Georgia Power Gets Green Light To Dramatically Grow Grid To Draw Data Centers

Authored by John Haughey via The Epoch Times (emphasis ours),

The Georgia Public Service Commission will allow the state’s largest electric utility to proceed with its $15 billion plan to build nearly 10,000 megawatts of new generation—two-thirds of its present capacity—within a decade to accommodate “large load” demand from data centers.

The Vogtle Unit 3, being constructed by primary contractor Westinghouse, a business unit of Toshiba, near Waynesboro, Ga., in this photo taken in March 2017. Georgia Power/Handout via Reuters

The five-member commission on Dec. 19 unanimously approved a “stipulated agreement” with Georgia Power Company that requires data center developers to pay capital improvement costs related to grid expansion, and that households and small businesses won’t be left with the bill should projected growth not materialize as anticipated.

The decision follows months of contentious debate before the commission, which re-surfaced before the final vote during three hours of laborious discussion on motions filed by advocacy groups questioning the certainty of those assurances, followed by animated public comment dominated by opponents.

Many were ushered out of the commission’s Atlanta chambers, chanting, “Nay, nay, nay! The people say, ‘Nay!’” so the vote could be conducted.

Among opponents’ claims was that the commission, which has until March 2026 to issue its final decision, was proceeding with the vote before two Democrats who defeated incumbent Republicans in a November election could be seated in January.

Many expressed anger over rising electricity costs for Georgia Power’s 2.8 million customers across 155 of the state’s 159 counties. The commission has approved six Georgia Power rate increases since 2023, costing the average household at least $43 a month, or an additional $500 a year, according to the Southern Environmental Law Center, while, at the same time, its profits have increased 40 percent.

In July, the commission imposed a moratorium on Georgia Power rate hikes through 2028, but, as many noted, that freeze only applies to base use charges while exempting “reasonable and prudent” costs it incurred—approximately $860 million—in damage from 2024’s Hurricane Helene that can be “recovered” from customers.

Opponents argued that consumers will eventually be left paying for “stranded assets” in a massive build-out to serve data centers that become obsolete or out of business.

Georgia Power now generates between 14,000 and 15,000 megawatts of electricity, and in 2022, projected it would need 200 to 300 megawatts of grid growth over the next decade.

The 10,000 megawatt expansion—enough electricity to power nine million homes—includes at least 8,500 megawatts between 2029 and 2031. It is the largest projected percentage increase in electricity demand over the next five years in any state nationwide except Texas, according to a November Grid Strategies’ analysis.

The company said in testimony filed with the commission that 80 percent of the projected build-out will serve data center development, which it says will boost state and local economies, and “allow Georgia to contribute to the nation’s focus on the global importance of artificial intelligence and the digital economy.”

According to Florida-based Data Center Map, more than 166 of the nation’s 4,297 data centers are in Georgia—sixth most of any state—with Microsoft, Meta, QTS, and Trammell Crow among hyperscalers operating large-load operations.

But as documented by Baxtel, a data center market tracker, those numbers are poised to dramatically increase—more than 26 data centers are under construction and at least 52 planned within 60 miles of Atlanta.

Not all Georgians are enthused. Concerns over water and energy demands by “server farms” have prompted eight Georgia counties and cities to adopt moratoriums on data center development, including Atlanta, which in September 2024 prohibited data center projects within a 22-mile radius of its Beltline Overlay District.

Microsoft, Meta, QTS, and Trammell Crow are among hyperscalers operating large-load data centers in Georgia. Rick Rycroft/AP Photo ‘Trade Secrets’

Under its “stipulated agreement” with the commission’s Public Interest Advocacy staff, Georgia Power said it agreed to file its next “rate case” in 2028 “in a manner that will ensure incremental revenue from large-load customers will provide benefits of at least $556 million per year, equivalent to $8.50 per month, or approximately $102 per year, for the typical residential customer using 1,000 kilowatt-hours per month.”

Attorneys Jennifer Whitfield, representing Georgia Interfaith Power & Light and Southface Institute, Blan Holman on behalf of the Southern Renewable Energy Association, and Sierra Club’s Curt Thompson claimed in motions that information used in Georgia Power’s calculations are regarded as “trade secrets” so they cannot be reviewed.

They debated for 90 minutes with Georgia Power attorney Brandon Marco and Public Interest Advocacy attorney Christopher Collado about, among other issues, the distinction between public disclosure of proprietary information and requiring that information be “on the record” for those who sign non-disclosure agreements to review.

“We need to know today what the assumptions are in that financial promise if we’re going to enforce it down the road,” Whitfield said, requesting the commission “order Georgia Power to supplement the record with financial information related to showing its work as to what went into the financial stipulation promise.”

Advocates motioned for hearings on what information was provided to the commission and to ask Georgia Power “clarifying questions.”

Commission Chair Jason Shaw denied two motions but said one has merit.

“I will grant the request to schedule a hearing … to determine whether petitioners should be granted access to trade secret information under an appropriate confidentiality group,” he said.

Shaw said advocates “failed to justify” disclosure or hearings on Georgia Power’s confidential calculations, which Collado confirmed his staff has vetted.

Commissioner Lauren “Bubba” McDonald said anxiety is understandable, but misdirected in targeting the commission when it can only review applications for loads of 100 megawatts or more.

“We do not solicit data centers, they are solicited by the Governor’s Office of Economic Development,” he said. “They are solicited by [developers] coming in looking at Georgia because of the reliability of energy this state provides.”

Ultimately, McDonald said, “local governments are the ones that decide if a data center is going in, not the public service commission. I want that to be clearly understood.”

Commissioner Tim Echols, one of two incumbents defeated in November, said he was proud after serving 15 years on the commission that “my last vote” will provide “the power we need to keep the state moving forward until 2031.”

His biggest disappointment is the slow pace of nuclear development, which, he said, is the best way to generate the electricity needed to power AI development.

Hyperscalers “need to take the financial risk for building out America’s nuclear future because it doesn’t appear it’s going to happen any other way, and I do think they ultimately will,” Echols said. “They’re using the bulk of the power, and I think they should pay the bulk of the cost and take the risk.”

Tyler Durden Mon, 12/22/2025 - 10:10

Key Events This Shortened Week: GDP And Durables On Deck As 2025 Closes

For those traders who are still "out there" instead of the slopes of Chamonix mingling with freshly embezzled US tax dollars by way of Kiev, DB's Jim Reid reminds that we’re now entering a very quiet spell for markets before Christmas, with data releases and other headline announcements almost completely drying up. Indeed, there’s only two-and-a-half days left to go for many places, as the US and several European markets are closing early on Christmas Eve, and this week usually sees some of the lowest volumes of the year.

In terms of the week ahead, it’s a pretty quiet one on the events calendar. One thing to note will be a few US data releases, including the delayed Q3 GDP print Tuesday, but that’s very backward-looking and covers the period before the shutdown. Otherwise the more recent data will be the December consumer confidence reading from the Conference Board, also on Tuesday, which will be in the spotlight given the recent downtick in sentiment. In fact, the previous reading for November was the lowest since the Liberation Day turmoil in April. But apart from that, there really isn’t much scheduled.

With little on the calendar this week, this lack of events got Reid thinking about whether anything could disturb the pre-Christmas calm, as we have seen a few occasions when this week has brought heightened volatility.

The best recent example is probably 2018, when you may remember a huge selloff saw the S&P 500 fall -7.7% in the four pre-Christmas sessions. A whole bunch of negative factors converged at once, including a hawkish Fed signalling more hikes to come, weak global data, US-China trade tensions, and the start of a US government shutdown on Dec 22. That selloff deepened further after the US Treasury Department said in a Dec 23 statement that Secretary Mnuchin had spoken with CEOs of the largest US banks, and that the President’s Working Group on financial markets would have a call. So that created huge concern that policymakers knew something that the rest of us didn’t, and the S&P hit its closing low on Christmas Eve.

Another good example, although not quite as fearful, happened in 2022. That was the year central banks hiked aggressively to combat inflation, with global bonds and equities entering a bear market that featured huge bouts of volatility as they kept sinking lower. And the Christmas run-up was no different, with the 10yr Treasury yield surging +26bps in the week before Christmas. That followed an adjustment to the Bank of Japan’s yield curve control policy on Dec 20, which was widely seen as the beginning of the end of Japan’s ultra-loose monetary policy. They permitted the 10yr JGB yield to rise to around 0.5%, up from 0.25% previously, but the effects cascaded globally given Japan’s role as one of the last anchors for low yields. So that led to some dramatic moves right before Christmas, and it was one of the biggest weekly jumps that year for the 10yr Treasury yield.

To be fair, this time last year saw a pre-Christmas Santa rally that took the S&P 500 up +2.9% in the final 3 days before Christmas. But either way, it shows that even if it’s a quiet week on the calendar, we can’t completely dismiss the prospect of a final year-end curveball, which would be in keeping with the constant surprises of 2025 so far. After all, this year has seen a huge regime shift in German fiscal policy in March, the Liberation Day tariffs in April, a direct military conflict between Israel and Iran in June, and the longest-ever US government shutdown over October-November. And that’s before we think about some other long-running themes, including periodic bond market flareups around fiscal policy, fears of a potential AI bubble, and ongoing concern around private credit.

This morning, the main news has been further sharp losses for Japan’s government bonds, which follows the Bank of Japan’s Friday decision to hike rates by 25bps to 0.75%, the highest since 1995. The hike already meant that Japan’s 10yr yield was up +6.9bps last week to close above 2%, and this morning they’re up another +6.9bps to 2.08%, their highest since 1999.

One factor behind that has been the weakness in the Japanese yen, which fell -1.40% against the US dollar on Friday, despite the hike. And this morning, the country’s chief currency official Atsushi Mimura said to reporters that “We’re seeing one-directional, sudden moves especially after last week’s monetary policy meeting, so I’m deeply concerned”. So in turn, that weakness for the yen is seen as raising the chance of another BoJ rate hike and has prompted the latest selloff for JGBs. We’ve seen that echoed across other countries too this morning, with 10yr Australian yields up +5.1bps this morning, whilst the 10yr Treasury yield is up +2.0bps to 4.17%.

For equities however, there’s been a much stronger picture across the board overnight, with gains for Japan’s Nikkei (+1.90%), along with the KOSPI (+1.82%), the CSI 300 (+0.79%), the Shanghai Comp (+0.64%) and the Hang Seng (+0.20%). Looking forward, US equity futures are also pointing higher, with those on the S&P 500 up +0.26%. Moreover, there’s been a fresh rally for precious metals this morning, with gold prices up +1.40% to $4400/oz, which would be an all-time closing high if sustained, and is the first time they’ve reached that level on an intraday basis as well. Similarly, silver prices (+3.25%) are up to a fresh record of $69.34/oz. So that now leaves their YTD gains at +68% for gold and +140% for silver, which would be the biggest for both since 1979, back when oil prices surged after the Iranian Revolution that year led to major supply disruption.

Courtesy of DB, here is a day-by-day calendar of events:

Monday December 22

• Data: UK final Q3 GDP, Italy November PPI, US September Chicago Fed national activity index
• Central banks: ECB’s Simkus, Vujcic and Kazimir speak 
• Auctions: US 2-yr Notes ($69bn)

Tuesday December 23

• Data: US Q3 GDP, preliminary October durable goods orders, November industrial production, capacity utilisation, December Conference Board consumer confidence index, Richmond Fed manufacturing index, Canada October GDP
• Central Banks: RBA minutes from December meeting
• Auctions: US 2-year FRN (reopening, $28bn), 5-yr Notes ($70bn)

Wednesday December 24

• Data: US initial jobless claims
• Central banks: BoJ minutes from the October monetary policy meeting
• Auctions: US 7-yr Notes ($44bn)

Thursday December 25

• Data: Japan November housing starts, December Tokyo CPI (23:30 London time), November jobless rate (23:30 London time), retail sales (23:50 London time), industrial production (23:50 London time)
• Central banks: BoJ Governor Ueda speaks

* * * 

Turning to just the US, the key economic data releases this week are the Q3 GDP and durable goods reports on Tuesday. There are no speaking engagements by Fed officials scheduled this week. 

Monday, December 22 

• There are no major economic data releases scheduled. 

Tuesday, December 23 

• 08:30 AM GDP, Q3 second release (GS +3.6%, consensus +3.2%, last +3.8%); Personal consumption, Q3 second release (GS +2.8%, consensus +2.7%, last +2.5%); Core PCE inflation, Q3 second release (GS +2.86%, consensus +2.9%, last +2.6%): We estimate that GDP rose 3.6% annualized in the initial reading for Q3, following a +3.8% annualized increase in Q2. Our forecast incorporates a further decline in imports (-5.5%, quarter-over-quarter annualized vs. -29.3% in Q2 and +38.0% in Q1) after frontloading ahead of tariff increases boosted imports earlier in the year. We expect a further acceleration in consumption growth (+2.8% vs. +2.5% in Q2) but another quarter of soft residential investment growth (-3.9% vs. -5.1% in Q2). We estimate that domestic final sales rose 2.4% in Q3, and that the core PCE price index increased 2.86% annualized (or 2.86% year-over-year) in Q3.
• 08:30 AM Durable goods orders, October preliminary (GS -3.0%, consensus -1.5%, last +0.5%); Durable goods orders ex-transportation, October preliminary (GS +0.2%, consensus +0.3%, last +0.6%); Core capital goods orders, October preliminary (GS +0.5%, consensus +0.3%, last +0.9%); Core capital goods shipments, October preliminary (GS +0.2%, consensus +0.3%, last +0.9%): We estimate that durable goods orders declined 3% in the preliminary October report (month-over-month, seasonally adjusted), reflecting a decline in commercial aircraft orders. We forecast a 0.2% increase in core capital goods orders and a 0.5% increase in core capital goods shipments—the latter reflecting the sharp increase in orders in the prior month.
• 09:15 AM Industrial production, November (GS +0.1%, consensus +0.1%, last +0.1% [September]); Industrial production, October (GS +0.1%); Manufacturing production, November (GS flat, consensus +0.1%, last flat [September]); Manufacturing production, October (GS -0.1%); Capacity utilization, November (GS 75.9%, consensus 75.9%, last 75.9% [September]) ;Capacity utilization, October (GS 75.9%): We estimate industrial production increased by 0.1% in October and 0.1% in November. Our November forecast reflects strong oil and mining production partially offset by weak natural gas and auto production. We estimate capacity utilization remained at 75.9%.
• 10:00 AM Conference Board consumer confidence, December (GS 91.0, consensus 91.2, last 88.7)

Wednesday, December 24 

• 08:30 AM Initial jobless claims, week ended December 20 (GS 215k, consensus 223k, last 224k)
• Continuing jobless claims, week ended December 13 (last 1,897k)

Thursday, December 25 

• Christmas Day holiday. There are no major economic data releases scheduled. NYSE will be closed. SIFMA recommends that bond markets also close. 

Friday, December 26 

• There are no major economic data releases scheduled. 

Source: DB, Goldman

Tyler Durden Mon, 12/22/2025 - 10:00

Futures Rise, Japanese Yields Surge, Gold And Silver Soar

As we previewed late last week, the Santa Rally is back all right, and US equity futures are trading near session highs with the Nasdaq 100 poised to wipe out December’s losses as revived appetite for technology stocks powered gains across equity markets. As of 8:15am ET, S&P futures are 0.4% higher after the benchmark climbed 0.9% on Friday, the most in close to a month; Nasdaq futures rise 0.6% set to build on Friday’s jump as NVDA jumped 2% on a Reuters report the company sees H200 shipments to China starting by mid-February; Oracle and Micron both climbed more than 2% in premarket trading while most members of the Magnificent Seven megacaps advanced.Tech and mining shares outperformed in Europe. In Asia, benchmarks most exposed to artificial-intelligence demand, including South Korea’s Kospi, also led gains. Global bond markets remained under pressure, led by a second day of losses in Japanese debt following an interest-rate hike by the Bank of Japan. The dollar fell. Gold ($4400) silver ($69) and copper all climbed to record highs.The US economic calendar includes the Chicago Fed national activity index (8:30am). No Fed members scheduled to speak for the session

In premarket trading, Nvidia and Tesla lead gains among the Mag 7 tech stocks as sentiment toward AI-exposed companies improves following Micron Technology’s results last week. Nvidia has told Chinese clients it aims to ship its second-most powerful AI chips to China by mid-February, Reuters reports, citing people familiar with the matter. (NVDA +1.7%, TSLA +1.2%, GOOGL +0.5%, AMZN +0.4%, META +0.4%, MSFT +0.3%, AAPL is little changed).

• Gold and silver miners advance after prices of both precious metals hit record highs. Newmont (NEM) climbs 2% and Coeur Mining (CDE) rises 4%.
• Clearwater Analytics Holdings Inc. (CWAN) is up 8% as a group of private equity firms led by Permira and Warburg Pincus has agreed to acquire the investment and accounting software maker in a deal valuing it at $8.4 billion including debt.
• Honeywell (HON) slips 1% after the industrial conglomerate adjusted its full-year and fourth quarter 2025 guidance to reflect the reclassification of its Advanced Materials business — now Solstice Advanced Materials Inc. — as it discontinued operations following its spinoff on October 30.
• Marvell Technology (MRVL) rises 2% after Citi opened a positive catalyst watch on the chipmaker ahead of next month’s CES conference.
• Rocket Lab (RKLB) gains 4% after saying late Friday that it won a contract to design and build 18 satellites, the company’s largest single contract to date.
• T1 Energy (TE) climbs 7% after it signed a three-year contract to supply Treaty Oak Clean Energy with a minimum of 900MW of solar modules built with domestic solar cells from T1’s planned G2_Austin solar cell fab.

A year-end rally in stocks is taking hold, with investors positive about further gains in 2026, although volumes are set to be thinner in this holiday-shortened trading week. Sentiment has been bullish for three weeks in a row, according to Deutsche Bank strategists. Meanwhile, in commodities, oil rose as Trump intensified a blockade on Venezuela. Gold and silver soared to all-time highs on the escalating geopolitical tensions and bets on Fed rate cuts.

“It has been very remarkable how precious metals’ prices have decorrelated from other assets in recent months,” said Roberto Scholtes, head of strategy at Singular Bank. “Earlier this year, gold prices were materially correlated to the dollar and to high-beta risk assets such as tech stocks and cryptos. But this has been waning gradually, and nowadays they’re running freely.”

The focus on price moves in commodities went beyond record-setting metals, with oil climbing amid heightened geopolitical tensions after the US stepped up a blockade on Venezuela.

Bullishness toward stocks has pushed positioning higher, while fund managers are maintaining record low levels of cash, according to the latest BofA Fund Manager Survey. They are betting on a further rally next year, despite concerns in some quarters over rich valuations, heavy artificial intelligence capex and potentially over-optimistic earnings expectations. Separately, Goldman strategists say the economic outlook is supportive for small-cap stocks, a factor that’s underpriced by the market. The Russell 2000 is likely to advance 10% in 2026, close to the 12% return expected in the S&P 500, they say.

Optimism for a year-end rally in equities are growing after dip buyers late last week supported a rebound in US stocks. While some doubts about the AI trade and elevated valuations persist, optimism over the economy and corporate earnings is helping lift sentiment.

“Markets are riding a risk-on liquidity wave into year-end as resilient US growth underpins earnings next year, while a lower Fed fund rate eases financial conditions,” said Desmond Tjiang, chief investment officer for equities and multi-asset investment at BEA Union Investment. “Fears of AI capex and returns also recede on improving compute economics.”

Unlike the US, enthusiasm for European equities is missing on Monday as the Stoxx 600 slips 0.2% with utilities as well as food and beverage shares among the biggest laggards. Meanwhile, miners outperform as traders monitor the geopolitical outlook in Venezuela. Here are some of the biggest movers on Monday:

• Saipem shares rise as much as 4.3%, the most since July, after the Italian energy services and drilling specialist wins an offshore EPCI Contract Worth $3.1 Billion by QatarEnergy LNG.
• Fresnillo shares climb as much as 3% to a record high, leading a rally in mining stocks as gold, silver and copper prices hit record highs.
• Gruvaktiebolaget Viscaria shares rise as much as 17%, the most in more than a year, after Handelsbanken initiated coverage of the Swedish mining company’s stock with a buy rating, calling its growth potential attractive.
• Rank Group shares decline as much as 9.1%, hitting the lowest level since mid-May, after the gambling firm said its Spanish businesses, Enracha and Yo, were targeted by payment fraud totaling about €7.1 million.
• ASP Isotopes shares plunge as much as 50% in Johannesburg after Bronstein, Gewirtz & Grossman said it is investigating potential claims on behalf of purchasers.
• Fenerbahce shares fall as much as 3.5% in Istanbul to the lowest level since May after state-run Anadolu Agency reported the sports club’s chairman was questioned as part of an investigation into illegal drug use.
• Pantheon Resources shares drop as much as 58%, the most since April 2018, after pausing testing of the Dubhe-1 well, citing cost profile of winter operations and focus on “disciplined” capital allocation.

In rates, Japanese yields remain center stage, with the 10-year segment hitting its highest level since 1999. The yield is 6bps higher today, amid speculation the Bank of Japan may need to raise interest rates more aggressively. This has spilled into other global benchmarks, lifting US, UK and German yields by 1-2bps. US yields cheaper by 1bp to 2bp across the curve with 2s10s, 5s30s spreads steeper by 1.2bp and 1bp on the day. US 10-year yields trade around 4.165%, cheaper by 1.5bp vs. 

In Asia, stocks extended gains, as tech firms tracked their US peers higher in a holiday-shortened week. The MSCI Asia Pacific Index climbed as much as 1.1%, with TSMC and Samsung Electronics supporting the gauge higher. Tech-heavy benchmarks in Taiwan and South Korea led gains in the region with a more than 1.5% increase each. Japan and Hong Kong shares also advanced. Here Are the Most Notable Asian Movers

• Kokusai Electric and Tokyo Electron shares climbed after Morgan Stanley MUFG analysts raised ratings and price targets for the stocks on signs of a recovery in demand for front-end semiconductor equipment. Meanwhile, Nidec shares rose after news the Japanese electronic component company’s founder Shigenobu Nagamori is stepping down from his position as chairman of the board.
• Shriram Finance shares surge to a record after analysts saw Mitsubishi UFJ Financial Group’s $4.4 billion investment improving prospects of a credit rating upgrade.
• Mixue Group shares surge as much as 13% in Hong Kong, the most since March 7, after the Chinese fresh tea maker opened its first store in the US.
• Moore Threads shares rise as much as 4.2% after the company unveiled a new generation of chips aimed at reducing dependence on Nvidia Corp.’s hardware.
• WiseTech shares drop as much as 4.7%, the most since Nov. 18, after Executive Chair Richard White’s investment vehicle RealWise entered into a collar derivative transaction.
• Seatrium shares gain after the offshore engineering company reached an agreement with Maersk Offshore Wind’s affiliate Phoenix II A/S to deliver a wind turbine installation vessel by Feb. 28.
• Kokusai Electric and Tokyo Electron shares climbed Monday after Morgan Stanley MUFG analysts raised ratings and price targets for the stocks on signs of a recovery in demand for front-end semiconductor equipment.
• Daikin shares rose as much as 2.7%, the most since Nov. 20, after SMBC Nikko Securities raised the Japanese air conditioner maker to outperform from neutral on expectations for demand recovery and capital efficiency improvement.
• Nidec shares climb as much as 7.3%, the most since Nov. 11, after news the Japanese electronic component company’s founder Shigenobu Nagamori is stepping down from his position as chairman of the board.

This week’s Treasury auctions kick-off at 1pm New York with $69 billion 2-year notes, followed by $70 billion 5-year notes and $44 billion 7-year notes Tuesday and Wednesday. Before today’s auction, the WI 2-year currently trades around 3.482% which is ~0.7bp richer than November’s sale

In FX, the upside in Japanese yields and officials’ jawboning has supported the yen versus the dollar. Bloomberg’s Dollar Index is down 0.2%, pressured also by the outperformance in AUD, NZD and GBP.

In commodities, as noted above, gold and silver sit at record highs, up 1.6% and 2.8% respectively. WTI crude oil futures are up 1.9% as the US pursues a third tanker in Venezuela. Bitcoin continues to rise, up 1.8%.

The US economic calendar includes September Chicago Fed national activity index (8:30am). No Fed members scheduled to speak for the session

Market Snapshot

• S&P 500 mini +0.4%
• Nasdaq 100 mini +0.6%
• Russell 2000 mini +0.4%
• Stoxx Europe 600 -0.2%
• DAX little changed
• CAC 40 -0.4%
• 10-year Treasury yield +2 basis points at 4.16%
• VIX +0.1 points at 15.05
• Bloomberg Dollar Index -0.2% at 1207.51
• euro +0.2% at $1.1737
• WTI crude +1.2% at $57.17/barrel

Top Overnight News

• U.S. Coast Guard Chasing Another Tanker Involved in Shipping Venezuela Oil: WSJ
• Russian General Is Killed After Car Bomb Explodes in Moscow: BBG
• Paramount Amends Bid for Warner Discovery With New Ellison Guarantee: WSJ
• Trump on Friday said he would call a meeting of insurance companies in the coming weeks to push them to cut prices and stay in the system.
• Trump on Friday announced deals with nine pharmaceutical companies to cut prices on most drugs sold through Medicaid and lower cash-pay prices, while committing to most-favoured-nation pricing for future drugs, according to Reuters. The companies also pledged more than USD 150bln in US manufacturing and R&D investment, agreed to remit some foreign revenues to offset US costs, and received relief from US tariffs in return.
• Charlie Kirk’s Empire Is Lining Up Behind a JD Vance Presidential Bid: WSJ
• Vanke Averts Default as Bondholders Approve Longer Grace Period: BBG
• Japan prepares to restart world's biggest nuclear plant, 15 years after Fukushima: RTRS
• CBS News Pulls ‘60 Minutes’ Segment; Correspondent Calls Decision Political: WSJ
• One of Elon Musk’s Old Enemies Joins the Race to Run GM: WSJ
• Syrians emptied Assad’s prisons. They’re filling up again, and abuse is rife: RTRS
• Toxic Fumes on Planes Blamed for Deaths of Pilots and Crew: WSJ
• The Warner Deal: Cinema owners fear that Netflix or Paramount acquiring Warner could reduce number of theatrical releases or speed time to streaming platforms: WSJ
• Trump names Louisiana governor as Greenland special envoy, prompting Danish alarm: RTRS

Central Banks

• ECB's Kazmir said that the ECB remains flexible and will be ready to step in if needed. He is concerned about the long term growth prospect of the Eurozone.
• Fed’s Hammack (2026 voter) said rates should be held steady into the spring after recent cuts, warning she was inflation-wary, noting November’s 2.7% CPI likely understated 12-month price growth due to data distortions, and suggesting the neutral interest rate was higher than commonly believed, the WSJ reported.
• Former BoJ member Sakurai said the first hike to 1.0% could come around June or July and that the BoJ likely sees the neutral rate sitting somewhere around 1.75%.
• Chinese Loan Prime Rate 5Y (Dec) 3.50% vs. Exp. 3.50% (Prev. 3.50%).
• Chinese Loan Prime Rate 1Y (Dec) 3.00% vs. Exp. 3.00% (Prev. 3.00%).

Trade/Tariffs

• China's Commerce Ministry is to impose levies of up to 42.2% on EU dairy products, effective 23rd December, following its anti-subsidy probe.
• New Zealand concludes free trade agreement with India; deal set to be signed in H1 2026. India and New Zealand are confident of doubling bilateral trade over the next five years.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks kicked off the week with gains across the board as the region coat-tailed on the strength seen stateside. Tech outperformance continued across the region. ASX 200 edged higher as miners tracked gains in gold prices, with the yellow metal buoyed by a weekend packed with geopolitics Nikkei 225 was the clear outperformer as it topped 50.5k as the index cheered the post-BoJ JPY weakness on Friday alongside the global tech rally, whilst simultaneously overlooking the continuing rise in JGB yields. KOSPI was underpinned by its tech sector and following a month-to-date rise in exports. Hang Seng and Shanghai Comp conformed to the risk tone but with upside shallower than the above peers, with the PBoC LPR left unchanged as expected, whilst reports on Friday suggested US lawmakers urged the Pentagon to add DeepSeek and Xiaomi to the list of firms allegedly aiding the Chinese military.

Top Asian News

• Japanese Chief Cabinet Secretary Kihara said will not comment on the forex market; recently seeing one-sided, rapid moves; important for currencies to move in a stable manner reflecting fundamentals; will take appropriate action against excessive moves. Closely watching the impact of higher interest rates while cooperating with the BoJ.
• Japanese Top Currency Diplomat Mimura said he is recently seeing one-sided, rapid moves; will take appropriate action against excessive moves; concerned about forex moves.
• China Vanke (2202 HK) bondholders approve the decision on a vote for 30-day extension of CNY 2bln bond, however rejecting one-year extension for 15th Dec CNY 2bln bond, via Reuters sources.
• Goldman Sachs expect Chinese stocks to continue advancing in 2026, citing easing geopolitical tensions and as investors household savings begin flowing to equities as interest rates fall. Analyst Kinger Lau writes that "we expect the bull run to continue, but at a slower pace". Though the firm highlights some main risks to the upside, including; global recession, AI exuberance, US-China tensions and disinflation. Finally, analysts suggest that the macro / equity-market policies remain in effect which should shift the expected fair value of Chinese stocks upward.

European equities (STOXX 600 -0.2%) are trading lower/flat this morning, with price action fairly rangebound in light newsflow. European sectors are trading with a mostly negative bias. Basic Resources (+1.1%) leads on firmer metal prices, followed by Tech (+0.4%) on positive spillover from the strong Nasdaq close, and Energy (+0.3%) on higher crude amid ongoing geopolitical tensions between Russia-Ukraine and US-Venezuela. On the downside, Utilities (-0.9%), Optimised Personal Care (-0.9%) and Food Beverage and Tobacco (-0.9%) lag.

Top European News

• German Ifo survey finds that 26% of firms expect business to deteriorate in 2026, 59% expect no change, 15% forecast an improvement.

Geopolitics: Venezuela

• US Coast Guard officials over the weekend tracked two oil tankers in international waters close to Venezuela, marking three tankers within the past week. An official suggested that the tanker is subject to sanctions, according to several media reports.
• The Venezuelan government rejected the seizure of a new vessel transporting oil, it said in a statement.

Geopolitics: Ukraine

• US Special Envoy Witkoff said the Ukrainian delegation held productive meetings over three days in Florida with US and European partners, including a separate US–Ukraine meeting, with discussions focused on timelines and sequencing of next steps.
• Ukrainian President Zelensky said broader consultations with European partners should follow recent talks in the US.
• Ukrainian President Zelensky said allies had started to slow supplies of air defence missiles and said Kyiv should stand by the US as mediator on talks with Russia, commenting on French President Macron’s proposal.
• Ukrainian President Zelensky said the situation in the Odesa region was harsh after Russian strikes and said Russia was trying to restrict Ukraine’s access to the sea.
• The Kremlin said changes made by Ukrainians and Europeans to peace proposals did not bring agreements closer or add anything positive, IFAX reported. It said Dmitriev was still in Miami meeting with Americans and would report on the results upon his return to Moscow. Kremlin aide said a trilateral Russia–US–Ukraine meeting was not being discussed.
• Ukrainian President Zelensky said elections could not be held in Russian-occupied parts of Ukraine, could only take place once security was guaranteed, and said Kyiv was working with the US on a stable peace while preparing voting infrastructure for Ukrainians abroad, Reuters reported.
• Ukraine’s deputy prime minister said Russia attacked the Pivdennyi port and was deliberately targeting civilian logistics in the Odesa region.
• Russia’s Defence Ministry said Russian troops had captured Vysoke in Ukraine’s Sumy region and Svitlie in the Donetsk region, according to IFAX and TASS.
• Russia's Kremlin said Envoy Dmitriev will report to President Putin on the US proposals for a possible Ukraine settlement. Adds the US intelligence perception of Putin's aims are mistaken following the Reuters report.
• Russian General Sarvarov was injured in a car explosion in Moscow, via Unn; subsequently, the Russian Investigative Committee said the general was killed in the explosion.
• "TASS: [Russian President] Putin's envoy is likely to hold the next meeting with the US delegation in Moscow", via Al Arabiya.
• Two vessels and two piers were damaged in Russia’s Krasnodar after a Ukrainian drone attack, regional authorities said; damage to piers led to a large fire in the area.
• US Special Envoy Witkoff said weekend meetings between US and Russian delegation were productive and constructive; Russia remains fully committed to achieving peace in Ukraine.

Geopolitics: Middle East

• Israeli PM Netanyahu reportedly plans to brief US President Trump on possible new Iran strikes, according to NBC News. Israeli officials believe Iran is expanding its ballistic missile program. They are preparing to make the case during an upcoming meeting with Trump that it poses a new threat. Israeli officials have announced a Dec. 29 meeting.
• Sources said the biggest risk is a war between Israel and Iran will break as a result of a miscalculation with each side thinking the other plans to attack and try to preempt it, according to Axios.
• Israeli officials warned the Trump administration over the weekend that an Iranian IRGC missile exercise could be preparations for a strike on Israel, according to Axios sources.

US Event Calendar

• 8:30 a.m. ET: Chicago Fed Nat Activity Index

DB's Jim Reid concludes the overnight wrap

For anyone still out there, we’re now entering a very quiet spell for markets before Christmas, with data releases and other headline announcements almost completely drying up. Indeed, there’s only two-and-a-half days left to go for many places, as the US and several European markets are closing early on Christmas Eve, and this week usually sees some of the lowest volumes of the year.

This morning, the main news has been further sharp losses for Japan’s government bonds, which follows the Bank of Japan’s Friday decision to hike rates by 25bps to 0.75%, the highest since 1995. The hike already meant that Japan’s 10yr yield was up +6.9bps last week to close above 2%, and this morning they’re up another +6.9bps to 2.08%, their highest since 1999. One factor behind that has been the weakness in the Japanese yen, which fell -1.40% against the US dollar on Friday, despite the hike. And this morning, the country’s chief currency official Atsushi Mimura said to reporters that “We’re seeing one-directional, sudden moves especially after last week’s monetary policy meeting, so I’m deeply concerned”. So in turn, that weakness for the yen is seen as raising the chance of another BoJ rate hike and has prompted the latest selloff for JGBs. We’ve seen that echoed across other countries too this morning, with 10yr Australian yields up +5.1bps this morning, whilst the 10yr Treasury yield is up +2.0bps to 4.17%.

For equities however, there’s been a much stronger picture across the board overnight, with gains for Japan’s Nikkei (+1.90%), along with the KOSPI (+1.82%), the CSI 300 (+0.79%), the Shanghai Comp (+0.64%) and the Hang Seng (+0.20%). Looking forward, US equity futures are also pointing higher, with those on the S&P 500 up +0.26%. Moreover, there’s been a fresh rally for precious metals this morning, with gold prices up +1.40% to $4400/oz, which would be an all-time closing high if sustained, and is the first time they’ve reached that level on an intraday basis as well. Similarly, silver prices (+3.25%) are up to a fresh record of $69.34/oz. So that now leaves their YTD gains at +68% for gold and +140% for silver, which would be the biggest for both since 1979, back when oil prices surged after the Iranian Revolution that year led to major supply disruption.

The latest rise in bond yields this morning follows several central bank decisions last week, where hawkish-leaning elements pushed yields higher around the world. So for example, the Bank of Japan did their 25bp rate hike as expected but also signalled more were still ahead and said real interest rates were “at significantly low levels”. Meanwhile in Europe, there was ongoing speculation about a potential ECB hike next year, particularly after they upgraded their forecasts for growth and core inflation. So that helped to push 10yr bund yields up +3.8bps last week to 2.89%, their highest level since the German fiscal stimulus announcements back in March.

However, the main exception to that pattern were US Treasuries, whose yields fell after the soft CPI print led investors to price in more rate cuts, with the 10yr yield down -3.7bps last week to 4.15%. That comes as speculation around the next Fed Chair has continued to swirl, and Trump said last week that it would be “someone who believes in lower interest rates”. We got some more headlines on the next Fed Chair last Friday as well, as CNBC reported that Fed Governor Waller had a “strong interview” with Trump, and that BlackRock’s Rick Rieder would be interviewed in the last week of the year. So as it stands the current odds on Polymarket are 56% for NEC Director Hassett, 22% for former Fed Governor Warsh, 12% for Governor Waller, and 6% for Rieder.

In terms of the week ahead, it’s a pretty quiet one on the events calendar. One thing to note will be a few US data releases, including the delayed Q3 GDP print today, but that’s very backward-looking and covers the period before the shutdown. Otherwise today, the more recent data will be the December consumer confidence reading from the Conference Board, which will be in the spotlight given the recent downtick in sentiment. In fact, the previous reading for November was the lowest since the Liberation Day turmoil in April. But apart from that, there really isn’t much scheduled.

With little on the calendar this week, this lack of events got us thinking about whether anything could disturb the pre-Christmas calm, as we have seen a few occasions when this week has brought heightened volatility. The best recent example is probably 2018, when you may remember a huge selloff saw the S&P 500 fall -7.7% in the four pre-Christmas sessions. A whole bunch of negative factors converged at once, including a hawkish Fed signalling more hikes to come, weak global data, US-China trade tensions, and the start of a US government shutdown on Dec 22. That selloff deepened further after the US Treasury Department said in a Dec 23 statement that Secretary Mnuchin had spoken with CEOs of the largest US banks, and that the President’s Working Group on financial markets would have a call. So that created huge concern that policymakers knew something that the rest of us didn’t, and the S&P hit its closing low on Christmas Eve.

Another good example, although not quite as fearful, happened in 2022. That was the year central banks hiked aggressively to combat inflation, with global bonds and equities entering a bear market that featured huge bouts of volatility as they kept sinking lower. And the Christmas run-up was no different, with the 10yr Treasury yield surging +26bps in the week before Christmas. That followed an adjustment to the Bank of Japan’s yield curve control policy on Dec 20, which was widely seen as the beginning of the end of Japan’s ultra-loose monetary policy. They permitted the 10yr JGB yield to rise to around 0.5%, up from 0.25% previously, but the effects cascaded globally given Japan’s role as one of the last anchors for low yields. So that led to some dramatic moves right before Christmas, and it was one of the biggest weekly jumps that year for the 10yr Treasury yield.

To be fair, this time last year saw a pre-Christmas Santa rally that took the S&P 500 up +2.9% in the final 3 days before Christmas. But either way, it shows that even if it’s a quiet week on the calendar, we can’t completely dismiss the prospect of a final year-end curveball, which would be in keeping with the constant surprises of 2025 so far. After all, this year has seen a huge regime shift in German fiscal policy in March, the Liberation Day tariffs in April, a direct military conflict between Israel and Iran in June, and the longest-ever US government shutdown over October-November. And that’s before we think about some other long-running themes, including periodic bond market flareups around fiscal policy, fears of a potential AI bubble, and ongoing concern around private credit.

Recapping last week’s moves now, global equities navigated several headwinds at the start of the week to recover into the weekend, with the S&P 500 ultimately closing up +0.10% for the week. Concerns over AI valuations had been an issue in the middle of the week, with Oracle struggling after the FT reported that Blue Owl Capital wouldn’t back a $10bn deal for Oracle’s data centre in Michigan. However, the soft US CPI report and a more positive earnings release from Micron helped things turn around into the weekend, and the Magnificent 7 ultimately posted a +1.48% gain for the week.

That US CPI report was critical because it kept open the prospect of further rate cuts from the Fed next year. Admittedly, there were questions about the data’s methodology given the government shutdown, but the print was still viewed as soft enough to make Fed rate cuts more likely. So the headline CPI rate was down to +2.7% year-on-year (vs. +3.1% expected), whilst core CPI hit its lowest since early 2021 at +2.6% (vs. +3.0% expected). Earlier in the week, we also had the delayed jobs report for November, which showed the unemployment rate ticking up to 4.6%, whilst it showed payrolls had fallen by -105k in October, before rebounding by +64k in November. So overall, that kept up the momentum behind further rate cuts, with 60bps of further cuts priced in by the December 2026 meeting at the close on Friday. In turn, US Treasuries rallied across the curve, with the 2yr yield (-3.9bps) down to 3.48%, whilst the 10yr yield (-3.7bps) fell to 4.15%. US credit spreads saw little movement however, with IG spreads widening +1bp last week, whilst HY spreads were unchanged.

In Europe, equities put in a stronger performance, with the STOXX 600 (+1.60%) closing at a new record. In part, they were supported by signs of progress on the Ukraine peace talks, and Brent crude (-1.06%) fell back to $60.47/bbl, whilst yields on Ukraine’s 10yr dollar bonds fell to their lowest since March. In the meantime, the ECB left their deposit rate at 2%, although some hawkish tones also saw yields on 10yr bunds (+3.8bps), OATs (+3.5bps) and BTPs (+3.7bps) move higher. Otherwise, the Bank of England delivered a 25bp cut, taking their policy rate down to 3.75%, albeit in a close 5-4 vote that saw the rest prefer to keep rates on hold. Meanwhile, Euro IG credit spreads were unchanged last week, whilst HY spreads were +1bp wider.

Tyler Durden Mon, 12/22/2025 - 08:30

Nvidia Prepares To Ship H200 AI Chips To China By Mid-February

Nvidia shares rose slightly in premarket trading in New York after Reuters reported that the US chipmaker has informed customers it plans to ship its second-most powerful AI chip, the H200, to China before the Lunar New Year in mid-February.

Sources familiar with the shipment say Nvidia plans to deliver about 5,000 to 10,000 chip modules, equivalent to 40,000 to 80,000 H200 AI chips, to China in the coming months.

Those same sources noted that the chipmaker plans to expand H200 production capacity in the new year, with orders for that capacity scheduled to open in the second quarter of 2026.

Designed by Nvidia, the H200 AI chips are manufactured by Taiwan Semiconductor Manufacturing Company using its advanced 4-nanometer process. This is the same foundry that manufactures most of Nvidia's Hopper-generation GPUs.

Major Chinese tech firms, including Alibaba Group and ByteDance, are interested in the H200s for training large AI models. This chip offers about six times the performance of the H20.

However, the sources noted:

Significant uncertainty remains, as Beijing has yet to approve any H200 purchases and the timeline could shift depending on government decisions, the sources said.

"The whole ‌plan is contingent on government approval," the third source said. "Nothing is certain until we get the official go-ahead."

. . .

Chinese officials held emergency meetings earlier this month to discuss the matter ‍and are weighing whether to allow shipments, Reuters reported this month. One proposal would require each H200 purchase to be bundled with a set ratio of domestic chips, according to the report.

This report follows the Trump administration's approval of Nvidia's sale of H200s in China, but only on the condition of a 25% surcharge. The opportunity from the US Gov't will also be available to other chipmakers, such as Intel and AMD.

However, China's move to expand domestic production of advanced AI chips may be at odds with Western chipmakers trying to expand market share in the world's second-largest economy.

Tyler Durden Mon, 12/22/2025 - 08:20

'Rather Brilliantly Evil': Life In The Fast Lane With Robinhood Markets

Authored by Eric Salzman via Racket News, (emphasis ours)

By just about any metric it has been a blowout year for the retail brokerage company Robinhood Markets. The company’s stock (HOOD) price is up about 220% in 2025, revenues and account growth have shot higher, and founder Vlad Tenev has become a multi-billionaire.

Robinhood was founded in 2013 but really burst onto the scene in 2020, changing the face of the retail brokerage industry. After a near-death experience in 2021 with the infamous GameStop episode, the company has become a phoenix, rising from the ashes, turning itself into a casino that can fit in a young man’s pocket. On the Robinhood app you can buy and sell stocks, options, crypto and bet on Monday Night Football all at the same time!

Robinhood is a pusher in plain sight and dopamine is the drug it peddles. It rounds up retail, non-professional traders and matches them up with the best and fastest traders in the world and gets paid handsomely to do it. Tenev continually claims he’s democratizing investing, but his customers are, in effect, profitable lab rats. Their order flow is sold to professional trading firms and studied. They’re more like marks than investors.

The Wall Street Journal recently reported:

The chief executive of Robinhood took the stage at the online brokerage’s annual summit in Las Vegas this fall decked out in a race-car driver’s jumpsuit and customized Nikes.

Vlad Tenev told the hundreds of cheering traders in the audience that they had chosen “one of the most intense lifestyles out there.” He compared trading to driving a race car. “A finely tuned machine can make all the difference,” he said, “and that’s the role we feel Robinhood plays for our active investors.”

Vlad is right about one thing: trading for a living is definitely intense. I’ve done it professionally until I realized I really wasn’t good at it (most people aren’t) and went back to sales and strategy! A veteran trader, who was actually very good at it, said to me once, “If it were easy, Girl Scouts would be doing it.”

As far as Vlad taking the stage in race-car driver get-up and talking about a finely tuned machine making the difference, the analogy only works if the driver knows how to handle the damn car.

If you put 99.99% of us into a Formula One car, we’re going to run that thing into the first wall we see. Maybe the odds are a little better trading stocks, or options on stocks and the host of other high-octane wagers that Robinhood promotes and offers, but over the long term, not much better.

The Journal’s story includes that of a 35-year-old man who says he gets up at 6:30 a.m. every day to start trading zero-day options.

It’s a hobby he said he never would have picked up if not for how easy it is on Robinhood. “The thrill gets me going. If $500 can get me $50,000 or $60,000, let me just try.”

Good Lord.

I have to admit that I’ve looked at the meteoric growth of Robinhood with fascination and a sick sense of admiration for what Vlad Tenev and Baiju Bhatt built.

I felt the same way when I watched “Narcos Mexico” and saw how Felix Gallardo built the first Mexican marijuana and cocaine cartel.

My admiration comes from the rather brilliantly evil way Tenev and Bhatt took their early experiences with high frequency trading (HFT), identified a new brokerage profit model that could offer a no-fee brokerage combined with a video game-like interface to serve up dopamine hits to a whole new generation of investors that the traditional brokerage houses either overlooked or didn’t know how to reach effectively.

A Ticket to Billions: Payment for Order Flow

Fee-less trading was Robinhood’s main draw when it started in 2013. You might ask yourself how Robinhood could have made money without the traditional fees a retail broker would charge per trade. To this day, most users of Robinhood don’t know the answer to this question.

From their experience with high frequency trading, the Robinhood boys learned that they didn’t have to send your order to the publicly visible New York Stock Exchange, but could sell customer orders to buy and sell stocks and options to the big and secretive HFT market makers, like Citadel, Dash, Wolverine, Susquahanna, Jane Street and Morgan Stanley, who will happily take the other side of your trade and quietly pay Robinhood for the privilege. This is called Payment for Order Flow (PFOF). You may have read or heard about this from Michael Lewis’ book, “Flashboys.” Before all the super geniuses of the planet went into Artificial Intelligence, they went to Wall Street or Chicago to build these super-fast trading algorithms that can transact in about 100 milliseconds, or faster than you can blink your eyes.

Without getting too into the weeds, when a Robinhood customer places an order to buy a stock, Robinhood can go to say, the New York Stock Exchange to fill the customer’s order or can route the order to one of the HFT market makers as long as it’s making the best effort to get the best execution (essentially, price) for the customer. The HFT market makers post where they will buy or sell a particular stock or option. The market maker profits from the difference.

Profit isn’t guaranteed but market makers typically make a penny or two per share on stock trades — and they are potentially making tens of millions of pennies per day. For options, the HFTs can make a much larger spread, anywhere from 10 cents to a few dollars. This is why HFT market makers like options! HFT market makers pay retail brokerages like Robinhood and Charles Schwab a certain amount per share of their retail orders to direct the orders to them, and as long as the retail customer is getting the National Best Bid and Offer (NBBO) at the moment of trade, all good, right? Maybe.

The SEC found that from 2015 to 2018, Robinhood was not disclosing to its retail clients how the company was making money off orders by selling their order flow. from the 2020 SEC press release.

“…Robinhood made misleading statements and omissions in customer communications, including in FAQ pages on its website, about its largest revenue source when describing how it made money – namely, payments from trading firms in exchange for Robinhood sending its customer orders to those firms for execution, also known as “payment for order flow.” As the SEC’s order finds, one of Robinhood’s selling points to customers was that trading was “commission free,” but due in large part to its unusually high payment for order flow rates, Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices. Despite this, according to the SEC’s order, Robinhood falsely claimed in a website FAQ between October 2018 and June 2019 that its execution quality matched or beat that of its competitors. The order finds that Robinhood provided inferior trade prices that in aggregate deprived customers of $34.1 million even after taking into account the savings from not paying a commission.

After that ethical speed bump, Robinhood really got down to business. The demographic Robinhood was going for suddenly had lots of time on its hands when Covid hit. The Robinhood app provided a fix as people went to work day-trading, especially trading options. When it comes to getting your dopamine on, trading options — especially those expiring in a week or two — can do the trick.

Leverage

Here is a simple example. Back in 2021 when stocks were on a huge bull run, especially the big technology stocks like Google, Robinhood traders used options to get leverage. Leverage means using a smaller amount of your own money to control a much larger position or exposure in the market — essentially amplifying both potential gains and losses.

In this case, one standard stock option contract gives you control over 100 shares of the underlying stock (without having to buy the shares outright). Therefore, the trader could buy 10 call option contracts for $1,200, betting that Google stock will go higher by more than about 5% in the next two weeks. That $1,200 controls exposure to 1,000 shares (10 contracts × 100 shares each), which is the leverage in action.

At the end of two weeks, if Google went up say, 7%, the options could roughly double in value (or more, depending on the details), letting the trader turn that $1,200 into a big profit. However, if Google only goes up 4% (or less than the break-even point), the options the trader paid $1,200 for expire and become worthless, and the entire $1,200 is lost.

From June 1, 2020 to December 31, 2021, (Source Bloomberg) Google went up 102% and the option bets paid off handsomely. Since this was the first time many Robinhood traders invested in options, they felt it was a license to steal! They had never really lost. However, in 2022 Google shares dropped 39% and option bets got creamed as newbie traders learned the downside of leverage. In 2021 Bloomberg News reported on Robinhood’s option activity.

New disclosures show the app’s monthly volume of options executed tripled last year, making the firm the second-most active among peers behind Charles Schwab Corp., a 50-year-old stalwart that just bought TD Ameritrade. Offering options is so lucrative that they accounted for two-thirds of Robinhood’s reported revenue from order flow, a significant source of income. A single contract can generate more money than handling 100 shares.

Using its app, clients can unlock Robinhood’s most advanced level of options strategies in minutes by tapping their details into a smartphone. They can then instantly start placing wagers on some of the most complex U.S. markets available to the investing public. Approval for similar access can take days at competitors such as Schwab and Morgan Stanley’s E*Trade.

Between 2020 and the 3rd Quarter of 2025, Robinhood has been paid billions by HFT firms for their option order flow. For example, in the 3rd quarter of 2025, HFT market makers paid Robinhood approximately $260 million.

Robinhood gets paid more than other retail brokers for its option order flow. Why?

As of September 2025 Robinhood was paid by HFT firms $0.53 per options contract. Their closest option flow competitor Schwab got $0.39 per contract. Why is Robinhood’s flow so much more valuable than Schwab’s? One theory that I subscribe to is that Robinhood’s main client base — young men — is aggressive risk takers and relatively predictable. As we learned in the “Meme Stock” craze of 2020-2021, this client base moves in herds. HFT algorithms study the trading patterns of this demographic and predict what the Robinhood customer is going to do before they do it and I would bet that Vlad and Baiju knew about this when they started the firm more than a decade ago.

The HFT firms are not guaranteed wins every time, and they are taking risk which means they are not necessarily doing anything wrong. Robinhood on the other hand, pushing option trading aggressively because they know their option order flow is the most valuable by a wide margin is, at best, sleazy.

Recently, the Wall Street Journal reported:

(Vlad) Tenev has come to realize that plugged-in, aggressive traders are actually key to his company’s success.

Robinhood offers a host of ordinary financial products, including retirement accounts and credit cards. It is the riskier products tailored to day traders that make the most money for the company. In the most recent quarter, customer trading generated more than half of Robinhood’s revenue, and 78% of that transaction-based revenue came from crypto and options trading.

Tenev said he directed his team to cater more to that group. “These are our most engaged customers that generate the lion’s share of our revenue,” he said in an interview. “We put our best people on active traders.”

This sort of reminds me of “The Wire” druglord Avon Barksdale

Crypto

Robinhood has continued to expand rapidly in crypto. The Block reported last week:

Robinhood wants to attract more advanced, high-volume crypto traders in both the U.S. and EU and is unveiling new features to do so, including lower fees and added leverage for altcoin futures, the company said Monday.

Hoping to woo sophisticated traders away from rival exchanges, the stock and crypto trading platform has in the U.S. expanded the number of available fee tiers from three to seven, “offering rates as low as 0.03% for high-volume traders,” Robinhood said in a statement. In the EU, users who want to trade perpetual futures will now have access to new trading pairs with eligible customers able to trade up to 7X leverage.

7x leverage on altcoins, what could possibly go wrong?

Zero Day Options

Also recently, Robinhood has piled into a fabulous product mentioned earlier, zero-day options. If there was ever a product where probably 99% of Robinhood customers should not be playing in, it is zero-day options or 0DTE (Zero Days to Expiration), especially with Michael Lewis’ “Flash Boys.”

The way the product works is, say the S&P 500 index starts the day at 6,800. The customer can buy an option that pays off if the S&P 500 goes up 1% by the end of the day or down 1% (greater than 6,868 or less than 6,732). This is called “buying volatility.” If the S&P moves more than 1% in either direction by the end of the day, the customer wins; if not customer loses. There are many iterations of this type of trade, the type of trade Flash Boys wrote the book on, and they are the ones Robinhood’s customers are trading against. Who do you think will win that one over time?

Robinhood is getting paid handsomely to serve up its customers to the sharks. I imagine there are lots of guys like the one the Wall Street Journal spoke to who put down a daily bet at the opening bell and stare at their phone or iPad until the 4 pm close instead of actually living a life.

Prediction Markets

Finally, there’s the prediction markets. Prediction markets have been around for a while. The biggest prediction exchange in the U.S. is Kalshi, which started up in 2021. Kalshi is pretty simple.

Take an event like the presidential election. The player thinks Trump will beat Harris and currently 53% of all betters think Trump will win. The player bets $0.53 on Trump, and if Trump wins the player gets $1.00 and has made $0.47. Conversely, the players that bet on Harris put up $0.47. Now you can pretty much bet on the outcome of anything with Kalshi, including most sporting events.

The genius of Kalshi is that it’s able to call its product an “event contract” regulated by the Commodity Futures Trading Commission (CFTC). Kalshi is now considered to be a regulated exchange. Not having its product classified as a wager, but instead a regulated financial product, means that it’s legal to sell to 18-year-olds in all 50 states. Online sports gambling sites like DraftKings at least require customers to be 21 years old.

Brilliant.

Naturally, this August, just in time for football season, Robinhood partnered with Kalshi to put prediction markets for the NFL and college football on Robinhood’s app. Then in late November, Robinhood partnered with Susquahanna (one of the HFT Flash Boys that buys Robinhood’s order flow) and bought an existing CFTC-regulated exchange, acquiring a designated contract market (DCM) and derivatives clearing organization (DCO), MIAXdx. Susquahanna will be the market maker. The whole shebang will be launched in 2026 and the best news is, those highly entertaining but idiotic Same Game Parlay NFL bets will be available.

Starting Tuesday, users are able to trade preset combinations of the outcome, totals and spreads of individual NFL games, and starting in early 2026, users will have the ability to create custom combos of up to 10 outcomes across NFL games. Those will have “a structural look or feel as a parlay,” JB Mackenzie, vice president and general manager of futures and international at Robinhood, told CNBC.

Even more, the company is allowing users to wager on the performances of individual NFL players in real time. For example, they can place prop bets on a certain player scoring a touchdown at any point during a game as well as the passing, receiving and rushing yards for a player.

Awesome, bro.

We have been in a bull market for stocks for three years now. At some point we are going to have a draw down, probably a big one. Unfortunately, these three years have drawn in hundreds of thousands of our kids to the Robinhood pocket-casino. I’d like to think something can be done before the bad event to at least stop Robinhood’s growth, but there’s really nothing that can or will be done. I’d like to see the prediction market on that.

You can also listen to Eric Salzman discuss Robinhood on his podcast, Monkey Business.

Tyler Durden Mon, 12/22/2025 - 08:05

Denmark Furious After Trump Names Special Envoy To Greenland

President Donald Trump announced late Sunday on Truth Social that he is appointing Louisiana Gov. Jeff Landry to serve as the U.S. Special Envoy to Greenland. The move prompted Denmark's Foreign Minister, Lars Lokke Rasmussen, to summon the U.S. ambassador, saying the appointment suggests continued American interest in the resource-rich island.

"I am pleased to announce that I am appointing the GREAT Governor of Louisiana, Jeff Landry, as the United States Special Envoy to Greenland. Jeff understands how essential Greenland is to our national security and will strongly advance our country's interests for the safety, security, and survival of our allies, and indeed, the world. Congratulations, Jeff!" Trump wrote in the Truth Social post.

Following Landry's appointment, Rasmussen told Reuters in an emailed statement, "The appointment confirms the continued American interest in Greenland. However, we insist that everyone—including the U.S.—must show respect for the territorial integrity of the Kingdom of Denmark."

In a separate statement, Rasmussen told CBS News he was "deeply angered" by the appointment and warned Washington to respect Denmark's sovereignty.

This prompted Denmark to summon the U.S. ambassador. Danish officials also summoned the U.S. ambassador in August after a report that at least three people with connections to Trump carried out covert influence operations in Greenland.

I am happy to see the Trump Administration isn't giving up on acquiring Greenland. It should be one of the top goals for the Administration to require Greenland. I would tell NATO that we are done if a deal isn’t reached. There are a lot of reasons why we need to have Greenland. pic.twitter.com/se5dRz50hj

— The Calvin Coolidge Project (@TheCalvinCooli1) December 22, 2025

Trump's proposal to buy Greenland didn't come out of nowhere. The US has had a military presence in Greenland since World War II and became its military defender in 1951. Harry Truman offered to buy it for $100M in gold. And our bases there are still deterrents against Russia. pic.twitter.com/zLetEHvCzv

— Glenn Beck (@glennbeck) January 23, 2025

Trump has repeatedly stated that the U.S. should have jurisdiction over Greenland, mainly for defense and mineral-rich deposits. The strategically located Arctic island fits into the broader theme of Western Hemisphere Defense.  

In March, Vice President JD Vance toured the U.S. Pituffik Space Base, met U.S. Space Force personnel on the island, and accused Denmark of underinvesting there.

According to a January opinion poll, a majority of Greenland's 57,000 people wanted to become independent from Denmark but did not want to join the U.S.

The continued American interest in Greenland underscores the strategic importance of the resource-rich island in the Arctic for hemispheric defense purposes.

Tyler Durden Mon, 12/22/2025 - 07:45

Pump Baby, Pump! EIA Thinks OPEC Can Produce Far More Than Anyone Expected

Authored by Julianne Geiger via OilPrice.com,

The U.S. Energy Information Administration quietly rewrote a key assumption about the global oil market this week: OPEC can produce more oil than previously thought.

In its December Short-Term Energy Outlook, the EIA updated how it defines and estimates OPEC crude oil production capacity. The result was a material upward revision.

The agency now estimates OPEC’s effective production capacity was higher by about 220,000 barrels per day in 2024, 370,000 bpd in 2025, and 310,000 bpd in 2026 compared with its earlier assessments.

The change didn’t come from new drilling or surprise barrels. It came from a rethink of what “capacity” actually means.

The EIA refined two concepts it uses to assess supply risk: maximum sustainable capacity and effective production capacity. Maximum sustainable capacity is the theoretical upper limit a producer could reach within a year if everything runs smoothly. Effective capacity is more practical — the amount of oil that could realistically be brought online within 90 days and sustained without damaging fields or infrastructure. That second number is what the EIA uses to judge how much oil is actually available to respond to market shocks.

By tightening those definitions and reassessing disruptions, the agency concluded that OPEC’s buffer is larger than previously assumed. Because actual OPEC production estimates were left mostly unchanged, the revisions flowed almost directly into higher estimates of spare capacity.

This spare capacity serves as the oil market’s shock absorber.

When it’s thin (or thought to be thin), prices react violently to wars, sanctions, hurricanes, or refinery outages. When it’s fat, geopolitical risk carries less pricing power. In its latest update, the EIA is effectively telling the market that supply is less fragile than many traders believed.

This complicates OPEC+ messaging.

The group has leaned heavily on the narrative of tight capacity to justify production discipline. The EIA’s recalculation doesn’t blow that argument up, but it does weaken it.

As the EIA tells it, the market may not be as close to the supply edge as it thought. And that’s not a bullish message.

Tyler Durden Mon, 12/22/2025 - 07:20

Beijing Condemns Trump's Gunboat Diplomacy After China-Bound Tanker Seizure

Beijing has condemned the U.S. interception of sanctioned crude tankers off the Venezuelan coast after a China-bound oil tanker was seized on Saturday. Beijing said Venezuela has the right to conduct trade with other countries.

Reuters cited China's foreign ministry spokesperson Lin Jian at a regular press briefing, who said the US seizure of another country's tanker was a serious violation of international law. Jian added that China opposes all "unilateral and illegal" sanctions.

On Saturday, the U.S. Coast Guard seized the Centuries, which was loaded with 1.8 million barrels of sanctioned Venezuelan crude and was flying under the false name "Crag." The tanker was bound for China.

China is the largest buyer of Venezuelan crude, but Venezuelan oil accounts for only about 4% of China's total crude imports.

Reuters reports that data this year show Venezuelan crude exports to China range from 400,000 to 580,000 barrels per day, depending on the period and shipping patterns.

A White House spokesperson told Reuters that the Centuries was a "falsely flagged vessel" and carried sanctioned oil that was part of Venezuela's shadow fleet.

So far, the US has seized two sanctioned tankers. The first, VLCC Skipper, earlier this month. Skipper is set to be unloaded in the coming days at the Galveston Offshore Lightering Area (GOLA). After Saturday's seizure, news hit late afternoon Sunday of US forces in pursuit of yet another tanker.

All of this fits within the Trump administration's gunboat diplomacy foreign policy strategy, which is designed to accelerate regime instability in Caracas while materially weakening Cuba; the core objective is to disrupt financial flows, sever funding channels, and allow second- and third-order effects to follow.

Tyler Durden Mon, 12/22/2025 - 06:55

Freedom Lovers Aren't 'Fascists'

Authored by J.B. Shurk via American Thinker,

There’s nothing ‘right-wing’ about defending the Bill of Rights.

Being called “right-wing” or “fascist” is detestable. The label implies a preference for dictatorship, authoritarianism, and government supremacy over personal freedom. The exact opposite is true. I would describe myself as a supporter of autarchism in the sense that we should rule ourselves and not be ruled by others.

As someone who believes strongly in individual liberty, self-reliance, and self-government, I distrust all repositories of power — whether such power resides in government, corporations, or social institutions. As Lord Acton advised: “Power tends to corrupt and absolute power corrupts absolutely.” In my estimation, nothing in this physical world can be trusted with power for very long. Regrettably, all forms of power eventually become abusive.

Nineteenth-century diplomat and political writer John O’Sullivan (the man who coined the phrase “manifest destiny” in 1845) helped to popularize a sentiment shared by other luminaries of his time such as Henry David Thoreau, Ralph Waldo Emerson, and Mark Twain: “The best government is that which governs least.”

Government is Leviathan. It knows only how to grow its size and the number of its tentacles until it is capable of wrapping its predacious powers around everyone and everything.

Emissaries of Big Government globalism speak of government as a benevolent “friend” and “parent” whose job is to “protect” and “take care of” the people. But government is none of those things. Government is coercion. It is force, including the threat of lethal force. It robs people of their labor in the form of taxes. It presumes to know what is best for everyone. It insists on telling people how to use their property and how to live their lives. It intrudes into family households and inserts itself between parents and children. Whereas a friend will fight beside you and a parent will sacrifice everything for your well-being, governments start wars recklessly, sacrifice citizens callously, and ignore the pleas of those suffering.

The German Nazis, Italian fascists, Soviet communists, and Chinese Maoists were all Big Government socialists who justified murdering their citizens for the good of the government. Government is not a “friend” or a “parent.” It is a homicidal maniac that society tries to keep somewhat restrained lest it indulge its basest instinct: to kill everyone in its path.

Government does not “protect” people. It uses people to its advantage. Government does not “take care of” people. It bullies them, steals from them, and keeps them divided against each other. Anybody praising the “virtues” of Big Government is nothing more than a macabre salesman for institutional slavery, indemnified violence, and legalized theft.

Those of us who identify as liberty lovers and defenders of freedom harbor profound distrust of government. It is therefore galling when Big Government leftists, socialists, globalists, Marxists, and even outright communists (especially those exercising power as so-called “journalists” working for multinational corporate news organizations) call us “right-wing.”

What is “right-wing” about wanting government bureaucrats to just leave us the hell alone? I try to put myself in the small wingtips of someone such as CNN’s Brian Stelter. When I say, “I want government out of my life,” how does he hear, “Right-wing fascism is overtaking America”? Is Brian obtuse? Maliciously dishonest? Both?

I find it perplexing to hear Stelter, Jake Tapper, and their fellow ideological clones on cable news describe those of us who most ardently defend the Bill of Rights as somehow being threats to American freedom. Look around the universe of political writers today, and you will find that almost all of the staunchest advocates for free speech, freedom of religion, the right to bear arms, and protections from warrantless government searches and mass surveillance are Americans whom Stelter, Tapper, and their cohorts would describe as “right-wing.”

On the other hand, the very leftists and globalists whom CNN anchors adore are daily calling for mass censorship in the name of fighting “disinformation” and “hate speech.” Stelter has made an entire career out of playing a “truth-telling hall monitor” who believes he is empowered to tell social media companies what should be stricken from public debate. He has explicitly called for a “harm reduction model” of permissible speech by illogically claiming that “reducing a liar’s reach is not the same as censoring freedom of speech. Freedom of speech is different than freedom of reach.” He defends censorship in the name of “freedom” because he expects to be the corporate news umpire who gets to decide what is true or false.

Could there possibly be anything more authoritarian than CNN personalities claiming the authority to declare official truths?

Nonetheless, CNN ignores its own assaults on free speech and instead decries “right-wingers” who believe parents should have a say over whether elementary school libraries include books on “transgenderism,” abortion, sexual fetishes, and pornography. CNN’s talking heads even call those of us who oppose “drag queen story hour” for kindergartners “Christian nationalists” — as if trying to be a moral person, a faithful Christian, a protective parent, and a patriotic American were the hallmarks of “fascism.”

Effective communication between human beings is difficult even when people speak the same language, share the same culture, and enjoy similar beliefs. When politicians and “journalists” defame as “fascists” those of us who fight for expansive personal freedom and against government tyranny, they rob society of peaceful public discourse and light the fuse of future violence.

Those in the “journalism” business who use words to sell fear and provoke bloodshed know exactly what they’re doing. When you demonize your political enemies long enough, some eventually get murdered. Charlie Kirk wasn’t the first, and he will not be the last. After all, there is an entire army of fascist Antifa terrorists who hunt “right-wingers” for sport. Or is that too much truth for Stelter’s “harm reduction model” to permit me to say out loud?

Tyler Durden Mon, 12/22/2025 - 06:30

Cocoa Prices Face Worst Annual Collapse In Six Decades As Goldman Sees "Tailwinds" For Hershey

After nearly tripling last year and soaring to a record $13,000 a ton, cocoa futures are on track for their worst-ever annual decline, based on data going back more than six decades.

Cocoa futures in New York are set for a 50% decline if losses persist through the end of the year.

Prices are currently trading around $5,845 as of Friday's close, a stark difference from the $12,000 to $13,000 range in late 2024 and early 2025.

The cocoa surge sparked a price shock and crushed margins for major food companies that relied heavily on chocolate production. Those companies include Nestlé, Hershey, and many others.

In return, supermarket prices for chocolate rose, but now Wall Street analysts don't expect the latest declines to translate into cheaper candy until the second half of 2026.

"The prices that the chocolate industry is currently working with are very high and painful," said Jonathan Parkman, head of agricultural sales at commodities brokerage Marex Group in London, as quoted by Bloomberg. "It's going to take us quite a while to work through that."

Swiss-Belgian cocoa processor Barry Callebaut has noted that supply risks in West Africa, the world's top-growing region, persist due to underinvestment, climate stress, and disease. The processor said chocolate was "far too cheap for far too long."

Lambertz, one of Germany's oldest confectioners, has enough cocoa supplies to last through the midpoint of 2026, after securing them when prices were high, said owner Hermann Bühlbecker. "As far as I can remember, there has never been such a price explosion," he said.

To cope with the price shock, many brands have responded with shrinkflation and reformulation, such as lighter bars or reduced cocoa content. Companies like Mondelez have made significant adjustments to formulation.

Last week, Bonnie Herzog, managing director and senior consumer analyst at Goldman Sachs, highlighted easing pressures in the cocoa market that could produce "tailwinds" for candy and junk food companies:

Pockets of easing commodity pressure to aid earnings growth for some. While input cost inflation has meaningfully moderated for Staples at large over the past couple of years, certain pockets (e.g., cocoa, proteins) were still inflationary and weighed on earnings. As prices continue to come down meaningfully from peak levels, we would expect benefits from an easing cost environment to aid earnings growth. However, spot rates suggest aluminum will likely see the highest inflation in 2026. Moreover, oil/natural gas prices remain volatile owing to ongoing geopolitical tensions, which, along with pressure from tariffs, could further limit the extent of gross margin expansion ahead. Ultimately, we believe the input cost environment will be much more accommodative for our Staples universe next year, which along with an increased focus on productivity (as supply chains and service levels have normalized), should support continued margin expansion and reinvestments ahead. We highlight HSY as best placed to benefit from this dynamic, where we expect gross margin expansion to drive EPS growth in 2026. We also highlight potential tailwinds for MDLZ, HRL, and SFD.

Herzog noted where inflation and deflation trends linger in the commodity market this year:

Hershey versus cocoa futures (inverted)...

Conversations so far are that any price relief for chocolate at the supermarket won't show up until the 2H26. We're watching Hershey next year...

Herzog also told clients to buy nicotine, energy drink, candy, and beauty stocks heading into 2026 as a stronger consumer backdrop emerges.

Tyler Durden Mon, 12/22/2025 - 05:45

Trump Announces $1.3 Billion In Sales Of 'Gold Card' Visas Since Dec. 10

President Donald Trump announced Dec. 19 that his administration has sold more than $1.3 billion worth of “Trump Gold Cards,” a new immigration program offering expedited residency to high-skilled foreign talent, with proceeds going toward paying down the national debt.

In remarks to the press, Trump said that sales had exceeded $1.3 billion and described the Gold Card as a “green card on steroids.”

He said the option would allow companies to retain graduates from elite institutions, such as Harvard and Wharton, who might otherwise have to go back to their native countries upon graduation.

“They graduate from the top schools,” Trump said. “These people want to hire them. Now you’re able to buy a card and you’re able to keep people in the country.”

Trump highlighted how his immigration policy focuses on securing top talent and curbing illegal immigration.

“Under the Biden administration, 25 million people came in, and they came from prisons and mental institutions, and they were drug dealers and all sorts of people came in that shouldn’t be here. They came from the jails,” he said.

President Donald Trump holds up a "Trump Gold Card" as he makes an announcement from the Roosevelt Room of the White House on Dec. 19, 2025. Brendan Smialowski /AFP via Getty Images

As Kimberly Hayek details below for The Epoch Times, the Gold Card allows businesses to purchase the visas for foreign workers, enabling them to stay indefinitely with work rights. The visa costs $1 million in the form of a donation to the U.S. federal government.

The program, which has been challenged legally, began accepting applications on Dec. 10.

Trump launched the Gold Card in September with an executive order and instituted a $100,000 fee for H-1B visa applicants. The H1B fee exempts current holders and renewals, according to the White House.

Trump first proposed the Gold Card visas in February, floating a $5 million price tag for residency and a path to citizenship.

“Wealthy people will be coming into our country,” he said when he proposed the program. The administration launched a dedicated website in June.

When launching the immigration Gold Card program, Trump said it would “reduce our taxes greatly and hopefully bring some great people into our country.”

Payments go straight to the U.S. Treasury. Howard Lutnick, secretary of commerce, was instrumental in launching the program, he said.

Twenty states, however, filed a lawsuit against the $100,000 H-1B fee, arguing it goes beyond executive authority.

Meanwhile, proponents say the program fixes longstanding issues with the H1-B lottery system.

Tyler Durden Mon, 12/22/2025 - 04:15

Can The Dark Ages Return?

Authored by Victor Davis Hanson via VictoreHanson.com,

Western civilization arose in the 8th century B.C. Greece. Some 1,500 city-states emerged from a murky, illiterate 400-year-old Dark Age. That chaos followed the utter collapse of the palatial culture of Mycenaean Greece.

But what reemerged were constitutional government, rationalism, liberty, freedom of expression, self-critique, and free markets—what we know now as the foundation of a unique Western civilization.

The Roman Republic inherited and enhanced the Greek model.

For a millennium, the Republic and subsequent Empire spread Western culture, eventually to be inseparable from Christianity.

From the Atlantic to the Persian Gulf and from the Rhine and Danube to the Sahara, there were a million square miles of safety, prosperity, progress, and science—until the collapse of the Western Roman Empire in the 5th century AD.

What followed was a second European Dark Age, roughly from 500 to 1000 AD.

Populations declined. Cities eroded. Roman roads, aqueducts, and laws crumbled.

In place of the old Roman provinces arose tribal chieftains and fiefdoms.

Whereas once Roman law had protected even rural people in remote areas, during the Dark Ages, walls and stone were the only means of keeping safe.

Finally, at the end of the 11th century, the old values and know-how of the complex world of Graeco-Roman civilization gradually reemerged.

The slow rebirth was later energized by the humanists and scientists of the Renaissance, Reformation, and eventually the 200-year European Enlightenment of the 17th and 18th centuries.

Contemporary Americans do not believe that our current civilization could self-destruct a third time in the West, followed by an impoverished and brutal Dark Age.

But what caused these prior returns to tribalism and loss of science, technology, and the rule of law?

Historians cite several causes of societal collapse—and today they are hauntingly familiar.

Like people, societies age. Complacency sets in.

The hard work and sacrifice that built the West also creates wealth and leisure. Such affluence is taken for granted by later generations. What created success is eventually ignored—or even mocked.

Expenditures and consumption outpace income, production, and investment.

Child-rearing, traditional values, strong defense, love of country, religiosity, meritocracy, and empirical education fade away.

The middle class of autonomous citizens disappear. Society bifurcates between a few lords and many peasants.

Tribalism—the pre-civilizational bonds based on race, religion, or shared appearance—remerge.

National government fragments into regional and ethnic enclaves.

Borders disappear. Mass migrations are unchecked. The age-old bane of anti-Semitism reappears.

The currency inflates, losing its value and confidence. General crassness in behavior, speech, dress, and ethics replaces prior norms.

Transportation, communications, and infrastructure all decline.

The end is near when the necessary medicine is seen as worse than the disease.

Such was life around 450 AD in Western Europe.

The contemporary West might raise similar red flags.

Fertility has dived well below 2.0 in almost every Western country.

Public debt is nearing unsustainable levels. The dollar and euro have lost much of their purchasing power.

It is more common in universities to damn than honor the gifts of the Western intellectual past.

Yet, the reading and analytical skills of average Westerners, and Americans in particular, steadily decline.

Can the general population even operate or comprehend the ever-more sophisticated machines and infrastructure that an elite group of engineers and scientists creates?

The citizen loses confidence in an often corrupt elite, who neither will protect their nations’ borders nor spend sufficient money on collective defense.

The cures are scorned.

Do we dare address spiraling deficits, unsustainable debt, and corrupt bureaucracies and entitlements?

Even mention of reform is smeared as “greedy,” “racist,” “cruel,” or even “fascist” and “Nazi.”

In our times, relativism replaces absolute values in the eerie replay of the latter Roman Empire.

Critical legal theory claims crimes are not really crimes.

Critical race theory postulates that all of society is guilty of insidious bias, demanding reparations in cash and preferences in admission and hiring.

Salad-bowl tribalism replaces assimilation, acculturation, and integration of the old melting pot.

Despite a far wealthier, far more leisured, and far more scientific contemporary America, was it safer to walk in New York or take the subway in 1960 than now?

Are high school students better at math now or 70 years ago?

Are movies and television more entertaining and ennobling in 1940 or now?

Are nuclear, two-parent families the norm currently or in 1955?

We are blessed to live longer and healthier lives than ever—even as the larger society around us seems to teeter.

Yet, the West historically is uniquely self-introspective and self-critical.

Reform and Renaissance historically are more common than descents back into the Dark Ages.

But the medicine for decline requires unity, honesty, courage, and action—virtues now in short supply on social media, amid popular culture, and among the political class.

Tyler Durden Sun, 12/21/2025 - 23:20

Burnt-Out US Air Traffic Controllers Rerouting Their Careers To Australia

In a year in which they endured chronic understaffing, 60-hour weeks, uneven shifts and even having to work without a paycheck for a stretch, many US air traffic controllers are re-evaluating their careers, with a growing number chasing happiness on the other side of the world -- in Australia. 

According to a Wall Street Journal report on the phenomenon, these controllers aren't chasing more money. Indeed, some of the controllers who've taken the leap were happy to take a lower salary in exchange for less on-the-job stress and a better work-life balance. One of them is Austin Brewis, a 29-year-old who gave up a $145,000 salary at an air traffic facility in Illinois for a $137,000 one in Sydney.

Three-meter-high, corrugated-iron kangaroos adjacent to the main runway at Canberra Airport (Canberra Times)

Brewis told the Journal that 60-hour workweeks had worn him down. More than 41% of US controllers work 10 hours a day for six days straight, according to the National Air Traffic Controllers Association. It's not just the high number of hours -- Brewis worked them in staggered schedules that have start and finish times changing from day to day. Chasing three-day breaks to enjoy meaningful relief from the heavy hour-load, many controllers take a "2-2-1" schedule. As the Journal explained in an earlier article: 

Controllers work two swing shifts, two day shifts, and one midnight shift. The second day shifts ends at 2 p.m. and the subsequent midnight shift begins at 10 p.m., just eight hours later. Such a schedule disrupts circadian rhythms, creating fatigue on the midnight shift.... 2-2-1 has long been called "the rattler," since it can come back and bite the controller, degrading his performance. 

“That grinds you down after years of doing it,” Brewis said. The contrast Down Under is stark -- with the average Australian controller's work-week spanning just 36 hours. Heightening the attraction for younger controllers is a guarantee of having some weekends off each year. Brewis said he'd have had to put at least 10 years under his belt before he'd routinely have weekends off in America, where that pleasure is driven by seniority. 

A woman in a control tower in Brisbane, Australia (Courier Mail) 

“It’s absolutely disgusting how much better their lifestyles are than ours," air traffic controller Chris Dickinson told the Journal. After 13 years controlling US airspace, he's now working in Sydney. He said concerns he had about anxiety or depression have evaporated, and he's shed 20 extra pounds too. 

In an ominous indication that Australia could become a chronic driver of controller attrition in America, when Brewis stepped into an Australian classroom for his entry training earlier this year, he found that 8 of his 10 classmates were Americans. Government-owned Airservices Australia says it isn't setting out to poach Americans from the FAA. However, of 100 controllers it expects to bring on board this year, 36 are Americans. “Qualified controllers are welcome to apply from any country,” a spokesman said. 

While those kind of numbers aren't striking in the context of a US controller force that exceeds 13,750, the chronically-undermanned FAA doesn't need any more head-count headwinds. By the National Air Traffic Controllers Association's math, the FAA is operating with a 3,800-controller shortage. 

That's not just a burden for air traffic controllers and FAA bureaucrats, it's a worrisome state of affairs for the flying public, which has seen too many scary headlines about disasters, near-disasters and mishaps in recent months: 

• Reagan Tower Reportedly Understaffed When Army Helicopter Collided With Passenger Jet
• Another Near-Disaster At DC Airport: Delta Jet Narrowly Misses USAF T-38
• Mapping Every Understaffed Air Traffic Control Tower In The US

Tyler Durden Sun, 12/21/2025 - 22:45

2 More Heritage Foundation Board Members Resign

Authored by Emel Akan via The Epoch Times (emphasis ours),

WASHINGTON—Two more members of conservative think tank The Heritage Foundation’s Board of Trustees, Shane McCullar and Abby Spencer Moffat, resigned Dec. 16, citing concerns over the organization’s direction and approach to combating anti-Semitism.

Exterior view of the Heritage Foundation building in Washington, D.C., on Jan. 18, 2025. Terri Wu/The Epoch Times

In a statement, Moffat said that leaving the board was a difficult but necessary decision.

“Heritage’s handling of recent challenges reveals a drift from the principles that once defined its leadership,” she said.

“When an institution hesitates to confront harmful ideas and allows lapses in judgment to stand, it forfeits the moral authority on which its influence depends.”

Moffat is recognized as one of the most powerful women in philanthropy and has been a major donor to the think tank through the Diana Davis Spencer Foundation.

In 2023, the foundation announced a $25 million commitment, one of the largest gifts in the think tank’s 50-year history.

McCullar raised similar concerns in his statement.

“No institution that hesitates to condemn anti-Semitism and hatred—or that gives a platform to those who spread them—can credibly claim to uphold the vision that once made the Heritage Foundation the world’s most respected conservative think-tank,” McCullar said.

“I leave with respect for the Heritage Foundation’s past, but I cannot support the course it has chosen for its future.”

Another board member, Robert P. George, a Princeton University professor, resigned last month, citing the same reason.

The controversy erupted after Heritage President Kevin Roberts defended Tucker Carlson’s interview with controversial live streamer Nick Fuentes, known for his anti-Israel and anti-Semitic views.

In his Oct. 30 video commenting on Carlson’s interview, Roberts said that “Christians can critique the state of Israel without being anti-Semitic.”

Roberts also said that the think-tank would not bow to the “venomous coalition” that is attacking and trying to “cancel” Carlson over the Fuentes interview.

Roberts later offered an apology, expressing his regret for the video he posted.

“I made a mistake, and I let you down, and I let down this institution. And I am sorry for that. Period. Full Stop,” Roberts said in a video from the foundation’s staff meeting, which The Washington Beacon first published.

“I didn’t know much about this Fuentes guy—still don’t, which underscores the mistake,” Roberts said.

Roberts told staff that he was willing to resign but felt a “moral obligation” to address the situation.

Tyler Durden Sun, 12/21/2025 - 22:10

Rand Paul Calls Partial Release Of Epstein Files A 'Big Mistake' For Trump

During an interview on ABC’s This Week with ABC’s Jonathan Karl on Sunday, Sen. Rand Paul of Kentucky delivered a blunt warning about the administration’s handling of the Epstein records, echoing concerns raised by Rep. Thomas Massie (R-Ky.), who has been relentless on the issue.

Massie forced the release vote and has accused Attorney General Pam Bondi of violating the law by slow-walking and limiting disclosure. 

Paul did not dispute the core of that argument.

Instead, he went further, laying out exactly why half-measures on Epstein are political poison.

“I’ve supported transparency on the Epstein files from the beginning,” Paul said. “I’ve voted repeatedly to release them. I think it’s a good idea.”

Paul explained why that approach is doomed to fail.

“I think that trust in government is at a low ebb, and that people need to trust that justice is the same whether you’re rich or poor,” he said.

“And people tend to believe that some rich people got off scot-free in this — in the Epstein case, the Epstein files.”

 Despite the Democrats’ attempts to weaponize the release of the files against Trump, the fact remains that the Biden administration sat on the files for four years—a decision that former Vice President Kamala Harris defends—despite endless rhetoric about transparency. Trump returned to office promising real transparency, and even Trump’s allies believe the administration has failed to live up to its promise fully.

Paul made clear that the administration’s fundamental mistake came when officials hyped the release and then appeared to back away once the spotlight intensified.

“I think it’s a big mistake,” Paul said.

“Look, the administration has struggled for months and months with something they initially ginned up and then sort of tried to tamp down.”

 Paul warned that partial disclosure guarantees prolonged political fallout.

“So, any evidence or any kind of indication that there’s not a full reveal on this, this will just plague them for months and months more,” he said.

He’s right. Democrats have been insinuating for months that the Epstein files would somehow incriminate Trump, despite zero evidence. 

Paul offered simple advice that should not require a Senate seat to understand.

“So, my suggestion would be — give up all the information, release it,” he said.

“What’s going to happen to people if they don’t? That will play out over time. But my suggestion to them is be transparent and release everything the law requires of you.”

When Trump signed the Epstein Files Transparency Act, and the documents failed to deliver the left’s long-promised bombshell, Democrats pivoted to conspiracy theories and bureaucratic excuses. For example, Democrats pounced when a photo from the Epstein files was briefly removed from the online cache of Epstein-related material. This led to conspiracy theories that the Department of Justice was trying to protect Trump. 

In an appearance on NBC’s Meet the Press, Deputy Attorney General Todd Blanche discussed the photo and the reason for the redactions in the files.

Blanche explained the removal had “nothing to do with President Trump” and was instead prompted by concerns over victim privacy after officials realized the images contained identifiable women. He stressed that DOJ policy allows victims, their lawyers, or advocacy groups to request that any document or photo identifying them be taken down and reviewed, a process he said explained the temporary disappearance of the materials. 

"Well, you can see in that photo, there’s photographs of women," Blanche said. "And so we learned after releasing that photograph that there were concerns about those, about those women, and the fact that we had put that photo up. So we pulled that photo down."

Blanche also noted that numerous photos of Trump with Jeffrey Epstein have long been public, and that Trump himself has acknowledged socializing with Epstein in the 1990s and early 2000s before cutting ties with him years before Epstein’s 2006 arrest. Given that history, Blanche dismissed as “laughable” the notion that the department would selectively hide a single image to protect the president when “dozens” of similar photos are already in circulation. 

.@DAGToddBlanche: "The absurdity of us pulling down a photo — a single photo — because President Trump was in it is laughable, and the fact that everybody is trying to act like that's the case is a reflection of their true motivation." pic.twitter.com/9u7ZjgL4m7

— Rapid Response 47 (@RapidResponse47) December 21, 2025

Democrats have failed to produce a promised “smoking gun” linking Trump to Epstein’s crimes despite years of access to the files under the Biden administration, and are now seizing on procedural moves in the document release to sustain conspiracy theories. Nevertheless, if Republicans want to prove they mean what they say, the path forward is obvious. Release everything required by law. Let the facts land where they may. The longer Washington drags its feet, the louder the suspicion grows, and the harder it becomes to argue that this time is different.

Tyler Durden Sun, 12/21/2025 - 21:35

DOJ Seeking Appeals On Dismissals Of Criminal Cases Against James Comey, Letitia James

Authored by Troy Myers via The Epoch Times (emphasis ours),

The U.S. Department of Justice (DOJ) is appealing the dismissal of a pair of criminal cases against New York Attorney General Letitia James and former FBI Director James Comey, according to new court documents filed on Friday.

(Left) New York Attorney General Letitia James leaves the Walter E. Hoffman United States Courthouse following an arraignment hearing in Norfolk, Va., on Oct. 24, 2025. (Right) James Comey, former FBI director, speaks at the Barnes & Noble Upper West Side in New York City on May 19, 2025. Win McNamee, Michael M. Santiago/Getty Images

James was indicted in October by a grand jury with charges of bank fraud and making false statements to a financial institution. Comey was charged in September with lying to and obstructing Congress during his testimony in 2020 about the FBI’s investigation into false claims of ties between President Donald Trump’s 2016 campaign and Russia.

Both had pleaded not guilty, and their cases were thrown out in late November.

The newest appeals by the DOJ mark the latest move in what’s been a series of unsuccessful legal actions taken against the New York attorney general specifically.

James’s original case was dismissed in late November after U.S. District Judge Cameron Currie ruled that former Trump lawyer Lindsey Halligan’s appointment by the president as interim U.S. attorney for the Eastern District of Virginia was unlawful.

The judge tossed Comey’s case for the same reason that Halligan’s appointment violated laws restricting the DOJ from naming top prosecutors without a Senate confirmation. Halligan had presented Comey’s case to a federal grand jury by herself five days before the statute of limitations would expire on the former FBI director’s testimony he gave to Congress.

In Currie’s Nov. 24 decision, she wrote both James and Comey’s cases were a “unique, if not unprecedented, situation where an unconstitutionally appointed prosecutor” used powers that she “did not lawfully possess.”

The DOJ vowed to continue pursuing charges.

Since the case was dismissed, DOJ prosecutors attempted twice this month to secure a new indictment against James, but a grand jury refused to bring charges both times. The New York official has repeatedly claimed the prosecution against her is “baseless.”

In the latest legal filings, the DOJ is appealing James and Comey’s case dismissals, along with several other actions, including the judge’s decision that found Halligan’s appointment and her signing of the indictments unlawful.

James’s indictment alleged that she lied about her plans for a Virginia home, for which she obtained loan terms that would have saved her approximately $19,000 over the life of the loan. Her lawyer said the indictments against James were a “mockery of our justice system” and accused the president of “political vendetta.”

The Justice Department did not immediately respond to a request for comment on the appeals.

The attorneys for both Comey and James also did not respond to a request for comment on the latest development in their cases.

Tyler Durden Sun, 12/21/2025 - 21:00

Somali 'Medicaid Mogul' Accused Of Looting Maine Taxpayers, Family Allegedly Put Bounty On Reporter

If you thought the alleged Medicaid fraud in Minnesota by Somalis, which federal prosecutors say could reach $9 billion, was insane, wait until you read the latest report from The Maine Wire: the head of a local nonprofit is accused of lashing out at a local journalist over an investigation, while members of his family allegedly put a bounty on the head of a journalist in Somalia for sharing the reporting.

Related note: this picture has never appeared in one of the major newspapers in Maine. I’m not sure if any other outlet has published it. pic.twitter.com/dVQ2j1cAgc

— Steve Robinson (@SteveRob) December 21, 2025

Earlier this month, Abdullahi Ali, the Executive Director of Health Services contractor Gateway Community Services, was accused of ripping off taxpayers.

Public forensic investigation into Gateway Community Services has revealed this... 

NewsNation spoke with a whistleblower who spilled the beans: false records were filed for services that were never provided...

A former Gateway employee, Christopher Bernardini, said the nonprofit was reimbursed with tax dollars from Maine's Medicaid program and later with federal tax dollars from the Paycheck Protection Program.

While heading up the nonprofit in Maine, Ali was also running for President of Jubbaland in Africa. He boasted to a Kenyan media outlet about how he helped raise funds for the Jubaland Somali army to buy guns and bullets.

Here’s another video of Medicaid mogul Abdullahi Ali, a top ally of Gov. Janet Mills and Shenna Bellows, talking about how he plans to use the militia he bankrolled in southern Somalia.

Gateway Community Services said it was racist to describe him as a “wannabe warlord.” pic.twitter.com/dkhbGgzROl

— Steve Robinson (@SteveRob) December 20, 2025

Main Wire's Steve Robinson pointed out that Ali "threatened to murder a journalist in Somalia who shared our reporting."

Robinson continued:

Gateway Community Services CEO Abdullahi Ali yesterday attacked me personally, and now his fellow clan members — his son and cousin — are threatening to murder a journalist in Somalia who shared our reporting. Why does Gov. Janet Mills continue to fund this organization with MaineCare dollars and no-bid contracts? And why are Democrats cravenly smearing the character of anyone who exposes fraud or calls out corruption?

Abdullahi Ali's son and cousin are openly placing bounties on a Somali journalist's head and calling for his killing. All because they've helped shine light on Ali's migrant agency over-billing MaineCare (~$800k per DHHS) and the fraud allegations made against his company. Ali's former employee has made credible and detailed allegations of systematic fraud. This employee has shown great courage by revealing how Ali allegedly directed his company to invent fake MaineCare claims and defraud the taxpayers of Maine.

Ali has never denied these allegations. Instead he has attacked me. Now his allies in Jubaland are calling for violence against journalists for exposing the truth, while his allies in Maine turn a blind eye or smear the reporters and politicians exposing fraud and corruption.

Attorney General Aaron Frey refuses to investigate credible allegations of fraud against Gateway. Instead, the thugs in the Mills Administration had the whistleblower audited. Imagine that! Exposing corruption, at great personal risk, only to have the Mills Team pull a mafia tactic and sic Maine Revenue Services on you.

Democrats are not only defending this behavior from the migrant NGO complex, many of them are part of it. Rep. Deqa Dhalac worked at Gateway as Assistant Executive Director while the alleged fraud was happening. So did Rep. Yusuf Yusuf. Shenna Bellows fundraised this summer with Safiya Khalid, former special assistant to Abdullahi Ali. Ekhlas Ahmed, a former Gateway employee, runs the "Office of New Americans" for Janet Mills.

Gov. Janet Mills has the authority to stop payments to Gateway, but instead she has issued them no-bid contracts. Hundreds of thousands of dollars that could have gone to Maine schools or to low-income Mainers are instead funneled into Gateway Community Services and other migrant NGOs.

Why?

Because Gateway's offices in Lewiston and Portland are basically arms of the Maine Democratic Party. Those offices host vote harvesting operations that recruit migrants into welfare programs and supply Democrat votes — all paid for with tax dollars.

For those who care to pay attention, all the receipts, the contracts, the documents, and the evidence is contained within the Substack post below and the linked posts.

"Is this the type of diversity we wanted here in Maine. Are you f*cking liberals happy?" one perturbed resident said on TikTok.

BREAKING:

A Somali politician in Maine has placed a BOUNTY on the head of a journalist for reporting fraud in Maine’s Mainecare (medical).

WTF is happening in America?!

Time to KICK these LOWLIFE’S OUT. pic.twitter.com/JyAlR8LO1N

— Mila Joy (@Milajoy) December 7, 2025

In a recent interview with The National News Desk, Maine State Sen. Matt Harrington said, "It's disgusting to me that they would do this."

"You can't rob a bank for millions of dollars. You shouldn't be able to rob taxpayers of millions of dollars and get away with it. There absolutely needs to be a criminal investigation into this immediately," Harrington said.

From Minnesota to Maine ... What Democratic-run state will be next where investigations uncover appalling allegations of public resources being looted by migrants?

The parallels between Minnesota and Maine are so eerie.

In both states, there can be zero trust that DHHS and the Gov aren’t an extension of criminal orgs siphoning money from welfare.

Only federal intervention can end this culture of fear and retribution. https://t.co/Odm22ycavC

— Steve Robinson (@SteveRob) December 20, 2025

Maryland? California?

Tyler Durden Sun, 12/21/2025 - 19:15

AI, CEOs, Yields, And Peace

Authored by Peter Tchir via Academy Securities,

AI largely drove the show last week on the risk front. We started poorly, as Blue Owl pulling out of a future Oracle deal triggered some fears. But we finished the week strong as Micron had a solid beat, alleviating many concerns (a nice, soft CPI print helped matters too).

This flip-flopping back and forth on the AI story fits well with last week’s themes - AI Debt Diet vs AI Spend Diet.

Bitcoin seemed to be a decent leading indicator for stocks, but the past few days watching Bitcoin’s intraday moves was about as painful as watching Elaine dance on Seinfeld.

Equity markets are hovering near important levels. I know we’ve been talking a lot more than usual about technical levels, but they often seem to play a more important role during slow, less liquid periods than normal. The Nasdaq 100 bounced, just above the 100-day moving average (like it did in November when the Fed turned dovish). It closed just above the 50-DMA on Friday, which if it holds, should let the Santa rally loose. If it fails, we could be testing the 100-DMA for the 3rd time, and that tends to not work well.

With a holiday shortened week, let’s have some fun with AI.

What If CEOs Were Being Replaced by AI?

With markets being powered by AI, it is one of the main topics of conversation. Literally, every conversation.

In general, I’m on board with the importance of AI. I use it. It is improving rapidly. Having said that, using it “hampers” learning (not searching, reading, and digesting info on my own) and creates “work” around looking for hallucinations. I’d rather do some of the original, interesting work, including going down the wrong path, than searching for ticker symbols that don’t exist, etc. I do worry about the spend versus the results, at today’s costs and usefulness.

What I’ve been wondering lately is how much demand there would be for AI if CEOs thought they were going to be replaced by AI?

First, let’s make it abundantly clear, the CEOs can be guilty of “herd mentality.” Remember when every company had to have a China strategy? When any announcement of investment in China by U.S. companies triggered stock price gains! See Free Money. The rationale was there:

• The potential to sell into a market of 1 billion people, whose incomes and net worths were growing.

• Even cheaper supply chains.

Yeah, yeah, there were people who questioned whether a 51% stake for China made sense. Questioned whether China would ever truly open their markets and whether Chinese consumers would ever spend much on “American” goods? Heck, some even questioned the ability to protect IP.

• At the time, naysayers were drowned out and CEOs were rewarded for their skills in driving business to China. It didn’t always work out quite as planned.

I’m not arguing that the investment in AI is anything like the “need” to have a China plan, but I’m not sure that it is completely irrelevant.

But anyways, why not replace CEOs with AI?

At the moment the trend is to try to reduce jobs and hiring at lower levels in the organization.

Virtually everyone in “our industry” is talking about the ability to have fewer analysts, or do more with existing analysts (code for hiring fewer people). While I’m more familiar with what is going on in our industry, I think it is safe to say that most of the AI spend is centered around reducing labor costs at the lower end of the corporate ladder.

But why?

• At today’s cost, is it really cheaper to spend on AI than to have a few more junior people?

  • Sure, if you can spend $100k and replace 3 junior people, it’s a huge win. But are those the numbers we are currently seeing? If it is $1 million to save 3 jobs, maybe it isn’t the correct trade off?

• Why not empower junior employees? The cynical side of me (which is by far the bigger side) sometimes thinks the management consultant industry exists because CEOs prefer to pay a lot of money to be told by recent grads at the consulting firms what their own recent grads could tell them as part of their daily duties.

  • I will admit that perspective on the consulting industry is a bit over the top, but all too often it seems that it is difficult for people doing a job every single day, to get their own voice heard on what would make their job more effective. Maybe it is easier for AI to cancel the 10am Monday meeting, than to listen to some junior person argue that it is pointless? Maybe management is scared to empower the people who might know best what would make their jobs easier? Certainly, before embarking on AI spend, it would make some sense to see what can be done internally? I highly expect the conclusions wouldn’t be that dissimilar, but you’d have people who will grow with the organization, and the organization will be better for it in the long run.

  • The U.S. military, and my colleagues at Academy who have served (and in some cases are still serving in the reserves) relies heavily on NCOs. The Non-Commissioned Officer class (typically sergeants) is one of the unique features of the U.S. military relative to other militaries. Not that other militaries don’t have that rank, they just don’t empower them. General after General, Admiral after Admiral, all tell me that empowering the NCOs is one of the big advantages the U.S. military has. They carry on the culture. They mold those who serve with them (including sometimes, junior officers at the start of their career). They can take action in the field, of their own volition, in pursuit of goals and targets. Those actions often are the difference between winning and losing, which in the military, really is a matter of life or death.

  • Maybe I’m rambling, but I suspect we could all listen to juniors more, even as part of any AI implementation, and be pleasantly surprised how many good ideas for efficiency and growth are there, just waiting to be tapped?

• The CEO’s job is extremely difficult.

  • No other job requires so much input. In my role at Academy, I have relatively few inputs to take into account while delivering what I deliver. As you move up the management chain, you have to deal with more and more inputs. Almost a mind boggling amount of information for a CEO of a large company. And the consequences of their decisions matter! If you hate this T-Report, you may not open the next one. That is probably the biggest downside from my decision today. Decisions to open or close business lines have far bigger impacts, ones that cannot be changed quickly.

  • So why isn’t AI groomed to be CEO?

    • The job is more difficult and requires more information to be processed, so isn’t AI better suited for that? Aren’t the “real” benefits of AI more relevant to the CEO than to the average employee? If you “fix” junior jobs, you are talking about dollars and cents. If you fix the CEO jobs you are talking about millions, and maybe billions?

    • I did use AI to find that in 2024 the average CEO to worker pay ratio for S&P 500 companies was 285:1. The same AI, also told me that CEOs on average made $21.45 million while employees earn on average about $51,394 – which is 400 times.

    • Yes, there is only 1 CEO and leadership is also a crucial role the CEO plays. Not just the decision making part, but also getting the team focused and working together. AI cannot replace leadership, and it really can’t replace leadership at junior levels, where that leadership is also critical.

Just like China strategies evolved, I expect that we could see AI strategies evolve, hopefully in a way that we maximize the Human Intelligence (HI?) while trying to be cost effective in our AI deployment.

I do think this section, as offbeat as it might seem, is something people are thinking about and may slow the AI spend, as costs continue to rise.

It will also drive the AI (and data centers) to new solutions and products to feed the evolution of the industry and the use cases.

Back to Yields

If the “scary” chart of the past couple of weeks has been Oracle CDS, it was Japanese bond yields by the end of this week. For the record, Oracle CDS finished a couple bps tighter on the week – making the end of my interview last Friday seem better than it did early in the week when it was still widening.

The Japanese 10-year bond yield broke 2% for this week. It spent most of the past decade below 0.5%.

So far this rise in Japanese bond yields has been accompanied by a weakening yen. Not exactly what the “textbook” would predict, but markets often follow narratives of their own (in theory as the yield differential decreases, the currency should appreciate, or so I read).

The yen carry trade is either some huge overriding trade that drives global markets, or it is a niche trade, where many overstate the importance of it. I’m in the latter camp, but since it is gaining a lot of attention lately, it is worth revisiting.

In theory many funds borrow in yen to fund positions in other assets. The interest rate on borrowing in yen was so low that you could “outperform” your borrowing costs (even taking FX risk). The corollary or flipside of this, is that many Japanese bond investors would buy U.S. Treasuries and attempt some currency hedges to outperform direct investments in Japanese government bonds.

That trade is less appealing on the interest rate differential. The difference between Japanese and U.S. central bank rates was 5.4% as recently as February 2024. It is down to 3.1%. Still a large differential, but it could impact the so-called “carry” trade.

A return to a strengthening of the yen would put far more pressure on the trade as many don’t hedge the FX risk. Again, this is a bit of a murky trade where some argue it is a huge driver of risk premium across the globe, while I suspect its importance is overstated. But not so overstated that we can completely ignore it.

This may go a long way to explaining why U.S. 10-year yields are still stuck between 4.1% and 4.2%.

The EU Had “One Job”

Periodically, I search the “you had one job” meme on social media. It never fails to deliver a smile.

Today, I’m not smiling.

Our assessment of what the EU can do to support Ukraine, maybe even as part of their commitment to NATO, was to seize Russia’s frozen assets and use them to purchase military equipment.

The EU does not have the military equipment or personnel to contribute, so aside from fully enforcing sanctions (which they have also been loathe to do), they could fund more equipment purchases for Ukraine.

Seizing Russia’s frozen reserves seemed to be the “easiest” way for Europe to do this:

• It would not only fund the war effort, but it would also hurt Putin.

• It would avoid Europe dithering for weeks or months, on issuing debt to fund some sort of purchases. Not exactly the sort of business arrangement the President likes (and I cannot blame him – we’ve argued that many of Trump’s comments seem to have laid down the gauntlet around Europe and Russia’s reserves). In any case, this time, despite the sound of it, I’m not being cynical. Sometimes what sounds like cynicism is just reality.

Without this seizure, we are seeing European bond yields rise. The “mitigating” factor is that it is probably safe to bet that Europe won’t really act. That there won’t be a deluge of European debt offerings to fund weapons purchases for Ukraine because weapons purchases won’t happen at scale.

What a “Peaceful” Ukraine/Russia Will Look Like

The consensus of the GIG is that we aren’t headed towards peace any time soon, but that Putin has the capability to outlast Ukraine, and Ukraine will ultimately come to the table.

Without the seizure of Russia’s reserves, I think Ukraine has to come to the table faster than they would otherwise.

They may not like what the U.S. is proposing, but it is “reasonably” concrete. If you were Ukraine, you could try and keep some of the U.S. proposals at bay, while waiting for Europe to come through. Whatever machinations Europe goes through, if I’m Ukraine, I’m more skeptical about any sort of game changing help from Europe. When headlines read Belgium and Putin win, you have to be nervous (the Weakest Link was almost more popular in the U.K. than in the U.S., maybe because it is the politics of the EU – the UK was part of the EU when that show was at peak popularity). Unanimous decisions within the EU are hard to reach, so appeasing every country makes it difficult to do much. And that is ignoring the hard truth that many European nations have their own economic concerns to deal with.

So, time to think a little bit more about what “peace” might look like:

• Stronger security guarantees by the U.S. for Ukraine.

  • These will be given because Ukraine will give the U.S. (and its corporations) extremely favorable deals for years. The admin will not provide security guarantees so much to protect Ukraine, but to protect the business interests that will be generated.

• The business deals with Russia will be even better for U.S. corporations.

  • Whatever Ukraine may have to give up, as they realize they cannot get enough support from Europe to continue, will be big for the U.S. Russia will give up even more since Europe clearly had no interest in giving them anything and they are being pushed to the brink by the U.S. It will be interesting to see what China and maybe even India have to say about any favorable treatment given to the U.S. and U.S. businesses.

• Look for Poland and even Romania to thrive.

  • Whatever the prognosis is for lasting peace, many companies will want to stage their operations outside of Russia, and even outside of Ukraine. When deciding where to launch your expansion into Russia and/or Ukraine, both Poland and increasingly, Romania make sense. Poland has proven itself to be resilient and extremely competent during the war. Romania, in my understanding, and I’m learning more, has also played a key role and has some advantages in terms of its borders.

Much of what the admin is looking for in the region fits our ProSec™ narrative, and I think we are one step further towards seeing the admin achieve those goals.

Bottom Line

Despite signs that inflation is abating, bond yields will be a bit stubborn, because of what is happening across the globe, rather than due to our domestic policy/data. I want to buy the long end, and own flatteners, but it is still a touch early.

Credit was a little weaker than stocks this week. Fear of the calendar seems to be keeping spreads from tightening even when other risk assets do well. That will likely persist, but I think the start of the new issue season will be a sign to load up on credit. A lot of “room” has been made to absorb the supply, and if we are correct on the AI Debt Diet thesis, some fears, currently priced into the market, will dissipate.

Something looks seriously “off” in the crypto market (I cannot unsee Elaine dancing). Even with the support this admin and the regulators have for the business, it seems prudent to remain cautious. It continues to be erratic and stuck at levels that seem to make little sense given the ongoing drumbeat of positive news.

If stocks can open decently on Monday, look for strength into year-end, and then some more choppiness. If stocks cannot hold onto the gains from Friday, we will all have a far more anxious holiday season than we were hoping for, as support and “blindly” buying the dip don’t seem to be there.

The AI Debt Diet and AI Spend Diet will be key factors for the markets early next year.

Any peace with Russia and Ukraine is likely to lower commodity prices (as access is granted), but look for U.S. companies to dominate any rebuilding and look for the admin to focus on refining and processing even more than extraction.

And no, CEOs should not be replaced by AI, but we should all be figuring out the right balance and what the real cost/benefits are. I think that could drive down spend a little bit, and actually drive up productivity.

Hopefully, markets cooperate and let us enjoy the holiday season as we ramp up for what should be a busy 2026!

Tyler Durden Sun, 12/21/2025 - 18:40

California Faces Fuel Disaster As Refineries And Gas Stations Shut Down

The Democrat crusade to divert blame for the stagflation crisis triggered during the Biden Administration led them down a path of economic lies.  The central theme of their narrative was that corporations were "price gouging" consumers and inflation was actually a product of "corporate greed."  In reality, helicopter money and dollar devaluation during the pandemic triggered a massive consumer demand rush as well as shortages in a variety of goods and raw materials.

The profit margins in many of these industries were paper thin as their manufacturing and labor costs skyrocketed, yet Democrats tried to scapegoat them anyway.  The word "accountability" is not in the leftist vocabulary.

We are only now starting to witness the aftermath of the legislation and policies put in place by blue states as a means to control prices.  California under Governor Gavin Newsom may have staged its own economic demise (the final nail in the coffin) after laws were passed requiring even greater state interference into oil refineries and gas stations.

Gavin Newsom 's major refinery law, ABX2-1 (signed Oct 2024), gives the state power to mandate minimum fuel storage levels and control refinery maintenance to prevent price spikes, empowering the California Energy Commission (CEC) to stabilize supply. This builds on earlier efforts (like SB X1-2) creating an oil market watchdog (DPMO) to increase oversight, aiming to stop refiners from manipulating supply for profit, while also adding data reporting requirements for companies.

In response, companies are shutting down refinery operations in the state.

Lawmakers in California at both the state and federal levels are warning that refinery closures could push prices higher while leaving the state more dependent on foreign oil.  At the center of the warning is the planned shutdown of two major refineries: Valero’s Benicia facility and Phillips 66’s Los Angeles plant. Together, the closures would eliminate nearly 20% of California’s in-state refining capacity.

Experts suggest prices could go as high as $10-$12 per gallon as a result of the supply squeeze, spreading outside of CA to Arizona and Nevada. Republican lawmakers say that the loss of in-state production threatens not only consumer prices at the pump but also the state’s military readiness; a matter of national security. 

The refineries make jet fuel and diesel and gasoline for military bases across California.  California is home to more than 30 military bases, many of which rely on fuel refined in-state.  Gavin Newsom has mostly dismissed concerns as exaggeration, asserting that foreign shipments of fuel will fill the supply gap.  He argued in a recent statement:

“The claim that California policies pose a national security risk isn’t grounded in fact. The state has proactively engaged defense fuel customers throughout this energy transition, and no credible concerns have been raised about future fuel supply for the military. California is leading this transition responsibly while ensuring families have access to a safe, reliable, and affordable supply of transportation fuels..." 

California law, primarily through Senate Bill 445, also mandates that all single-walled Underground Storage Tanks (USTs) and piping must be permanently closed or replaced with compliant double-walled systems by December 31st, 2025.  The claim is that this will prevent leaks and environmental contamination, with significant fines for non-compliance.

The state created a program called "RUST" to supposedly help small businesses meet the deadline by providing subsidies to pay for new tanks.  However, many mom-and-pop gas stations are reporting that they never received any aid from the RUST program, even though they applied far in advance.  Hundreds of small business gas stations in CA are set to shut down in 2026.  A large number of them are rural and operate as the only gas stations for long stretches of highway.  

In October, the newly created Division of Petroleum Market Oversight released its first annual report meant to discover why CA gas prices are so high.  The report merely confirmed what was already known - CA prices are much higher than other states because of the differential in taxes and regulatory costs.  No concrete evidence of price gouging on the part of energy companies was found.

Blue states like CA have been increasingly subjecting their citizens to an experiment in artificial energy scarcity; reducing access to "fossil fuels" while raising taxes to force consumers into the electric car market.  All of this is being done in the name of stopping "man-made global warming", a problem which does not exist.  Newsom claims that he is trying to help CA citizens by lowering gas prices, but all of his actions are leading to a price explosion.

Tyler Durden Sun, 12/21/2025 - 18:05

Pentagon Fails Audit For 8th Consecutive Year

Authored by Ryan Morgan via The Epoch Times,

The Pentagon has failed to pass a full financial audit for the eighth year in a row.

Congress initially mandated annual independent audits across the Department of Defense in 2018. In that time, the department has failed to pass a single full audit.

The Department of Defense—also known as the Department of War—lists $4.65 trillion in assets and $4.72 trillion in liabilities through fiscal year 2025, which ended on Sept. 30. The Pentagon cannot account for its full balance sheet.

An audit report, finalized on Dec. 18 by the Department of Defense Office of Inspector General, identified 26 material weaknesses and two significant deficiencies in the Pentagon’s financial reporting practices for the year.

Auditors rendered adverse opinions in 10 of 28 subaudits contained within the overall Pentagon audit for the year. Adverse opinions are issued when audits find financial reporting to be inaccurate.

The audit also listed further disclaimers of opinion, meaning auditors could not be certain one way or another whether the balance sheets of certain funds or programs were accurately recorded.

Auditors applied the disclaimers of opinion to the Department of the Army General Fund, the Department of the Army Working Capital Fund, the U.S. Navy General Fund, the Department of the Air Force General Fund, the Department of the Air Force Working Capital Fund, the U.S. Transportation Command Transportation Working Capital Fund, the Defense Intelligence Agency, the National Geospatial-Intelligence Agency, the Defense Health Program General Fund, the Defense Information Systems Agency General Fund, and the Defense Logistics Agency Working Capital Fund.

The audit report said the disclaimers of opinion cover programs and funds that comprise a combined 43 percent of the U.S. military’s total assets and at least 64 percent of the military’s total budgetary resources.

Auditors found material misstatements within the Joint Strike Fighter program, which oversees the F-35 Lightning II stealth fighter used by the various U.S. military branches and numerous partner nations.

The report found the program did not properly account for its global pool of spare parts.

The audit also found misstatements in the various programs the U.S. military uses to build up the military strength of various global allies and partners. Auditors determined there were $18.9 billion worth of material misstatements across partnership programs.

Despite eight attempts and eight failures, the Pentagon still has a way to go before it passes a full audit. The Pentagon is currently set on a goal to pass its first audit in 2028.

“We have reviewed the audit report and acknowledge the findings and results. The Department of War is committed to resolving its critical issues and achieving an unmodified audit opinion by 2028,” Jules Hurst, who is performing the duties of the Pentagon comptroller, said in a Dec. 18 statement attached to the audit report.

Despite the setbacks, the Secretary of War Pete Hegseth said the latest report showed continuing improvements across the Pentagon’s accounting efforts.

“This year’s audit revealed remediations in key areas, reflecting significant progress in financial management,” Hegseth said in a statement attached to the audit report.

Tyler Durden Sun, 12/21/2025 - 17:30