step toward ending the conflict that erupted after Hamas attacked Israel on Oct. 7, 2023 and threw the Middle East region into crisis. Canadian PM Mark Carney pushed back against Trump’s protectionism in the auto industry, saying that the US-Mexico-Canada Agreement strengthens the US industry. China unveiled broad new curbs on its rare earth exports.

European stocks are mixed. The CAC 40 adds 0.3% while the DAX climbs to a fresh record. The FTSE 100 falls 0.4% as HSBC shares slump after the bank proposed taking its Hong Kong subsidiary private. Here are some of the biggest European movers today:

  • HelloFresh shares surge as much as 11% as UBS upgrades to buy from neutral and says the firm offers a “compelling risk-reward”
  • Sodexo shares advance as much as 3.5% after the food services company announced that Sophie Bellon will step down as CEO
  • Suedzucker shares rise as much as 1.8% after analysts at Warburg said the drop in earnings during the first half is not a major surprise
  • Volution shares rise as much as 10%, hitting an all-time high, after the firm delivered annual results that were ahead of expectations
  • MTG shares gain as much as 11% after it updated its full-year 2025 guidance and announced a SEK400 million share buyback program
  • Mobilezone shares rally as much as 12% after agreeing to sell its German business to Freenet
  • Polar Capital shares rise as much as 5.9% as assets under management grow 15% in the three months to the end of September
  • Emmi shares gain as much as 4.8% as Oddo BHF starts coverage of the Swiss dairy producer with an outperform recommendation
  • Lloyds Banking Group shares drop as much as 3.9% after the lender said it will likely have to set aside an additional provision to compensate customers who were missold car loans
  • Michelin shares drop as much as 6.5% following a pre-close call ahead of its 3Q sales update scheduled for Oct. 22
  • Gerresheimer shares drop as much as 14% after the company cut its outlook for the year yet again
  • Sopra Steria shares fall as much as 5.6% after its CEO Cyril Malargé decided to step down

Earlier in the session, Asian stocks rose, as an AI-fueled tech rally resumed following a brief pause and shares in mainland China gained as the market reopened after the Golden Week holidays. The MSCI Asia Pacific Index rose as much as 0.6%, poised for its first gain in three sessions. A sub-gauge of tech shares was the top performer among sectors, rebounding from Wednesday’s declines. It had risen for seven straight days before that. TSMC was the biggest boost to the MSCI Asia measure after a US index of chip stocks jumped to a fresh all-time high on AI euphoria. China’s CSI 300 Index advanced 1.5% to its highest since January 2022 as investors got up to speed on headlines from OpenAI deals to gold’s climb above $4,000. Benchmarks in Japan and Taiwan climbed to fresh records.

In FX, the Bloomberg Dollar Spot Index is flat, in early London trade it pushed up to its highest level since Aug. 5. EUR/USD was slighly lower at 1.1623; its selloff has slowed as French President Emmanuel Macron is set to name a new prime minister by Friday evening, avoiding the need to call a snap election for the time being. USD/JPY steadies around an eight-month high of 153.22; investors contemplate how much the Japanese currency must weaken before authorities intervene again

In rates, treasury yields are within a basis point of Wednesday’s closing levels following similarly rangebound price action in core European bonds. Focal points of US session include 30-year bond reopening, last of three coupon auctions this week. Fed Chair Powell delivers pre-recorded welcoming remarks at its community bank conference at 8:30am New York time, with text release expected. US 10-year, little changed near 4.12%, trades marginally cheaper vs German and UK counterparts; curve spreads are marginally flatter on the day. $22 billion 30-year bond reopening at 1pm New York time follows Wednesday’s middling 10-year note auction, which tailed by 0.8bp. WI 30-year yield near 4.7% is ~5bp cheaper than last month’s, which stopped on the screws.

The Bloomberg Dollar Spot Index . Spot gold loses a few dollars but remains firmly above $4,000/oz.

In commodities, oil slipped and gold stalled near a record high above $4,000 as traders focused on cooling tensions in the Middle East. Israeli markets staged a broad rally, sending the shekel to a three-year high. The Tel Aviv Stock Exchange 35 Index added 1.7%, notching a fresh all-time high, while bond yields fell across the board.  WTI crude futures fall 0.2% to $62.40 a barrel. Bitcoin falls 1%.

Looking at today's calendar, wholesale trade/inventories for August are scheduled for 10 am ET, but govt. data releases are likely to be impacted by the shutdown. Fed’s Bowman, Goolsbee, Barr, Kashkari and Daly are scheduled to speak and Fed Chair Powell gives pre-recorded remarks at Fed community bank conference. 

Market Snapshot

  • S&P 500 mini little changed
  • Nasdaq 100 mini little changed
  • Russell 2000 mini -0.3%
  • Stoxx Europe 600 -0.2%
  • DAX +0.3%
  • CAC 40 +0.2%
  • 10-year Treasury yield +1 basis point at 4.13%
  • VIX +0.1 points at 16.41
  • Bloomberg Dollar Index little changed at 1210.88
  • euro little changed at $1.1619
  • WTI crude +0.3% at $62.72/barrel

Top Overnight News

  • Israel and Hamas agreed on terms for the exchange of all hostages held in Gaza for about 2,000 jailed Palestinians. Donald Trump told Fox he expects the hostages to be released “probably” on Monday. A Gaza ceasefire is in effect, Israel’s deputy foreign affairs minister said. A Gaza ceasefire is in effect, Israel’s deputy foreign affairs minister said.  BBG
  • President Trump said most workers will get back pay and noted they want to make Obamacare better, while he stated that military personnel will probably be paid during the shutdown. Furthermore, it was separately reported that White House officials said President Trump is mulling shifting funds to pay troops: POLITICO.
  • Democratic bill to end US government shutdown failed to win enough votes to pass in the Senate, while the Republican bill to end the US government shutdown also failed to win enough votes to pass in the Senate.
  • US House Minority Leader Jeffries said he supports an effort to pass a standalone bill to pay military troops.
  • US IRS is to furlough 34k employees as part of the government shutdown.
  • Bessent wrapped up Fed chair interviews on Tuesday and while Hassett, Warsh, and Waller are still frontrunners, BlackRock’s Rick Rieder performed “very well.” FT
  • China tightened its control over rare earths/ sectors crucial to making high-tech products including electric vehicles and jet fighters, threatening to reignite trade tensions with the U.S. ahead of an expected meeting between President Trump and Chinese leader Xi Jinping. WSJ
  • China's commerce ministry on Thursday added 14 foreign organizations to its "unreliable entity list", it said in a statement, restricting their ability to carry out commercial activities within the world's second-largest economy. Some of the companies, which are mostly based in the United States, had supplied anti-drone technologies to Taiwan. Politico
  • China is using the rally in gold to reduce reliance on US-led financial systems and challenge dollar dominance. Beijing has been accumulating gold reserves for a decade and is now seeking to woo other nations to store gold in China’s bonded warehouses and trade the metal on the Shanghai Gold Exchange. BBG
  • Nato allies are discussing a more forceful response to Putin’s increasingly provocative actions, including by deploying armed drones along the border with Russia and easing restrictions on pilots to allow them to open on Russian aircraft. FT
  • TSMC reported a better-than-expected 30% increase in its third-quarter sales. BBG
  • The US has approved several billion dollars worth of Nvidia Corp. chip exports to the United Arab Emirates, an initial step in implementing a controversial deal that could serve as a blueprint for American AI statecraft. BBG
  • NY Fed President John Williams said he supports further rate cuts this year, citing labor market concerns, the NYT reported. He added that he doesn’t think the US is on the verge of a recession. BBG
  • Fed's Williams supports further rate cuts; does not think the US economy is on the verge of a recession: NYT. 

Trade/Tariffs

  • US President Trump's administration is reportedly planning to exclude generics from the big pharma tariff plan, although the decision isn't final and could change, according to WSJ.
  • Canadian PM Carney said there will be some bilateral deals alongside the USMCA
  • China’s government announced export controls on rare earth materials with MOFCOM stating that foreign firms and individuals must obtain a dual-use items export license regarding rare earth exports, while domestic exporters exporting some dual-use items shall declare the final destination country or region as required, with requirements taking effect from December 1st. Furthermore, it stated that exports of items for design, development, production or use of weapons of mass destruction will not be approved and export applications to overseas military users, as well as to importers and end-users on watch lists, shall not be approved in principle.
  • Vietnam said negotiators are to travel to the US in October and November to continue trade talks.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were predominantly higher following the tech rebound stateside, where the S&P 500 and NDX notched fresh record levels, while participants were encouraged by an agreement on the first phase of a Gaza ceasefire deal, and with Chinese traders returning from the National Day Golden Week holiday. ASX 200 eked mild gains with strength in mining and materials, while tech and the top-weighted financial industry lagged. Nikkei 225 resumed its recent rally with the ascent spearheaded by tech advances following the strength in US counterparts. Hang Seng and Shanghai Comp were somewhat mixed as the Hong Kong benchmark took a backseat to the Mainland Chinese markets, which reopened for the first time this month, while there were also divergences between some banks as Hang Seng Bank was the biggest gainer after jumping more than 26% and with HSBC in the red after proposing to take the former private.

Top Asian News

  • Former BoJ Deputy Governor Wakatabe said the BoJ can raise interest rates if inflation expectations heighten and push up underlying inflation, but added the BoJ will likely find it hard to justify raising rates this year due to prospects of weak Q3 GDP. Furthermore, he said the BoJ has not committed to a set timing for raising rates and has not dropped any signals, while he stated the BoJ must coordinate policy with the government, but does not need to keep rates low solely to fund government spending.
  • Chinese Commerce Ministry announces export control on some rare earth equipment materials; adds new rare earth elements to list. Announces additional export control on items related to Lithium batteries and Artificial Graphite anode materials. Export control on items related to super hard materials. Export control on some medium and heavy rare earth-related items. List includes rare earth materials and machinery for export control.
  • Adviser to Japan's new LPD leader Takaichi, Honda, says the BoJ should be cautious about raising interest rates; unclear when the next rate hike would be, but Takaichi is likely to be cautious. USD/JPY is unlikely to rise above 155 as inflation expectations remain cautious. Weak JPY is positive for the economy when in the recovery phase.

European bourses (STOXX 600 -0.2%) opened mostly on a firmer footing, but sentiment has slipped a touch to display a bit more of a mixed picture in Europe. European sectors are mixed. Telecoms and Basic Resources takes the top spot, with the latter boosted by a few broker upgrades from within the sector alongside strength in underlying metals prices. Banks are found towards the foot of the pile, with losses in HSBC (-6.4%) driving the sector lower after it proposed to privatise Hang Seng Bank. Elsewhere, Lloyds (-2.9%) dips after the Co. warned of a "material" hit related to the FCA's latest motor finance ruling.

Top European News

  • German coalition agrees to EUR 3bln in EV incentives through 2029, Chancellor Merz adds that they are aiming for an accord on the combustion ban by Thursday.
  • Jean-Louis Borloo has come to the attention of Politico as a potential candidate for French PM Politico writes "Jean-Louis Borloo could fit the composite portrait drawn up overnight by a Macronist strategist: he could “speak to the left,” “embody a depresidentialized government,” and be “not as openly a lieutenant of Emmanuel Macron” as Sébastien Lecornu. Put more trivially by an advisor who got wind of the idea: “He won't go and ask the PR for permission to pee.”"
  • BoE's Mann says "the risks to the outlook for the UK economy are two-fold. Inflation remains persistently persistent and the outlook for growth remains modest". "This assessment of risks to consumption is set against a background of persistently high inflation, and drifting household inflation expectations. Neither are target-consistent". "For the first theme, inflation and consumer scarring, the research shows that the rapid increase in the price level has scarred consumers, even as inflation has moderated and real income growth resumed".

FX

  • A fourth session of gains for the broader USD and index, this time with a lending hand from GBP weakness (more below), as well as ongoing losses in the NZD following the 50bps jumbo rate cut delivered by the RBNZ yesterday. The macro narrative surrounding the US remains a downbeat one as the government shutdown continues to drag on, delaying economic data releases and threatening a hit to domestic growth, with today's weekly Jobless Claims also shelved for now. DXY prints on either side of 99.00 and eclipsed Wednesday's peak (99.06).
  • EUR/USD is subdued but to a lesser extent than some peers, with some degree of certainty arising on the French political front, with news that French President Macron will name a new PM in the next 48 hours and said there is a possible path to a budget by December 31st. Polymarket odds point to a 32% chance of a French election being called by the end of the month, vs a c. 70% probability yesterday morning, according to ING. On the data front, Germany printed a larger trade surplus than expected, although imports and exports contracted. This follows a string of woeful German data, with German Industrial Output and Industrial Orders this week falling well short of consensus. Focus now turns to the ECB Minutes later.
  • USD/JPY tilts higher amid Dollar strength and following rangebound APAC trade amid a pause from the recent Takaichi-related advances, with her economic measures and PM nomination said to likely be delayed. USD/JPY has climbed as high as 153.22, with focus now on whether the pair begins to approach 155.
  • GBP is among the laggards, despite limited newsflow before comments from BoE's Mann. Initial losses were seemingly driven by technicals as GBP/EUR fell under 1.1500. BoE's Mann stuck to her stance, arguing that "policy needed to remain restrictive for longer, both to squeeze out inflation persistence". Little reaction was seen on the comments.
  • Antipodeans are subdued with little notable influence from China's return from the National Day Golden Week holiday, whilst the Kiwi underperformed and is still feeling the hangover from the RBNZ on Wednesday.

Fixed Income

  • A contained start to the day for USTs. Newsflow has been light aside from last night’s FOMC Minutes being digested and the ongoing geopolitical situation around Hamas - see the feed for analysis. The above aside, the US docket is once again devoid of data owing to the shutdown, which still continues with no end in sight. As such, the main focal point is the heavy speakers docket headline by Chair Powell; from Powell, we do expect a text release, though this will be pre-recorded welcoming remarks, no Q&A expected. Texts also due from Bowman (voter), Goolsbee (2025), Barr (voter). As it stands, USTs are in a very narrow 112-18 to 112-24+ band and entirely within Wednesday’s 112-17 to 112-27 confines.
  • OATs are awaiting the announcement from President Macron on who the next PM will be, an update on this is expected by the end of Friday but there is no specific time for this yet. Politico reports that Jean-Louis Borloo has come to their attention as a potential candidate for French PM, as he can “speak to the left,” “embody a depresidentialized government,” and be “not as openly a lieutenant of Emmanuel Macron”, Politico surmises. Ahead of this, OATs are outperforming peers with gains of c. 20 ticks at most. Upside that appears to be a function of the diminished odds of legislative elections in the near term and signs of some cooperation between parties. Given this, the OAT-Bund 10yr yield spread is holding just beneath 83bps, vs the 88.2bps seen in recent sessions.
  • Drifting throughout the European morning. Down to a 128.79 low with downside of c. 12 ticks at most. While marginally underperforming its peers, the benchmark remains clear of Wednesday’s 128.49 base. Pressure potentially a function of the updates on Germany’s automobile situation. As the nation has agreed on EUR 3bln worth of EV incentives, an agreement that comes ahead of a meeting at 14:00BST on the subject. While we don’t yet know how the incentives will be financed, the prospect of additional issuance is potentially weighing on the space.
  • Gilts opened lower by 13 ticks before slipping one more to a 90.65 trough, a point that the benchmark has remained around since. UK-specific newsflow light. No move to a text release from BoE’s Mann that stuck to her known hawkish bias. Overall, the complex is under modest pressure but is broadly in-fitting with EGB peers as we await a fresh catalyst.

Commodities

  • Crude benchmarks trade rangebound as the European session got underway, as Hamas and Israel agreed to the first part of the Gaza ceasefire. Despite today being the day of the ceasefire, Israel continues to raid the Gaza Strip; sources citing Netanyahu's office said, "the ceasefire will come into effect only after the government approves it", according to Al Jazeera. The Israeli cabinet is to meet at 15:00 BST. Though most recently Bloomberg reported, citing the Israeli Deputy Foreign Minister that the ceasefire is in effect.
  • Spot XAU is taking a breather this morning as the yellow metal formed a new ATH at USD 4059/oz in yesterday’s session. The metal fell down to USD 4k/oz during the APAC session as the Gaza ceasefire eased geopolitical tensions and dollar strengthening following the hawkish Fed minutes.
  • Base metals extend higher as Chinese markets re-open following a week-long holiday. 3M LME Copper dipped to a low of USD 10.59k/t before reversing c. USD 280/t higher as China announced export controls on rare earth materials. Within the announcement, foreign firms and individuals must obtain a dual use items export licence to export rare earth materials. This is to come into effect on December 1st.
  • Britain's energy grid operators are confident of sufficient electricity and gas supply this winter, while peak British day gas demand is seen at 182 MCM this winter vs. peak supply of 565 MCM.

Geopolitics: Middle East

  • Kann News, on the Israel-Hamas deal in the Israeli government, states that a clear majority in the government is expected. National Security Minister Ben-Gvir and Finance Minister Smotrich are expected to vote against - but not to resign.
  • "Channel 12 quoted sources in Netanyahu's office: The ceasefire will come into effect only after the government approves it", according to Al Jazeera.
  • Israeli security cabinet and government meeting on agreement delayed to 17:00 local time (15:00BST), according to Reuters citing sources.
  • "Israeli Raid on Gaza Strip", according to Sky News Arabia.
  • Gaza ceasefire agreement goes into effect, via Al Qahera.
  • Israeli PM Netanyahu's office confirms that PM Netanyahu will convene the government on Thursday to approve the Gaza agreement, while an Israeli government spokesperson said they expect hostages to start being released on Saturday. Furthermore, Yedioth Ahronoth quoted Israeli officials stating that the Gaza agreement will be signed on Thursday and the first release will be either Saturday or Sunday, while it was later reported that the ceasefire will come into effect today at 12:00 noon (10:00BST/05:00EDT).
  • Hamas said an agreement was reached to end the Gaza war, secure an Israeli withdrawal and for a hostage-prisoner swap, while it called on US President Trump and guarantor states to ensure Israel implements the Gaza ceasefire deal.
  • Qatar Foreign Ministry spokesperson noted that mediators said an agreement was reached on all terms of the first phase of the Gaza ceasefire, while the Gaza ceasefire is to include an end of the war, the release of Israeli hostages and Palestinian prisoners, as well as entry of aid. Furthermore, the spokesperson said the details of the Gaza ceasefire agreement are to be announced later.
  • US President Trump previously said he may go to the Middle East by the end of the week, maybe on Sunday, while he separately commented that he will most likely be going to Egypt. It was also reported that the White House said President Trump will get a routine yearly check-up on Friday and is considering going to the Middle East shortly thereafter.
  • US Special Envoy Witkoff and White House Kushner is to travel to Israel on Thursday night, via Israeli Media.
  • US President Trump announced that Israel and Hamas have both signed off on the first phase of the peace plan which means that all of the hostages will be released very soon, and Israel will withdraw their troops to an agreed upon line as the first steps towards a strong, durable, and everlasting peace. Trump also said he believes Iran will be part of the peace situation and that he spoke with Israeli PM Netanyahu, while he thinks Gaza will be rebuilt and that hostages will probably be released on Monday. In relevant news, Trump told Axios's Ravid in a phone call that he is likely going to Israel in the coming days and would possibly speak in front of the Knesset, which he will definitely do if they want him to.

Geopolitics: Other

  • Taiwan Defence Ministry report stated that China is using hybrid warfare to weaken people's trust in the government and support for defence spending, while it added that China is increasing its grey zone attacks and frequency of military activities. Furthermore, it stated that China has been using AI tools to scan weak points in Taiwan’s critical infrastructure and steal and analyse intelligence, as well as noted that China is using botnet cyber-attacks with AI to weaken Taiwan’s digital infrastructure and cybersecurity.
  • UN is to slash a quarter of peacekeepers globally due to lack of funding, according to a senior UN official.
  • Ukraine President Zelenskiy says Russian forces aim to urgently capture eastern city of Pokrovsk, Ukrainian strikes against Russia may lead to gasoline shortages of up to 20%, US and Russia 'have no shared perspective' on war.
  • Kremlin spokesperson Peskov says the dialogue between Russia and the USA have been put on a "serious pause", via CGTN Europe.

US Event Calendar

  • 8:30 am: Oct 4 Initial Jobless Claims, est. 228k: DELAYED
  • 8:30 am: Sep 27 Continuing Claims, est. 1930k: DELAYED
  • 10:00 am: Aug F Wholesale Inventories MoM, est. -0.2%, prior -0.2%: DELAYED

Central Banks (All Times ET):

  • 8:35 am: Fed’s Bowman Delivers Welcoming Remarks
  • 9:00 am: Fed’s Goolsbee Appears in Podcast
  • 12:45 pm: Fed’s Barr Speaks on Economic Outlook
  • 1:00 pm: Fed’s Kashkari and Barr Speak in Conversation
  • 3:45 pm: Fed’s Bowman Delivers Speech on Community Banking
  • 9:40 pm: Fed’s Daly at the Silicon Valley Directors Exchange

DB's Jim Reid concludes the overnight wrap

Markets recovered their poise yesterday, with global equities at new highs as investors remained unfazed by the ongoing political uncertainty in various countries. So the S&P 500 (+0.58%) and the NASDAQ (+1.12%) both hit an all-time high, despite the government shutdown. And over in Europe there was an even stronger performance, even before news that President Macron has avoided a snap election for now by promising to name a new prime minister by the end of the week. Moreover, this rally was clear across multiple asset classes, with global bonds rallying on both sides of the Atlantic, oil prices picking up again, and gold prices (+1.44%) at another record of $4,042/oz.

 In terms of those political various stories, last night was the deadline given to France’s outgoing PM Lecornu to seek a way through the impasse. In the end President Macron’s office announced that he would but forward a new Prime Minister by Friday evening. This puts off the risk of snap elections for the time being. Investors were fairly optimistic during the trading session, as the outgoing PM Lecornu continued to insist a path forward was possible and that the deficit target for 2026 should be below 5% of GDP. And in turn, that led to a positive market reaction, with the Franco-German 10yr spread (-2.4bps) falling back to 83.5bps, whilst the CAC 40 (+1.07%) was the best performer among the major European indices. The attention now will shift to whether this new PM can form a cabinet, or whether Macron will eventually have to call for parliamentary elections. Polymarket has the implied probability of another election by year-end down to 51% overnight from nearly 80% earlier yesterday.  

Over in the US, the focus remained on the government shutdown, amidst mounting speculation that it might even drag on to next month. That came as Republicans and Democrats showed no sign of publicly shifting their positions, with Democratic Senate Minority Leader Chuck Schumer saying that their position on healthcare subsidies remained the same. Republican Senate majority leader Thune said that the Senate Republicans are prepared to bring individual appropriations bills forward in order to reopen the government department by department in what would be a long process. Speaker Johnson has not been receptive to this idea however, according to reporting from Axios. Nevertheless, US equities continued their historic pattern of shrugging off the effects, and both the S&P 500 (+0.58%) and the NASDAQ (+1.12%) moved up to new records. And once again, that was driven by tech and semiconductor companies. The Philadelphia Semiconductor Index (+3.98%) was up to a new record of its own led by AMD (+11.4%) which continues to rise after the OpenAI headlines from earlier this week.

Rate markets had a busy afternoon in the US with the Fed minutes and a 10yr auction within an hour of each other. The minutes showed that most FOMC members at the September meeting “judged that it likely would be appropriate to ease policy further over the remainder of this year.” This aligns with the dot plot as well as recent fedspeak. There was clearly a level of caution throughout the minutes as “Participants generally assessed that recent readings of these indicators did not show a sharp deterioration in labor market conditions.” However, on inflation, the majority of members emphasised upside risks. 10yr yields were nearly flat on the day before the minutes and then closed -0.7bps lower at 4.117%. 10yr yields had been stronger earlier in the session but were potentially weighed down by a late auction concession ahead of a $39bn 10yr note sale an hour before the Fed minutes. The auction metrics were solid with decent demand even as the primary dealer award ticked up from last month’s record low. Today we’ll get another test of duration demand with a $22bn 30yr auction.

Meanwhile, the spotlight on gold continued after spot prices (+1.43%) closed above $4000 for the first time. A lot of the investor moves towards gold have been led by both official central bank and ETF demand as the US government shutdown continues. In fact, total holdings of gold ETFs have already seen their highest point since September 2022, back when we had surging inflation globally and the Fed were hiking by 75bps per meeting to get it under control again. This flow into gold and other alternatives like Bitcoin (also up +0.73%) is something to keep an eye on, although yesterday we also saw the dollar index (+0.34%) hit a two-month high.

Back in the rest of Europe, equities also posted a strong advance, with the STOXX 600 (+0.79%), the FTSE 100 (+0.69%) and the DAX (+0.87%) all rising to fresh records. We did get a bit of data, including from the UK’s ONS, who announced that it had revised down the government’s borrowing for the current fiscal year by £2bn, leaving the budget deficit at £17.7bn in August. Nevertheless, gilts still underperformed, with the 10yr yield only down -1.0bps, compared to larger falls for 10yr bunds (-3.1bps), OATs (-5.5bps) and BTPs (-6.0bps).

In terms of data yesterday, we did get some small misses on Swedish headline CPI inflation (+0.9% y/y vs 1.0% y/y expected) and CPIF ex-energy (2.7% y/y vs 2.8% y/y expected) relative to consensus for September, but they were firmly in line with the Riksbank’s fresh forecasts, and are unlikely to change the central bank’s mind from holding rates for now. Today in Europe, we’ll also get the ECB’s account of their September decision, and several speakers including ECB President Lagarde and BoE Governor Bailey.

Asian equity markets are largely reflecting the overnight gains observed on Wall Street, primarily driven by increases in technology shares, as ongoing optimism regarding AI has spurred investment in chipmaking and related sectors. Throughout the region, mainland Chinese markets are leading the way, rebounding after a week-long holiday, with the CSI index rising by (+1.61%) and the Shanghai Composite index also experiencing a significant increase of (+1.24%). In Japan, markets have continued their upward trend, with the Nikkei index climbing (+1.40%) and the Topix index increasing by (+0.24%), both approaching record high closing levels due to gains in the technology sector. South Korean markets are closed for a holiday, while the S&P/ASX 200 index in Australia is seeing slight gains (+0.11%) with the Hang Seng moving back to flat after experiencing a decline of as much as -1.0% earlier pressurised by losses in health tech and healthcare stocks following a report from the Wall Street Journal indicating that tech giant Microsoft intends to make significant investments in AI-driven healthcare. US equity futures are flat.  

To the day ahead, and data includes Germany’s August trade balance. Central bank speakers include the Fed’s Kashkari and Barr, the ECB’s Villeroy, and the BoE’s Mann, and we’ll also get the ECB’s account of their September decision. Earnings include Delta Air Lines and Pepsi. Lastly, there’s the US 30yr bond auction.

Tyler Durden Thu, 10/09/2025 - 09:06

'Debasement Trade' Lifts Silver Above $50 For First Time Since 80s' Hunt Brothers Squeeze

'Debasement Trade' Lifts Silver Above $50 For First Time Since 80s' Hunt Brothers Squeeze

The last few months have seen gold soar to record highs above $4,000 amid the so-called “debasement trade,” with investors flocking to the perceived safety of alternates while pulling away from major currencies.

It’s a monetary regime change – if market participants are trading anything it’s getting rid of a fiat currency (“it’s the denominator, stupid”) for a store of value – and we’re seeing it in spades with Bitcoin and gold:

However, quietly on the side, silver has been outperforming gold...

Source: Bloomberg

Citadel's Ken Griffin said investors are starting to view gold as a safer asset than the dollar, a development that's "really concerning" to the billionaire investor. 

“The conversation around debasement, irrespective of its realities, has ignited investors enthusiasm towards gold and silver to the point where regression analysis gives way to something more akin to how investors view AI or the technology sector,” said Kieron Hodgson, commodity analyst at Peel Hunt Ltd.

And now that is spreading to bitcoin and silver as the white metal topped $50 this morning...

Silver's surge takes it back to the highs from 1980...

...when the Hunt brothers, Texan oil billionaires and notorious speculators, whose fear of inflation and belief in the metal as a store of wealth prompted them to try to corner the global market. They stockpiled more than 200 million ounces, driving the price above $50 an ounce before it crashed below $11.

Notably, silver in yen really snapped higher this morning...

With a break in the relationship as silver topped $50 - Something's going on there... Were silver shorts being funded with Yen shorts? It appears that forced closing of silver shorts led to forced closing of yen shorts?

The white metal is used around the world as an investment asset, but also has industrial applications including in solar panels and wind turbines, which collectively account for more than half of the silver sold. Demand is set to exceed supply for the fifth consecutive year in 2025.

“I think the deficits are the slow burn,” said Philip Newman, director of consultancy Metals Focus Ltd.

“Just the size of the deficits have been so remarkable, and it takes time for that to manifest itself in the price.”

Additionally, Bloomberg reports that the silver market in London has tightened to an almost unprecedented degree, with sky-high borrowing costs for the metal.

This year, fears that the US could levy tariffs on silver have spurred a dash to ship the metal to the US, drawing down inventories in London and reducing the amount of material available to borrow.

Much of the stock of silver in London is held in vaults backing exchange-traded funds, and not available to buy or borrow on the market.

“I think when you look at above-ground stocks of silver in London you are looking at an increasingly small share, which is not allocated against ETFs,” Newman said.

As we detailed earlier in the week, it appears the so-called "debasement trade" - driving investors to bet more on gold, silver, and bitcoin - is set to continue with Gold remaining Goldman Sachs' highest-conviction long commodity recommendation because of the:

a. Additional price upside in our base case (driven by structurally higher central bank gold demand)

b. Large upside risks to our price forecast from potential additional private sector diversification

c. Attractive portfolio hedging properties in downside (tail) scenarios that .are less favorable for equity-bond portfolios than our base case (e.g. global growth slowdown, rising market concerns about DM macro policy)

This price hike is likely to trigger more fears from Citadel's Griffin who warned, during and interview with Bloomberg's Francine Lacqua, that "we're seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize, or de-risk their portfolios vis-a-vis US sovereign risk."

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

Texas AG Paxton Pledges Crackdown On 'Leftist Terror Cells'

Texas AG Paxton Pledges Crackdown On 'Leftist Terror Cells'

Authored by Savannah Hulsey Pointer via The Epoch Times,

Texas Attorney General Ken Paxton just announced an undercover investigation into “leftist terror cells” in his home state, citing the “political assassination of national hero Charlie Kirk” and the rise of “leftist violence” nationwide as reasons for the operation.

“Leftist political terrorism is a clear and present danger. Corrupted ideologies like transgenderism and Antifa are a cancer on our culture and have unleashed their deranged and drugged-up foot soldiers on the American people,” Paxton said in a statement.

The operation will focus on the identification and infiltration of radical groups that have “incubated an environment where political violence is not only justified but celebrated,” he said.

“To those demented souls who seek to kill, steal, and destroy our country, know this: you cannot hide, you cannot escape, and justice is coming.”

Kirk’s accused killer, Tyler Robinson, is said to have exchanged messages with a significant other about what he perceived as problems with the conservative commentator’s views.

Similarly, just days after Kirk’s Sept. 10 assassination, an Immigration and Customs Enforcement (ICE) facility in Dallas was targeted by a shooter who sprayed the building and nearby vehicles with bullets, killing two detainees.

The gunman, who died of a self-inflicted wound, had penned anti-government and anti-ICE writings that were found by law enforcement in the course of their investigation.

A shooting at an ICE facility in Alvarado, Texas, was linked to the Antifa extremist group.

On April 9, Paxton announced he will run for the U.S. Senate, facing off against Sen. John Cornyn (R-Texas), who has held the seat since 2002.

On Sept. 22, President Donald Trump designated Antifa a domestic terrorist organization. He called on his administration to “utilize all applicable authorities to investigate, disrupt, and dismantle any and all illegal operations—especially those involving terrorist actions—conducted by Antifa.”

Paxton, in announcing the operation, referenced Kirk’s shooting, saying: “The martyrdom of Charlie Kirk marks a turning point in America. There can be no compromise with those who want us dead.”

Tyler Durden Thu, 10/09/2025 - 08:25

Stabbed German Mayor Knew Her Attacker, Remained Silent; Adopted Kids In Custody

Stabbed German Mayor Knew Her Attacker, Remained Silent; Adopted Kids In Custody

Via Remix News,

The newly elected Social Democrat (SPD) mayor of the German city of Herdecke, Iris Stalzer, was stabbed multiple times yesterday inside her home. The woman’s two adopted children, a 15-year-old son and a 17-year-old daughter, were taken into custody after the incident. Photos of the son being led away in handcuffs were also published in a variety of German media outlets.

Stalzer’s life remains in danger, but according to Focus, she was briefly awake and was able to answer police questions. However, although she signaled she knew who her attacker was, she refused to provide any further details to police.

An investigation remains underway, and so far, it does not appear anyone has been charged in the attack. However, the two adopted children appear to be the focus of the investigation and were actively questioned following the stabbing attack. According to Focus, the 15-year-old son is the focus of the investigation now, with the youth featuring a history of “mental health” problems.

Stalzer’s life is still in danger, a spokeswoman for the Hagen police said Wednesday morning.

Crime scene investigators were active inside the home and on the street yesterday, securing evidence. Both children were also checked for forensic evidence. Investigators believe the crime has a family background and is not politically motivated. According to a report from Spiegel, police were called to the residence just a month earlier, after the 17-year-old daughter threatened the mother, also allegedly with a knife.

Security sources told Welt that neighbors reported hearing a loud argument between the 15-year-old son and his mother before the stabbing. The father was not home at the time, only returning home later that evening after a trip abroad.

Police press officer Tino Schaefer answers questions from journalists in Herdecke, Germany, Tuesday, Oct. 7, 2025, after the newly elected mayor of Herdecke, Iris Stalzer, was found critically injured in her apartment. (AP Photo/Martin Meissner)

There has been much back and forth among media outlets over whether the son or the daughter might be responsible for the crime, but so far, police have left open whether either of them are suspects. There were also reports that the son told police his mother was attacked by a “group of men” on the street, but all reports confirm she was found bloody inside her home.

Stalzer suffered multiple stab wounds to her upper body and received first aid at the scene. She was later transported to the hospital by helicopter.

The newspaper Westfalenpost learned from security sources that Stalzer was awake during a brief moment of police questioning. She told police she knew who committed the crime but declined to further comment.

German Chancellor Friedrich Merz also wrote about the attack on X, stating, “We have received news of a despicable act in Herdecke. It must now be solved quickly. We fear for the life of the mayor-elect, Iris Stalzer, and hope for a full recovery.”

Read more here...

*  *  * 2-Day Emergency Survival Backpack // Free Shipping

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

Ferrari Shares Crash Most On Record After 2030 Outlook Disappoints

Ferrari Shares Crash Most On Record After 2030 Outlook Disappoints

Shares of Ferrari NV crashed 16% in Milan trading, marking the biggest intraday decline since 2016, after the exotic carmaker delivered a cautious long-term outlook that fell short of Wall Street expectations. Analysts, including Tom Narayan's team at RBC Capital Markets, said Ferrari's updated 2030 guidance came in below consensus estimates. The cautious forecast comes as UBS warned last week that softness in U.S. consumer demand has spread from low-income to middle-income buyers.

Ferrari executives told investors at Capital Markets Day in Maranello that the 2025 guidance has been slightly revised higher, now targeting revenue of at least 7.1 billion euros and adjusted EBITDA of 2.72 billion euros, up from the previously announced target of at least 2.68 billion euros. 

However, the underwhelming 2030 forecast disappointed investors, according to UBS analyst Narayan. He pointed out that management forecasted revenue of 9 billion euros and EBITDA of 3.6 billion euros, implying a CAGR that is well below the 10% growth trajectory forecasted in 2022. 

Here's the snapshot of the 2025 Forecast (courtesy of Bloomberg):

  • Sees adjusted Ebitda at least EU2.72 billion, saw at least EU2.68 billion, estimate EU2.73 billion (Bloomberg Consensus)

  • Sees adjusted Ebit at least EU2.06 billion, saw at least EU2.03 billion, estimate EU2.07 billion

  • Sees adjusted diluted EPS at least EU8.80, saw at least EU8.60, estimate EU8.90

  • Sees industrial free cash flow at least EU1.3 billion, saw at least EU1.2 billion, estimate EU1.41 billion

  • Sees revenue at least EU7.1 billion, saw above EU7 billion, estimate EU7.09 billion

Headlines from Capital Markets Day (courtesy of Bloomberg): 

  • To Increase Div Payout to 40% of Net Starting From 2025

  • Sees 2030 net revenue of about EU9 billion

  • Sees 2030 adj. Ebitda of at least EU3.60 billion

  • Says exceeding the 2026 business plan's profitability targets one year in advance

  • Sees 2030 adj. Ebit of at least EU2.75 billion

  • Sees 2030 adj. EPS of at least EU11.50

In Milan, Ferrari shares plunged 16%, the largest decline on record, with data dating back to January 2016, when the stock first began trading. In New York, Ferrari shares fell 14%; those shares have been listed on the market since October 2015.

Back to Milan trading, shares are down 15% year-to-date, a multi-year bull run that began in 2022 now appears to be correcting.

Meanwhile, cracks began to appear among low-income consumers; now, UBS sees those cracks spreading to middle-income ones. 

. . . 

Tyler Durden Thu, 10/09/2025 - 08:05

Bank Of England Warns AI Valuations "Stretched" As Potential Data Center "Bottlenecks" Could Spark "Sharp Corrections" 

Bank Of England Warns AI Valuations "Stretched" As Potential Data Center "Bottlenecks" Could Spark "Sharp Corrections" 

By now, readers have grasped, through several notes, how the AI bubble is inflating, primarily driven by the "circle jerk" vendor-financing scheme at the heart of the system. As for its scale, we noted last night that the AI bubble has morphed into a debt bubble as well, quietly surpassing the entire banking sector to become the largest segment of the market. And just last week, we laid out the "shocking math" showing that AI CapEx will require approximately $1 trillion in new debt within the next two years.

So far... 

The Nasdaq 100's 18% rally year-to-date, trading at 28x forward earnings versus a 10-year average of 23x, has drawn comparisons to the late-1990s dot-com bubble by AI industry leaders and some of the most notable market watchers.

To begin the week, Amazon founder and executive chair Jeff Bezos told the audience at the Italian Tech Week in Turin that AI investment might look like a bubble, it's the good kind - an industrial bubble that drives progress rather than financial destruction.  

"This is kind of an industrial bubble as opposed to financial bubbles. The ones that are industrial are not nearly as bad - they can even be good. Society benefits from those inventions," Bezos said, adding, "Investors don't usually give a team of six people a couple of billion dollars with no product, and that's happening today."

Given the mechanics surrounding the AI bubble, the Bank of England warned on Wednesday, following its most recent Financial Policy Committee meeting (Oct. 2), that AI-related valuations are "stretched." The irony, of course, is that central banks are almost always late to the game when they start warning about inflated valuations or emerging cracks in markets and economies.

"On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence (AI). This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic," the BoE wrote in the report. 

The BoE noted that "material bottlenecks to AI progress" such as "power, data, or commodity supply chains" could "also harm valuations, including for companies whose revenue expectations are derived from high levels of anticipated AI infrastructure investment," adding, "The risk of sharp corrections in asset prices remained high." 

In recent weeks, Goldman analysts identified the power grid as a "vulnerable link" at the epicenter of the energy security debate and warned it could be the next chokepoint. It's not just a lack of spare power capacity on the grid or a backlog in data centers connections to local grids; there's also the water component (for cooling data centers), which Morgan Stanley analysts recently outlined as yet another emerging issue. 

In the markets, the AI bubble has single-handedly pushed stocks to their highest valuation since the Dot-Com bubble. 

Separate from the AI valuation warning, the BoE also warned about central bank independence with President Trump's attempts to change the Federal Reserve's board, as well as his repeated criticism of Fed Chair Jerome Powell's monetary policy stance. 

At the start of the year, Bridgewater Associates founder Ray Dalio told the Financial Times that there was already a "bubble" similar to 1998 or 1999 while Greenlight Capital founder David Einhorn said recently that expenditure on AI infrastructure is "so extreme" that there is a "reasonable chance that a tremendous amount of value destruction is going to come through this cycle".

As a reminder, here is economist John Maynard Keynes' famous quote, "Markets can remain irrational longer than you can remain solvent," which only suggests that with circle jerking vendor finance schemes and a full-of-government approach, this bubble can keep inflating. Yet there is an unpredictable nature of the bubble, because there could be another 'Deep Seek' scare or, as the BoE put it, "material bottlenecks to AI progress" that scares market participants. 

Tyler Durden Thu, 10/09/2025 - 07:45

Surprising Surge: Trucking Spot Market Rates Climb Overnight

Surprising Surge: Trucking Spot Market Rates Climb Overnight

By Craig Fuller, CEO of FreightWaves

There’s something happening here
What it is ain’t exactly clear
There’s a man with a gun over there
A-telling me I got to beware

That’s the song that’s playing in my head as I try to make sense of what I’m seeing in the freight market.

The spot market heat map in SONAR, which tracks sudden shifts in spot market rates, has turned extremely blue, indicating that spot rates are suddenly surging well beyond recent trends.

It’s happening all over the country, and it happened overnight. What makes this unusual is that a sharp market development such as the one we’re currently experiencing is happening without tender volumes or rejections indicating market stress.

In fact, trucking volumes are anemic, and tender rejections are sitting at 5.5%.

As we continued to investigate, our channel checks confirmed what we’ve been talking about for months: the administration’s recent immigration enforcement efforts are starting to have a significant psychological and behavioral impact on immigrant truck drivers and carriers that hire truck drivers with questionable immigration status.

In an article in the Serbian Times, an immigration lawyer warned Serbian truck drivers to stay off the roads for fear of being detained or deported, risking a permanent ban.

He says, “I advise my clients who drive trucks that even if they have a valid work permit, they should not go on the roads.” The article describes that being deported might not be the worst thing. He goes on to describe dire conditions in immigration holding cells and, because of the significant backlog of cases, that hearings may be postponed indefinitely and bail is unlikely, so they may stay behind bars for a long time.

The question on everyone’s mind in trucking is whether this is a temporary blip or the start of a spot market squeeze that could result in much higher rates and a capacity scramble.

Tyler Durden Thu, 10/09/2025 - 07:20

Macron Will Name New Prime Minister, Averting Snap Election & Further Political Turmoil 

Macron Will Name New Prime Minister, Averting Snap Election & Further Political Turmoil 

What a wild week it's been for French politics. Let's dive right into the latest development: overnight news that President Emmanuel Macron will appoint a new prime minister by Friday evening, avoiding (for now) a snap election that could spark even more political turmoil. 

UBS analyst Aditi Samajpati updated clients with the latest: 

French President Emmanuel Macron will reportedly name a new prime minister by Friday evening, having avoided the need to call a snap election for the time being. Outgoing Premier Sebastien Lecornu told local television that sufficient progress had been made to allow work to begin on forming a new cabinet along with possibilities for a compromise in parliament.

The new PM will face significant challenges, including forming a cabinet and navigating a split parliament with three deeply antagonistic blocs, as well as the looming 2027 presidential election.

Lecornu, who resigned after less than a month in office, expects a new premier to be named rather than early legislative elections or Macron's resignation to resolve the crisis. He emphasized that the prospects for snap legislative elections had "receded" and insisted that Macron should serve out his mandate until 2027, adding, "Let's not make the French believe that it's the president who votes the budget."

There's no indication yet on who could be the new premier - unless Lecornu is reappointed, his successor will be the eighth PM of Macron's presidency since 2017. Lecornu suggested that a more technocratic government could be named, with people in the new cabinet not having "ambitions" to stand in the 2027 presidential elections. He highlighted the need for a team that decides to "roll up its sleeves and solve the country's problems until the presidential election."

Macron's path forward for any new administration is fraught with hazards, given that parliament is deeply divided among three parties with no interest in compromising, and each is highly focused on positioning itself for the presidential election in less than two years. Meanwhile, National Rally leader Marine Le Pen, a leading contender for 2027, has vowed to censure any government backed by Macron in an effort to force fresh elections. 

UBS analyst Simon Penn noted:

The bigger concern now is how long this goes on for. Most of the conversation late Wednesday wasn't actually about who would be the new PM, but rather that the rinse/repeat continues until 2027 and the presidential election. In other words, French politics and parliament is essentially in a holding pattern until Macron is required to ask the country the big question on the political slant of its next president.

Despite the turmoil, French 10-year yields fell five basis points to 3.51% on today's news, while the CAC 40 has nearly erased its losses from earlier in the week.

Reporting from earlier in the week:

Important. 

Earlier in the week, UBS analyst Penn provided clients with the three possible pathways for Macron to move forward: 

  1. He can try another technocrat type

  2. He can call a general election

  3. He can quit and call a full presidential election

The Bloomberg Economics team provided readers with the visualization. 

So, a new Prime Minister it is, then?

And by the way, we'll end with Macron's imploding popularity: his approval rating tumbled to a record-low 14%, according to an Oct. 7-8 Elabe poll. 

Let's not forget elsewhere...

. . . 

Tyler Durden Thu, 10/09/2025 - 06:55

UK's Green Party Demands Abolition Of Private Landlords

UK's Green Party Demands Abolition Of Private Landlords

Authored by Jonathan Turley,

On Sunday, the Green Party in the United Kingdom voted to “abolish” private landlords in a move that reaffirms the party as a largely socialist movement.

For some environmentalists, it is a sad hijacking of a cause by far-left elements that moves it away from its original environmental priorities.

The motion passed at the Greens’ conference in Bournemouth calls for the  “effective abolition of private landlordism.”

That would impact roughly three million people in Britain who rent out properties, including at least one high-ranking Green official, Adrian Ramsay, who is one of the Greens’ four MPs.

Ramsay insisted that he is not making a profit on his rental and would soon stop being a landlord.

The Green Party is committed to effectively eliminating private landlords through rent controls, a “land value tax,” and other means.

The move is reminiscent of Zohran Mamdani’s call to seize unoccupied luxury condos in New York and give them to the homeless. He has also called for Democratic Socialists to “seize the means of production” in America.

Ironically, this week former New York Gov. Andrew Cuomo called out Mamdani for hypocrisy as a landlord of vacant valuable land in Uganda.

The Green Party motion states:

‘The private rental sector has failed, it is a vehicle for wealth extraction, funnelling money from renters to the landlord class…

This motion makes it clear that Green Party policy is to seek the effective abolition of private landlordism and to support the building of council housing.

…The Green Party believes the existence of private landlords adds no positive value to the economy or society, that the relationship between landlord and tenant is inherently and intrinsically extractive and exploitative.”

Carla Denyer, Green MP for Bristol Central, insists that the call to end private landlords as “inherently and intrinsically extractive and exploitative” does not actually mean an outright ban: “While the motion to confidence had an eye-catching name, it does not actually ‘abolish’ landlords.”

Once again, the Green Party has been steadily moving toward an openly socialist agenda, leaving many environmentalists at odds with the party.

Polls show that socialism is now more popular than capitalism in Great Britain, with a shocking increase in favor of communism.

Tyler Durden Thu, 10/09/2025 - 06:30

Victor Hanson Exposes Reactionary, Neo-Confederate Portland

Victor Hanson Exposes Reactionary, Neo-Confederate Portland

Authored by Victor Davis Hanson,

In blue cities across America - Portland, Oregon, especially - often violent protesters now seek to surround ICE facilities to stop federal officers from fulfilling their assigned and legal duties of arresting illegal aliens.

Some 10 million or more illegal aliens were allowed to enter the U.S. during the Biden years—illegally and thus without criminal or health checks.

Neither Antifa nor liberal urban America objected to such a flagrant disregard for the law. But both are now as intent on obstructing the legal enforcement of the law as they were earlier in favor of its illegal non-enforcement.

Much less did they care about the consequences of sending millions of foreign nationals into cities and counties where they swamped social services, spiked crime, and flooded emergency rooms and schools.

ICE has repeatedly presented data that show in its first rounds of deportations, it is concentrating on removing either criminal illegal aliens or those who have already been processed with deportation orders, somewhere between 70 and 90 percent of all current apprehensions.

No matter.

Left-wing protesters are swarming ICE headquarters in Portland to violently oppose all deportations, even those of known criminals and those who have already exhausted efforts to remain here illegally.

Why?

The Democratic Party apparat knows that the public wants both secure borders and deportations of illegal aliens. Indeed, in part, it lost an election by its open-borders advocacy.

But Democrat officials feel that if street thugs like Antifa can surround and besiege ICE facilities in Portland, Oregon, then deportations will stop. Then, a de facto amnesty will follow for millions who entered the U.S. illegally—and will soon become Democratic constituents.

As a result, they do not fully enforce the law when thugs attack federal law enforcement. Antifa and its spin-off groups favor the night, when they try to block all entries and exits of ICE vehicles and personnel, and can commit their violence with greater anonymity.

The masked rioters assault anyone in their way. They count on exemption from punishment for committing violence against federal officers through the goodwill or indifference of kindred local and state officials who hate the Trump administration more than they respect the law. An Orwellian scenario follows in which federal officers are attacked by Antifa, which in turn counts on the non-intervention of local police.

Summed up: the city of Portland’s armed officers are in a de facto proxy war with their federal counterparts—in our version of something out of 1860, on the eve of a real civil war.

Portland Mayor Keith Wilson and Oregon Governor Tina Kotek feel their constituents want open borders and thus should have the right in their own city and state to do as they please—and federal law be damned.

But by doing so, both the Democrat Party officialdom and the street armies of Antifa are on the proverbial wrong side of history.

America for almost 200 years has already decided, in formal law and court rulings, that no local or state entity can disrupt the enforcement of federal laws or usurp Washington’s powers. To do so with impunity would unravel the American nation in short order.

We know that from our own violent history. Andrew Jackson, in 1832, like Trump, threatened to send troops to stop South Carolina’s nullification of federal tariff laws.

America fought a Civil War over Confederate states’ efforts to ignore federal law and confiscate or occupy federal property within their state jurisdictions.

As late as 1963, Alabama Governor George Wallace thought he could nullify federal law by using his state guard to deny black students’ enrollment in the University of Alabama—until the Kennedy administration federalized all state troopers and sent in additional federal troops.

So what we are witnessing in Portland—and elsewhere—is a neo-Confederate attempt to supersede federal law and, in reactionary fashion, invoke states’ and cities’ rights.

Oregon and Portland believe that they are more moral than the federal government and thus have a natural right to side with street mobs by both not enforcing their own laws against Antifa violence and ignoring the innate civil rights of ICE personnel.

The latter are denied freedom of movement, association, and the ability to fulfill their job duties by what has turned out to be a near city-sanctioned siege of their facilities.

The Democrats are fine with all this. They think the violence against ICE will be portrayed daily as general chaos by their allied media. Thus, the proverbial people who keep clear of the siege and its detritus will simply want all the bother to go away—and supposedly blame those enforcing, not breaking, the law. In sum, the Democratic Party is the official face of the left. Antifa provides the street shock troops, and the media serves as its propaganda arm.

So, the left-wing logic is to allow the violence and siege to continue in a “safe space” for Antifa. A strapped ICE will supposedly eventually shut down operations and move on. And any violence that occurs can be chalked up to Trump’s federal government “baiting” Portlanders.

The reigning moralistic assumption is that ceding territory to terrorists, not enforcing local and state laws, and nullifying federal statutes are all small prices to pay for the larger projection of chaos and violence that can be blamed on Trump.

Such thinking entails utter indifference to any Portlanders who live near the siege and are nightly subjected to constant disruptions, harassment, and occasional violence. Do these law-abiding residents have fewer civil rights than the lawbreaking armies of the night?

In contrast, the use of federal troops to stop the siege of ICE facilities will remind the violent protesters of the left that their neo-Confederate tactics will not work, but instead subject them to arrest and federal indictments.

Bringing in federal forces to uphold the law will also protect the rights of ICE personnel and neighborhood residents to live in peace and security and have their constitutional protections secured. Not all American citizens are Portlanders, but all Portland citizens are Americans.

In other words, both Antifa and the appeasing Oregon officials are our new neo-Confederate secessionists. They feel that their states are now autonomous entities that are still entitled to federal money but not obligated to follow federal laws.

Portland also reminds us of the recent utter incoherence of Los Angeles Mayor Karen Bass. On the one hand, she pleads for federal dollars to restore her city’s burned-out neighborhoods due to her own incompetence and neglect, while on the other hand actively obstructs the federal government from enforcing immigration laws in her own city.

For a party that has been quick to shout “insurrection,” it is ironic that Democrats and their useful, though violent, Antifa insurrectionists are in rebellion against the federal government and its agents.

It is hard to know which is worse - the Antifa thug who nightly tries to injure a federal officer, or the sanctimonious neo-Confederate official who empowers him to keep trying?

Tyler Durden Wed, 10/08/2025 - 19:15

"I Don't Want This On Camera": Leading Candidate For California Governor Throws Tantrum Over Simple Question

"I Don't Want This On Camera": Leading Candidate For California Governor Throws Tantrum Over Simple Question

The leading candidate to replace Gavin Newsom in California's upcoming gubernatorial election threw a complete tantrum during an interview because she was asked how she'd appeal to the 40% of residents who voted for Trump. 

"What do you say to the 40% of California voters, who you’ll need in order to win, who voted for Trump?" asked CBS News correspondent Julie Watts in an interview recorded last month. 

Porter, flabbergasted, insisted she could win without the 40% - before getting nasty.

"I feel like this is unnecessarily argumentative. What is your question?" Porter snapped.

"Every other candidate has answered this question," Watts replied. "This is not argumentative." 

Porter then started removing her microphone.

"I don’t want to keep doing this. I’m going to call it," she said. "I want to have a pleasant, positive conversation … And if every question, you’re going to make up a follow-up question, then we’re never going to get there."

"I don't want this on camera," Porter said later - claiming "I've never had to do this before." 

Watch:

As Not the Bee notes, Porter is a radical Dem known for promoting abortion as an inflation buster, dismissing the murder of Laken Riley, and for being an election denier (when she's the loser), and being an accused "abusive and racist boss," apparently has no idea how to be on the receiving end of an interview.

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Tyler Durden Wed, 10/08/2025 - 18:50

Gut Changes Persist Years After Stopping Certain Medications

Gut Changes Persist Years After Stopping Certain Medications

Authored by Rachel Ann T. Melegrito via The Epoch Times (emphasis ours),

The body clears medicines within hours to weeks. However, a recent study suggests that drugs you took years ago may continue to affect your gut—and the more frequently and the longer they’re used, the greater their effect.

Troyan/Shutterstock

Nearly nine out of 10 commonly used medications leave permanent changes in gut bacteria - including drugs never before linked to digestive effects, according to the study.

This holds true not only for antibiotics but also for drugs used to manage high blood pressure, anxiety, and stomach hyperacidity.

“We may be underestimating the impact of common medications on gut health,” Kara Siedman, nutritionist and director of partnerships with resbiotic Nutrition, who wasn’t involved in the research, told The Epoch Times.

Your Gut Remembers

The findings extend far beyond antibiotics, which doctors already know disrupt gut bacteria. The study showed that even medications targeting human cells—including antidepressants, beta-blockers, acid reflux medicines such as omeprazole, benzodiazepines, and metformin—reshaped the gut microbial composition.

“We often think of medications as acting only on human cells, but they also interact with the gut ecosystem—the microbes, the intestinal barrier, and the immune system,” said Siedman.

The study found that many drugs left lasting effects on the gut, still visible more than three years after people stopped taking them. To test whether the drugs themselves were responsible, the researchers tracked a smaller subgroup over time. In this group, starting a drug caused predictable gut shifts, and stopping it often reversed them, supporting a causal link.

Findings showed that common drugs had similar effects to antibiotics. Benzodiazepines, commonly prescribed for anxiety, changed the gut as much as certain broad-spectrum antibiotics by reducing microbial diversity. Antidepressants also left patterns similar to those seen with antibiotics.

Gut Microbes Affected

A common bacterial type that increases with drug exposure, such as antidepressants and beta-blockers, is the Clostridium family. Some of these bacterial species are linked to rare cases of infections in humans.

Benzodiazepines are linked to increases in Dorea formicigenerans and Ruminococcus torques. Dorea formicigenerans are linked with obesity and metabolic syndrome in some human studies, though it can also produce beneficial metabolites. Ruminococcus torques is a bacterium that breaks down the mucus in the gut lining and is linked to gut conditions such as Crohn’s disease, irritable bowel syndrome, and metabolic disorders when present in abundance.

Drugs used for the same condition didn’t always affect the gut in the same way. For instance, within benzodiazepines, alprazolam (Xanax) led to a greater loss of gut microbial diversity than diazepam (Valium).

Proton pump inhibitors are linked to increased levels of oral bacteria such as Streptococcus parasanguinis and Veillonella parvula, both linked to periodontal disease and dental cavities.

Perhaps most striking was the cumulative nature of these changes. People with a history of antibiotic use never fully regained the same gut diversity as those who had never taken them, regardless of how long ago their last course was prescribed.

Past use added up: higher doses and longer durations left stronger, longer-lasting shifts in the microbiome. This additive pattern was seen with benzodiazepines, steroids, and beta-blockers.

How Drugs Affect the Gut Microbiome

There are several mechanisms by which medications might affect gut bacteria.

Drugs can slow or stop the growth of some gut bacteria while letting others thrive, shifting the microbiome’s balance. Some directly kill or suppress beneficial microbes, while others alter stomach acid, influence immune responses, or weaken the gut lining.

Antidepressants can disrupt how gut bacteria make and use energy, sometimes killing them directly. Nonsteroidal anti-inflammatory drugs can irritate the gut lining, making it leakier and more inflamed, which changes which microbes can thrive.

Beneficial microbes make short-chain fatty acids that help calm inflammation. Elimination of these microbes can lead to gut inflammation and breakdown of the gut barrier as short-chain fatty acid levels drop.

Gut inflammation and breakdown of the gut barrier can contribute to metabolic problems such as fatty liver, insulin resistance, and possibly higher cardiovascular risk.

Microbes can bounce back after stopping a drug, especially if the gut was diverse to begin with or if the diet supports regrowth. Although some may vanish completely if wiped out and not replenished.

A 2024 review noted that recovery isn’t always complete. Even when diversity returns, the mix of bacteria can stay changed for months because some species never come back or are replaced.

Babies are highly vulnerable to gut microbial changes.

A 2022 study found that infants who were given proton pump inhibitors (PPIs) for more than 400 days had a less diverse, less balanced gut microbiome—and these changes persisted even after one month of stopping the medication. The researchers concluded that longer PPI use may disrupt the microbiome more than shorter courses.

Early-life exposure to antibiotics is also linked to increased risks of metabolic and atopic disorders, as well as higher risks of allergies, asthma, and metabolic diseases later in life.

Recovery Is Personal

While drugs affect the gut in predictable ways, the extent varies widely.

“Diet is the strongest driver of microbiome health and resilience. What we eat shapes microbial diversity, fiber fermentation, and bile acid production, all of which interact with drugs,” Siedman said.

A high-fiber diet helps restore balance after antibiotic use, while a low-fiber diet can weaken the gut barrier and fuel inflammation, slowing microbiome recovery. Gut inflammation can also change how quickly drugs are absorbed, and shifts in bile acids can alter how fat-soluble drugs are processed.

A person’s baseline microbiome composition is another key factor. “Two people can take the same medication and see very different microbiome shifts and recovery times depending on how diverse or robust their gut community was to begin with,” Siedman added.

How to Protect Your Gut

For patients who require ongoing medication, Siedman suggested practical ways to build resilience and support the gut ecosystem:

  • Focus on Fiber Diversity: Eat a variety of whole grains, legumes, fruits, and vegetables to promote microbial diversity and support recovery.
  • Add Polyphenol-Rich Foods: Eat berries, drink green tea, and include cocoa to help feed beneficial bacteria and reduce inflammation.
  • Include Fermented Foods: Eat yogurt, drink kefir, and include sauerkraut and kimchi in your diet to add live microbes and compounds that nurture a healthy gut ecosystem.
  • Take Targeted Supplements: Use certain probiotics to support microbial balance. Add prebiotics (fiber that feeds good bacteria) and postbiotics (beneficial compounds produced by microbes) to strengthen the gut barrier and modulate inflammation.

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Tyler Durden Wed, 10/08/2025 - 18:25

Goldman's Conversation With Top Execs Reveals What's Ahead For Single-Family Rentals

Goldman's Conversation With Top Execs Reveals What's Ahead For Single-Family Rentals

The Single-Family Rental (SFR) space has become the de facto middle-class housing market across America. With elevated 30-year mortgage rates and high home prices, affordability has collapsed, sidelining multiple generations of Americans from homeownership.

For expanded visibility into the SFR market, as well as homeownership affordability, demand fundamentals, supply dynamics, rental growth expectations, and the transaction environment, Goldman analysts hosted a private webinar on Tuesday with executives from several of the largest owners of single-family homes in the U.S, including David Todd (Managing Director in Brookfield's Real Estate group as well as CEO of Maymont Homes, Brookfield's SFR business), Chris Avallone (Amherst's CFO & Head of Merchant Banking), and Dave Feldman (Co-President of Progress Residential). 

One of the key takeaways from the webinar is that the SFR market remains resilient, driven by high homeownership costs that continue to fuel strong rental demand, particularly in the Midwest and interior Southeast, while softer conditions persist in Florida, Texas, and Phoenix. 

The executives told Goldman that tenant credit quality and occupancy remain high, at nearly 96%, with average lease terms around three years. They said rent growth is moderating, as renewal spreads average 3% to 4% and new leases soften slightly, though smaller, more affordable homes are seeing renewed demand.

Here are the top takeaways from the webinar, which were presented in bullet-point format to clients by a team of analysts led by Julien Blouin:

Demand: Still Healthy but More Market Dispersion

  • Demand: remains solid given elevated homeownership costs, which continues to benefit top and bottom of demand funnel for SFR.

  • Regional performance: relative strength in the Midwest and interior Southeast markets; market softness exists in parts of Florida, Texas, and especially Phoenix.

  • Quality of demand: SFR tenant credit and income profiles remain very strong, high quality applications, portfolio occupancy near 96%, with subdued levels of turnover.

  • Wage growth is now outpacing home-price appreciation while mortgage rates should ease somewhat, modestly improving homeownership affordability — but not enough to materially convert renters to buyers.

  • SFR continues to represent by far the most affordable way to access a home for families priced out of ownership.

Rent Trends & Leasing Dynamics: Softer New Leases But Renewals Holding up for now

  • Our panelists characterized 1H25 as normal, but with signs of moderation in operating trends in 2H25 (to differing extents).

  • Blends remain healthy mostly underpinned by renewals (~75% retention).

  • New leases softer in recent months, slightly positive as of September.

  • Renewal spreads: averaging 3–4%, consistent with low/mid-single-digit total revenue growth outlook for 2026.

  • Length of stay: >3 years on average; tenants less price-sensitive due to frictional move costs. Infill vs. outer-ring: infill portfolios (mature neighborhoods) show greater resilience and lower rent volatility. Outer-rings proving more vulnerable to supply impacts.

  • Smaller homes at lower rents rebounding the most in terms of demand, reversing prior preference for large 4–5BR homes.

  • Stronger markets: Midwest, inland parts of Southeast.

  • Weaker markets: Florida coast, Phoenix, Dallas.

Supply Environment: Managing Through BTR & Shadow Inventory

  • Favorable demand–supply imbalance still exists, but incremental supply (BTR and shadow) is giving renters more choice, softening new-lease pricing.

  • BTR pipeline: skepticism around execution and funding continuity; institutional capital flows choppier — more limited near-term threat.

  • Builder tapes: some for-sale pivoting to rental, but selective participation due to absorption dynamics.

The full note is available in the usual place for ZeroHedge Pro Subs and includes additional commentary on the capital markets and transaction environment within the SFR space.

Tyler Durden Wed, 10/08/2025 - 18:00

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