Individual Economists

Q3 GDP Tracking

Calculated Risk -

From BofA:
[O]ur 3Q GDP tracking has moved up a tenth to 1.6%. Also, our 2Q GDP tracking is down a tenth to 3.2% from the second estiamte of 2Q GDP by the BEA. [September 5th comment]
emphasis added
From Goldman:
We lowered our Q3 GDP tracking estimate by 0.1pp to +1.6% (quarter-over-quarter annualized). We left our Q3 domestic final sales estimate unchanged at +0.7%. [September 4th estimate]
And from the Atlanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.0 percent on September 4, unchanged from September 2 after rounding. After recent releases from the US Bureau of Economic Analysis, the US Census Bureau, and the Institute for Supply Management, increases in the nowcasts of real personal consumption expenditures growth and real gross private domestic investment growth from 1.7 percent and 5.3 percent, respectively, to 2.1 percent and 6.0 percent, were more than offset by a decline in the nowcast in the contribution on net exports to GDP growth from 0.69 percentage points to 0.28 percentage points. [September 4th estimate]

New York AG Asks Appeals Court To Reinstate Trump's $500 Million Civil Fraud Penalty

Zero Hedge -

New York AG Asks Appeals Court To Reinstate Trump's $500 Million Civil Fraud Penalty

Authored by Matthew Vadum and Sam Dorman via The Epoch Times,

New York Attorney General Letitia James filed an appeal on Sept. 4 of a court ruling that threw out an estimated $500 million penalty in President Donald Trump’s business fraud case.

James’s office filed a notice of appeal with the New York Supreme Court in Manhattan, indicating an appeal was being launched with the state’s highest court, the Court of Appeals of the State of New York, on behalf of the state. The brief notice does not spell out arguments from James as to why the appeal should be allowed.

The filing came after a ruling on Aug. 21 by the New York Appellate Division’s First Judicial Department, a branch of the New York Supreme Court, tossed the penalty in a fractured ruling but left the civil judgment against Trump undisturbed. The case concerned allegations that the Trump Organization was involved in financial fraud by misrepresenting property values.

The trial judge, New York Supreme Court Justice Arthur Engoron, ruled against Trump in February 2024, issuing a judgment of more than $460 million, with interest accruing. Trump posted a bond of $175 million, and the appeals process moved forward in the New York Appellate Division’s First Judicial Department.

The Appellate Division affirmed the judgment issued by Engoron, but the panel of five judges was divided, filing three separate opinions, including partial dissents.

Two of the jurists—Justices Peter Moulton and Dianne Renwick—said they thought James “acted well within her lawful power in bringing this action, and that she vindicated a public interest in doing so.” However, both disagreed with the high-dollar penalty.

Moulton said in a concurring opinion that the lower court’s penalty order “is an excessive fine that violates the Eighth Amendment of the United States Constitution.”

Justices John Higgitt and Llinet Rosado joined an opinion saying Engoron’s judgment should be vacated and a new trial ordered.

Justice David Friedman criticized James, saying she was focused on “political hygiene, ending with the derailment of President Trump’s political career and the destruction of his real estate business.”

He said that the court’s ruling “unanimously derails the effort to destroy his business.”

Trump hailed the Appellate Division ruling in an Aug. 21 post on Truth Social, saying he achieved “total victory” and that he was “so honored by Justice David Friedman’s great words of wisdom.”

James lauded the Appellate Division ruling when it came out.

“The First Department today affirmed the well-supported finding of the trial court: Donald Trump, his company, and two of his children are liable for fraud,” she said on X.

“The court upheld the injunctive relief we won, limiting Donald Trump and The Trump Organization officers’ ability to do business in New York.”

It is unclear when the Court of Appeals of the State of New York will act on the appeal.

Tyler Durden Fri, 09/05/2025 - 15:05

Trump Deploys F-35s To Puerto Rico Airfield After Pair Of Venezuelan Jets Buzz US Warship

Zero Hedge -

Trump Deploys F-35s To Puerto Rico Airfield After Pair Of Venezuelan Jets Buzz US Warship

The Pentagon has warned Venezuela after two of its miliary aircraft buzzed a United States Navy ship in international waters, as an apparent show of force after a US naval build-up in the region.

The pair of warplanes, identified in various media as F-16 jets, flew over over the guided-missile destroyer Jason Dunham in the southern Caribbean Sea on Thursday, and while the US ship did not engage the aircraft, a subsequent Department of Defense statement called it "highly provocative" and "an attempt to interfere with our counter-narco-terror operations."

US Navy file image

"Today, two Maduro regime military aircraft flew near a US Navy vessel in international waters," the Pentagon said in a post on X. "The cartel running Venezuela is strongly advised not to pursue any further effort to obstruct, deter or interfere with counter-narcotics and counter-terror operations carried out by the US military," the Pentagon said.

This was clearly President Maduro's response to Tuesday's US strike on an alleged drug trafficking speedboat in the same waters and general posture of saber-rattling. President Trump says the blown-up boat belonged to a criminal organization tied to Maduro, and the rare military action resulted in the deaths of eleven people.

However, some international monitors have noted that if those slain were civilians, this amounts to an extra-judicial killing, also given there was no apparent attempt to intercept the vessel or arrest those aboard. This is likely what's behind the sudden frequent use of the term 'narco-terrorists' by the US administration.

The sudden terror pretext and label makes it easier to justify direct military action in front of the American people, who have become generally wary of the potential for new, unnecessary wars and foreign adventurism abroad - even if in Latin America.

Maduro has ordered a heightened defense posture due to the US sending some eight naval ships, with Venezuela’s Noticias Venevision news outlet quoting him as saying it is the "first time in history that the communal units of the militia will be activated, spanning the national map from north to south, from east to west, down to the last community."

But the White House is answering further by deploying even more assets near Venezuela in the dangerous environment of rising tit-for-tat tensions. 

President Trump has newly ordered ten F-35 fighter jets to be deployed to Puerto Rico, the American territory and Caribbean archipelago, in what's becoming (or rather, being sold to the public) an all-out Pentagon war on drug cartels. Reports say the advanced aircraft will be in position by week's end. They will join the at least eight warships and one nuclear-powered fast attack submarine to the eastern Caribbean, which are also there.

Just ahead of this new jet deployment, Trump warned after hitting the drug boat, "Please let this serve as notice to anybody even thinking about bringing drugs into the United States of America." 

What's really going on here? One trend being reflected, as we've long previewed, is that President Trump's worldview is for greater coordination of national and hemispheric defense across the Americas, hence the push for stronger economic integration between the United States and Canada, coupled with a hardened defense perimeter stretching from the Arctic to the Panama Canal. Monroe Doctrine on steroids?

But this surge in major defense assets off Venezuela's coast could also more likely be about renewing regime change efforts targeting Caracas, after some apparent failed externally-backed coup efforts which happened during Trump's first term. After all, the 'war on drugs' is a losing proposition in the historic US policy playbook (and ironically the CIA was a hidden hand which helped fuel drugs on American streets), given it had been on for past many decades, and deploying warships and stealth jets is hardly the right tool set for something the DEA and Coast Guard have conventionally done.

There's also the question of to what degree one takes seriously the US administration's claims concerning Maduro and his socialist country's role in shipping dangerous substances into the United States. Why not a force concentration against the Mexican drug cartels instead - or at least in parallel? Of course, Mexico is not home to the world's largest known reserves of oil, as Venezuela is, and consideration of what's really going on can't happen without that key fact front and center.

Tyler Durden Fri, 09/05/2025 - 14:45

Justin Sun Urges Trump-Linked WLFI To Unlock 'Unreasonably' Frozen Tokens

Zero Hedge -

Justin Sun Urges Trump-Linked WLFI To Unlock 'Unreasonably' Frozen Tokens

Authored by Zoltan Vardai via CoinTelegraph.com,

Tron founder Justin Sun is urging World Liberty Financial (WLFI), a crypto project linked to the Trump family, to unfreeze his token allocation. His wallets were blacklisted after suspicious transactions flagged by blockchain trackers sparked accusations of selling.

Sun’s World Liberty Financial (WLFI) token address was blacklisted on Thursday, after blockchain data from Nansen and Arkham flagged the address for a $9 million transfer, Cointelegraph reported.

In a Friday response to the blacklisting, Sun said his pre-sale tokens were “unreasonably frozen,” urging the team behind World Liberty Financial to unlock his investment, in respect to the principles of decentralized blockchain technology. 

World Liberty’s decision to block his tokens is a violation of investor rights and risks “damaging broader confidence in World Liberty Financial,” wrote Sun in a X post, adding:

“I call on the team to respect these principles, unlock my tokens, and let’s move forward together toward the success of World Liberty Financials.”

“Tokens are sacred and inviolable—this should be the most basic value of any blockchain. It’s also what makes us stronger and more fair than traditional finance,” added Sun.

Source: Justin Sun

Sun was among the first investors to join the Trump family-linked WLFI pre-sale, and said that he was looking to hold the tokens long-term.

Sun “stated he will not be selling soon (his words) and is creating yield on HTX for WLFI deposits — plus minting $200M USD1 on Tron to power the ecosystem,” wrote the WLFI platform in a Tuesday X post, referencing Sun’s earlier statement.

Source: WLFI

“Justin and the WLFI team are in active communication about this matter,” a spokesperson for Justin Sun previously told Cointelegraph.

Justin Sun moved $9 million of WLFI to HTX: Bubblemaps

The blacklisting occurred shortly after Sun had started moving WLFI tokens to the HTX cryptocurrency exchange.

“Justin Sun moved $9M of his still-unlocked $WLFI to HTX. In total, he sent $10M to CEXs over the past 3 days,” wrote Bubblemaps in a Friday X post.

Source: Bubblemaps

Other crypto analysts have also suggested that Sun was selling his allocation, despite earlier promises.

“If Justin Sun really lured in WLFI tokens from HTX users with a 20% APY to lock them, and then sell them to get out of ‘his’ own position while they’re still unvested, then he deserves to get his account frozen,” wrote Quinten François, cryptocurrency analyst and the co-founder of social decentralized application weRate, in a Friday X post.

Others, including Nansen crypto intelligence platform founder Alex Svanevik, contend that Sun has not been selling his allocation.

Source: Alex Svanevik

“At first, it (an AI agent) thought @justinsuntron caused the dump. Then I asked it to scrutinize the timestamps. Conclusion seems to be: he did not,” wrote Svanevik in a Friday X post, referencing his conversation with the Nansen AI agent.

Still other industry analysts allege that Sun circumvented HTX to end up selling via the Binance exchange instead.

“A Binance deposit wallet connected to Justin Sun received over 60 million WLFI tokens worth $12M yesterday from HTX,” according to Conor Grogan, head of product at Coinbase exchange.

“The 60M WLFI deposit represents about 52.6% of HTX’s total WLFI holdings at present from what I can find onchain based on HTX’s public wallets,” Grogan said in a Thursday X post.

Tyler Durden Fri, 09/05/2025 - 14:25

Kenvue Craters On Report RFK Jr To Link Autism To Tylenol Use In Pregnancy

Zero Hedge -

Kenvue Craters On Report RFK Jr To Link Autism To Tylenol Use In Pregnancy

The stock of Tylenol maker Kenvue is crashing after a WSJ report according to which Robert F. Kennedy Jr. plans to announce that pregnant women’s use of an over-the-counter pain medication is potentially linked to autism in a report that will also suggest a medicine derived from folate can be used to treat symptoms of the developmental disorder in some people.

The report, sourced to "people familiar" and expected this month from the Department of Health and Human Services, is likely to highlight low levels of folate, an important vitamin, and Tylenol - which has been mass produced since 1955 - taken during pregnancy as well as other potential causes of autism.

Kennedy’s department also plans to pinpoint a form of folate known as folinic acid, or leucovorin, the people said, as a way to decrease the symptoms of autism, which affected roughly one in 31 eight-year-olds in the U.S. in 2022.

Tylenol, whose active ingredient is acetaminophen, and has been used for decades, is a widely used pain reliever, including by pregnant women. While a handful of previous studies indicated risks to fetal development, others have found no association. The American College of Obstetricians and Gynecologists says it is safe to use in pregnancy, though it recommends pregnant women consult with their doctors before using it, as with all medicines.

Tylenol is made by McNeil Consumer Healthcare, a division of Kenvue, and other companies make similar acetaminophen-based products. 

“Nothing is more important to us than the health and safety of the people who use our products,” a Kenvue spokeswoman told the WSJ. “We have continuously evaluated the science and continue to believe there is no causal link between acetaminophen use during pregnancy and autism.”

Of course in a market where nobody is surprised when crazy things come out of left field late on Friday, the stock of KVUE plunged, losing 12% of its value because RFK Jr., long leeches, short tylenol pair trade was taking on water in recent decades.

Tyler Durden Fri, 09/05/2025 - 14:15

One Of Russia's Largest Oil Refineries Once Again On Fire After Ukraine Drone Strike

Zero Hedge -

One Of Russia's Largest Oil Refineries Once Again On Fire After Ukraine Drone Strike

Ukrainian drones have yet again targeted one of Russia’s largest oil refineries overnight - this time a Rosneft facility in the Ryazan region, which lies southeast of Moscow.

Ryazan Governor Pavel Malkov in confirming the strike on what he called an "industrial enterprise" described that eight drones were shot down in the area, but which resulted in no injuries or damage to residential buildings.

The attack unleashed two active fires at the Ryazan refinery, with witnesses hearing explosions around 2 am local time, after which large flames and thick smoke were spotted above the southern outskirts of the city.

Over 90 drones in total were launched across various parts of Russia overnight. Cross-border drone attacks have been a regular feature of the war, coming nightly, and Russia has just as frequently responded with its own major missile and UAV attacks.

One Ukrainian military blogger has claimed that due to Ukraine's sustained attacks on Russia's energy infrastructure"Gasoline (in Russia) is becoming scarce, while gas and oil are quickly running out."

Strikes from this summer have reportedly disrupted some 20% of Russia’s refining capacity, or roughly 1.1 million barrels per day.

Ukraine's military and media have classified Russia's refineries as essentially military targets, given they prop up funding of the armed forces as they execute Putin's 'special military operation' in Ukraine:

According to Ukraine's General Staff, the ELOU-AVT-6 primary oil processing unit, with an estimated annual capacity of 6 million tons, was hit.

The plant, which has a capacity of 13.8 million tons per year, was previously struck by Ukrainian drones on Aug. 2, forcing two of its three main refining units to halt operations.

Ukraine's military said the facility plays a role in supporting Russia's armed forces.

Just the past month has seen at least a dozen similar attacks on Russian crude refineries and distribution sites - revealing a concerted effort to permanently damage the Kremlin's ability to fund the war.

Newsmax writes that "The impact has been felt nationwide. Motorists face fuel shortages, long lines, and record prices." The report adds, "Wholesale gasoline prices have jumped 54% since January, prompting authorities to suspend exports and impose rationing in some regions."

Tyler Durden Fri, 09/05/2025 - 14:05

Is Lisa Cooked?

Zero Hedge -

Is Lisa Cooked?

By Molly Schwartz, cross-asset macro strategist at Rabobank

Yesterday, the Department of Justice opened an investigation into Fed Governor Lisa Cook, probing allegations of mortgage fraud. This comes after a series of tweets from Bill Pulte, Director of the Federal Housing Finance Agency, with supposed evidence supporting claims that she was not living at her home in Ann Arbor, MI. Questions, however, still remain as to if she is even guilty, given that she has not yet been convicted (though the DOJ probe might change that) and whether this is even fair grounds to fire her from her position on the Board of Governors in the first place.

Cook’s legal team maintains that she “never committed mortgage fraud,” asserting that discrepancies in her mortgage paperwork were already flagged and addressed during her 2022 confirmation process. Indeed, her legal team has filed a lawsuit against Trump over his attempts to remove her. The rest of the Governing Board, including Chair Powell, were also named in the suit, though they are “being sued only to the extent that they are able to effectuate President Trump’s purported termination of Governor Cook.”

Whether Cook is guilty or not, there are clear political incentives for Trump to fire her. As it stands, Trump has two Governors, Waller and Bowman, ready and willing to vouch for cuts if it means it will get them on the short list for Fed Chair. Meanwhile, Stephen Miran is on deck to replace Kugler, who stepped down shortly after the July FOMC decision. With Cook still employed, Trump sympathizers are capped at a 3-4 minority. If Trump can stack the Fed with another pick of his own to replace Cook and pull in a sympathetic outsider to act as Fed Chair when Powell steps down, Trump would achieve a 5-2 majority on the Board in 2026.

But before Miran can step into Kugler’s shoes, he must be confirmed by the Senate. Yesterday, Miran testified before the Senate Banking Committee, making his case for confirmation. According to Senator Moreno, Miran is already ahead, having confirmed that Miran has “never lied on a mortgage application.” Miran made sure to emphasize his commitment to Fed independence in his prepared statement. However, Senator Warren challenged this, asking Miran several pointed questions, including whether Trump lost the 2020 election. Miran avoided a direct answer, stating only that Congress confirmed Biden’s victory. Other questions included if he believed the Bureau of Labor Statistics falsified data ahead of the 2024 election (in an attempt to sway public sentiment in favor of Harris) and if he thought tariffs had caused tangible price increases. Warren criticized Miran’s responses, saying he had “blown it” and made his loyalty to Trump clear.

Another point of contention among Democratic senators was Miran’s dual role as Chairman of the Council of Economic Advisers (CEA) and his nomination to the Fed. Miran stated he would take an unpaid leave of absence for the remainder of Kugler’s term – about four and a half months – as advised by counsel, but that he would resign from the CEA if granted a longer term. Still, senators expressed concern that even on leave, Miran remains functionally employed by the Trump Administration and therefore may be influenced to make decisions that serve political interests rather than economic ones.

Another major proponent of “imposing bans on the revolving door between the executive branch and the Fed” is none other than Stephen Miran himself, as explained in a co-authored paper published in March of 2024. In the article, Miran (and Katz) take aim at Chicago Fed President Austan Goolsbee, indirectly referring to him as a “Biden campaign surrogate.” While complimenting Goolsbee’s talents as an economist, Miran and Katz went so far as to argue that “to pretend that one can easily shift between highly political and allegedly nonpolitical roles without letting political biases inform policy is, at best, naïve – and, at worst, sinister.”

While perhaps a tad melodramatic, it’s an unfortunate position for Miran to be in the hot seat and have his own words spun back at him by Elizabeth Warren. But question remains if Miran is the exception to his own rule.

Across the Atlantic, European leaders gathered at the Coalition of the Willing Summit – seated on bouclé chairs – to discuss the future of Ukrainian security. According to Macron, 26 countries agreed to support Ukraine, including sending troops if necessary. Zelenskiy tweeted after the event, speaking of a “long and detailed conversation” with Trump and thanked him for his support, though he did not elaborate on what exactly that support entailed and what commitments the US would make towards Ukrainian security going forward. He did, however, hint at the continued use of US sanctions and tariffs, citing “strong economic measures to force an end to the war.” Zelenskiy also praised the NATO’s Prioritized Ukraine Requirements List (PURL) initiative, agreed upon in July of this year, which helps to supply Ukraine with American weapons.

In an absence of data yesterday on the Eastern Hemisphere, we once again turn our focus back to the United States. Yesterday morning, ADP employment data registered only 54k payrolls added to the economy, down from 104k the month prior, for the fifth sub-100k print year-to-date. This was followed by similarly weak data in ISM services employment at 46.5, fueling the ever-increasing likelihood of a Fed cut at the September meeting. Surprisingly enough, despite slipping yields, USD was still the strongest performing G10 currency. We also saw economic activity data from south of the U.S. border, suggesting continued economic lethargy in Mexico as gross fixed investment contracted at a rate of 6.4% year-over-year and 1.4% month-over-month in June. Meanwhile, the Canadian trade balance, which registered its deepest deficit in April, has shown some improvement in July, with the deficit creeping back up to “only” -$C 4.94 billion, which is at least better than the April 2020 deficit.

Tyler Durden Fri, 09/05/2025 - 13:45

Six Flags Faces Bankruptcy Fears After $500M Debt And Park Closures

Zero Hedge -

Six Flags Faces Bankruptcy Fears After $500M Debt And Park Closures

We're not sure what more of a comment about discretionary spending one would need...

Six Flags, less than a year removed from its merger with Cedar Fair, is drowning in debt, closing parks, and facing warnings of bankruptcy, according to The Sun.

The company has racked up $500 million in debt, seen revenue fall by $100 million in Q2, attendance drop 9%, and season pass sales decline 8%. Two parks have already been shut down, with California’s Great America set to close in 2027.

“The whole company needs to be reimagined,” said Dennis Speigel of International Theme Park Services, who warned “bankruptcy is not out of the question.”

Citi analyst James Hardiman agreed, saying “everything should be on the table as we think about asset sales,” though flagship parks like Cedar Point are expected to survive.

The July 2024 merger was billed as a growth engine, with executives projecting 6% attendance gains in 2025. Instead, attendance fell 9%. “It’s about the biggest miss I’ve ever seen in the theme park industry versus expectations,” Hardiman said.

The Sun writes that leadership turmoil has added to the crisis. CEO Richard Zimmerman announced he will step down at year’s end, a move Hardiman called “odd,” especially mid-season. Chairman Selim Bassoul remains in charge.

Six Flags blames poor weather for disrupting nearly 50 operating days, but critics say demand for multi-park passes was overstated. Controversial new fees for haunted houses at Halloween events have further angered passholders.

Stock prices have plunged to $23.84, less than half their pre-merger value. Two law firms are already exploring potential securities-fraud lawsuits.

“If I were running the company, there are 10 to 12 parks I would keep, pay off debt and start over,” said Speigel. “I wouldn’t be surprised if you see the company on the precipice of bankruptcy to get that debt off the books.”

Tyler Durden Fri, 09/05/2025 - 13:25

Why Keynes' Economic Theories Failed In Reality

Zero Hedge -

Why Keynes' Economic Theories Failed In Reality

Authored by Lance Roberts via RealInvestmentAdvice.com,

A recent post from Daniel Lacalle, How Keynesians Got The US Economy Wrong Again,” exposed the widening gap between John Maynard Keynes’ economic theory and reality. Despite the confident forecasts of leading Keynesian economists, the U.S. economy in 2025 continues to defy expectations. The Federal Reserve’s tightening cycle failed to trigger the widely predicted “hard landing,” and growth has proven more resilient. Simultaneously, inflation remains somewhat sticky, but still declining, and the economy refuses to follow the neat, linear pathways that textbook models suggest.

This latest embarrassment for Keynes’ orthodoxy is part of a much larger story. The failures aren’t isolated miscalculations but the predictable result of a flawed framework that policymakers have clung to for decades. Keynesian economics didn’t just “get it wrong” in 2025, but has repeatedly failed to deliver on its promises for over forty years. And the consequences are becoming impossible to ignore.

At its core, Keynesian economics is deceptively simple. When demand for the private sector falls, the government should borrow and spend to fill the gap. The idea is that temporary fiscal stimulus injections will smooth business cycles, reduce unemployment, and quickly return the economy to full capacity.

But the key word here is temporary. John Maynard Keynes was clear: governments should run deficits during downturns and surpluses during expansions. The debt incurred to rescue the economy should be repaid once conditions normalize.

However, in practice, this discipline never materialized. Politicians discovered that voters liked stimulus but hated austerity. Since the 1970s, deficits have become a permanent feature of U.S. fiscal policy, regardless of the business cycle. The results are sobering: the U.S. national debt now exceeds 120% of GDP, entitlement programs are structurally underfunded, and each crisis requires larger interventions with diminishing economic benefits.

The COVID-19 pandemic was the ultimate Keynes experiment. Between 2020 and 2022, the federal government injected over $5 trillion in fiscal stimulus into the economy, complemented by the Federal Reserve slashing interest rates to zero and expanding its balance sheet by $120 billion each month. According to the Keynesian model, this unprecedented monetary and fiscal stimulus should have ushered in a durable economic boom.

The Failure of Artificial Growth

However, as we noted in “MMT Was Tried And Failed,” the massive flood of stimulus temporarily boosted economic growth by “pulling forward” future demand, but it also created several problems.

“The most obvious problem was the impact of dramatically increasing demand on a supply-stricken economy. With the economy “shut down” due to Government-mandated restrictions, the flood of stimulus payments led to a demand boost. Given the basic economics of supply versus demand, prices rose. As expected would be the case, the implementation led to a massive surge in inflation. (Given most Americans’ have fixed healthcare and housing payments for a contractual period, the third measure shows what cost-of-living is for most every month.)”

Crucially, inflation, excluding housing and healthcare, surged to nearly 12% during the pandemic-stimulus-infused spending spree. However, today, as the economy slows and the stimulus fades from the system, that inflation rate has declined to just 1.61%.

Secondly, the “economic boom” created by the demand-pull stimulus continues to disappear as the economy normalizes slowly back to roughly $3.50 in debt to make $1 of economic activity. Following the pandemic shutdown, the economy surged to unprecedented levels, nearing 17.5% nominal growth. On a shuttered economy, the byproduct of all that demand was an inflation surge to 40-year highs, peaking above 9% in 2022. Five years later, inflation continues to decline towards the Fed’s 2% target, but remains sticky as remnants of monetary and fiscal stimulus continue to flow through the system.

The Broken Transmission of Monetary Policy

A further failure of modern Keynesian policy is its overreliance on central banks. Through rate cuts and quantitative easing (QE), monetary stimulus has become the go-to solution for any economic slowdown. Yet the transmission mechanism between monetary policy and real economic activity has fundamentally broken. Artificial interventions and “MMT” failed to work in reality because the underlying transmission system failed.

“The promise of something for nothing will never lose its luster. So MMT should be viewed as a form of political propaganda rather than any real economic or public policy. And like all propaganda, we must fight it with appeals to reality. MMT, where deficits don’t matter, is an unreal place.”

Meanwhile, the velocity of money, the rate at which money changes hands in the economy, while recovering somewhat from the economic shutdown, continues to trend lower. In other words, the Fed can inject liquidity but fails to circulate productively. The velocity trend does not provide an encouraging outlook for GDP growth.

Given the weakening economic growth rates and subsequently declining inflation, a direct reflection of weakening consumer demand, banks have little incentive to expand lending at current rates, especially in an environment of tighter regulations and poor credit quality.

One key problem is that Keynesian models assume a linear cause-and-effect relationship between government spending and economic output. They focus almost entirely on aggregate demand, neglecting critical dynamics like debt saturation, supply chain fragilities, and the feedback loops of global capital markets.

In today’s highly financialized economy, government spending does not circulate efficiently. As noted, much of it gets trapped in financial markets, inflating asset prices rather than stimulating productive investment. Ultra-low interest rates, another hallmark of Keynesian policy, discourage savings and encourage debt-fueled speculation. This distorts capital allocation, causing malinvestment in unproductive assets like meme stocks, speculative real estate, and unprofitable tech ventures. Most benefits remain trapped in the top 10% of the economy, which owns roughly 88% of the inflation-adjusted financial assets.

In other words, the wealthy retain the monetary injections while inflation taxes them away from the poor.

Mr. Lacallie highlighted this mismatch between Keynes’ theories and economic realities. As he noted, many mainstream economists repeatedly forecasted a 2023-2024 recession that never arrived, underestimated inflation persistence, and misread the impact of fiscal tightening. These forecasting errors expose deeper flaws in how Keynesians model the modern economy.

Hayek’s Warnings Prove Prophetic

The Austrian school of economics, particularly Friedrich Hayek’s views, starkly contrasts with Keynesian thinking. Austrian economists believe that a sustained period of low interest rates and excessive credit creation creates a dangerous imbalance between saving and investment. In other words, low interest rates tend to stimulate borrowing from the banking system, which leads, as one would expect, to the expansion of credit. This expansion of credit, then, in turn, increases the supply of money.

Therefore, as one would ultimately expect, the credit-sourced boom becomes unsustainable as artificially stimulated borrowing seeks out diminishing investment opportunities. Finally, the credit-sourced boom results in widespread malinvestments. When the exponential credit creation is no longer be sustainable, a “credit contraction” occurs, ultimately shrinking the money supply. The markets eventually “clear,” which causes resources to be reallocated towards more efficient uses.

Modern policymakers refuse to allow this natural process. Each downturn results in more aggressive stimulus, which only delays the necessary corrections. The result has been a relentless build-up of economic imbalances. Inefficient businesses survive on cheap debt, zombie firms proliferate, and innovation suffers. Each economic expansion is weaker than the last, and each recovery depends on larger interventions to stay afloat.

Perhaps the greatest misconception perpetuated by Keynesian economists is that debt-financed stimulus is a free lunch. In reality, servicing the debt and rising debt service costs become a significant economic headwind. The Congressional Budget Office projects that U.S. interest payments will exceed national defense spending in the coming years and approach $1.5 trillion annually by 2030. Of course, that is assuming that rates stay where they are currently. The next crisis, which has become more common since the turn of the century, will significantly lower rates. As shown, a reduction in rates by 1% would dramatically impact future liabilities.

This is not just a fiscal issue—it’s a macroeconomic drag. Spending dollars on interest payments diverts them from infrastructure, education, or productive investment. Worse, rising debt levels crowd out private investment, distort capital markets, and reduce the flexibility to respond to future crises.

Conclusion: Keynes’ Economic Theory Has Failed

For the last 40 years, each Administration and the Federal Reserve have continued to operate under Keynes’s monetary and fiscal policies, believing the model worked. The reality, however, is that most of the economy’s aggregate growth is financed by deficit spending, credit expansion, and a reduction in savings. 

This reduced productive investment and slowed the economy’s output. As the economy slowed and wages fell, the consumer took on more leverage, decreasing savings. The result of the increased leverage required more income to service the debt, rather than fuel increased consumption.

Secondly, most government spending programs redistribute income from workers to the unemployed. Keynes’ economists argue that this increases the welfare of many hurt by the recession. What their models ignore, however, is the reduced productivity that follows a shift of resources toward redistribution and away from productive investment.

All of these issues have weighed on the overall prosperity of the economy. What is most telling is the inability of current economists, who maintain our monetary and fiscal policies, to realize the problem of trying to “cure a debt problem with more debt.”

This is why Keynes’ economic policies have failed, from “cash for clunkers” to “Quantitative easing.” Each intervention either dragged future consumption forward or stimulated asset markets. Pulling future consumption forward leaves a “void” in the future that must be continually filled. However, creating an artificial wealth effect decreases savings, which could be used for productive investment.

It’s time we wake up and realize we are on the same path.

Tyler Durden Fri, 09/05/2025 - 13:05

EU Slaps Google With Massive €2.95 Billion Antitrust Fine 

Zero Hedge -

EU Slaps Google With Massive €2.95 Billion Antitrust Fine 

The European Commission has slapped Google with a €2.95 billion fine for abusing its dominance in the search advertising market through "self-preferencing" practices, according to a new Financial Times report. The EU ordered Google to end these behaviors within two months or risk a potential breakup. This marks one of the largest EU fines against a company, following the €4.12 billion Android fine in 2018.

EU competition chief Teresa Ribera warned Google to draw up a "serious remedy to address its conflicts of interest, and if it fails to do so, we will not hesitate to impose strong remedies." 

Lee-Anne Mulholland, Google's global head of regulatory affairs, called the fine "unjustified" and said "it requires changes that will hurt thousands of European businesses by making it harder for them to make money." 

The commission's investigation began around 2021, with formal charges issued in 2023. Brussels warned back then that the only solution for Google might be breaking up its ad-tech business. 

Not since US v Microsoft, filed in 1998, has Silicon Valley been so threatened.  

Meanwhile, in the US, Google earlier this week avoided a breakup order after a judge ruled against forcing divestitures of Chrome or Android. Instead, Google must share more data and stop exclusive distribution deals. 

Even as Brussels and Washington ramp up antitrust actions against the tech giant, its New York-listed shares have gone parabolic this year.

. . . 

Tyler Durden Fri, 09/05/2025 - 12:45

Biden-Appointed Judge Blocks Trump's Transgender Passport Order

Zero Hedge -

Biden-Appointed Judge Blocks Trump's Transgender Passport Order

Authored by Aldgra Fredly via The Epoch Times (emphasis ours),

A federal appeals court on Sept. 4 upheld a lower court ruling that blocked enforcement of President Donald Trump’s executive order banning the use of gender-neutral markers on passports.

U.S. passports are arranged for a photograph in Tigard, Ore., on Dec. 11, 2021. Jenny Kane/AP Photo

U.S. District Judge Julia Kobick issued an injunction in April blocking the Department of State from enforcing the passport policy against six plaintiffs who filed the case, later expanding it in June to grant class certification, covering other Americans identifying as nonbinary or transgender.

In the Sept. 4 ruling, the court’s three-panel judge stated that the government failed to meaningfully address the district court’s finding that the changes to passport policy were rooted in “unconstitutional animus toward transgender Americans.”

The judges noted that the federal government did not meet its burden to secure a stay, despite its argument that blocking the policy could harm “certain long-term institutional interests of the executive branch.”

“In contrast, based on the named plaintiffs’ affidavits and the expert declarations submitted by the plaintiffs, the district court made factual findings that the plaintiffs will suffer a variety of immediate and irreparable harms from the present enforcement of the challenged policy, including ‘a greater risk of experiencing harassment and violence’ while traveling abroad,” the judges stated.

The American Civil Liberties Union (ACLU) of Massachusetts, which represented the plaintiffs, said the ruling ensures that “transgender, non-binary, and intersex people will continue to be able to obtain accurate passports.”

The White House did not respond to a request for comment by publication time.

The United States had permitted individuals who identify as transgender and intersex to choose a different sex for their passport than their birth sex since 1992, pending submission of medical documentation, until the rules were changed in 2021 under President Joe Biden.

The Biden administration allowed people to self-select their passport sex marker based on gender identity. Individuals who identified as non-binary or intersex were allowed to select an “X” marker rather than “M” or “F.”

After taking office on Jan. 20, Trump signed an executive order titled “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” mandating that government-issued identification documents, including passports, use sex rather than gender identity.

“It is the policy of the United States to recognize two sexes, male and female. These sexes are not changeable and are grounded in fundamental and incontrovertible reality,” the order stated.

ACLU filed the lawsuit in February on behalf of the plaintiffs challenging Trump’s order. Kobick ruled in their favor in April, noting that the administration failed to demonstrate substantial government interests in changing the passport policy.

Joseph Lord contributed to this report.

Tyler Durden Fri, 09/05/2025 - 12:20

What will happen with House Prices?

Calculated Risk -

Today, in the Real Estate Newsletter: What will happen with House Prices?

Brief excerpt:
Almost every day a journalist or an analyst asks me what will happen with house prices.

Every cycle is different, and usually I focus on inventory, sales, and months-of-supply to answer this question.

However, there have been significant policy changes this year, especially with trade and immigration. This has led to a period of rising inflation, and a weakening employment situation (rising unemployment rate). A period of stagflation.

These are powerful forces for the economy and housing.
...
RentBut what is the impact of rising unemployment?

The following graph shows the year-over-year in the Case-Shiller National Index versus the Sahm rule (from economist Claudia Sahm). The Sahm rule is a measure of changes in the unemployment rate. It compares the three-month moving average of the unemployment rate (U3) to the minimum of the three-month averages from the previous 12 months.

In general, a rising unemployment rate corresponds to weaker house prices. Of course, correlation does not imply causation. And there are exceptions - like at the onset of the pandemic when the unemployment increased sharply, but house prices took off (mortgage rates fell sharply and most potential homebuyers stayed employed).
This is much more in the article.

Lululemon Plunges On Weak Guidance As Sexy Leggings Demand Slumps

Zero Hedge -

Lululemon Plunges On Weak Guidance As Sexy Leggings Demand Slumps

Lululemon shares in New York crashed on Friday after the upscale athletic apparel retailer slashed its full-year earnings guidance, citing the Trump administration's move to end the de minimis exemption loophole.

"This is a disappointing update from LULU, and we expect shares to underperform peers tomorrow as a result," Goldman analyst Brooke Roach wrote in a first take note to clients after the earnings release on Thursday. 

Across the board, Lululemon cut its FY25 outlook, lowering revenue expectations in the US, Canada, and China as demand for its overpriced sports bras, workout tops, and leggings weakens.

Roach provided more color on the outlook downgrade

The company lowered its FY25 outlook across all key line items. For FY25, LULU's lowered its revenue growth expectations for the US, Canada and China as consumer demand for the brand continues to soften, and margin pressures have increased as a result of (1) Incremental tariff rate increases (~50bps net headwind vs. 40bps prior); (2) Changes in the de minimis exemption (~170bps net headwind); (3) Elevated promotionality (~50bps headwind vs. 10-20bps prior); and (4) Incremental SG&A deleverage due to FX and ongoing investments in Power of 3x2 initiatives (~80-90bps deleverage vs. ~50bps prior). Management noted they expect a ~$320mn EBIT headwind from tariffs (incl. de minimis pressures) as they look out to FY26.

As a result, Lululemon shares plunged in New York, down about 16% by 10:00 a.m. EST. Year-to-date, the stock is off 55%, hitting lows not seen since early 2020.

Roach is "Neutral" on the stock. He explained (Pro Subs read here) that he lowered his 12-month price target to $200 from the previously stated $232.

Other Wall Street analysts noted weakness in its US business. Stifel downgraded the stock to "Hold" from "Buy." 

According to Bloomberg data, 28.9% of Wall Street analysts rate the stock a "Buy," 57.9% a "Hold," and 13.2% a "Sell."

More commentary (courtesy of Bloomberg):

Stifel's Peter McGoldrick (cut to hold from buy, PT to $205 from $324)

  • The meaning FY25 guidance cut was due to challenges from domestic market pressures and removal of the de minimis exemption

  • While the acknowledgment of underperformance within the casual side of the business is a starting point, "reigniting brand momentum in the US is likely to take longer than we had previously anticipated"

Bloomberg Intelligence's Poonam Goyal

  • "Lululemon is facing increased pain from tariffs and slowing sales, notably in the Americas"

  • Along with guidance for a $240 million annual hit to gross profit from tariffs and the removal of the de minimis exemption, the company cut its earnings guide

JPMorgan's Matthew Boss (neutral, PT to $191 from $224)

  • The company's 2Q same-store-sales was weighed down by weak Americas comps, "which sequentially worsened over the course of the quarter despite taking higher than planned markdowns"

  • "Merchandise mix reset required into spring 2026"

Jefferies' Randal Konik (underperform; PT $150)

  • Says the US business is declining, adding that the third- quarter earnings appear to be a "little better," but the topline miss is the major issue due to competition and will continue to worsen given the below Street outlook

  • "We believe guidance cuts continue and will become more severe through the end of the fiscal year"

EMARKETER's Suzy Davidkhanian

  • Lululemon's second-quarter results were mixed as revenue grew 7% to $2.5 billion, but missed guidance, while adjusted EPS beat expectations

  • "Once the trailblazer in athleisure, Lululemon has lost its innovation edge, now squeezed by luxury newcomers like Alo Yoga and private-label dupes with comparable fabric tech at lower prices" 

  • "Looking ahead, holiday gifting may provide a short-term lift, but sustainable growth hinges on whether Lululemon can move credibly into new sport verticals and find the right formula for its footwear"

Queue the Sweeney ad...

. . .

Tyler Durden Fri, 09/05/2025 - 11:20

California Passes Bill To Require Schools To Notify Parents Of ICE Operations

Zero Hedge -

California Passes Bill To Require Schools To Notify Parents Of ICE Operations

Authored by Jill McLaughlin via The Epoch Times (emphasis ours),

An emergency bill to require California schools to notify parents and school staff when federal immigration officers are operating in the area passed the state Legislature on Sept. 2.

A Homeland Security officer speaks to classmates and relatives gathered outside immigration court in Chelmsford, Mass., on June 5, 2025. Brian Snyder/Reuters

Senate Bill 98—dubbed the Sending Alerts to Families in Education, or SAFE Act—is now waiting to be signed by Gov. Gavin Newsom.

“With students returning to school, this legislation is more important than ever,” the bill’s author, state Sen. Sasha Renée Pérez, a Democrat from Pasadena, said in a statement. “The SAFE Act will inform and protect immigrant students and their families on school campuses.”

If signed into law, the measure will require all elementary, secondary, charter schools, and college campuses to make the notifications. The schools would need to update their safety plans to include procedures for the notifications and provide additional resources for families about their educational rights, state privacy laws, and counseling or support services.

The notification would also be required to include the date, time, and location of the immigration enforcement.

The legislation includes an urgency clause, which means it would take effect immediately after Newsom signs it, instead of the typical date of Jan. 1, 2026.

California schools serve an estimated 133,000 children ages 3 to 17 who are illegal immigrants, according to the Migration Policy Institute, a Washington, D.C.-based global immigration policies think tank.

More than 2.7 million people in California are illegal immigrants, and over 400,000 have moved to the state within the last five years, the institute reported.

President Donald Trump declared a national emergency at the southern border on his first day in office Jan. 20, making immigration enforcement a top priority. Since then, federal Immigration and Customs Enforcement (ICE) operations have included checking the welfare of immigrant children who crossed the border illegally and without a parent in the past four years.

In April, two elementary schools in Los Angeles denied entry to Department of Homeland Security investigators checking on the health and safety of such children.

“DHS is leading efforts to conduct welfare checks on these children to ensure that they are safe and not being exploited, abused, and sex trafficked,” a department spokesperson told The Epoch Times in an email at the time.

In the face of ongoing federal immigration operations, Pérez said the SAFE Act can help “inform and empower school communities to make the best decisions about their safety and their family’s safety.”

“I urge [Newsom] to sign the SAFE Act,” Pérez continued. “Students and their families have been living in fear. California must ensure our schools and colleges remain places where students can learn, teachers can teach, and classrooms can be safe places for young Californians.”

Flanked by images of a person arrested for violence during the ICE protests in Los Angeles, White House press secretary Karoline Leavitt speaks about President Donald Trump's response to the protests at the White House on June 11, 2025. Bryan Dozier/Middle East Images via AFP via Getty Images

The legislation was a priority of the California Latino Legislative Caucus and was sponsored by the state’s Superintendent of Public Instruction Tony Thurmond, the University of California Student Association, California State Student Association, Student Senate for California Community Colleges, California Faculty Association, and others.

Our immigrant families are living in fear and our time to act is limited,” Thurmond said in a statement. “The school year has begun, and now is the time to make decisive efforts to protect our communities and maintain school as a safe place for learning.”

Aaron Villarreal, chair of the Cal State Student Association, said he has witnessed classmates and colleagues struggle with fear of immigration enforcement.

“This anxiety is not unique to Sacramento State but is shared across all 22 campuses,” Villarreal said.

Tyler Durden Fri, 09/05/2025 - 11:00

UK Deputy PM Resigns After Home Purchase Tax 'Error'

Zero Hedge -

UK Deputy PM Resigns After Home Purchase Tax 'Error'

While Fed Governor Lisa Cook attempts to litigate her way out of an alleged mortgage fraud (for which the Trump administration has delivered the receipts), The U.K.’s deputy prime minister, Angela Rayner, resigned this morning following an 'ethical' error on her home purchase tax payments.

Rayner, who admitted on Wednesday that she did not pay enough tax on her purchase of an apartment in Hove, on England’s south coast, earlier this summer, said the report found that she acted in good faith, but that, crucially, she should have sought more specific tax advice.

“I take full responsibility for this error," she said in her resignation letter to Prime Minister Keir Starmer.

Of course, this is very different from Lisa Cook's playing of the race-card, not addressing the actual crime she is accused of, and distracting from her actual fraud by claiming it's a witch hunt.

As AP reports, in the U.K., levies are charged on property purchases, with higher charges due on more expensive homes and secondary residences.

Reports have suggested that Rayner saved 40,000 pounds by not paying the appropriate levy, known as a stamp duty, on her 800,000-pound ($1 million) purchase.

Rayner, 45, had sought to explain that her “complex living arrangements” related to her divorce in 2023 and the fact that her son has “lifelong disabilities” underlay her failure to pay the appropriate tax.

In response, Starmer voiced his sadness but said Rayner had made the right decision.

“I have nothing but admiration for you and huge respect for your achievements in politics,” Starmer wrote.

The handwritten letter signed off “with very best wishes and with real sadness.”

But, as Stephen Bush writes at The Financial TimesAngela Rayner’s resignation leaves Sir Keir Starmer’s government weaker and his own position more uncertain, even as the full extent of the damage is still unclear.

Those around Starmer knew full well that if they could keep Rayner, they were better off doing so, because of the chaos and uncertainty that a fresh election for deputy leader creates within the Labour party.

This is why the loudest defenders of the now ex-deputy prime minister were not her core allies but those of Starmer — Rachel Reeves, the chancellor, whose political career lives or dies with his, and Peter Kyle, the ultraloyal secretary of state for science and technology.

As far as the government as a whole is concerned, today’s events force Starmer’s hand in conducting a ministerial reshuffle, at a time when he did not want one.

Given that Downing Street’s own weakness makes a wider reshuffle too risky, he may be saddled with a less far-reaching set of changes than he might have been able to make in the new year.

...

Everything from the government’s position on the UK’s relationship with the EU to wealth taxes to trans rights to its handling of Donald Trump could now come under fire from rival deputy leadership candidates.

For Rayner, her housing arrangements have already extracted their price. The costs to Starmer are only just beginning.

Rayner's previous comments had opened her up to charges of hypocrisy, particularly from current Conservative leader Kemi Badenoch, who said Rayner's position had been “untenable for days.”

“The truth is simple, she dodged tax," she said in a video posted on social media. “She lied about it.”

Tyler Durden Fri, 09/05/2025 - 10:40

More Than 40% Of Americans Expect To Work Until They Die: Survey

Zero Hedge -

More Than 40% Of Americans Expect To Work Until They Die: Survey

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

A significant share of Americans believe they may never retire, with 43 percent admitting they see themselves working until death, financial services company WalletHub said in a Sept. 2 survey.

50 percent of people don’t think it’s realistic for the average American to expect to retire comfortably,” WalletHub said.

“These concerns aren’t unfounded, given the heavy debt burden many households carry, the lack of adequate savings, and the uncertainty surrounding the future of government benefits.”

For instance, the average American household held $152,653 in debt by the end of the second quarter of 2025, WalletHub said last month, based on data from the Federal Reserve Bank of New York.

Meanwhile, the personal savings rate has been hovering below the 5 percent level since 2022, a stark contrast to pre-2022, when the rate remained mostly above this level, according to the Federal Reserve Bank of St. Louis data.

In the WalletHub survey, two out of five respondents said they felt anxious when thinking about retirement. One in four said they don’t have a retirement plan.

A quarter of respondents said they are counting on family members to support them financially once they retire.

“Most Americans (53 percent) think paying off debt is more important than making retirement contributions,” WalletHub said.

The survey was conducted online among 200 respondents nationwide.

A May 1 report from investment company State Street had also made similar findings—that Americans were worried about preparing for retirement.

However, respondents in the survey expressed higher confidence regarding retirement, it said.

Americans’ overall confidence in their ability to retire at some point improved by eight percentage points, from 54 percent to 62 percent, with certain demographic groups showing particular optimism,” said the report.

“Young people were more likely to plan to fully retire, with 75 percent of those respondents between the ages of 18 and 34 expecting they will do so completely—perhaps not surprising, given the longer runway ahead and a less clear picture of what will be required to make it to retirement.”

Best Places to Retire

A key factor for a good retirement is where people choose to spend their life after retiring. Locations that are affordable and have a good quality of life and health care would be optimal for this stage.

A Sept. 2 WalletHub report compared the retirement friendliness of more than 180 American cities in 45 metrics such as cost of living and health infrastructure.

Orlando, Florida, topped the list as the best city for retirees, followed by Scottsdale, Arizona, and Minneapolis, Minnesota. Miami and Tampa took the remaining two of the top five spots.

“It’s important to choose wisely when picking where to retire, as many retirees are on a fixed income,” said WalletHub analyst Chip Lupo.

“As a result, the best cities for retired people are those that minimize taxes and expenses, as well as have good opportunities for retirees to continue paid work for extra income, if they choose to do so.

In addition, the top cities provide high-quality health care and offer plenty of enjoyable activities for retirees.”

According to a June 18 post by the Investment Company Institute, total U.S. retirement assets amounted to $43.4 trillion as of March 31, accounting for 34 percent of household financial assets.

Assets in individual retirement accounts made up $16.8 trillion out of the $43.4 trillion. Defined contribution plan assets accounted for $12.2 trillion.

Meanwhile, the Trump administration is taking action to protect the retirement benefits of millions of Social Security beneficiaries.

During Aug. 25 remarks to reporters at the Oval Office, President Donald Trump emphasized that he would not touch Social Security when it comes to congressional cost-cutting proposals.

“One thing I said and I gave my word—we’re not going to hurt anybody on Medicaid, Medicare, or Social Security,” he said. “We’re doing great on Social Security,” and “we’re going to protect it.”

According to Social Security Administration data, there were 69.9 million Social Security beneficiaries as of July, out of which 53.17 million were retired workers.

Tyler Durden Fri, 09/05/2025 - 10:25

Let's Get Ready To Rumble: UFC Cage Match Planned At White House 

Zero Hedge -

Let's Get Ready To Rumble: UFC Cage Match Planned At White House 

Ultimate Fighting Championship CEO Dana White emerged from a White House meeting on Thursday, declaring to his nearly 11 million Instagram followers: 

We had the meeting at the White House. It could not have gone better. This is going to be awesome. The White House fight is on. I'll have more details on that in the next couple of weeks, but we got it done today.

What White was referring to is UFC's Octagon fight, which is coming to the White House's South Lawn next year. In fact, the event is scheduled for June 2026, just before America's 250th birthday celebration on July 4. 

Here are more details from The Wall Street Journal:

The initial idea called for the event—a full card featuring men and women—to be held July 4, 2026, as a capstone to America's 250th birthday celebration. But with so many events already planned, the date shifted to sometime in June, people involved in the planning said. UFC plans to have a large presence in Washington ahead of the event, with several days of fan festivities on the National Mall, which are to include autograph sessions with UFC stars and punching bags for tourists to test their skills.

Trump spokesman Steven Cheung told the outlet:

This will be one of the greatest and most historic sports events in history, and President Trump hosting it at the White House is a testament to his vision to celebrate America's monumental 250th anniversary.

UFC at the White House represents a new era in America - one that celebrates the youth of "strong men" - in sharp contrast to the Biden-Harris regime years, when all things woke projected from the White House lawn, including transgenders flaunting their fake body parts... 

... which ushered in a period of toxic wokeism and the dark age of weak men. History reminds us: strong men build nations, weak men destroy them. And America's young men crave strength and health - not the Democratic Party's hollow, rainbow-colored messaging of weakness.

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

Rate-Cut Odds Surge After Soft Labor Market Signals; Here's What Wall Street Thinks...

Zero Hedge -

Rate-Cut Odds Surge After Soft Labor Market Signals; Here's What Wall Street Thinks...

Rate-cut expectations surged this morning following the weak labor market signals from the payrolls report with 2025 now pricing in 3 full cuts...

Source: Bloomberg

As we predicted, the chance of a 50bps cut in September are also rising, but for now it appears 25bps in each of Sept, Oct, and Dec is the most likely outcome...

Source: Bloomberg

As The Wall Street Journal's fed Whisperer, Nick Timiraos, pointed out in a brief post on X: 

"Weak hiring this summer will make it easier for Fed policymakers to agree on a 25 bps cut at their meeting in two weeks but further muddies the debate over the pace of cuts after that."

Consensus across Wall Street appears to be that Powell will cut in September, and continue to cut at each meeting this year at least:

Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities:

“The job market has weakened and the transition between public to private sector job growth will require lower rates. The Fed will begin to lower rates this month and we expect a string of more cuts along the way. The forward curve has us down to neutral by the end of 2026 but that timeline could very well be sooner.”

BI chief US interest-rate strategist Ira Jersey has a first take: 

The bull steepening is no surprise given the overall payroll report. Negative revisions continue and hourly earnings growing more slowly point to the potential for a slowing in non-debt-fueled consumption growth in the next few quarters.”

“Bull steepening should be maintained for the present, and we still target 10-year yields below 4% by year end, with 10-year yields having about a 0.5 beta to 2-year yields.”

Matt Maley, chief market strategist at Miller Tabak:

[Bad news is good news for stocks] is the initial response. However, history tells us that if lower yields are signaling a significant slowdown in growth, it’s negative for stocks. So, we’re going to see how the market acts once the cash market opens.”

Audrey Childe-Freeman, Bloomberg Intelligence’s chief G-10 FX strategist:

Dollar bears have just been given another lift, with the August employment report which will not only validate the September 25-bp Fed rate-cut talks, but is also likely to entertain speculation of more aggressive Fed easing going forward.”

“This confirms our US yield-driven euro-dollar bullish case as we consider 4Q, with a break of $1.1750 now looming. Note that the euro context isn’t rosy at all — see French politics in particular — but for now, we expect this pair to be mainly driven by US considerations.”

A jumbo rate cut?

Brian Jacobsen, chief economist at Annex Wealth Management, goes there in his reaction to the data.

"A 50 basis-point cut is back on the table. Everyone was probably more keyed-in on the revisions than the headline number. With revisions, there was nearly net zero job creation. Aggregate weekly hours were unchanged in August with broad declines across industries. Anything trade or tariff related saw declines in aggregate weekly hours worked.

The diffusion index for private sector employment has been below 50, so it’s a top-heavy economy. You need some better breadth to remove the economic anxiety out there."

BlackRock’s Jeff Rosenberg on the payrolls print on Bloomberg TV: 

What it really puts on the table is a Fed that gets back in motion for cutting rates, and if the economy is not falling off a cliff, that’s a pretty good combination for risk assets.” 

Neil Dutta at Renaissance Macro says the numbers are a comprehensive defeat of the policy hawks and growth bulls.

“To borrow from Powell, now is the time to unleash the great monetary power of the United States.”

Seema Shah, chief global strategist, Principal Asset Management:  

“Today’s report just about strikes a balance between reinforcing market expectations for a sequence of Fed rate cuts and not yet inviting renewed concerns around recession, so the broad market response should be mildly positive. But concerns about the health of the economy are starting to creep in and a further deterioration in the health of the labor market would soon tip the balance to ‘bad news is simply bad news.’”

Kevin Flanagan, head of fixed income strategy at WisdomTree says,

The markets are leading the Fed and the jobs report was the last data point needed for a quarter point cut this month. A half point is not out of the question, but at this stage of the game I would still lean to a quarter-point cut, now if we had seen a negative payroll, then a 50bps cut would be on the table.”

Ali Jaffery‘s take at CIBC Capital Markets:

While the macro case for easing policy isn’t so clear cut, with the economy looking fairly resilient in the face of a major trade war and an immigration crackdown, the politics of monetary policy are getting complicated and it’s likely not worth defending keeping rates on hold.

Stephanie Roth, chief economist at Wolfe Research LLC, gave ger first thoughts on the report on Bloomberg Television’s Surveillance: 

“First take is another weak summer employment report. Immigration seems to be having another impact on the data. When you look at the household survey, the foreign-born population was again, sort of the weaker part of it.”

“On Sept. 9, once we get the annual preliminary benchmark revisions, that’s going to be revised down to the tune of something like 600,000 — that’s going to be another really bad negative headline. Then beyond that, we think that the signs will look a little bit better.

Finally, the factory sector is clearly showing pain and reflects ongoing uncertainty linked to the new tariffs and the need for lower borrowing costs, Alliance for American Manufacturing President Scott Paul says in a release:

The August jobs report should hopefully spur on two important actions. First, a cut in interest rates by the Federal Reserve. Second, concluding tariff actions and trade deals to provide businesses with the certainty they need to hire, invest in new capital equipment, and realign supply chains. Manufacturing will be treading water until we see those changes.”

For now, stocks are higher, Treasury yields are significantly lower (and bull steepening), gold hit a new record high, and bitcoin is surging .

Tyler Durden Fri, 09/05/2025 - 09:33

NATO Troops In Ukraine 'Legitimate Targets' Even If There For Peace Deal: Putin

Zero Hedge -

NATO Troops In Ukraine 'Legitimate Targets' Even If There For Peace Deal: Putin

French president Emmanuel Macron had on Thursday hosted a 'coalition of the willing' on Ukraine in Paris, involving 26 nations which have declared readiness to get directly engaged in providing security guarantees for a post-war order.

The plan will reportedly be finalized with US approval, as American forces are sought to 'backstop' the plan, including possibly by air. However, Russian President Vladimir Putin has reiterated in Friday comments that any Western troops in Ukraine would become legitimate targets, even in the scenario of enforcing a peace deal.

Via Reuters

Speaking before the Eastern Economic Forum in Vladivostok, Putin described that "The West’s dragging of Ukraine into NATO was one of the causes of the conflict. If any troops show up now, while the hostilities are ongoing, we would consider them legitimate military targets," according to state media translation.

"If decisions are made that result in long-term peace, then I simply see no sense in such a presence," he clarified further. "Nobody should doubt that Russia would implement the agreed terms fully. We will respect security guarantees that both Russia and Ukraine need to be offered."

Putin additionally complained that despite all of these Western meetings and talk of security guarantees, none of these things have been directly discussed with Moscow - which remains an essential if there's hope of ending the war.

The Kremlin's position is certainly nothing new, and so it seems as usual that the two sides are talking past each other. Some analysts read it as the more hawkish Europeans putting up yet more obstacles to peace. One such example is featured in The Guardian as follows:

Finland’s president Alexander Stubb said president Donald Trump in a call with European leaders on Thursday suggested the US and Europe should act together on further sanctions against Russia, and that sanctions on oil and gas were up for discussion.

“Trump’s approach was very much that we must act together on sanctions policy and now look for ways in particular to halt Russia’s war machine by economic means,” Stubb told Finnish media after the meeting, Reuters reported. “In that case there are two targets, namely oil and gas. The President of the Commission, Ursula von der Leyen, and President Trump’s close advisers will discuss this over the next 24 hours,” Stubb said.

All of this underscores the need of the Europeans and Washington to get on the same page if they hope to enact any of this, or also achieve ceasefire and deescalate the proxy war nature of the conflict.

"Without the participation of the USA, all the talk of the ‘coalition of the willing’ will remain words on paper," a Russian analyst, Sergey Poletaev, editor of the Vatfor project, has stated.

Tyler Durden Fri, 09/05/2025 - 09:20

Comments on August Employment Report

Calculated Risk -

The headline jobs number in the August employment report was below expectations and June and July payrolls were revised down by 21,000 combined.  A weak report. The participation rate increased, the employment population ratio was unchanged, and the unemployment rate was increased to 4.3%.
Earlier: August Employment Report: 22 thousand Jobs, 4.3% Unemployment Rate
Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate increased in August to 83.7% from 83.4% in July.
The 25 to 54 employment population ratio increased to 80.7% from 80.4% the previous month.
Both are down from the recent peaks, but still near the highest level this millennium.

Average Hourly Wages

WagesThe graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  
There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.7% YoY in August, down from 3.9% YoY in July.
Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of people employed part time for economic reasons, at 4.7 million, changed little in August. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons increased in August to 4.75 million from 4.68 million in July.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 8.1% from 7.9% in the previous month. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.93 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.83 million the previous month.
This is down from post-pandemic high of 4.171 million, and up from the recent low of 1.056 million.

This is above pre-pandemic levels.

Job Streak

The recent streak of positive job reports ended in May (Payrolls were negative in June).  The recent streak finished in 2nd place of the longest job streaks in US history (since 1939).
Headline Jobs, Top 10 Streaks Year EndedStreak, Months 12020113 22025531 3199048 4200746 5197945 6 tie194333 6 tie198633 6 tie200033 9196729 10199525 1Recent Streak Ended in May
Summary:

The headline jobs number in the August employment report was below expectations and June and July payrolls were revised down by 21,000 combined.  The unemployment rate increased to 4.3%.
This was a weak employment report.  

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