The Mar-a-Lago Accord Confirmed: Miran Brings Trump's Reset To The Fed

Authored by Lau Vegys via InternationalMan.com,

[ZH: This was written before Trump fired Fed Governor Cook, potentially further entrenching his appointees on the Fed Board]

Stephen Miran’s appointment to the Federal Reserve isn’t just another personnel move—it’s the placement of Trump’s Reset architect inside the very institution that will help carry out America’s most ambitious economic overhaul in generations.

If you’re still unfamiliar with what Trump’s Reset entails, I strongly recommend checking out Matt Smith’s comprehensive analysis. He’s done the heavy lifting of connecting dots that were only hinted at in Miran’s original white paper.

Without getting into the weeds, Miran, the mastermind behind what’s been dubbed the “Mar-a-Lago Accord,” outlined a comprehensive plan to flip the U.S. dollar’s reserve status from a burden into a bargaining chip. To turn America’s towering debt from an embarrassment into leverage. And to reorient the entire global economic structure in Washington’s favor.

And of course, what makes this especially relevant right now—particularly for anyone with gold exposure—is the timing.

The yellow metal has been on a relentless march higher throughout 2025, setting multiple all-time highs and blasting past $3,400 an ounce just last month. Now, with Miran’s appointment to the Fed, we’re seeing exactly why smart money has been quietly accumulating the yellow metal all year.

But anyone thinking Miran’s appointment is simply about giving Trump another dovish vote for rate cuts is missing the much bigger picture. Gold isn’t just rising because of anticipated rate cuts. It’s been rising because informed investors recognized what Trump’s Reset strategy would eventually require: the systematic weakening of dollar dominance and a potential gold revaluation.

Again, I urge you to check out Matt’s report if you’re unclear on the specifics—he’s laid out the relationships and implications more clearly than anyone I’ve seen attempt it.

The upshot is that Miran’s appointment is simply the latest confirmation that this plan is moving from theory into practice. (And once you see what that implies for both the dollar and gold, it’s easier to understand why $3,400 gold may be only the beginning.)

Miran’s Fed Position Is a Game-Changer

I don’t want to sound like a broken record, but I can’t stress this enough.

This isn’t just about securing another dovish vote for rate cuts—Trump could have picked any yes-man for that. It’s about placing the architect of America’s monetary reset directly inside the Federal Reserve.

You see, the Fed doesn’t set tariffs, negotiate trade deals, or sign defense pacts—but it does control the single most important lever in Trump’s Reset: the cost and flow of money.

From his position as Fed governor, Miran will have a permanent vote on the Federal Open Market Committee (FOMC), giving him direct influence over interest rates, money supply, and crucially, the Fed’s balance sheet operations. But more importantly, he’ll be positioned to coordinate monetary policy with the broader Reset strategy he designed.

Think about what this means in practical terms—and from Trump’s perspective. The Reset strategy involves coordinated dollar devaluation—but that requires the Fed to be on board. You can’t orchestrate a Plaza Accord (more on it below)-style currency adjustment if your central bank is fighting you every step of the way. With Miran inside the Fed, Trump gets someone who understands both the macroeconomic theory behind dollar devaluation and the practical mechanics of how to execute it through monetary policy.

Note: The U.S. dollar has already weakened more than 10% over the past six months. To put it in perspective, the last time the dollar fell this much early in the year was 1973—right after the U.S. finalized its break from gold and the fiat era fully took hold.

Miran’s appointment also signals something even more significant: the institutional capture of monetary policy. When Jerome Powell’s term expires in May 2026, Fed chairs are typically chosen from among existing governors. By installing Miran now, Trump is positioning his Reset architect to potentially lead the entire Federal Reserve system.

In short, it’s Trump making sure the Fed itself becomes a primary tool for carrying out his Reset. And there’s a very deliberate reason for that.

Trump’s Reset Needs the Fed on Side

Now, I brought up the Plaza Accord above because it’s the closest historical precedent to what we’re calling Trump’s Monetary Reset (or the Mar-a-Lago Accord).

You’ve probably heard of it.

On September 22, 1985, finance ministers from the world’s largest economies gathered at New York’s Plaza Hotel to coordinate a devaluation of the unnaturally strong U.S. dollar.

Naturally, outside the U.S., no one wanted a weaker dollar—it would make their exports pricier for American buyers. But, just like today, Washington applied pressure with tariffs, import surcharges, quotas, and pointed accusations of “unfair trade.”

And guess what? It worked. West Germany and Japan—the economic powerhouses of the day—caved.

But here’s what made the Plaza Accord actually work: the Federal Reserve was fully on board. Fed Chairman Paul Volcker coordinated closely with Treasury Secretary James Baker to ensure monetary policy backed the dollar devaluation strategy. He cut interest rates from roughly 12% to 6% between late 1984 and late 1986, creating the conditions for the dollar to fall. Without that cooperation, the Plaza Accord probably would have been just another piece of paper.

This is exactly why Miran’s appointment is so crucial. Trump learned from Reagan’s playbook—to execute coordinated currency devaluation, you better make sure your central bank is pulling in the same direction. By installing the Reset architect inside the Fed, Trump ensures that monetary policy will align with, rather than undermine, his broader economic strategy.

And what happened to gold in the wake of the Plaza Accord?

It surged. Take a look at the chart below.

After the Plaza Accord in 1985, gold jumped from about $320 per ounce to over $370 between September 1985 and March 1986. That’s in just six months.

Adjusted for today’s prices, that would be like seeing gold leap to roughly $4,000 an ounce.

But here’s the thing… If Trump’s Reset unfolds the way Matt and I believe it will, it won’t just be a repeat of the Plaza Accord—it’ll be that on steroids.

In today’s globalized and overleveraged economy, the ripple effects could be enormous. I wouldn’t be surprised to see gold surge to $5,000–$8,000 per ounce as markets scramble to adapt.

*  *  *

Stephen Miran’s arrival at the Fed isn’t just a policy shift—it’s confirmation that Trump’s Reset strategy is already moving from blueprint to reality. The implications for the dollar, gold, and your personal wealth are enormous. We’ve been tracking the signs of this coming shift for months—the hidden gold run out of London, the quiet buildup of reserves, and now the placement of Trump’s Reset architect inside the Federal Reserve itself. If you’ve been wondering what all this means for your money—and how to prepare before the Reset accelerates—I strongly urge you to read our latest deep-dive: Get Ready for Trump’s Monetary Reset. Inside, you’ll see why central banks are scrambling for gold, how Trump’s team plans to “monetize America’s balance sheet,” and why we believe this could unleash the biggest wealth revaluation in half a century. Most importantly, you’ll learn the practical steps you can take right now to protect your savings—and position yourself to potentially profit. Click here to get the full story before the Reset leaves you behind.

Tyler Durden Tue, 08/26/2025 - 13:00

Bolton Attacks Trump For 'Utterly Incoherent' Ukraine Policy Days After FBI Raid

Former national security adviser John Bolton has gone after President Trump, blasting his Ukraine strategy as "incoherent" in an opinion piece published Monday, just a few days after federal agents raided his Maryland home and D.C. office over the handling of classified documents.

"President Donald Trump’s Ukraine policy is no more coherent today than it was last Friday when his administration executed search warrants against my home and office," Bolton said in Washington Examiner.

Bolton's op-ed title went all-in: "Trump’s utterly incoherent Ukraine strategy." He wrote that "Collapsing in confusion, haste, and the absence of any discernible meeting of the minds among Ukraine, Russia, several European countries, and America, Trump’s negotiations may be in their last throes, along with his Nobel Peace Prize campaign."

AFP/Getty Images

Hoped-for momentum towards an eventual trilateral Putin-Zelensky-Trump summit has indeed been stalled, and Trump said late last week that we could make a major decision if peace isn't negotiated in two weeks - which likely means more biting sanctions on Russia and its trading partners.

Neither warring side has actually backed off from its position, and Russia has little reason to soften its demands given that it maintains the clear upper-hand on the battlefield. Still, Bolton - as one of the neocon madmen behind the push to invade and overthrow Iraq (and other countries) - is not one to talk about coherent foreign policy.

"The administration has tried to camouflage its disarray behind social media posts, such as Trump comparing his finger-pointing at Russian President Vladimir Putin to then-Vice President Richard Nixon during the famous kitchen debate with Nikita Khrushchev," Bolton said further in his piece. "Why Trump wants to be compared to the only president who resigned in disgrace is unclear."

So clearly, Bolton is not backing down or being quiet despite the FBI raid on his home last Friday, which was described as a "court-authorized law enforcement activity."

The 'war' in the op-ed pages has been unleashed, as on Tuesday White House trade adviser Peter Navarro took to The Hill and charged Bolton with "profiteering off of America’s secrets" in relation to his 2020 book, "The Room Where It Happened."

Navarro's op-ed said "He was trafficking in Oval Office conversations and national security intelligence that should have stayed secret - either by law or under executive privilege." 

"That isn’t service. That isn’t patriotism. That’s profiteering off of America’s secrets," Navarro wrote, citing a federal judge who at the time said "seems to be out of the barn" - when Trump officials had tried to stop its publication. Back in 2020, Navarro had slammed the memoir as like "revenge porn".

Bolton has only issued rare praise of Trump when he bombs another country (as he did Iran this summer)...

John Bolton, who Trump denounced in his first term as a “warmonger” when he fired him, heaps praise on Trump for… being a warmonger. pic.twitter.com/HHdiKgUDam

— jeremy scahill (@jeremyscahill) June 22, 2025

As for the raid on Bolton's house, Trump has said that he didn't personally order it or know about it before-hand, amid accusations that it is politically motivated retribution. The president has, however, said that Bolton "could be a very unpatriotic guy. We're going to find out."

Tyler Durden Tue, 08/26/2025 - 12:40

NY State Trying To Restore Welfare Access For Illegal Immigrants

Authored by José Niño via Headline USA,

The Federation for American Immigration Reform (FAIR) recently submitted a federal court brief challenging New York‘s request to restore Trump Administration funding, which was suspended after the state refused to say whether it was still providing public benefits to illegal aliens.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) restricts public benefits to “qualified aliens” exclusively—a category that excludes illegal aliens. PRWORA additionally mandates that states verify they aren’t distributing public benefits to unqualified non-citizens.

Following PRWORA’s passage, then-Attorney General Janet Reno under the Clinton administration issued state waivers exempting them from this verification mandate.

The Trump administration revoked these waivers and currently withholds federal funds from states like New York that decline to verify they aren’t providing public benefits to undocumented immigrants.

FAIR’s legal filing argues the state’s injunction request must be rejected because the federal court lacks jurisdiction to grant such relief.

According to statute, Congress has removed federal court authority to review executive actions where Congress hasn’t established review standards, instead leaving such decisions to executive discretion.

PRWORA grants the Attorney General unreviewable authority to approve or revoke verification requirement waivers.

“For our immigration laws to be enforced effectively, it is essential that the magnet of public benefits be turned off,” declared Dale L. Wilcox, FAIR’s executive director and general counsel.

“Illegal aliens should not receive a pay-off for breaking our laws. Congress understood that very well when it passed PRWORA, and New York’s plea that it be allowed to go on flouting the law is without any legal basis. We hope the court sees that it doesn’t even have jurisdiction to enter an injunction, and denies relief.”

According to Pew Research, there are 825,000 illegal aliens residing in New York. 

The litigation is identified as State of New York v. U.S. Department of Justice, No. 1:25-cv-00345 (D.R.I.).

Tyler Durden Tue, 08/26/2025 - 12:20

Cooked By State Capitalism

By Benjamin Picton, senior market strategist at Rabobank

The Powell-induced equity rally took a breather yesterday as the S&P500 closed 0.43% lower, the NASDAQ 0.22% lower and the EuroStoxx 50 0.81% lower. Asian equities – perhaps still playing catchup from Powell’s Jackson Hole speech – had traded higher earlier in the day. China’s CSI300 closed up more than 2% and the Hang Seng gained 1.94% with notable lifts in rare-earth stocks after Beijing published new rules to tighten oversight of production and trading of the geopolitically-sensitive minerals. South Korea’s KOSPI gained 1.3% ahead of a Monday (US time) meeting between South Korean President Lee Jae-myung and US President Trump (more on that below).

There are consequential headlines everywhere this morning, but perhaps the most consequential for markets (in the very short term, at least) is Donald Trump’s announcement that he has fired Fed Governor Lisa Cook, effective immediately. Cook was a Biden appointee who had recently come under pressure after being accused of mortgage fraud by FHFA Director Bill Pulte. Trump said in a letter to Cook that there was sufficient reason to believe that she had made false statements on one or more mortgage agreements. He also said that in light of Cook’s “deceitful and potentially criminal conduct” he did not have confidence in her integrity and her actions called into question her “competence and trustworthiness as a financial regulator”, presenting cause for her firing.

As noted in this Daily yesterday, Trump has been busily working over the Fed to bend it to the MAGA program. That program is winning the competition with China by reshoring production, controlling critical supply chains and scoring strategic wins by pulling allies tighter into the US orbit and forcing them to help isolate challengers to US supremacy. China has been playing much the same game for decades now and continues to do so, as illustrated by the recent tightening on controls of rare earth exports, which the United States can’t supply itself with and needs for defence and technology applications.

The MAGA strategy encapsulates a series of carrots and sticks to coax production back inside US borders. Tariff protection to penalise offshore competition and provide an implicit subsidy to local producers was step one, lower taxes and lower regulation through the One Big Beautiful Bill and DOGE is step two, cheap energy through friendly relations with Saudi Arabia and ‘Drill, Baby, Drill!’ is step three, and cheap capital by getting the Fed into a headlock and forcing it to follow the wishes of the executive is step four. Executing a ‘reverse Nixon’ by improving relations with Russia to split them off from their “no limits” partnership with China would have been a nice to have from the perspective of the administration, but looks increasingly unlikely.

Given that Trump is only six months into his second term and has already executed on most of the major planks of the MAGA economic program, it is clear that the economy is being re-made at an astonishing rate, and the commentariat is clearly struggling to keep up. Long term free market evangelists over at the Financial Times are now describing Trump as the ‘Dirigiste-in chief’, which of course he is. The Republican Party of Ronald Reagan is not the Republican Party of Donald Trump. Friedmanite ideas of free markets and low touch government are out and a strong executive hand on the economic tiller is now very much in.

As the FT notes, the examples of this are manifold: the US government’s ‘golden share’ that Trump extracted from Nippon Steel in exchange for approving its purchase of US Steel (Trump has previously said “if you don’t have steel [production], you don’t have a country”), deals to allow Nvidia and AMD to sell chips in China in exchange for the US government receiving 15% of the revenue, the Pentagon becoming the largest shareholder in rare earths producer MP Materials (in an effort to counteract the Chinese export controls noted above) and the US’s 10% stake in chipmaker Intel that was confirmed over the weekend.

The FT quotes the Cato Institute’s Scott Lincicome comparing these “pretty darn bonkers” deals to Barack Obama’s effective nationalization of US automakers during the Great Recession of 2007-8. The comparison is fitting, but its perhaps worth noting that the Obama strategy managed to save those automakers while also allowing the US government to recover some of the cost by selling its stake in later years. A handy counterfactual might be Australia’s government bailout of Qantas during the Covid pandemic, when $2.7bn of taxpayer money was handed over, gratis, and none of it recovered once the company was back on its feet (because state ownership would have been ideologically intolerable). Which was the better deal for main street?

In many respects, the United States as the world’s pre-eminent Western, liberal democracy is responding to competition from China (not Western, not liberal and not a democracy) by mirroring Chinese economic practises back to China and much of the rest of the world. For the first time in a long time the United States is back in the game of economic planning with a coherent (albeit risky) economic, industrial, financial (for more on that, see RaboResearch’s recent piece on the emerging role of stablecoins here) and military strategy now adopted to achieve foreign policy objectives. Gone are the days of assuming that the market knows best in all applications and will deliver wealth and power if simply left alone to do its work.

These are all trends that have been flagged extensively in this Daily and in the work of RaboResearch’s Global Strategist Michael Every for many years now. None of this is should come as a surprise for the intellectually curious who cared to look, but markets still retain the capacity to be surprised by these sorts of statecraft moves. Many markets currently pricing for perfection –or for the assumed continuation of a single globalized system of prices – in the most imperfect of market conditions run the risk of being mugged sooner or later.

Turning back to President Lee’s visit to the White House, these trends are again evident. Trump continues to engage in a kind of aeroplane diplomacy employed in previous trade agreements by securing commitments from Korean Air to purchase 100 (made in the USA) Boeing jets, while also securing commitments from Hanwha to assist with increasing shipbuilding capacity at its facilities in the US by 8-10x and seeking to take “ownership” of land leased from South Korea to host US military bases.

Notably, within the last 24 hours Trump has similarly applied aeroplane diplomacy to China by saying that China was “intelligently” withholding rare earths from the US, but that the US would retaliate by withholding critical aircraft parts. Trump said that “we have tremendous power over them, and they have some power over us”. “We have much bigger and better cards than they do... If I played those cards, that would destroy China. I’m not going to play those cards.” While relations appear relatively cordial at the moment, the potential for bifurcation clearly remains. “If we want to put 100%, 200% tariffs on, we wouldn’t do any business with China. And you know, it would be OK too, if we had to.”

Following his meeting with Trump, President Lee also said that South Korea would “take on a more leading role in maintaining security on the Korean Peninsula”, beginning by increasing defence spending in much the same fashion that European NATO members were recently forced to do by the United States. Tellingly, when asked whether South Korea could continue to rely on the United States for its security while reaping economic benefits from trade with China (South Korea’s largest trading partner) Lee said “[Korea] can no longer maintain the same approach as in the past... It is no longer possible for Korea to act or make judgements in ways that run counter to the U.S. basic policy direction.”

Australia and New Zealand (and Japan?), who plan to spend less on defence that Korea does now and who also have their security underwritten by the United States while profiting from China as their largest trading partner are now very much on notice

Tyler Durden Tue, 08/26/2025 - 11:40

Trump Jr's VC Company Takes Stake In PolyMarket At $1 Billion+ Valuation

Polymarket, the world’s largest prediction platform, has secured a double-digit million-dollar investment from Donald Trump Jr.’s venture capital fund 1789 Capital, Axios reported Tuesday.

As part of the deal, Trump Jr. will also join Polymarket’s advisory board.

"Polymarket is the largest prediction market in the world, and the U.S. needs access to this important platform," said Donald Trump Jr.

 "Polymarket cuts through media spin and so-called 'expert' opinion by letting people bet on what they actually believe will happen in the world. I am pleased that 1789 Capital is investing in Polymarket and am honored to join the company's advisory board. I look forward to working with the team to advance its mission of bringing truth and transparency to everyone – including the U.S."

The investment comes just months after Polymarket was valued at more than $1 billion by Founders Fund and follows the company’s $112 million acquisition of derivatives exchange QCEX, which gave it a CFTC license to operate in the US.

"1789 Capital looks to invest in companies that are entrepreneurial, innovative, and demonstrate great potential for growth. Polymarket meets each of these criteria," said Omeed Malik, Founder of 1789 Capital.

"Polymarket stands at the intersection of free expression and financial innovation by empowering individuals with real-time truth in a world clouded by noise, and we are proud to support its vision."

Trump Jr. now stands on both sides of the sector, also serving as a paid strategic advisor to Kalshi, Polymarket’s main rival and a fully regulated US prediction market.

1789, whose portfolio also includes Anduril and SpaceX, views Polymarket as an eventual IPO candidate.

Tyler Durden Tue, 08/26/2025 - 11:18

French Bonds, Stocks Tumble As Government Risks New Collapse In Weeks

And just like that, Europe is gripped by another political crisis (but... but... the euro is soaring) after French Prime Minister Francois Bayrou called a confidence vote that may topple France’s government as soon as September 8, prompting a selloff in French assets as investors hedged for more political uncertainty. 

The conservative National Rally party, the leftist France Unbowed and the Greens all said they would vote against the Sept. 8 motion while even the Socialists - so pretty much the entire political spectrum in France - said they wouldn’t back the government. If a majority of lawmakers vote against Bayrou, which now appears to be the case, he’ll be forced to submit his government’s resignation. This would be overdue for a government which should have been bounced long ago. 

The failure of another French government — the previous prime minister, Michel Barnier, lasted only 90 days — would underscore the tenuous position of President Emmanuel Macron, whose party and its allies lost any semblance of a parliamentary majority in 2024. Marine Le Pen’s National Rally, which became the largest party in the lower house in that vote, is calling for a new election

Here is a recap of all the latest developments: 

• French PM Bayrou has called for a Vote of Confidence (Article 49.1) to take place on Sep 8th 
• This vote requires a simple majority of votes cast, which is different to a Vote of No-Confidence (Article 49.3) which require an absolute majority in parliament 
• This makes it harder for the PM to win the vote, as abstentions do not help him – he will need MPs to explicitly vote for his government’s survival 
• If Bayrou loses the vote, Macron will have the option to dissolve parliament and trigger new parliamentary elections or to appoint a new PM 
• Speaking last week, Macron rejected the prospect of a second snap parliamentary election in as many years 
• Even if the PM wins the vote, there is still the issue of passing the budget which would likely trigger several votes of no confidence over October / November 

This has put French risk back into the spotlight and we are now likely to see continued headlines and volatility in the region over the coming months. Indeed, for the second day in a row, France's CAC 40 has tumbled more than 1%, Europe's worst performing index, and the 2nd biggest two day drop for the CAC since the Liberation Day plunge.

It's not just stocks: French bonds are also getting hammered with 10Y OAT yields spiking since the announcement...

... which is to be expected: as these Goldman charts show, French domestic stocks have performed well in recent months despite a widening in sovereign spreads which may well have sensed that this showdown is coming.

While Goldman naturally sees French domestic stocks as the most sensitive slice of the market to French political risks, the bank shows in the chart below other European indices and their long-term correlation with sovereign spreads (French and Peripheral spreads). Southern European indices, Banks, CAC 40, Cyclicals and the EUR tend to be most sensitive, while Consumer Staples, Healthcare, Low vol stocks and FTSE 100 are most positive positively correlated (in terms of relative performance) when sovereign spreads widen.

So how to hedge a worst case outcome? Below we lay out some ideas from Goldman's Thilo Deller, writes that implied vols have moved higher in the front-of the curve, albeit from low levels.  With the CAC vol term structure now slightly inverted here...

... Goldman prefers owning vol in Dec, where the likelihood of capturing a potential election is higher.  While the implied move for the 8th of September has moved higher (~1.1% in SX5E), the options market has started to price increased volatility in the months following the vote on the back of potential elections and budget uncertainties. 

Separately, for traders seeking broad French equity protection, these are the trades:

CAC Dec25 95%/85% Put Spread costs 1.35%   [20-delta | 7.4x pay-out] 

For more targeted French exposure Deller likes the bank's French domestic basket.  This has >50% domestic exposure vs ~15% for CAC.  We can see that historically and on a day like today, it exhibits a high beta to French risk (today CAC -1.8% vs basket -3.8%).  

As a hedge :: 

• GSXEFRDO Dec25 95%/80% Put Spread costs 2.4%   [24-delta | 6.2x pay-out] 

For reversion :: 

• GSXEFRDO Oct25 105%/110% Call Spread costs 0.95%   [19-delta | 5.2x pay-out] 

Finally, here is an excerpt from a Goldman Q&A on the French Confidence Vote (full note available to pro subs)

Q1. What happened?

French Prime Minister Bayrou held a press conference yesterday (August 25) in which he announced that he would call a confidence vote on September 8.

The announcement was unexpected, as there had been no leaks or hints ahead of the press conference. The decision to call for a confidence vote is all the more surprising because the government does not have a majority in parliament, and because the upcoming budget vote was in any case likely to lead to several no-confidence votes.

Q2. How likely is the government to collapse?

The confidence vote will follow Art 49.1 of the Constitution, which requires a simple majority of votes cast (for or against, but excluding abstentions) against the government for it to collapse. This makes for a lower bar than a no-confidence vote under Art 49.3 of the Constitution, which requires an absolute majority of all votes (including abstentions) against the government.

At the time of writing, a majority of opposition parties in Parliament have announced they would vote against the government. These include RN (far-right), LFI (far-left), as well as the socialist, green, and communist parties (left), totalling close to 330 seats in Parliament. In comparison, the government is supported by the parties allied to President Macron and LR (centre-right), amounting to around 210 seats.

The government could survive the confidence vote if some of the opposition parties flip their vote in support or end up abstaining in large enough numbers. It could also be that turnout on the day of the vote is surprisingly favourable to the government, as only the votes cast for or against the government will count towards the tally.

But the most likely outcome at this point is that the government loses the confidence vote and is forced to resign. Prediction markets accordingly assign more than an 80% chance of PM Bayrou leaving office by September 30.

Q3. What would be the next steps?

If the government were to collapse, President Macron would have the choice between appointing a new government under the current Parliament or calling for new parliamentary elections.

The current Parliament makes for limited government options, because coalitions that include LFI (far-left) and RN (far-right) are unlikely to reach a majority. We think the most viable option remains the broad centrist majority spanning President Macron’s allies (centre), LR (centre-right), and the socialists (centre-left). President Macron could therefore re-appoint a centrist or centre-right PM (similar to current PM Bayrou or former PM Barnier), appoint a centre-left PM, or appoint a more technocratic PM. In that case, the change in government could be relatively swift, such as when Bayrou took office 9 days after Barnier was forced to resign.

The key difference to when the government collapsed last December is that early parliamentary elections are now possible again. President Macron has until now expressed a preference not to call early elections. But he might have to if a majority of parties in Parliament call on him to do so (in practice, by pledging to veto any government until elections take place).

Opinion polls have not changed significantly since last year and continue to show voters split roughly three ways between the far- and centre-left, President Macron’s allies and the centre-right, and the far-right. But three important differences are that the alliance between the far- and centre-left has collapsed again, that far-right leader Marine Le Pen is now banned from running for office, and that local elections are scheduled for March 2026.

Q4. What would be the implications for the budget?

The potential collapse of the government underscores that the targeted deficit reduction (from 5.4% of GDP this year to 4.6% next year) looks too ambitious. We had already assumed that the government would make concessions to opposition parties and eventually raise the deficit target for next year to 5%.

If President Macron were to appoint a new government under the current Parliament, political parties could still have time to find a compromise and pass a budget before year-end. But the initial budget proposal would probably be less ambitious and still require concessions during parliamentary debates. In that case, we would look for a deficit of 5.2% of GDP next year and we are raising our baseline forecast accordingly. We expect the government debt-to-GDP ratio to increase from 116% this year to 122% by 2030.

If President Macron were to call for new parliamentary elections, the content of the budget would depend on the composition of the new Parliament. Given that current polls still point to a political deadlock, the most likely budgetary outcome might not look very different from that under the current Parliament. But there would be two important differences. First, the range of possible budgetary outcomes would become wider, because one of the three main political groups might secure a majority. Second, the change in government would likely take longer, and might lead to renewed concerns regarding slippage on this year’s budget. In that case, we would look for a slightly larger deficit this year and next, compared with our new baseline forecast of 5.4% in 2025 and 5.2% in 2026. As a result, the government debt would increase further than in our baseline forecast.

A collapse of government and corresponding increase in deficit expectations would also make further rating downgrades more likely. Fitch (AA-, negative outlook) will report on September 12, Moody’s (Aa3, stable outlook) on October 24, and S&P (AA-, negative outlook) on November 28.

Q5. What would be the implications for growth?

The implications for growth would be ambiguous. On the one hand, a smaller deficit reduction into next year would imply a smaller fiscal drag and be positive for growth, all else equal. On the other hand, the tightening in financial conditions and increase in policy uncertainty would likely be negative for growth. Taken together, growth would likely continue to run below trend (which we estimate at 1% in France). We are therefore leaving our growth forecast at 0.6% in 2025 and 0.9% in 2026.

More in the full notes from Goldman research (here and here) and trading (here) both available to pro subs.

Tyler Durden Tue, 08/26/2025 - 10:41

DNC Criticized Over "Private Agreement" To Continue To Pay Harris's Debts After The Election

Authored by Jonathan Turley,

Axios has a story out this week that disclosed that the Democratic National Committee (DNC) continued to pay off the debts from former Vice President Kamala Harris’s presidential campaign. Over $15 million has already been paid out by the DNC, which is reportedly struggling to raise money in the aftermath of a failed campaign.

Axios described it as a “private agreement” that was not disclosed to donors, who unknowingly contributed to the Harris campaign rather than the campaigns to retake the House and Senate.

The question is whether such private agreements are lawful if not disclosed to donors.

Harris shocked many in burning through over $1.5 billion in her brief 15-week campaign. Donors were irate over wasteful and excessive spending by Harris and her campaign. That has contributed to the poor fundraising figures reported from the DNC.

The article is likely to increase the anger of donors who have been reluctant to contribute after the wild spending of the Harris campaign. The notion of a bait-and-switch is even greater after the Harris campaign denied it had lingering debts that would have to be paid off by the DNC.

What is particularly shocking is that the Axios report said that in the “first six months of 2025,” the DNC has spent over $15 million on Harris’s debts.

Politico is reporting that the DNC only raised $15 million as of the end of June in comparison to the Republican National Committee (RNC) having $80 million “on hand.”

The amount reported by Axios may be slow.

The New York Times reported that the DNC “covered” roughly $20.5 million in “post-election bills” for Harris’s campaign.

My assumption is that, absent a pledge to spend on future campaigns, the use of donations for debts (even of past candidates) is lawful. It is not without legitimate questions when the DNC is raising money on the pledge to retake Congress in 2026. The DNC can argue that money is fungible and paying off debts is part of its operating budget. However, at a minimum, there is a concerning lack of transparency and disclosure in the “private agreement” with Harris.

In the meantime, Harris is starting a book tour for her book “107 Days,” which promises that Harris will “tell the story of one of the wildest and most consequential presidential campaigns in American history.”

It likely does not include a chapter on burning through a record $1.5 billion, which was insufficient even with supportive media, to secure the White House.

Tyler Durden Tue, 08/26/2025 - 10:20

Conference Board Consumer Confidence Slides In August As Inflation Fears Reignite

The Conference Board Consumer Confidence Index fell by 1.3 points in August to 97.4 (versus 96.5 expectations and from an upwardly revised 98.7 in July).

• The Present Situation Index - based on consumers’ assessment of current business and labor market conditions - fell 1.6 points to 131.2 (from an upwardly revised 132.8).

• The Expectations Index - based on consumers’ short-term outlook for income, business, and labor market conditions - fell 1.2 points to 74.8 (from an upwardly revised 76.0).

Source: Bloomberg

How do you revise consumer confidence data?

“Consumer confidence dipped slightly in August but remained at a level similar to those of the past three months,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board.

“The present situation and the expectation components both weakened. Notably, consumers’ appraisal of current job availability declined for the eighth consecutive month, but stronger views of current business conditions mitigated the retreat in the Present Situation Index.'

"Meanwhile," Guichard points out that "pessimism about future job availability inched up and optimism about future income faded slightly. However, these were partly offset by stronger expectations for future business conditions.”

Source: Bloomberg

Consumers’ write-in responses showed that references to tariffs increased somewhat and continued to be associated with concerns about higher prices. Meanwhile, references to high prices and inflation, including food and groceries, rose again in August.

Consumers’ average 12-month inflation expectations picked up after three consecutive months of easing and reached 6.2% in August - up from 5.7% in July but still below the April peak of 7.0%...

Source: Bloomberg

Finally, August saw consumers’ outlook on stock prices deteriorate slightly, with 47.4% of consumers expecting stock prices to increase over the next 12 months, down from 48.9% in July.

Conversely, 30.3% of consumers expected stock prices to decrease over the next 12 months, up from 28.1% in July.

The share of consumers expecting interest rates to rise increased to 54.0% from 53.1% in July and fewer consumers expected interest rates to fall (20.9% vs 21.4% in July).

Source: Bloomberg

Among demographic groups, confidence fell for consumers under 35 years old, was stable for consumers aged 35 to 55, and rose for consumers over 55.

The evolution of confidence by income groups was mixed, with no clear pattern emerging.

By partisan affiliation, confidence weakened in August among both Republicans and Democrats but was little changed for Independents.

Tyler Durden Tue, 08/26/2025 - 10:13

With Lutnick Watching, Centrus Signs MOU To Expand Uranium Enrichment

Regular readers of ZeroHedge are well that we believe Centrus Energy could be the next obvious candidate for the U.S. government to cozy up to and acquire a stake(similar to how the Trump admin recently did with rare earth company MP Materials and of course Intel, both of which we correctly predicted ahead of time, here and here). And now Centrus is obviously doubling down on its push to bring uranium enrichment back to U.S. soil, and get some Trump love - and taxpayer funds - in the process.

The company announced yesterday it has signed a Memorandum of Understanding (MOU) with Korea Hydro & Nuclear Power (KHNP) and POSCO International to explore potential investment in expanding its enrichment plant in Piketon, Ohio.

The signing ceremony drew high-level attention, with U.S. Secretary of Commerce Howard Lutnick and Korea’s Minister of Trade, Industry and Energy Kim Jung-kwan both in attendance. The deal underscores a growing U.S.–Korea partnership in civilian nuclear energy — and highlights the demand for secure, non-Russian sources of uranium enrichment.

Lutnick's mere presence, to us, already shows the company is extremely cozy with the Trump administration. 

Centrus CEO Amir Vexler emphasized moving business back to the U.S., one of the key goals of the Trump administration's global trade realignment. He didn’t mince words about what the deal represents: “We are proud to be strengthening our relationship with our partners in Korea in support of our work to restore America’s ability to enrich uranium at a large scale. This agreement reflects strong demand for a U.S.-owned uranium enrichment capability and another potential avenue for private investment capital to bring added supply diversity and competition to the marketplace – and meet Korea’s need for affordable, reliable fuel supplies for both new and existing reactors.”

"The agreement is aimed at strengthening US-South Korea cooperation on civilian nuclear energy," Bloomberg wrote Tuesday morning. 

The new agreement builds on a February 2025 supply contract between Centrus and KHNP to back construction of new enrichment capacity at the company’s American Centrifuge Plant in Ohio. As part of today’s announcement, the two sides agreed to boost the supply volume of low-enriched uranium (LEU). That commitment, however, depends on Centrus securing federal funding to expand production capacity — funding it is currently competing for from the Department of Energy.

The stakes are high. Nearly all uranium enrichment worldwide is controlled by foreign, state-owned enterprises. Centrus argues that federal support, matched with private investment and utility commitments, is necessary to create a viable U.S. alternative.

While the new MOU is non-binding, it sets the stage for private sector capital to flow into Piketon. It also opens the door to future deals, including supply agreements for LEU and high-assay low-enriched uranium (HALEU), which will be critical for next-generation reactor designs.

"Centrus is competing for funding from the U.S. Department of Energy to expand U.S. enrichment capacity."

Competing with whom?
How much you need? $5BN? $10BN? $20BN? Done https://t.co/i1t7vf3bdl

— zerohedge (@zerohedge) August 25, 2025

We've written extensively about the Trump administration's interest in taking direct stakes in US strategic companies, first with...

• US To Have 'Golden Share' In Nippon Steel Partnership With US Steel: Sen. McCormick

Then with:

• Rare Earth Producer MP Materials Soars 50% After US Government Becomes Largest Shareholder

And finally calling the government's take in Intel well in advance:

• US Finalizes 10% Equity Stake In Intel For $8.87 Billion in Funding

Needless say, now that industrial statecraft ahead of the looming war with China is all the rage, getting closer (and purchasing a stake) to a company like Centrus Energy makes perfect sense. The future is going to be powered by nuclear — and the administration has already signaled strong optimism toward nuclear and the next wave of small modular reactors. Those projects are going to need a reliable, domestic source of uranium, which could very easily be deemed a “matter of national security.” Centrus fits that bill perfectly.

Tyler Durden Tue, 08/26/2025 - 09:30

US Home Prices Plunge For 4th Straight Month In June

Home prices in America's 20 largest cities fell for the 4th straight month in June (the latest data available from S&P CoreLogic's Case-Shiller data released this morning).

The 0.25% MoM drop was larger than expected and dragged the YoY price growth down to +2.15% - the weakest since July 2023...

Source: Bloomberg

The US is coming off its weakest spring selling season in 13 years after high prices and mortgage rates sidelined many would-be buyers.

With few eager shoppers in the hunt, sellers are warming up to discounts and other concessions in parts of the country where listings have piled up.

"June’s results mark the continuation of a decisive shift in the housing market, with national home prices rising just 1.9% year-over-year—the slowest pace since the summer of 2023," according to Nicholas Godec, S&P Dow Jones Indices.

"Looking ahead, this housing cycle’s maturation appears to be settling around inflation-parity growth rather than the wealth-building engine of recent years"

Among 20 major cities, New York still “stands as a stark outlier,” Godec said, leading the index with a 7% annual gain in prices. Following were Chicago, with a 6.1% increase, and Cleveland, at 4.5%.

Prices, meanwhile, are falling in former pandemic-era “darlings,” such Phoenix, Tampa and Dallas, he said.

Tampa’s 2.4% year-over-year decline was the biggest in the index.

On the bright side, given the shift lower in mortgage rates in recent weeks, we may see price pressure relieved...

Source: Bloomberg

Additionally, home price appreciation does seem to track very closely with bank reserves at The Fed (6mo lag), which implies prices could re-acclerate once again...

Source: Bloomberg

Declining home prices (and the follow through into PCE/CPI calculations for Shelter costs) could more than offset any tariff-driven anxiety over the next few months.

The question remains, that after slashing rates by 100bps, home prices have started to decline (with significant lag)... is that what The Fed wants?

Tyler Durden Tue, 08/26/2025 - 09:12

Trump Threatens Tariffs For Nations With Digital Taxes On US Tech

Authored by Aldgra Fredly via The Epoch Times,

President Donald Trump on Aug. 25 threatened to restrict the export of U.S. advanced technologies like chips and impose additional tariffs on countries that refuse to eliminate digital regulations discriminating against U.S. tech companies.

In a Truth Social post, Trump opposed other nation’s digital taxes and regulations imposed on American companies that he said were intended “to harm, or discriminate against, American Technology.”

“They also, outrageously, give a complete pass to China’s largest Tech Companies. This must end, and end NOW,” Trump said of the lopsided treatment of the United States.

Trump warned that his administration would impose “substantial additional tariffs” on imports from those countries and restrict U.S. protected technology and chip exports, unless they withdraw their “discriminatory” digital taxes and regulations.

“America, and American Technology Companies, are neither the ‘piggy bank’ nor the ‘doormat’ of the World any longer,” Trump said.

“Show respect to America and our amazing Tech Companies or, consider the consequences.”

The president did not specify what the tariff rates might be.

Many countries, particularly in Europe, have levied taxes on the sales revenue of digital service providers, including Alphabet’s Google, Meta’s Facebook, Apple, and Amazon. The issue has been a longstanding trade irritant for multiple U.S. administrations.

The United States and the European Union issued a joint statement on Aug. 21 outlining a framework for a “reciprocal, fair and balanced trade” agreement as part of efforts to resolve their trade imbalances.

In the statement, both sides pledged to address “unjustified digital trade barriers” and agreed not to levy customs duties on electronic transmissions. The EU also agreed not to adopt network usage fees.

Washington and the 27-member bloc also pledged to “continue to support the multilateral moratorium on customs duties on electronic transmissions at the World Trade Organization and seek the adoption of a permanent multilateral commitment,” according to the statement.

Trump in June vowed to terminate trade negotiations with Canada due to the nation’s Digital Services Tax (DST) affecting U.S. tech companies such as Amazon, Google, and Netflix. The Canadian government later responded by saying it would rescind its DST legislation.

The U.S. Trade Representative’s office stated in its latest report that most of Canada’s DSTs “have been designed in ways that discriminate against U.S. companies, as they single out U.S. firms for taxation while effectively excluding national firms engaged in similar lines of business.”

Canada’s DST also imposes “significant retroactive tax liabilities” with immediate effects on U.S. companies, according to the report published in March.

“Through bilateral and multilateral engagement, the United States continued to raise serious concerns regarding Canada’s DST and to encourage Canada to withdraw or repeal the DST,” the report stated.

Earlier this year, Trump issued a memo directing his administration to look at which countries are imposing taxes that “may discriminate against” U.S. companies. Among the fines and fees that Trump’s memorandum looked to address were digital taxes.

A fact sheet provided by the White House states that foreign governments have used these digital taxes against U.S. businesses when they shouldn’t otherwise be subject to foreign jurisdiction.

Tyler Durden Tue, 08/26/2025 - 08:50

LA Police Bust Burglary Crew Suspected In 92 Residential Heists

Authored by Jill McLaughlin via The Epoch Times,

Police have arrested the last of 10 suspects involved in the “Rich Rollin Burglary Crew” linked to at least 92 residential burglaries in the city since 2022, the Los Angeles Police Department (LAPD) announced Aug. 25.

Detectives wrapped up a months-long investigation into the burglary ring on Aug. 20, arresting seven alleged members.

The 92 burglaries were carried out mostly in 2024 and 2025, according to the LAPD.

Other burglaries that occurred outside city limits might also be linked to the crew, but those are still under investigation, according to LAPD Chief Jim McDonnell.

Those arrested on Aug. 20 were Devon Collier, 37; Tyrone Tisby, 47; Frank Tisby, 38; Jeremy Shepard, 38; Jermaine Kimbrough, 22; Michael Lewis, 20; and Marquell Lewis, 26.

The men were booked on charges that included burglary and possession of controlled substances while armed.

“What made this takedown possible was the outstanding work of our officers and detectives—communicating across divisions and bureaus, sharing intelligence, and connecting the dots that revealed these burglaries were tied to the same crew,” McDonnell said in a statement.

Another suspect, Eric Cannon, 40, surrendered to police on Aug. 22 in response to an active arrest warrant.

Police had already arrested Anthony Leslie, 36, and Shawn Quinney, 36, who both face attempted murder charges.

All of the men arrested are repeat offenders and confirmed gang members, the LAPD reported.

Los Angeles County District Attorney Nathan Hochman told reporters at a press conference Aug. 25 that his office had filed charges against eight of the suspects.

Many of the suspects have one or two strikes against them for previous offenses. In California, some serious or violent felony convictions qualify as a “strike” under the state’s criminal laws, which can lead to tougher sentences.

L.A. County District Attorney Nathan Hochman on Aug. 11. 2025. John Fredricks/The Epoch Times

Those with two strikes “are looking at a maximum of life sentences,” Hochman said. “These are very serious consequences. We will be seeking to have these people serve maximum sentences.”

Hochman said authorities were also going after the shops that purchased the stolen items for resale or to turn them into cash. He called the burglaries “crimes of greed.”

According to police, the investigation gained momentum in February after three suspects were arrested following a pursuit involving a van connected to two burglaries.

Detectives used information from that arrest to identify additional suspects, the LAPD reported.

In April, detectives served a search warrant at a Los Angeles residence and recovered rifles, handguns, ammunition, body armor, large-capacity magazines, jewelry, watches, stolen credit cards, fake identification, and multiple license plates.

The evidence collected was directly tied to organized burglary, according to police.

Starting at 5 a.m. on Aug. 20, officers from West Los Angeles, North Hollywood, West Valley, Olympic, Hollywood, Wilshire, and downtown served search warrants at eight homes in Los Angeles, Hawthorne, Inglewood, and Carson.

During the searches, investigators recovered 15 firearms, including several reported stolen during the burglaries. They also found large amounts of ammunition and high-capacity magazines, including a 50-round handgun drum.

Investigators also found burglary tools, including handheld radios, face masks, headlamps, window punch devices, and cans of bear spray.

The stolen property included luxury watches, bracelets, high-end purses and luggage, credit cards, wallets, and U.S. and foreign currency. Narcotics, a money counter, and several cellphones were also recovered.

The seized evidence gave investigators a direct link between the burglary crew and their crimes, strengthening the criminal cases against them, the LAPD said.

Police don’t believe the burglary crew was tied to a rash of recent heists in Encino, a wealthy suburb of Los Angeles.

The case is also not related to South American “burglary tourists” who have struck homes recently using surveillance as part of their schemes. Crimes by burglary tourists who fly into the city to break into mansions, then fly back to their countries have decreased lately, police reported.

L.A. Mayor Karen Bass applauded the LAPD's arrests of burglary suspects. Above, Bass at  a news conference on Jan. 17, 2025. Apu Gomes/Getty Images

Los Angeles Mayor Karen Bass praised the LAPD’s work.

“In the early hours of last Wednesday, LAPD led a coordinated operation across multiple jurisdictions that successfully took down a burglary crew responsible for nearly 100 break-ins across our city and our County,” Bass said in a statement. “Thanks to the tireless work of our officers and detectives, this crew, which has victimized families and businesses, is no longer a threat to our neighborhoods.”

Tyler Durden Tue, 08/26/2025 - 08:48

Core Durable Goods Orders Rise At Fastest Annual Rate in 3 Years

Amid chaotic swings MoM driven by the variability of Boeing plane orders, analysts expected preliminary July data to show a 3.8% MoM decline (following June's big plunge, following May's big surge). The good news is that the actualk print was better than expected (-2.8% MoM) but still in the red for headline orders. This dragged down the YoY headline growth to 3.5% as the front-running of tariffs fades and earlier this month, Boeing Co. reported a fewer orders in July than in June.

Source: Bloomberg

Under the hood, ex-Transports, durable goods orders rose over 1.0% MoM (the fourth straight month of gains), lifting core orders 3.8% YoY - its strrongest growth since Nov 2022...

Source: Bloomberg

Once again, non-defense aircraft orders plunged (while defense aircraft orders rose)...

Source: Bloomberg

Capital Goods Orders, non-defense ex-aircraft rose 1.1% MoM (better than expected).

Non-defense capital goods shipments including aircraft, which feed directly into the equipment investment portion of the gross domestic product report, rose 0.7% after an upwardly revised gain a month earlier. Rather than orders, which can be canceled, the government uses data on shipments as an input to GDP.

The import/export tariffs - and the frontrunning of such - has clearly sparked chaos in the data.

Tyler Durden Tue, 08/26/2025 - 08:41

Futures Slide, Curve Steepens After Trump Fires Fed's Cook

US equity futures are a tad lower as the yield curve twists steeper with 5Y yields flat, after Trump moves to fire the Fed’s Cook, sending the USD is weaker. A showdown looms with Cook saying that Trump has no authority to oust her and that she will not quit (previously the SCOTUS indicated that the Fed Governors could not be fired at-will but if it does decide that Trump fired her for cause, Powell would be responsible if he keeps her on after Trump has sacked her). As of 8:15am, S&P and Nasdaq futures are down 0.2% even with Nvidia rising 0.5% ahead of its results on Wednesday. In premarket trading, semis are higher with Defensive sectors outperforming Cyclicals; large-cap Industrials are in the green. In Europe, major markets are all lower with France the biggest laggard on fears of gov’t stability; Germany and UK the relative areas of safety. Commodities are weaker, dragged by Energy. Key events today include the August Philadelphia Fed non-manufacturing index and July preliminary durable goods orders (8:30 a.m.), June FHFA house price index and S&P CoreLogic home price indexes (9 a.m.), August Richmond Fed manufacturing and business conditions indexes and Conference Board consumer confidence (10 a.m.). All eyes on Nvidia earnings tomorrow.

In premarket trading, Mag 7 stocks are mostly lower (Nvidia +0.4%, Microsoft -0.1%, Apple -0.1%, Amazon -0.2%, Meta Platforms -0.08%, Alphabet -0.2%, Tesla -0.4%). AMD (AMD) gains 2% after the company and IBM announced a quantum-centric supercomputing partnership. Here are some other notable movers:

• EchoStar (SATS) soars 58% after AT&T announced an agreement to buy spectrum licenses from the satellite broadband communication company for about $23 billion, adding an average of about 50 MHz of low-band and mid-band spectrum to AT&T’s holdings. AT&T (T) shares are up 0.6%.
• Eli Lilly & Co. (LLY) rises 1.8% after its experimental obesity pill helped patients lose 9.6% of their body weight in a trial that moves the company one step closer to a potential approval.
• Interactive Brokers (IBKR) climbs 3% after the S&P Dow Jones Indices announced that the automated-electronic broker will join the S&P 500 Index before trading opens Aug. 28, replacing Walgreens Boots Alliance Inc.
• Olaplex Holdings (OLPX) rises 6% after announcing the acquisition of Purvala Bioscience, a Boston-based biotech company.
• Semtech (SMTC) gains 3% after the semiconductor device company reported second-quarter results that beat expectations and gave an outlook that’s in-line with expectations.

Key corporate news:

• Eli Lilly & Co.’s experimental obesity pill helped patients lose 9.6% of their body weight in a trial that moves the company one step closer to a potential approval.
• EssilorLuxottica SA, the maker of Ray-Ban sunglasses, is exploring a potential deal to increase its stake in Japanese optical equipment manufacturer Nikon Corp., people with knowledge of the matter said.
• Interactive Brokers Group Inc. shares climb as much as 4.7% in premarket trading on Tuesday after the S&P Dow Jones Indices announced that the automated electronic broker will join the S&P 500 Index
• Brevan Howard Asset Management is set to hand a minority stake to Abu Dhabi’s Lunate in a milestone agreement for the macro-trading firm that turned the emirate into its biggest risk center in just a year after setting up a local office.
• Orsted A/S executives are working to reassure shareholders Tuesday after the Trump administration’s decision to halt one of the company’s two wind-power projects in the US raised questions about the viability of its proposed $9.4 billion stock sale.
• Indonesia’s newly established sovereign wealth fund has sounded out investors on a plan to raise $3.1 billion by selling so-called patriot bonds at below-market yields, people familiar with the matter said.

Overnight risk appetite was jolted after Trump said he had fired Federal Reserve Governor Lisa Cook for alleged criminal cause, stoking fears over the long-term outlook for inflation. The president also renewed his trade brinkmanship, threatening fresh tariffs and export restrictions on advanced technology and semiconductors in retaliation against digital services taxes abroad. Stocks and bonds were already under pressure after the optimism that followed Fed Chair Jerome Powell’s address at Jackson Hole faded on Monday. Doubts about the pace of easing are lingering ahead of an inflation report later this week, expected to highlight sticky price pressures.

“If the Fed is perceived as caving to pressure from the administration and lower rates prematurely to placate the White House, it risks inflation becoming more entrenched,” said Tom Essaye at The Sevens Report. “Since longer-dated yields trade primarily off inflation expectations, this pressure is boosting the 30-year Treasury yield.”

For the Fed, swaps imply about an 80% chance of a Fed quarter-point rate cut next month, with at least one more expected by year-end. Forcing out Cook would give Trump an opportunity to secure a four-person majority on the Fed’s seven-member Board of Governors. Her term wasn’t set to expire until 2038.  Trump said he had “sufficient cause” to fire Cook, the first Black woman to serve on the Fed Board in Washington, based on allegations that she made false statements on one or more mortgage loans.

In Europe, the Stoxx 600 fell 0.7% led by French assets which extended losses for a second day as investors fretted that Prime Minister Bayrou’s proposed confidence vote risks toppling his government. The CAC 40 slid 1.7%, leading declines across European bourses. Construction and banks sectors are among the worst performers, while mining and health care shares are leading gains. Here are the biggest movers Tuesday:

• Bunzl shares rise as much as 6.3% after the value-added distributor delivered first-half results broadly in line with expectations, reaffirmed its outlook and resumed its share buyback
• DiaSorin climbs as much as 4%, the most since mid April after Morgan Stanley upgrades to overweight as the bank continues to see strong prospects for the European diagnostics sector
• Huber+Suhner shares gain as much as 3.3% after Baader raised the recommendation to add from sell, citing strong growth ahead thanks to the firm’s optical circuit switch, which allows data centers to operate more efficiently
• Zurich Airport shares gain 3.1%, the most since May. Vontobel says first-half results topped expectations with strong travel demand, especially among local passengers
• Filtronic shares jump as much as 11% after SpaceX agreed to buy £47.3 million worth of the gallium nitride E-band product from the communication
• French stocks are the worst-performers in Europe on Tuesday after Prime Minister Francois Bayrou unexpectedly announced a confidence vote for next month, prompting a selloff in local assets
• British retail stocks drop after a raft of downgrades at Deutsche Bank. Analysts expect a squeeze in discretionary spending power as UK consumer confidence weakens amid concerns over expected tax increases and rising inflation
• Commerzbank shares fall as much as 6.3% after BofA downgrades the German lender to underperform from neutral, saying that its valuation appears stretched
• British American Tobacco shares slide as much as 2.9% as the maker of Dunhill, Rothmans and Camel cigarettes says CFO Soraya Benchikh is stepping down with immediate effect, after a little more than a year in the job

Earlier in the session, Asian stocks fell as a rally in Chinese equities paused amid signs of overheating, while earlier advances in the Japanese yen weighed on export-focused stocks. The MSCI Asia Pacific Index dropped as much as 1.1%, with tech firms Alibaba and Samsung Electronics among the biggest drags. Benchmarks in the Philippines, Japan and Hong Kong were among the biggest decliners in the region. Chinese gauges ended the day lower, after recording a few strong sessions on optimism that more retail money will flow into the market. Red flags are emerging following the surprise rally in onshore shares that’s mostly driven by liquidity rather than improved economic fundamentals. Japanese stocks underperformed in the region, as gains in the yen pressured exporters. Uncertainty around the Federal Reserve’s rate policy was exacerbated by US President Donald Trump’s move to oust Governor Lisa Cook, which weighed on investor sentiment. Elsewhere, South Korean stocks fell as investors grow impatient for concrete corporate reform measures and clearer insight into US tariffs’ impact on earnings.

“The threat to the independence of the Federal Reserve has exacerbated its difficulties in responding to a challenging economic and political environment,” according to a note from the UBS chief investment office. “The next move of the Federal Reserve remains the focus of attention, as investors are closely monitoring signs of further policy shifts.”

In FX, the Bloomberg Dollar Spot Index pared an earlier 0.3% drop to trade little changed, while the euro swung between gains and losses as the common currency got caught between Fed noise and French political risk.

In rates, treasuries are mixed with 30-year yields up 4 bps to 4.94% while two-year yields slip after Trump ousted Fed governor Lisa Cook for mortgage fraud, setting up a legal fight with the central bank, which he’s aiming to remake in pursuit of interest-rate cuts. With shorter-maturity yields little changed to lower, curve spreads widened, pushing 5s30s over 115bp for the first time since 2021 even as Treasury auctions of 2-, 5- and 7-year notes is set to begin. The 30-year is about 2bp higher on the day near 4.95%. Short-maturity yields reflected higher probability of Fed rate cuts, with the 2-year lower by about 1.5bp; swap contracts linked to future Fed rate decisions continue to fully price in one quarter-point rate cut this year in October and a second one by year-end. Month’s final coupon auction cycle begins with $69 billion 2-year note sale at 1pm New York time; WI yield near 3.68% is lower than 2-year auction results since last September. French 10-year yields slip 1 bp to 3.51% as the spread over Germany widens by another 2 bps to the widest since April.

In commodities, WTI crude drops 1.3% to near $64 a barrel. Spot gold rises $10. Bitcoin rises 0.7%.

Looking at today's US economic data calendar we get the August Philadelphia Fed non-manufacturing activity gauge and July preliminary durable goods orders (8:30 a.m.), June FHFA house price index and S&P CoreLogic home price indexes (9 a.m.), August Richmond Fed manufacturing and business conditions indexes and Conference Board consumer confidence (10 a.m.) Fed speaker slate includes Richmond Fed President Barkin repeating his Aug. 12 remarks on the economy (time TBD). We also get Nvidia’s results out after the US close tomorrow (with a +33.9% gain, Nvidia has again been the best performer in the Mag-7 year-to-date, but the past couple of quarters saw it deliver smaller earnings surprises after its euphoric growth during 2023-24). Rounding out US events, in tariffs, the "de minimis" exemption will end this Friday, while additional 25% tariffs on India (taking the total levy to 50%) are due to come into effect on Wednesday

Market Snapshot

• S&P 500 mini -0.1%
• Nasdaq 100 mini -0.1%
• Russell 2000 mini -0.2%
• Stoxx Europe 600 -0.8%
• DAX -0.6%, CAC 40 -1.8%
• 10-year Treasury yield +3 basis points at 4.3%
• VIX +0.6 points at 15.37
• Bloomberg Dollar Index -0.1% at 1206.27
• euro +0.1% at $1.1634
• WTI crude -1.2% at $64/barrel

Top Overnight News

• Donald Trump escalated his battle to exert more control over the Fed by moving to fire Lisa Cook over allegations she falsified mortgage documents. Cook said the president has no authority to oust her, and she won’t quit, setting the scene for a legal battle. Trump’s move may become a test of the Supreme Court’s intentions when it signaled earlier this year it would shield the Fed from at-will removal of board members. BBG
• The U.S. will increase tariffs and impose export restrictions on countries that tax or regulate U.S. tech firms, President Trump said on Monday evening, in his most direct threat to retaliate against nations that he views as discriminating against companies such as Google and Meta Platforms. WSJ
• Trump said on US stakes in companies, that he wants to get as much as he can and hopes to have many more cases like Intel, while he added there will be other cases.
• A senior Chinese trade negotiator is heading to Washington this week for what is expected to be the first dialogue in the U.S. capital, according to people familiar with the matter, as both sides seek to establish regular communication during an extended tariff truce. WSJ
• An announcement regarding the US-Japan trade deal involving a $550 billion investment vehicle is due this week, Commerce Secretary Howard Lutnick told Fox. BBG
• The US outlined plans to implement a 50% tariff on products from India. A draft notice said the levies would apply from 12:01 a.m. ET tomorrow. BBG
• Refiners in India, among the largest buyers of Russian crude, are planning to trim their purchases in the coming weeks, a modest concession to Washington’s hawks less than a day ahead of a hike in US tariffs, but also a signal that the country has no plans to sever ties with Moscow. BBG
• France's minority government looked increasingly likely to be ousted next month after three main opposition parties said they would not back a confidence vote which Prime Minister Francois Bayrou announced for September 8 over his plans for sweeping budget cuts. RTRS
• The intensifying Ukrainian drone campaign against Russian refineries has taken some 13% of Russia’s fuel production offline, according to analysts. Sanctions imposed by the West after the 2022 invasion, meanwhile, have limited Moscow’s ability to repair infrastructure and service remaining installations, and forcing them to ration. WSJ
• The Fed’s John Williams said the neutral interest rate may not be much different than before the pandemic. He didn’t elaborate but the latest median estimate of the neutral rate among Fed officials was 3%, up from 2.5% prior to Covid-19. BBG

Trade/Tariffs

• US President Trump threatened on Truth Social to impose substantial additional tariffs on countries that do not remove discriminatory actions such as digital taxes, legislation, and rules against US tech companies, while he also threatened export restrictions on tech and chips.
• According to Politico, citing Top Trade MEP Lange, the European Commission is expected to reveal its proposals to lift tariffs on US industrial goods and cars.
• South Korean President Lee's office said Lee and US President Trump talked about shipbuilding and that Trump stressed his support for Lee, while it added that the mood from the meeting was good enough that a written joint statement was unnecessary and the meeting was an opportunity for the leaders to get close to each other, rather than discussing the specifics on trade.
• South Korean adviser Wi said details on trade talks still need to be determined and progress has been made on modernising the alliance, while Wi added that Trump and Lee had meaningful talks about nuclear energy.
• Chinese top trade negotiator Li Chenggang is set to head to the US as talks resume and will meet with US Trade Representative Greer and senior Treasury Department officials later this week, according to WSJ. It was later reported that a US government spokesperson said Washington welcomes Chinese efforts to reduce its persistent and massive trade surplus with the US.
• US President Trump’s administration reportedly weighs visa sanctions for EU and EU member state officials over the bloc's digital services act, according to Reuters citing sources.
• Canadian and US officials are to meet after Canada removes some tariffs, according to Bloomberg News.
• Brazil's Foreign Minister Vieira said Canada and the South American bloc Mercosur are to resume negotiations for a free trade agreement, while he added a joint decision was made to resume the negotiations and there will be an important meeting in October regarding Canada-Mercosur talks.
• Indonesia's chief tariff negotiator says the US agrees in principle to exempt palm oil, cocoa and rubber from 19% tariffs.
• Morgan Stanley expects Fed to cut rates by 25bps in September and December (prev. saw no rate cuts in 2025); now expects 25bps cut in March, June, Sept and Dec in 2026, taking terminal target range to 2.75-3.00%

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly lower after global markets faded last Friday's post-Powell dovish reaction, while Trump also moved to fire Fed Governor Cook and threatened to impose substantial additional tariffs on countries that do not remove digital taxes and regulations against US tech companies. ASX 200 retreated amid a continued deluge of earnings releases including from the likes of Coles and Fortescue. Nikkei 225 underperformed with notable weakness seen in power names including TEPCO, and with Nissan pressured as Mercedes-Benz is to offload its 3.8% stake in the Japanese automaker, while participants also digested Services PPI data and Japan's top tariff negotiator is set to travel to the US as early as this week. Hang Seng and Shanghai Comp pared early losses and returned to flat territory with some resilience seen after another firm liquidity operation by the PBoC, while it was also reported that China's top trade negotiator Li Chenggang is set to head to the US and will meet with US Trade Representative Greer and senior officials at the Department of the Treasury later this week. US equity futures (ES -0.1%, NQ -0.1%) lacked demand amid Fed independence concerns and after Trump's latest tariff warning, while participants also await earnings from NVIDIA on Wednesday. European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.5% after the cash market closed with gains of 0.8% on Monday.

Top Asian News

• RBA Minutes from the August meeting stated the board saw a strong case for a 25bps cut in the Cash Rate and judged some further reduction in the Cash Rate is likely needed over the coming year, while the stance of policy was still judged somewhat restrictive and it noted the pace of rate cuts would be determined by incoming data and the balance of global risks. RBA Minutes also stated that the board saw arguments for both a gradual pace of easing and for a faster pace, as well as noted the labour market was still a little tight, inflation remained above the midpoint, and domestic demand was recovering. Furthermore, it said uncertainty about spare capacity and the neutral rate also argued for gradual easing, but faster easing might be needed if the labour market was already in balance, risking inflation undershooting the midpoint.
• Japan will invest USD 68bln in India over 10 years including in AI and chips, while India and Japan's PMs intend to revise their countries' joint declaration on security cooperation for the first time in 17 years, according to Nikkei.

European bourses (STOXX 600 -0.7%) began the session on the backfoot and continue to languish around these levels, driven lower by notable underperformance in Paris; France's Government is at risk of collapse after PM Bayrou called for a confidence vote. European sectors opened almost entirely in the red and continued their bearish bias throughout the morning. The underperformers are led lower by French heavyweights, hurting the likes of Banks, Construction and Insurance. French listed Socgen, BNP Paribas, Vinci, AXA and Alstom are the underperformers in the CAC, with losses ranging between -8% to -4%.

Top European News

• UK think tank Resolution Foundation's analysis highlighted a rapid weakening of the jobs market and warned the UK unemployment rate could hit 5% in the three months to August which would be the highest level since the start of 2021, according to FT.
• French Finance Minister Lombard says certainly not resigned to Government falling on September 8; needs to find path to prepare the 2026 budget which will be a recovery budget.

FX

• DXY is steady after Monday's paring of the post-Powell downside. The DXY took a brief leg lower overnight after US President Trump posted a letter removing Fed Governor Cook from her position. If successful, this would put Trump on course for a majority on the Fed board. That being said, Cook has been defiant in stating that she will not resign and that President Trump has no authority to fire her. For today's docket, US durable goods orders and consumer confidence are both due on deck. DXY held above support via its 50DMA at 98.06.
• EUR is resilient despite an unfavourable Eurozone risk backdrop over the past 24 hours. French politics is back in the headlines after French PM Bayrou called for a vote of no confidence on his government's fiscal plans on September 8th. Whilst the EUR is unfazed today, French assets are showing greater concern with the CAC 40 down over 2% and the FR/GE spread at its widest level since April. EUR/USD is back below its 50DMA 1.1651 and towards the bottom end of Monday's 1.1603-1.1723 range.
• JPY is slightly firmer vs. the USD but unable to hold onto the bulk of its APAC gains that were seen as the risk mood soured post-Trump/Cook. A decline in services PPI had little follow-through to the JPY. USD/JPY delved as low as 147.00 overnight, with the pair unable to test its 50DMA to the downside at 146.91.
• GBP is slightly firmer vs. the USD as UK participants return to market after the long weekend. UK traders return to little in the way of positivity however, with the latest BRC shop price data showing that UK food inflation in August rose to its highest level since February 2024. That being said, ING writes that EUR/GBP looks to stay offered this week as French politics prompts some reassessment of long euro exposure. Cable ran out of steam ahead of its 50DMA at 1.3492.
• Antipodeans are both are marginally weaker vs. the USD alongside the downbeat risk tone. There was little follow-through into AUD from the RBA minutes release, which showed that the board saw a strong case for a 25bps cut in the Cash Rate and judged some further reduction in the Cash Rate is likely needed over the coming year.
• PBoC set USD/CNY mid-point at 7.1188 vs exp. 7.1670 (Prev. 7.1161)

Fixed Income

• USTs are trading on the back foot today and lower by a handful of ticks, to currently trade in a 111-25+ to 112-03+ range. A tinderbox of catalysts for markets to digest on Monday and overnight, including trade developments and US President Trump’s decision to fire Cook. On the latter, ING highlights that “the US 2-30 year yield curve broke to a new cyclical high overnight at 122bp”, levels not seen since the start of the Russia-Ukraine war. Ahead, some Tier 2 US data, and with more focus on 2yr supply.
• Bunds are outperforming across global paper today, seemingly catching a “safety” bid, following on from the increasing risks of a French government collapse (discussed in OAT section). Currently trading in a 129.15 to 129.45 range, with price action fairly muted throughout the morning.
• OATs are lower today to the tune of around 10 ticks, extending on the prior day’s losses where French paper reacted to PM Bayrou’s calls for a confidence vote – it doesn’t seem likely he will get that (discussed below). In terms of price action today, OATs have traded in a 121.54 to 121.98 range. As it stands, the 10y German-French spread sits at 78.06bps, heading back towards levels seen on Liberation Day. As a reminder, in the prior session the spread widened roughly 4.3bps, a move which has continued slightly to make a total widening of 12.8bps at most (from Monday's open to current).
• Gilts are the clear underperformer today as UK paper returns from holiday, and plays catch-up to the broader losses seen in the prior session. Of course, French/US political uncertainty is factoring, but also as UK fiscal woes gradually come into the forefront of traders’ minds. As it stands, political commentary has been exceptionally downbeat on how Chancellor Reeves will enact her high growth/no tax increase budget this autumn.

Commodities

• Crude futures trade with losses near USD 0.90/bbl amid a downbeat mood across global markets, and a broad reversal of geopolitical gains made on Monday as Ukrainian Strikes on a Russian oil terminal did not have a great impact to any barrels.
• Spot gold is boasting gains, and is the clear outperformer in the metals space, with Silver flat and Palladium and Platinum continuing losses. The yellow metal benefits after US President Trump ordered the removal of Fed Governor Lisa Cook, alleging false mortgage statements. XAU/USD is currently trading around 3,375/oz.
• Copper outperforms in the base metals space, as it catches up to Chinese optimism after LME trade was closed on Monday. The industrial metal trades within USD 9,792.35-9,867.38/t parameters.
• Chile's mining regulator added requirements to restart sectors of Codelco's El Teniente copper mine affected by the collapse.
• Shanghai Futures Exchange lowers price limits and trading margins for aluminium alloy futures effective from close of settlement on 28 August

Geopolitics: Middle East

• US President Trump said Gaza has to be settled soon, while he thinks they will have a good and conclusive ending within the next 2-3 weeks.
• Australian PM Albanese said the Iranian government directed at least two antisemitic attacks in Australia and the Iranian ambassador will be expelled, while he added that operations at Australia’s embassy in Tehran have been suspended and Australian diplomats are now safe in a third country. Furthermore, the government will legislate to list Iran’s Islamic Revolutionary Guard Corps as a terrorist organisation.

Geopolitics: Ukraine

• US and Russian government officials have discussed several energy deals on the sidelines of negotiations in August that sought to achieve a peace deal in Ukraine, according to multiple sources, via Reuters; talks included Russia purchases of US equipment
• Ukrainian President Zelensky said he had a good meeting with US Envoy Kellogg and that Ukraine values US readiness to be part of Ukraine's security architecture, while he discussed with Kellogg how to exert pressure on Russia to hold "real talks" to end the war and said military cooperation is important with the US, particularly on purchases of weapons and accord on drones. It was separately reported that US and Ukrainian officials are expected to meet later this week.
• US President Trump said regarding talks with Russian President Putin that they are also talking about nuclear missiles and stated "we" would like to denuclearise, while he added that Putin is reluctant to meet Ukrainian President Zelensky because he does not like him. Furthermore, Trump later commented that he discussed denuclearisation with Putin, and thinks that Russia and China would be willing to do it.
• US President Trump said Russian President Putin and Ukrainian President Zelensky should meet, while Trump said he may be there for the Putin-Zelensky meeting or may not and there could be consequences if they do not meet, but we will see what happens over a week or two and at that point, he will step in.

Geopolitics: Other

• US President Trump thinks they can do something on North and South Korea and he looks forward to meeting with North Korean leader Kim, while South Korean President Lee said Trump is the only person who can solve the North Korean issue and that he would like to meet Kim this year.
• South Korean President Lee said he agreed to work closely with US President Trump for peace in the Korean peninsula and noted that North Korea keeps developing its weapons programme as a result of sanctions. Furthermore, Lee said problems cannot be solved solely by pressuring North Korea and that North Korea reached a stage with capabilities of making 10-20 nuclear weapons per year, while it was separately reported that South Korean President Lee invited US President Trump to APEC to pursue a meeting with North Korean leader Kim, according to Newsis.
• North Korea's military said US-South Korea drills prove a US intention to occupy the Korean peninsula, according to KCNA.

US Event Calendar

• 8:30 am: Jul P Durable Goods Orders, est. -3.8%, prior -9.4%
• 8:30 am: Jul P Durables Ex Transportation, est. 0.2%, prior 0.2%
• 8:30 am: Jul P Cap Goods Orders Nondef Ex Air, est. 0.2%, prior -0.8%
• 8:30 am: Jul P Cap Goods Ship Nondef Ex Air, est. 0.17%, prior 0.3%
• 9:00 am: Jun FHFA House Price Index MoM, est. -0.1%, prior -0.2%
• 9:00 am: Jun S&P CoreLogic CS 20-City YoY NSA, est. 2.08%, prior 2.79%
• 9:00 am: Jun S&P CoreLogic CS U.S. HPI YoY NSA, prior 2.25%
• 10:00 am: Aug Richmond Fed Manufact. Index, est. -11, prior -20
• 10:00 am: Aug Conf. Board Consumer Confidence, est. 96.5, prior 97.2

DB's Jim Reid concludes the overnight wrap

Readers rejoining us after the bank holiday weekend in the UK will have plenty to catch up on since Powell’s dovish tilt in Jackson Hole drove a buoyant market mood just in time for the European close on Friday. That strong cross-asset rally lost momentum on Monday, while President Trump's move last night to dismiss Fed Governor Lisa Cook has led long-end Treasuries to sell off amid renewed concerns over Fed independence. Meanwhile in Europe, political risks resurfaced in France yesterday, where the minority government is at risk of collapse in a confidence vote expected on September 8. French assets struggled in response, with the 10yr BTP-OAT spread falling its lowest level since the start of the century.

Starting with the overnight Fed news, in a letter posted last night Trump claimed he had "sufficient cause" to dismiss Governor Cook and was removing her effectively immediately. This follows allegations that Governor Cook had applied for “primary residence” mortgages on two separate properties within two weeks of each other in 2021 before she became Fed Governor. In a statement reported overnight, Cook challenged the move, saying she will not resign as "President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so". So this could turn into the most market-relevant test so far of Trump's ability to fire officials of independent government agencies. Were Cook's dismissal to hold, it would open up another seat for Trump to fill on the seven-person Federal Reserve Board. With Stephen Miran nominated for the seat recently vacated by Governor Kugler and with Governors Waller and Bowman dissenting in favour of a rate cut at the July meeting, this would increase the prospects of a dovish majority on the Board.

With Trump’s move seen as further escalating the US administration’s attempts to exert influence over the Fed, the dollar saw a kneejerk drop of nearly -0.4% on the news though it has largely reversed this decline as I type. Gold spiked by +1% and is holding on to most of this overnight gain, while futures on the S&P 500 (-0.14%) and the Nasdaq (-0.18%) are modestly lower. Meanwhile, the Treasury curve has seen a sizeable steepening, with the 2yr yield trading -0.7bps lower but the 10yr up +2.9bps and the 30yr +4.5bps to 4.93%. This has brought the 2s30s slope to 122bps, its steepest since January 2022 when the Fed had not yet started its post-Covid hiking cycle.

Earlier on Monday Treasuries had reversed some of Friday’s rally, with 2yr yields up +3.2bps (-9.7bps Friday) and 10yr up +2.5bps (-7.4bps Friday) even as markets still priced an 83% likelihood of a Fed rate cut in September (up from 71% before Powell spoke on Friday). The S&P 500 (-0.43%) lost ground after having its best day since May on Friday (+1.52%). The headline decline was mitigated by continued gains for the Mag-7 (+0.38%) as Nvidia rose +1.03% ahead of its results after market close tomorrow. However, there were broad declines otherwise with 80% of the S&P 500 constituents declining, which was the most in nearly six weeks.

As a brief recap, Powell’s speech at Jackson Hole showed a couple of notable dovish shifts. First, as the Fed Chair suggested that “downside risks to employment” were rising and second, as he noted that the “shifting balance of risks may warrant adjusting our policy stance”. This left a sense that in Powell’s view further labour market weakening was no longer needed to ease policy. Our US economists updated their near-term Fed view in response, now expecting a 25bps cut next month, with further 25bps cuts in December and March (see their reaction on Friday for more).

Remarkably, the moves over the past couple of sessions have been a near-carbon copy of those seen after Powell signaled impending rate cuts at Jackson Hole last year (see our EMR at the time). Both in terms of a strong cross-asset rally on Friday partially reversing on Monday, and in terms of the S&P 500 being within 1% of its all-time highs. Last year this was followed by 100bps of rate cuts over the next three FOMC meetings. This time round – with the fed funds rate now 100bps lower, unemployment stable at 4.2% over the past 12 months and core PCE inflation at 2.8% a smidgen higher than it was a year ago – it’s hard to see economic fundamentals justifying swift policy easing.

In Europe, the big news yesterday came in France where Prime Minister Bayrou called for a confidence vote as he seeks to force support for his budget plan that foresees EUR 44bn of fiscal tightening. The vote is due on September 8 and comments from opposition parties suggest that Bayrou’s minority government is likely to lose it. The government would need to achieve a simple majority in the National Assembly to survive, but officials from both the far-left and the right-wing populist RN said yesterday that they would vote against it. It would then require many of the centre-left Socialist MPs to support the government, but the Socialists’ leadership have suggested overnight that the Party will also vote against it. Should the government lose the confidence vote, President Macron may seek to nominate a different Prime Minister to form a government, who would then face the immediate challenge of passing a 2026 budget.

Alternatively, Macron could call snap elections. Current polls point to another fragmented outcome as happened after the summer 2024 snap vote, though with the far-right RN leading in polls, investors would be watchful whether it could translate this lead into an outright majority this time round.

Following the news, the 10yr OAT-Bund spread widened by +5.3bps to 75bps, its highest level since April, while the spread on Italian BTPs over OATs fell to just 9.8bps, its lowest since the start of our Bloomberg series in 1999. France’s CAC index (-1.59%) posted its biggest decline in three weeks, while the euro had its worst day against the dollar so far this month (-0.85%), closing at 1.1618.

Elsewhere in Europe, bonds and equities saw milder declines on Monday. 10yr bunds yield rose +3.6bps to 2.76%, helped by a decent August Ifo survey that saw its expectations series rise from 90.8 to 91.6, its highest level since February 2022. However, stocks still lost ground across the continent, with the Stoxx 600 down -0.44% as both the DAX (-0.37%) and FTSE MIB (-0.19%) posted modest declines.

Recapping yesterday’s other data releases, US new home sales totaled 652k in July, exceeding expectations (630k) as June data was revised higher from 627k to 656k, while median new sales prices edged lower. Meanwhile, we saw underwhelming regional readings in the Chicago Fed’s activity index (-0.19 vs -0.11 exp) and the Dallas Fed’s manufacturing index (-1.8 bs -0.9 exp).

Overnight in Asia, equity markets are reflecting Monday's losses from Wall Street as well as President Trump’s intensified rhetoric on tariffs yesterday evening. Trump’s comments included a threat of '200% tariffs or something' on China if it does not export rare-earth magnets. He also warned of fresh tariffs and export restrictions on countries that do not remove digital taxes and associated regulations that hit American technology companies. Both the Nikkei (-0.88%) and the KOSPI (-0.94%) are seeing notable declines.

Chinese stocks are mixed this morning, with Hang Seng down -0.22% but the CSI (+0.14%) and the Shanghai Composite (-0.11%) edging higher after rising for the previous four sessions. Indeed, the Shanghai Composite has surged by over +9% since August 1, reaching a new 10-year high on Monday on news of potential additional property market assistance. In a note yesterday (see here ), our China economists dissect what has driven the sudden risk-on performance of China’s on-shore market despite lacklustre economic data and discuss what to expect moving forward.
Looking forward to the rest of the week ahead, Friday will see key inflation data out on both sides of the Atlantic. In the US, our economists expect the July core PCE deflator to come in at +0.29% MoM (vs. +0.26% previous), bringing the YoY rate a tenth higher to 2.9%, with risks of this even rounding up to 3.0%. A 3% reading would be the highest since March 2024. In Europe, we expect the flash August CPI prints for Germany, France and Italy to show a slight uptick in annual inflation (see more from our European economists here).

Before that, we have Nvidia’s results out after the US close tomorrow. With a +33.9% gain, Nvidia has again been the best performer in the Mag-7 year-to-date, but the past couple of quarters saw it deliver smaller earnings surprises after its euphoric growth during 2023-24. Rounding out US events, in tariffs, the "de minimis" exemption will end this Friday, while additional 25% tariffs on India (taking the total levy to 50%) are due to come into effect on Wednesday.

Tyler Durden Tue, 08/26/2025 - 08:29

The Gauntlet Of Fed Chair Powell

Authored by Tuomas Malinen via Substack,

Chairman of the Federal Reserve Jerome Powell signaled a September rate cut in his speech in Jackson Hole on Friday. During the past decade or so, the annual meeting of the most powerful central bankers in Jackson Hole has turned from something we (macro)economists looked forward to into a ‘snake pit’ of central bank policy.

Back in the day, we looked for signals considering monetary policy, but in recent years we have started to worry about messages on world domination.

This year, it is likely that Central Bank Digital Currencies (CBDCs) and the independence of central banks, particularly the Fed, have been prominent topics of discussion, and they can only be described as tools for financial enslavement. The former is nothing more than a plan to take over the global financial system, while the latter is whether the central banks are in government control or not. The implications of the combination of these topics could not be more worrying for us regular citizens.

My friend, who works in a high position at the Bank of Finland, told me in the spring that there’s almost zero understanding towards the Central Bank Digital Currency, or CBDC, pushed by the leadership of the European Central Bank, ECB, among the economists at the BoF. The central bankers within the euro area I’ve spoken with in recent years tend to agree.

My friend summarized all this by noting that “Why on earth should a central bank start to compete with commercial banks?”

This does not make any sense, unless you add a conspiracy into it by noting that the attitude of central bankers towards CBDCs tends to change only at the very top (the leadership of the ECB).

I detailed the likely dark aims of CBDCs in my first entry into the Apocalypse Scenario. It was actually rather worrying, and intriguing, how squarely CBDCs fit into my (absolute) worst-case scenario for the world. It was like they were created for the domination of the financial world, and they probably are, summarized by this part of my piece:

They [commercial banks] would lose most of their freedoms as independent actors. While central bankers would not, at least in the very beginning, enact tough guidelines towards their newly acquired ‘commercial branches’ this would almost certainly change, when the economy falls into recession or if there was some major crisis. In such a case, the central bank would most likely issue strict guidelines on all transactions of banks, dictating what you could buy and from where (consider for example the sanctions against Russia). Moreover, in such situations, central bank and government policies would, most likely, also be strictly enforced on all lending activities. 

This means that lending to both corporations and consumers would be monitored, and only those projects and investments would get financed, which would follow the agenda and policies of the government (and the ‘elite’). 

Think, for example, of the enforcement of the ‘European Green Deal’ in all investment activities.

The striking fact is that there’s even academic research providing a very conspiratorial conclusion on the role of CBDCs in the financial system. Jesús Fernández-Villaverde, Daniel Sanches, Linda Schilling, and Harald Uhlig note in their 2021 paper, published in the Review of Economic Dynamics, that a central bank could be forced to use its profits and its ability to divert lending towards politically desirable ends, such as green initiatives, social, gender, or racial equality, universal basic income, or even towards supporters of politically acceptable political parties, if the independence of the central bank were to be broken. Such outspoken criticism against central banks and speculation on massive political corruption of central banks are utterly unheard of in a respected macroeconomic journal.

In the worst-case scenario, central bank digital currencies could be used to control what you can buy and what investments get financed. For example the European Central Bank (ECB) is already controlling the latter with loans to “dirty” industries (like coal) treated in the balance sheets of banks in such a way that banks get punished for issuing them. This is being done, I hear, despite the major energy issues faced by Europe, which naturally raises questions about the motives and aims of our leaders.

Now let's move back to the standard signals. Chair Powell noted on Friday that, “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” This central bank jargon implies that the Federal Reserve (the Federal Open Market Committee) is getting ready to lower rates. This is happening despite the increasing inflation pressures and the U.S. Producer Price Index, or PPI, reaching its highest monthly growth in July since March 2022. Illogical, yes, but our quest for the probable solution doesn't require extensive exploration.

Federal government current expenditures: Interest payments in billions of U.S. dollars. Source: St. Louis Fed, U.S. Bureau of Economic Analysis.

The administration of President Trump has gone on a mad spending spree, a possibility we at GnS Economics warned about in January. In just July alone, the U.S. federal government posted a $291 billion deficit, the 2nd largest July deficit on record. President Trump wants to bring down the interest rates so that it would bring some relief for massive interest rate costs (remember that the U.S. 2024 federal budget was $6.8 trillion), and he has been putting a lot of heat on Chairman Powell and FOMC to accomplish this. Yet, are (semi-high) interest rates really the root of the problem? They are not.

From the Bipartisan Policy Center.

Cutting interest rates would solve nothing, because this is a spending and not an interest cost issue, but it would bring temporary relief with a (massive) downside. Per the Kobeissi letter (and Wolf Street):

President Trump is pushing the Federal Reserve to cut interest rates into a darkening inflation picture just so that he would be able to finance an unsustainable borrowing spree from an unsustainable starting point. President Trump has always been good at playing with debt, but now he is likely to be over his head, like we saw in April.

In our (consensus) forecast for 2025 we noted that

The economic policy of President Trump will be first concentrated on helping the economy with tax cuts and shielding U.S. interests with tariffs. However, the deteriorating economic picture in the U.S., and globally, and growing issues in the bond markets will eventually force him to enact drastic spending cuts, which will cause a recession.

• President Trump will float the idea of U.S. defaulting on its federal debt at some point, but will eventually walk back from it, when the implications of such a move to the U.S. and global banking sectors is made clear to him.

Therefore, my dear President, do play freely with the bond market, but please remember that it delivers a nasty bite. And, to Fed Chair J. Powell, I leave this immortal quote by the (great) Paul Volcker:

It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less.

[I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with 'free banking.'

The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.

Tyler Durden Tue, 08/26/2025 - 08:05

Why The IEA Reinstated Its "Business As Usual" Scenario

Authored by Haley Zaremba via OilPrice.com,

• The IEA has reversed course by reintroducing the “Current Policies Scenario” in its flagship World Energy Outlook, marking a significant policy shift.

• The debate highlights the inherent subjectivity of data in energy modeling and the political stakes tied to forecasting fossil fuel demand.

• U.S. political leaders and fossil fuel advocates pressured the IEA, arguing that its previous modeling discouraged oil and gas investment and threatened energy security.

A great debate is unfolding about the subjectivity of data in producing the energy outlooks that guide public policy and private spending, shaping the future of the global energy sector. The International Energy Agency has been caught in the crossfire of a partisan debate in which environmental and energy industry leaders vehemently disagree about what constitutes accuracy, truth, and good science in data, and particularly in the agency’s flagship World Energy Outlook report. And this year, the fossil fuels industry is getting its way.

It’s easy to forget that data is not objective, nor is it purely subjective. This false dichotomy, according to data expert Melanie Feinberg, “distorts the empirical realities of data collection, the challenging work of forcing unruly phenomena to speak in clean, distinct, ideally quantitative phrases.” Instead, good science is about recognizing the responsibility of being an active decision-maker to produce methods and outputs that most accurately represent complex realities. 

Human-led decisions and difficult choices are being made at every step of developing a report like the International Energy Agency (IEA)’s annual World Energy Outlook – from how to collect and clean the data to how to analyze and report on it.

One of those critical choices is how the agency chooses to construct its projected scenarios for the clean energy transition and the phaseout of fossil fuels. 

The choice that has recently come under scrutiny is whether to include a “Current Policies Scenario” along with the typical scenarios that the agency uses to make its forecasts.

The IEA based its “business as usual” outlooks on current policies until 2019, when the agency decided to switch to a “Stated Policies Scenario,” which it believed to be more accurate.

The difference is that the Stated Policies Scenario assumes certain future policy actions, such as the extension and renewal of policies with end dates.

As an example, before the Inflation Reduction Act, the United States implemented solar and wind power tax credits that expired every few years, at which point they would be reviewed and adjusted as needed. A Current Policies Scenario only includes the policy as written, meaning that the scenario assumes those tax credits would end, since their (likely) renewal wasn’t in writing. A Stated Policy Scenario assumes, on the basis of policy analysis and stated aims, that the tax credits would be renewed. The argument is that while this is not based on concrete policy, it is a more accurate representation of policy – and ultimately a more accurate projection. 

This change in modeling has resulted in projections that foresee a much more rapidly approaching peak fossil fuel demand. This change has yielded some harsh critiques, especially from Republican leadership. Robert McNally, president of research and analysis firm Rapidan Energy and former energy advisor for President George W. Bush, wrote an op-ed earlier this year slamming the IEA for being “neutered” by “climate politics.” McNally wrote for the Wall Street Journal that the EIA’s energy modeling is posing “significant risks” to global energy systems by encouraging underinvestment in oil and gas, thereby undermining “its vital security mission.”

The Trump administration has also been a vocal critic of the IEA, and has recently threatened to withdraw from the agency due to what it sees as "unrealistically green” forecasting.

 “We will do one of two things: we will reform the way the IEA operates or we will withdraw,” said Energy Secretary Chris Wright last month.

“My strong preference is to reform it.”

And now we know that the IEA has yielded to this pushback.

The international agency very quietly confirmed in March calendar notice that this year will mark the much-debated return of the Current Policies Scenario.

The IEA statement noted that this year’s report will include a "wide spectrum of possible outcomes that today's markets and policies imply," encompassing “exploratory scenarios that flow from different assumptions about existing policies, including the Current Policies Scenario, as well as normative pathways that achieve energy and emissions goals in full."

This marks a major policy reversal on the part of the agency, which had previously ardently defended its choice to drop the model.

It also reflects a rapidly changing global policy environment that is more concerned with immediate-term energy security rather than long-term climate realities.

Tyler Durden Tue, 08/26/2025 - 06:30

Trump Family Went Pro-Crypto After Biden 'Weaponized' Banks

Eric Trump, son of US President Donald Trump, said the family became pro-crypto after they were “debanked” in the aftermath of the Capitol attack incident in early 2021.

Several banks shut down hundreds of bank accounts related to the Trump Organization without providing a reason, Trump told The Wall Street Journal, which led to the group having to rely on regional banks before finding a new, unidentified bank, to which they migrated. 

“At that time, I realized how fragile the financial system was and how easily it could be weaponized against you,” said Trump.

CoinTelegraph's Tarang Khaitan reports that the American businessman said that the reason was purely political in nature, which led him to become pro-crypto, as industry insiders told him that the Biden administration was restricting crypto companies from accessing banking services by applying regulatory pressure.

“This whole system was weaponized against them, no different than it had been weaponized against us for different reasons.”

Notably, The Trump Organization sued Capital One in March this year, claiming the bank had closed their accounts due to political reasons, which caused considerable financial harm to the organization.

A month later, Trump said banks must adopt crypto or face extinction in 10 years.

Some claim that banks are sticking to operation chokepoint policies, with banks closing accounts owned by crypto firms.

Eric Trump also spoke in support of the tokenization of real-world assets.

“Why is it that if I wanted to refinance Trump Tower, I couldn’t tokenize this asset and put it on the street for billions of people around the world to otherwise invest in it?” said Trump.

Trump family’s growing ties to crypto

The Trump family has several ties to the crypto industry, which have become the subject of critics who allege that they have used it to enrich themselves. 

This includes Donald Trump’s official memecoin, TRUMP, launched days before getting inaugurated as the 47th US president.

World Liberty Financial was launched on Sept. 16, 2024, and currently offers the USD1 stablecoin. The website lists Donald Trump as co-founder emeritus, while his sons are listed as co-founders.

Trump’s sons Donald Trump Jr. and Eric Trump are the founders of American Bitcoin, a subsidiary of Hut 8, which raised $220 million to purchase Bitcoin and Bitcoin mining equipment.

According to an Aug. 11 report, Donald Trump has amassed a fortune of $2.4 billion from his crypto endeavors. 

Eric Trump denied allegations that the Trump family profited from his father being elected as the 47th president. He has also floated the idea of him or one of his family members potentially running for the presidency in the 2028 election.

Tyler Durden Tue, 08/26/2025 - 05:45

Nuclear War, Volcanos, & Trump's New $500 Note; Martin Armstrong Says Gold Is Going Much Higher

Via Greg Hunter’s USAWatchdog.com,

Five weeks ago, legendary financial and geopolitical cycle analyst Martin Armstrong warned his “Socrates” predictive computer program showed a “100% Chance of Nuclear War.”  After that, Trump was able to get Putin to Alaska to start meaningful peace talks between Russia and Ukraine.  The chance for war is still 100%, but now, that war may not involve America. 

Armstrong explains, “My sources in Ukraine are telling me the losses on the battlefield are approaching 1.8 million, 5 million fled to Russia, 8 million fled to the EU..."

"Ukraine is about ready to fall apart... I spread this to Washington and that is President Zelensky was sending $50 million per month to UAE.  So, Zelensky has been preparing to leave.  There is no way this guy could possibly retire in Ukraine.  They will kill him.”

Does this mean the war may be over?

Zelensky and nearly all of Europe’s leaders came to Washington recently to meet with President Trump, but it really was not to talk peace.  Armstrong says:

“The fact that all those leaders came to Washington - uninvited, they all met with Zelensky before they went to meet with Trump.  Why did they come?  Because they need war.  I have warned Washington.”

So, if Europe starts a wider war with Russia, will Trump stay out of it?  Armstrong says:

“Yes, Trump said no American troops from what I have been told.  Trump refuses to send any American troops to Ukraine as peacekeepers—period.”

Reading between the lines, does this mean Trump is putting the EU on notice we are not going to Article 5 in if you start a war?  Armstrong says, “Article 5 is voluntary..."

"  I have made this very clear to them in Washington.  You don’t have to participate. . .. I can’t stop the war.  The best I can do is reduce the amplitude.  If I can keep America out of this war, that is our best outcome...

Europe knows it’s in trouble financially.  They have $335 billion of Russian assets frozen.  France has about $71 billion...

The rumor going around right now is if there is a peace deal and they have to release those frozen assets, France can’t because they have been dipping into them.  Europe is a complete mess. 

When it comes down to handing back $335 billion in Russian assets, I am not sure Europe is prepared to do that.”

Armstrong says forget all the talk of the elite wanting to get rid of cash and replace it with digital currency.  Armstrong says, “No, no, no..."

"  Why is Trump talking about a $500 note. . .. Trump would not even contemplate doing a $500 bill if he was going to cancel the currency. 

Everybody else is cancelling currency and putting in capital controls, and Trump is going in the opposite direction. . .. 

Gold is still projected to go much higher because it is anticipating war.”

One of the surprising things Armstrong brought up are new signals from “Socrates” on increasing volcanic activity all over the world.  Hawaii’s Kilauea eruption happened for the 31st time since December on Friday.  It spewed lava for 12 hours, and then there was the recent eruption in Northeast Russia that had a huge eruption after 600 years of lying dormant. 

Armstrong says, “We have every data base in there.  Earthquakes, volcanos and temperatures back to 1869 from New York City.  It does not show global warming. . .. "

"The computer says we are heading to global cooling and not global warming...

The computer is showing from 2025 on, we are going to be seeing a lot more volcanic activity. 

I just got off the phone with someone from Italy, and they say the super volcano there is starting to become active.”

In closing, Armstrong says, “I still want to have one of those $500 notes.”

There is more in the 64-minute interview.

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Martin Armstrong, who will update us on war, the dollar and increased volcanos for 8.23.25

Tyler Durden Tue, 08/26/2025 - 05:00

Roblox Accused Of Enabling Predator Who Exploited 10-Year-Old Girl

A North Carolina mother is suing Roblox, accusing the gaming platform of enabling a predator to sexually exploit her 10-year-old daughter. 

The lawsuit, filed in state court, claims Roblox knowingly fostered a “pedophile hellscape” despite marketing itself as safe for children. The girl, referred to as Jane Doe N.L., allegedly endured “unimaginable harm” after a predator posing as a child groomed her on the app and coerced her into sending explicit photos, according to the NY Post.

According to the filing, the predator rewarded her with Robux, Roblox’s virtual currency, and threatened to revoke it if she didn’t comply. The complaint argues Roblox’s lax safeguards — including reliance on self-reported birthdates and, until late 2023, settings that allowed adults to message minors — directly enabled the abuse.

“Had Defendant disclosed the truth of what was really occurring on its app, Plaintiff’s mother would never have permitted Plaintiff to use this app without her strict supervision,” the lawsuit states.

Roblox denies wrongdoing. “We are deeply troubled by any incident that endangers our users, and safety is a top priority,” a company spokesperson said. The company insists it invests heavily in moderation and technology, adding: “We also partner with law enforcement and leading child safety organizations worldwide to combat the sexual exploitation of children.”

Still, the suit points to contradictions in Roblox’s public messaging. In 2019, Vice President Tami Bhaumik admitted that “digital civility did not exist at Roblox a year and a half ago,” while a former employee told Hindenburg Research: “You can keep your players safe, but then it would be less of them on the platform.”

Attorney Matthew Dolman, representing the family, called the case “a terrifying reminder of the world we live in where capitalist greed far outweighs humanity,” adding: “There have never been sufficient safety measures and protocols in place, and children are suffering unimaginably.”

Recall, days ago, LA Attorney General Liz Murrill sued Roblox Corp. in state court, accusing the California-based company of enabling predators to target children and “facilitate the distribution of child sexual abuse material” on its platform.

These lawsuits come less than a year after high-profile short seller Hindenburg Research published a sweeping investigation into Roblox, alleging the platform is not only a haven for sexual predators but also misleads investors about the size and engagement of its user base.

Hindenburg claimed its research uncovered “digital strip clubs, red light districts, sex parties and child predators lurking on Roblox” despite years of scandals and public promises to clean up the platform. 

According to Hindenburg, Roblox’s open search system allowed a self-identified under-13 account to join groups like “Adult Studios,” which had thousands of members allegedly trading child pornography and soliciting sexual acts from minors.

Tyler Durden Tue, 08/26/2025 - 04:15

Data Center Operators Rush To Secure Gas Connections In The UK

Authored by Irina Slav via OilPrice.com,

Data center developers in the UK are scrambling to get their facilities hooked to gas-fired generation capacity, the Financial Times has reported, citing five such projects planned for southern England.

“The national gas transmission network is ready to play a key role in facilitating this critical investment today while working in partnership with the electricity networks,” the FT quoted the chief commercial officer of National Gas as saying in comments on the news.

The Starmer government has made artificial intelligence one of its top priority areas of future economic growth, alongside its net-zero plans that involve a substantial reduction in the share of oil and gas in the UK’s energy mix—but not just yet.

According to the Financial Times report, the developers of those five data centers in southern England had already submitted formal applications to National Gas to get connected to the gas network.

At the same time, some developers were planning to build their own gas-fired power plants because of the long waits for national gas grid connections.

The proliferation of data centers has turbocharged electricity demand growth, prompting a rush to secure reliable generation capacity.

In the United States, power utilities are set to spend $212.1 billion in capex this year, which would be a 22.3% increase on the year as they race to secure new electricity supply for data centers.

In the UK, data centers are also driving an investment rush in nuclear.

Earlier this year, the Starmer government said it would partner with Big Tech majors to pursue an expansion in nuclear capacity to respond to the power demand of data center operators. 

Natural gas, however, has emerged as the Goldilocks power generation source for the AI industry as it can be built faster than a conventional nuclear power plant and generates lower emissions than a coal plant, while providing baseload supply, unlike wind and solar.

Tyler Durden Tue, 08/26/2025 - 03:30