"No Arrests!" But More 'Developments'...

Authored by James Howard Kunstler,

The frantic ceremonies of Christmas shopping climax now. . . the stockings are hung by the chimney with care. . . and the republic judders into the darkest season of an evil era.

You fear the one gift you have waited for lo these twelve months will not be delivered: the frog-marching of Brennan, Clapper, Comey, Strzok, HRC, Mayorkas, Monaco, Rosenstein, Priestap, Halper, Yates, Lynch, Garland, Wray, Haynes, Sullivan, Schiff, Warner, Eisen, Elias, Weissmann, Jack Smith. . . and many other deep state treason-goblins into the maw of a federal courthouse for processing like so many mackerel in a cat food cannery.

“No arrests!” is the melancholy cry heard from sea to shining sea.

It’s true.

A whole year ticked by and no accountability for the immense decade-long free-ranging crime-spree against our country by so many government officials. Did I leave out Mr. Obama? Yes. He would probably have to dangle as an “unindicted co-conspirator,” cuz president, and all. But maybe not. It’s open to interpretation, I grant you. . . assuming anyone in the Trump DOJ could actually get serious and move a folder off his/her desk. Anyway, Christmas is upon us and the MAGA minions sulk in despair. No arrests!

And no Epstein files for you either, Tiny Tim, after all this hassling, haggling, screwing-around, trash-talk, innuendo, duplicity, dissimulation, and subterfuge. What is in there, do you suppose, that the country couldn’t take? Photos of Bill Clinton riding Ghislaine Maxwell like a bucking bronco? Larry Summers naked as a manatee in the shallow end of the Little St. James pool? Tom Hanks chowing down on a roasted human heart? You see: that’s where the mind goes when the truth is withheld.

Anyway, Dan Bongino, good old Danny Boombatz, has left the building, visibly sadder but wiser.

Dan Bongino leaves the J Edgar Hoover Building

He is — no sarc here — a first-class American patriot. Do not doubt that.

He surely took the job as Deputy Director of the FBI because the president importuned him to do so, and how can you say no when a president calls? Yet, something happened to him in FBI HQ, some dark passage into altered consciousness, and now he is out.

It’s pretty obvious that he missed his wife and children, and his former life in Florida, and his days on the mic in his studio. . . and that he had to suffer being quartered on some dreary DC military base for his safety the whole time he served the FBI. I suppose he accomplished quite a bit of a routine, plodding, law enforcement nature — catching bad guys and such all year. But. . . and it’s a big but. . . he was not able to effectuate the rounding-up of the aforementioned deep state villains we all know about — and hardly anyone knew more about that gang than Danny B — and it must have really grated to see them all still out there, flapping their gums on MSNBC.

He connected the dots, month after month and year after year, on his celebrated podcast better than any reporter in whatever pathetic remnant of the news media still exists. He remembered all the names (as he always reminded his audience to do). He saw how the whole treasonous saga played out from RussiaGate to Arthur Engoron’s malodorous courtroom and he knew exactly how all the pieces fit together. And the whole year he was at the FBI he kept his mouth shut out of a sense of duty.

Which leads you to wonder, what might Dan Bongino have to say now that he is out of the FBI inner sanctum? He had a year to sift through every document stashed in the J Edgar Hoover building, including, probably, a shit-load of incriminating memos and emails from the days of McCabe and Wray, all that stuff they found in the burn-bags. Did he have to sign some kind of non-disclosure document? Are there arcane regulations that we don’t know about constraining former FBI employees? Will his enemies — who are also enemies of the people — try to kill him now that he is on-the-loose?

I guess we’ll just have to stand by and see what happens with Dan Bongino, just as we have to stand by on where anything might go at Kash’s FBI and in Pam Bondi’s DOJ — and just about everybody in the public arena is piling on AG Pam Bondi these days. She’s in a tough spot.

Can’t really bring any prosecutions in the hopelessly compromised, woked-up, DEI-infested, Trump-deranged DC federal court district — where so many treasonous crimes were committed.

So, the work-around for that has been to tie all the ten years of treasons and seditious acts into one skein of a RICO case, allowing the DOJ to run a prosecution for all of it out of the Southern District of Florida, because that’s where one of the more recent crimes occurred in a chain of conspiracy: the unpredicated raid into Mar-a-Lago by Christopher Wray and prosecutor Jack Smith. It also works around various statute of limitation issues.

That case is underway, under Judge Aileen Cannon and prosecuting US Attorney Jason Reding Quiñones, but apparently will not go to the grand jury until sometime in the new year.

So, you will just have to cool your jets a bit longer.

One other thing: will White House Chief of Staff Susie Wiles do some ‘splainin’ about what possessed her to shoot her mouth off at Vanity Fair, one of the most out-front, scurrilous enemies of the president and his voters in all the mosh pits of Woke-gay-retarded journalism? She sat with their writers eleven times in 2025, and the result was a hit piece on the whole Trump White House.

How does this square with everybody saying she’s the savviest Chief of Staff to ever haunt the West Wing?

Can you figure how she doesn’t deserve to be fired for that?

Tyler Durden Fri, 12/19/2025 - 16:20

What Inflation Alarmists Missed In Their Warnings

Authored by Lance Roberts via RealInvestmentAdvice.com,

Over the last couple of years, inflation alarmists such as Paul Tudor Jones, James Grant, and Jeff Gundlach have all said that inflation is returning with force. In different ways, they each stated that they would not own Treasury bonds due to the expectation that inflation would rise as the dollar declined due to the ongoing deficits. They have all argued, in some form or another, that ballooning deficits, tariffs, and the “dollar debasement” would drive inflation much higher, with yields of 6% or more on the 10-year Treasury as inevitable.

As Jeff Gundlach noted in June of this year, a “reckoning is coming” for U.S. debt, and yields on long-term bonds could continue to rise as the economy weakens. Paul Tudor Jones said in October 2024 that “all roads lead to inflation.” Lastly, in June 2024, James Grant stated that “persistent inflation” is the new norm.

However, while these are brilliant, well-regarded gentlemen, the forecasts have not panned out, at least so far, as they believed, because they ignored the structural weight of the “3-Ds” (Debt, Deficits, and Demographics) on economic growth, which drives inflation.

Of course, it hasn’t been just these three gentlemen discussing higher inflation and higher interest rates. Inflation alarmists have filled media headlines over the last few years, making a myriad of claims, but they have misunderstood what drives inflation in a consumer-driven economy. Furthermore, they misjudged the nature of money creation in a debt-saturated system.

Veil Of Money

Let’s start by understanding the basics of money supply. The media often states that the Government is “printing money,” which will lead to inflation. The reasoning is sound on the surface; if a government prints more dollars, each of those dollars has less value, in theory. However, that view misses two crucial points. First, as discussed in “Money Printing,” the government does not “print money.”

“Modern economies operate under an endogenous money system, meaning banks create money in response to economic activity. As the Bank of England explained in its 2014 paper “Money creation in the modern economy,” it is not central banks that directly dictate broad money growth, but rather commercial banks extending credit when they see viable opportunities. Put simply: loans create deposits.“

Re-read that last bolded sentence, which is the most critical point. The U.S. does not “print” money. All money is lent into existence, as we continued explaining in that post.

“This means that the growth of the money supply closely follows the economy’s growth. When businesses expand, hire, and invest, banks extend more credit, and the money supply grows. Conversely, when the economy slows and loan demand weakens, money supply growth contracts, regardless of how much the Federal Reserve expands its balance sheet. We saw this after 2008: despite unprecedented quantitative easing, money growth and inflation remained subdued because banks hoarded reserves instead of lending.

 It’s easy to point to M2 charts and scream “debasement. “ However, the money supply must grow as the economy grows. If it doesn’t, deflationary risks emerge. Therefore, the key is whether money creation exceeds economic growth in a sustained way. Since 1959, the money supply has grown in alignment with economic growth.”

A better way to assess this is by comparing M2 to GDP. Historically, the two have tracked closely. Even during the COVID-19 shock, M2 as a percentage of GDP remained below 100%, indicating that money supply growth was broadly aligned with economic output. Today, that ratio is falling, not rising.

The reality is that the growth rates of M2 highly correlate with the state of the economy.

This brings us to the “Veil of Money” theory, which posits that money serves as a neutral medium of exchange, affecting only the nominal price level, but not the underlying fundamental economic factors, such as output, employment, and the allocation of resources. In this view, money overlays the real economy like a veil, and to understand economic activity, one must “pierce the monetary veil.”

During the pandemic, the money supply spiked. But that’s not the whole story. Bank reserves ballooned, yet lending barely moved. Consumer demand rose temporarily due to direct payments, rather than a structural shift in consumption. Once those payments stopped and the economy reopened, that demand faded, supply increased, and inflation started to recede. In other words, the increase in the money supply did not alter the real economy; in fact, it may have worsened it.

As such, the problem for the inflation alarmists is that inflation occurs only when demand exceeds supply. In a service-based, aging economy that’s already over-leveraged, such a demand surge rarely occurs sustainably.

While the inflation surge of 2021 and 2022 was real, it wasn’t systemic. It was the result of excessive government interventions in concert with global supply shocks. That combination created a short-term explosion in prices. But it was never sustainable.

The 3 D’s: Debt, Deficits, Demographics

To understand why inflation alarmists have been incorrect, at least so far, you have to understand the “3Ds”: Debt, Deficits, and Demographics.

Let’s return to the basics of “inflation,” which is simply the function of “supply and demand.” Nothing more. Nothing less. As we noted previously:

“Inflation is the rise in prices due to supply and demand imbalances. Rising wages and consumer demand for products and services that grow faster than the available supply create higher prices (aka inflation). The following economic illustration is taught in every ‘Econ 101’ class. Unsurprisingly, inflation is the consequence if supply is restricted and demand increases via monetary interventions.”

With this concept in mind, let’s start with the debt. Currently, total U.S. debt, comprising government, corporate, and household debt, stands at record levels. As shown below, when that debt, as a percentage of GDP, grows, it slows economic activity as increased interest payments consume income, thereby limiting consumption and investment.

What the inflation alarmists miss is that every dollar borrowed must be repaid with future income. As more income is allocated to servicing debt, less is available for spending, which reduces demand in the economy and, as shown, leads to lower inflation. That’s why high debt is deflationary, not inflationary. Such is also why expectations of yields hitting 6% or more remain unfounded, as an economy that is dependent on debt to function can’t support higher rates.

The second “D”, deficits, are also problematic to the inflation alarmists’ view. Annual deficits are now routine. The government borrows to fund everything from defense to entitlements to foreign aid, with the Congressional Budget Office projecting trillion-dollar deficits for the next decade. As the deficit grows, more money is diverted from productive investments into debt service, which again negatively impacts economic activity. As shown, when the deficit is reduced, it is because economic activity has increased, resulting in higher revenue for the government and potentially leading to inflationary pressures.

The long-term consequence of persistent deficits is low growth as more debt is needed to generate less output. That dynamic has played out in Japan, Europe, and now the U.S. However, ironically, while everyone hopes for lower inflation, which is economically repressive, we should be discussing how to increase inflation through stronger economic growth.

Lastly, the most overlooked driver of disinflation is the decline of demographics in the U.S. The population is aging, and the U.S. workforce growth rate is falling. Immigration has slowed. Birth rates are down. Fewer workers and more retirees result in lower production and consumption. Older people spend less. They don’t buy homes, take out loans, and live on fixed incomes, which translates to lower economic velocity.

At the same time, entitlements such as Social Security and Medicare are proliferating, absorbing an increasing share of the federal budget. That adds to debt, increasing deficits, which feeds into economic retardation.

Put all three together, high debt, chronic deficits, and an aging population, and you get structural stagnation, keeping inflation low, capping long-term rates, and reducing economic prosperity.

What the Market Is Telling You

The bond market isn’t stupid. When inflation spiked, yields rose, briefly. But as soon as growth slowed and fiscal drag returned, yields fell. Long-term expectations remain subdued, with the 10-year breakeven inflation rate still near 2.3 percent. The Fed’s own projections indicate that inflation will return to target over time. As shown, the spike in the Fed’s preferred measure of inflation, the trimmed mean PCE inflation rate, has returned to the bond market’s view of inflation. While the Fed took a lot of heat for saying inflation would be “transient,” ultimately, they were correct.

If inflation were going to stay hot, you’d see it in long-dated yields and in the breakeven rates. However, for now, at least, you don’t. That’s because markets understand what Wall Street celebrities don’t: structural forces matter more than temporary shocks.

If you’re expecting another surge in inflation, you’re betting against demographics, debt dynamics, and deficit math. That’s probably going to be a bad bet.

Here’s what you should prepare for instead:

• Inflation will remain volatile but is expected to trend lower.

• Long-term yields will stay capped by debt service constraints.

• Growth will slow as the stimulus fade continues.

• The Fed will pivot again — not toward more hikes, but to rate cuts and balance sheet expansion.

Does this mean we won’t ever see another rise in inflationary pressures? No. In fact, we should be hopeful for such due to economic growth that leads to broader economic prosperity.

However, the calls for runaway inflation and 6 percent interest rates are primarily a misunderstanding of the world in which we live. We are not in a 1970s cycle, but rather in a debt cycle where every dollar of growth incurs more debt, and every attempt to tighten policy leads to deflationary pressures.

That’s not a theory. It’s what the data shows. And until something changes in the structure of our economy, it’s what you should expect.

Tyler Durden Fri, 12/19/2025 - 15:40

Kevin Plank, Goldman Sachs Exit Any Further Development Of Billion-Dollar Ghost Town

Under Armour founder and CEO Kevin Plank, along with Goldman Sachs, is stepping away from further development of Baltimore Peninsula, formerly known as Port Covington, a 235-acre mixed-use waterfront redevelopment project in South Baltimore. Originally pitched as a 14-million-square-foot mini-city anchored by a new UA headquarters, a new report says less than 10% of the planned project has been built.

Representatives for Plank's real estate development company, Sagamore Ventures, and its equity partner, Goldman Sachs, told the local paper, The Baltimore Banner, that they will remain owners of the current Baltimore Peninsula development but will exit the rest of the project, much of which remains underdeveloped.

"Baltimore Peninsula is becoming a dynamic, connected community that adds real momentum to South Baltimore and serves as a source of pride for Under Armour and the city," Plank told the outlet.

The UA CEO said he wants to "remain focused on leading UA's comeback" and will let others "take the lead in carrying forward the next chapters of Baltimore Peninsula's development."

Kevin Plank exiting future development at Baltimore Peninsula.

Read more: https://t.co/aXJy5c0JOc pic.twitter.com/KyIKi9ICtx

— The Baltimore Banner (@BaltimoreBanner) December 18, 2025

The decision to withdraw from the rest of the project apparently hinged on a $66 million land loan that came due this past fall. Instead of paying the full amount, Plank and Goldman negotiated with Bank OZK, which would take over the project and be responsible for future development.

Plank and UA made massive bets on the mini-city, situated in the heart of crime-ridden Baltimore City, a metro area that has experienced one of the largest population exoduses in generations...

Much of the exodus has been driven by disastrous one-party Democratic rule, particularly failed social and criminal justice reforms. The result was a spike in violent crime after the 2015 riots, and people either fled the struggling state or moved to surrounding counties.

Perhaps one direct consequence of the failures at City Hall is that crime and chaos hindered Plank's mini-city from ever gaining traction. After all, the city once pitched Amazon on moving its second headquarters to the metro area, but seriously, why would any rational management team put white-collar workers in harm's way when parts of Baltimore still resemble war zones?

But it wasn't just Baltimore City's horrendous leadership of Democratic kings... The UA brand has lost traction with consumers, and its stock has imploded as the company works on a turnaround plan.

Meanwhile, Plank has been offloading real estate assets in the area, or at least attempting to, such as an $18.5 million, 500-acre racehorse farm, Sagamore Farm, just north of the city.

The reason Plank and Goldman are likely stepping away from further development of the mini-city is simple: it has been called a "billion-dollar ghost town."

Tyler Durden Fri, 12/19/2025 - 15:20

Russia's Oil Exports Face Delays As Tankers Take 70% Longer Route

By Charles Kennedy of OilPrice.com

Oil tankers carrying Russian oil appear to be avoiding the fastest Black Sea route to the Turkish straits and travel along the Georgian and Turkish coasts to avoid drone attacks from Ukraine, according to ship-tracking data compiled by Bloomberg. 

In recent weeks, several ships linked to Russia have been hit by Ukrainian drones in the Black Sea. All targeted vessels were empty at the time of the strikes.  

At least two tankers that have loaded oil from Novorossiysk, the Russian port on the Black Sea, have recently traveled along the Georgian and Turkish coasts instead of taking the shortest route to the Bosphorus Strait, according to the data compiled by Bloomberg. 

The detour along the Georgian and Turkish coasts would add about 350 miles, or 70%, to the journey of an oil tanker from the port of Novorossiysk to the Turkish straits. 

Crude oil exports from the Russian terminals on the Black Sea were much lower in November than originally planned as bad weather and Ukrainian attacks on infrastructure have delayed loadings and departures. 

Ukrainian attacks have also crippled Russia’s fuel exports from the Black Sea ports in recent weeks.  

Ukrainian drone attacks on refineries in southern Russia and the Black Sea oil port of Tuapse crippled exports of fuels from the Black Sea export terminals in November. 

The port of Tuapse suspended fuel exports for half of the month of November, due to the drone attack at the port infrastructure in early November.  

An attack on another Black Sea port, Novorossiysk, also led to a slump in crude and fuel shipments. 

Ukrainian forces have increasingly targeted Russian oil-refining, storage, and export infrastructure using drones and missiles. The campaign has gained intensity in recent months, with the Center for European Policy Analysis noting a shift in strategy “from smaller-scale strikes on storage tanks to targeting hard-to-replace refinery equipment, like cracking units, much of it western-made and subject to sanctions.”

Tyler Durden Fri, 12/19/2025 - 15:00

Centrus Energy Soars After Starting Commercial Uranium Enrichment Activity

The long awaited buildout of Centrus Energy’s uranium enrichment facility is finally underway as the company announced this morning it has begun constructing new centrifuges to support commercial production of low-enriched uranium (LEU). LEU stock is surging as much as 14% on the news. 

Why should anyone care though? We already have Urenco producing massive quantities of LEU in New Mexico. They’ve been producing millions of separative work units (SWU) worth of enriched uranium for use in the domestic commercial fleet of reactors in the US for years. They even export some of that enrichment to foreign reactor operators.

What makes the Centrus effort so special?

The difference is that under Trump, the US is done relying on others for its fuel. Not just gas or oil, but now uranium as well. Almost a quarter of US enriched uranium is imported from Russia, with the rest coming from companies like Urenco and Orano, all owned by foreign governments.

The US hasn’t produced its own uranium since the last plant closed in 2013, one of the major policy failures following the drop in approval for the use of nuclear energy following the Fukushima disaster in 2011.

Companies like Centrus Energy, BWXT, and General Matter, are both US owned and operated. The American ownership of the technology and the state-side location of operations enables the nuclear fuel to be labeled as unobligated.

Obligated fuel means in order to produce it, the use of foreign technology or equipment occurred at some point in the fuel chain, meaning the fuel cannot be used for US government purposes of any kind. All of the fuel that’s used in the US Navy’s submarine and carrier reactors, DoE research reactors, all the reactors under the Army’s Janus Program, as well as the multiple other programs that are ongoing with the US government, will not be able to use fuel that is obligated.

Only companies like General Matter, BWXT, and Centrus, can produce fuel that is allowed to be used by the US government for government purposes.

Centrus will rely on its domestic manufacturing chain to produce the AC100M enrichment centrifuge design, which is built on the AC100 design used in past enrichment cascades. With backing from the DoE’s LEU award program, international backing from South Korea, and recent significant capital raises and convertible notes offerings, Centrus has the capital on hand and the backlog stacked up to support the buildout of new enrichment capacity. They are already producing high-assay LEU (HALEU), which was developed with the DoE over the past few years.

The first production of LEU is expected in 2029.

Tyler Durden Fri, 12/19/2025 - 14:20

Putin Identifies The Main Issue Which Will Settle Ukraine War In Year-End Q&A

Russian President Vladimir Putin made clear during his annual end of year question-and-answer session in Moscow that the matter of Ukraine ceding land which Russia now controls is the heart of the issue when it comes to peace talks. The issue of territory gained, lost, to be ceded or not, remains the prime topic that must be considered, but it's the very thing that Ukraine's Zelensky refuses to talk about or compromise on, Putin explained.

"We know from statements from Zelenskyy that he’s not prepared to discuss territory issues," Putin told Q&A attendees in the capital’s Gostiny Dvor exhibition hall.

via TASS

The Kremlin has pressed for Ukrainian troops to exit the Donbass, reduce the size of Kiev's military, and for their to be international legal recognition that annexed eastern territories are part of the Russian Federation.

What's more is that after the capture of the strategic Donetsk city of Pokrovsk in early December, Putin expects his forces will soon gobble up more territory.

Putin declared he's "certain that before the year’s end we will witness new successes of our armed forces, our fighters."

He named specific places were Russian forces remain ascendent, according to state media translation:

There is also intensive fighting for Krasny Liman and Dmitrov, as well as Gulyay Pole in Zaporozhye Region, the president added.

In the south, Russian forces have captured the city of Kupyansk and are pressuring the Ukrainian battlegroup that dug in at a large railway juncture nearby. Putin said some 3,500 Ukrainian troops there “have virtually no chances” to survive after being denied a request to retreat.

"The time will come when our guys finish their work destroying the encircled Ukrainian forces on the northern bank of the river and turn to the west. That will happen pretty soon," Putin said.

Putin went on to explain that Zelensky's efforts to hold territory "at any cost" will only result in more devastating losses for Ukraine, and that sooner or later he'll be forced to concede at the future negotiating table, accepting defeat.

Speaking of prior efforts to solve the conflict, Putin said further of the Ukrainian side: "After the talks in Istanbul, they initially agreed... and then backed out, throwing all of those agreements into the trash. And now, in effect, they are refusing to bring this conflict to an end through peaceful means."

"Still, we see, feel and know that there are certain signals, including those coming from the Kyiv regime, indicating that they are prepared to engage in some form of dialogue," he added, expressing apparent hope for the Trump peace proposal.

❗️'No': Putin Bluntly Answers Strange BBC Question About If There Will Be More Special Military Operations

"If you treat us with respect and respect our interests as we always do with yours. As long as you don't play dirty tricks with us like about NATO expansion." pic.twitter.com/rNWAX1tV2M

— RT_India (@RT_India_news) December 19, 2025

The annual Q&A event has stretched back to 2001, and draws literally millions of submitted questions from the Russian public via phone, text and online platforms. An artificial intelligence system from there analyzes the submitted questions to identify common themes, which are then asked of Putin in the televised event.

Tyler Durden Fri, 12/19/2025 - 14:00

Federal Regulators Issue Order Requiring Large-Load Users Pay To Grow Grid

Authored by John Haughey via The Epoch Times,

Federal regulators have directed the nation’s largest regional electricity transmission organization to link, or “co-locate,” data centers and other industrial users with existing or new power-generating plants in order to speed development, trim infrastructure costs, and require large-load users to pay for expanding the grid.

The five-member Federal Energy Regulatory Commission (FERC) on Dec. 18 unanimously ordered PJM, which delivers electricity to more than 1,100 utilities serving 67 million customers across 12 Mid-Atlantic and Midwest states, to create two new transmission contract types, revise generator interconnection rules, respond within 30 days with options to meet demand, and provide a report detailing “ongoing initiatives to reduce practical and financial barriers … to efficiently connect new large loads” by February 2026.

Under the commission’s order, PJM must clarify that a power generator cannot leave the grid to serve a co-located load until all transmission upgrades needed to maintain reliability are installed, an interim network service is established “to provide a bridge” while new infrastructure is being built, and rules that “safeguard grid reliability and protect consumers” are strengthened.

“Today, FERC is pushing our country forward in the artificial intelligence and manufacturing revolution,” FERC Chair Laura Swett said. “While uncertainty has abounded across our country on how we will facilitate data centers, my colleagues and I are taking a critical step to give investors and consumers more certainty.”

She assured any member of the public who might qualify as a “non-FERC nerd” that the rule, which is more than 100 pages long and “highly technical,” can “solve the problem of meeting historic surging demand and realize our greatest potential as a country also while safeguarding the prices that we pay for electricity.”

In highlighting “a few core concepts,” Swett said the commission’s first priority was to ensure households and small businesses are not forced to pay for grid expansions fostered by demand from data centers and other large-load electricity customers.

“The reality is that large loads can be flexible in the amount of transmission service they use, but that they should pay their fair share for that service so consumers are not overly burdened,” she said.

The order recognizes PJM’s existing transmission services “are insufficient” and “do not recognize the controllable nature of co-location arrangements,” Swett said, adding that PJM’s current rate allocation imposes an “unjust and unreasonable” expense on existing customers.

The rule was issued a day after PJM’s capacity auction for the 2027–2028 delivery year fell short by 6,600 megawatts—enough electricity to power 4 million homes—of its reliability requirement and in the wake of a June report by Monitoring Analytics, its independent market monitor, that fast-tracked data center development will cost PJM customers as much $9.4 billion in coming years.

“PJM is not alone,” Commissioner Judy Chang said. “We just see it more visibly with PJM. So I think there’s just a lot more work to do” in ensuring households and small businesses do not foot the bill for data center-driven grid expansion.

Florida-based Data Center Map identifies 4,297 data centers that are operating in the United States, including 668 in Virginia, 245 in Illinois, and 217 in Ohio.

Definitions vary on what a “data center” is, and some estimates suggest there are more than 6,000 of them in the United States. An operation can generally be defined as a data center if it supplies power for AI, quantum computing, or cryptocurrencies.

President Donald Trump has identified rapid grid expansion to power data centers and AI development as a national priority. In October, he cited a Rand Corporation report that said that while China increased its power generation capacity by approximately 429 gigawatts in 2024, the United States only added about 65 gigawatts and must add 80 to 90 gigawatts a year in new generation to keep pace with demand.

Trump issued a July executive order that streamlines permitting for data center projects that produce at least 100 megawatts of new electricity load dedicated to AI, training, simulation, or synthetic data generation” and are supported by at least $500 million in committed private capital investment—especially if they generate their own “behind-the-meter” electricity and can be a generative source for nearby utilities.

Good Day For ‘Non-FERC Nerds’

“Behind-the-meter” electricity generation that supplements existing “front-of-meter” utility capacity or is built and consumed by new large-load users in a grid network is one of the goals of the new rule, Commissioner David Rosner said.

“What we’re enabling through these new co-location options is really simple,” he said. “When you connect a power plant directly to a large load like a data center, you minimize the impact on the grid because you don’t use the grid as much, and in turn, this limits the impacts on the bills that regular families and small businesses see.”

Of course, to a “non-FERC nerd,” there’s nothing simple about the nation’s electric grid and the matrix of federal, state, and local laws, regulations, and rules that apply to its 7,300 power plants, 160,000 miles of high-voltage power lines, millions of miles of low-voltage power lines, and distribution transformers managed by more than 3,000 utilities and regional transmission operators in wholesale and retail markets.

But Rosner gave it a shot.

“Today’s order directs PJM to create two new transmission services. We call them firm and non-firm contract demand,” he said, describing “firm” demand as what the developer and utility agree to in “net withdrawal” from its generation capacity and “non-firm” demand as its “behind-the-meter” generation.

“So for example,” Rosner explained, “consider a 1,000 megawatt data center that co-locates with a new 900 megawatt power plant. The data center wants to take 100 megawatts from the PJM grid [firm] and get the remaining 900 megawatts of supply from the on-site power plant [non-firm].”

The order directs PJM to clarify that a generator cannot leave the grid to serve a co-located load until all transmission upgrades needed to maintain reliability are in service, with the cost of those upgrades allocated 100 percent to the new large-load user, he said.

“So this means that generators comprising the backbone of today’s grid cannot abandon existing customers, unless and until those generators and their large load customers—not other ratepayers— build the transmission upgrades needed to maintain reliable service for everyone else,” Rosner said.

The order requires PJM to establish an interim network service to provide “a bridge” while the infrastructure needed to serve a large load with traditional front-of-meter network integration and transmission service is being built, he said.

Story continues below advertisement

The bottom line, Rosner said, is that similar orders that will largely replicate directives issued to PJM are going to be the standard in addressing the nation’s need to quickly grow its grid.

“It takes too long to build new infrastructure in this country and that definitely includes transmission. So building the upgrades we require to convert an existing power plant to hook into a co-located load” is the swiftest, least expensive, and fairest way to do it, he said.

Commissioner David LaCerte, noting the commission hasn’t created a “major new transmission service” since the 1990s, said the order “marks an important milestone here at FERC and for our nation, a giant leap forward for President Trump’s agenda of American energy dominance and artificial intelligence advancement.”

Even “non-FERC nerds” will understand that, he said.

“Artificial intelligence data centers and re-industrialization are dominating our dialogue, not only here at FERC, but at the kitchen tables of America. AI has the potential to revolutionize our way of life in nearly every manner, but we must first build it,” LaCerte said. “We must acknowledge that we need to think differently, be bold yet smart with our actions, and we need to accept the reality that the status quo has become untenable.”

Tyler Durden Fri, 12/19/2025 - 13:40

Russia Keeps Slamming The Door In Europe's Face

By Maartje Wijffelaars, Senior Economist at Rabobank

Crash Averted

It’s been a busy week in Europe, before the start of the holiday season. Heavy meetings in Brussels, monetary policy decisions, and intense peace talks in which Europe is trying hard to get its foot in the door, while Russia—at times aided by the U.S.—continues to slam it shut.

Yesterday, EU leaders have agreed to provide a EUR 90bn loan to Ukraine for 2026-2027. The EU won’t use frozen Russian assets as collateral, but rather borrow money on the capital markets against the headroom in the EU budget. The headroom is the difference between existing budget commitments and the amount EU countries can be called upon to contribute to the budget.

Put simply, this means that if Ukraine fails to repay, EU governments are liable through their contributions to the EU budget. Hungary, Slovakia and Czechia managed to get an opt out from the guarantees, in exchange for not blocking the loan. Leaders agreed that Ukraine would only have to repay the loan if it receives reparation payments from Russia. Absent those payments, Russian assets remain immobilized and the EU could still decide to use the frozen assets to repay the loan. Yet that would still require a majority agreement in the Council, which is as unlikely to gain approval from Belgium and others later as it was now.  

Leaders have also stated that Ukraine entrance to the EU is an important part of peace negotiations and that it is important to make progress on that front. Some argue that the EU’s mutual defense clause could provide similar guarantees to NATO’s Article 5, whose relevance has been questioned by the U.S. That said, support EU member states have to lend to a fellow in case of attack “to the best of their ability” arguably not necessarily concerns military aid. Broad agreement on the importance of Ukraine membership, however, doesn’t mean leaders agree Ukraine should be able to enter without fulfilling the legal and institutional requirements that are attached to EU membership – or at all if you ask Hungary’s Orbán. Necessity is the mother of invention, but the process could easily still take years.

In that light, reports that the US, EU allies and Ukraine are getting close to a formal agreement on strong security guarantees for Ukraine are more promising. It would allow for EU boots on the ground at a distance from the frozen frontline, in case of a peace deal. Talks are said to continue today and tomorrow in the US. That said, Russia has so far been unwilling to allow NATO forces on the ground in Ukraine. So it’s highly doubtful that Putin would agree to a deal including forces of individual NATO members being stationed in Ukraine. If anything, Putin made clear this week that the territorial goals of his invasion have not changed and that he wants to pursue those goals either through diplomacy or force.

Meanwhile, the Mercosur deal hasn’t made it to a vote yet. The Commission’s Von der Leyen was supposed to travel to South America this Saturday to sign the deal. But, France, Italy, Poland and Hungary, remained unhappy with the safeguards to protect EU farmers already included and asked for more. The vote has been pushed to January, after Italy’s Meloni called Brazil’s president Lula to ask for a one-month delay at most, to get the deal done. Lula said he would inform Mercosur countries. Earlier this week, Lula stated that the deal is in fact already more beneficial for the EU than the Mercosur block and isn’t interested in adding more safeguards to cap EU imports. So it remains to be seen if agreement can be reached.

Over to the monetary policy meetings. The ECB kept its deposit facility rate at 2% yesterday, as we had expected. They also upwardly revised their inflation and growth outlook for next year and lowered it somewhat for 2027 to (partially?) correct for the delay of ETS2 from 2027 to 2028.

With respect to growth, Lagarde stressed that the economy has been resilient so far and that trade tensions have eased. At the same time, however, she argued that the international environment is still volatile and that weak external demand will be a drag on growth. Instead, consumption should support the economy and "business investment and substantial govt investments should increasingly underpin the economy." This matches our own view as we’ve laid out in this week’s Eurozone 2026 outlook piece, although we are somewhat less optimistic than the ECB. We project growth to come in at 0.9% next year and 1.2% in 2027, compared to the ECB’s forecast of 1.2% and 1.4%, respectively.

As for guidance, the ECB reiterated that its data-dependent and will determine its rate action meeting-by-meeting. According to our forecasts this means that the ECB is likely to keep rates on hold in the coming year and will hike twice in 2027, in March and June. For a thorough assessment of yesterday’s announcements and outlook, please see Bas van Geffen’s take here.

Across the Channel, the BoE cut its interest rate with 25bp to 3.75%. The cut was broadly expected and so was the 5-4 vote. As our UK strategist Stefan Koopman noted beforehand, the labour market is cooling, wage growth is slowing, inflation is finally coming down and fiscal policy will tighten further next year. The MPC repeated that the Bank Rate is “likely to continue on a gradual downward path,” but warned that decisions on further easing will become a “closer call.” Bailey voted in favour of the cut and signalled that he sees scope for further easing, but is explicitly looking for progress in inflation expectations and in forward-looking wage indicators. So that's something to watch out for in the months ahead, Stefan Koopman notes. He expects two 25bp cuts in 2026, one in February and one in April, while acknowledging that decisions to move remain highly data-dependent. For more insights please see his post-meeting comment.

Other monetary policy announcements came from the Norges Bank, Riksbank, Banxico and the Bank of Japan. Norges Bank and Riksbank kept their interest rate constant, as expected, while Banxico lowered its overnight policy rate by 25bp to 7% as we had projected. Our Mexico strategist see at least two more 25bp cuts from Banxico in 2026. The BoJ hiked its policy rate to 0.75%, which is low in international comparison, but the highest level in three decades. Its 10-year yield also reached multi-decade highs at 2%.

At the other side of the Atlantic, November’s CPI print in the US supported rate cut bets, stocks and bonds. Both headline and core CPI came in 0.4pp lower than expected at 2.7%y/y and 2.6% y/y, respectively, down from 3% in September. There is no figure published for October due to lacking survey input. But as we understand it, the shutdown has also influenced the November figure due to the measures used to correct for missing October data. This suggests shelter inflation, for example, is underestimated. Nevertheless, investors embraced the soft print, with the S&P 500 up 0.8% for example, although it is still down 0.8% on the week. A cut by April is now over 90% priced in. Recall that our Fed watcher Philip Marey expects a cut in March, June and September next year, as Trump’s influence over the Fed grows.

Tyler Durden Fri, 12/19/2025 - 13:00

'A Disgrace': Dems Erupt As Kennedy Center Board Renames It 'Trump-Kennedy Center'

UPDATE (16:20): Moving extraordinarily fast -- and presenting a fait accompli to those who are eager to seek a restraining order -- workers have already added Donald Trump's name to the facade of what was previously known as the John F. Kennedy Memorial Center for the Performing Arts, which is (was?) the only national memorial to the assassinated president. As explained below, opponents of the move say the facility's name is fixed by statute, and can't be changed without congressional action.   

Less than 24 hours after Kennedy Center trustees voted to add Trump's name to the facility, workers already made the controversial and potentially illegal move a physical reality (Eric Lee - New York Times)

* * *

Democrats and Kennedy family members raged on Thursday after President Trump's handpicked board of trustees of the John F. Kennedy Center voted to rename it the "Trump-Kennedy Center." The move is certain to draw legal challenges centering on the fact that the center's current name is set by statute. For now, however, we can sit back and watch the fireworks exploding all along the country's left. Here's a sampling: 

• "It's a disgrace," seethed House Minority Leader Hakeem Jeffries.
• "If he defaces the place with his name, we will spackle it over," fumed Washington Rep. Rick Larsen."Congress named the Kennedy Center to honor the slain President... Nothing Trump does will change it."
• "It is beyond comprehension that this sitting president has sought to rename this great memorial dedicated to President Kennedy," railed JFK's niece Maria Shriver. "This is not dignified. This is not funny." 

“I was honored by it,” Trump told reporters after the news broke. “The board is a very distinguished board, most distinguished people in the country, and I was surprised by it. I was honored by it.” Despite his expression of surprise, Trump himself has previously engaged in his own half-joking rebranding of the venue: 

 

In February, Trump maneuvered himself into the chairmanship of the Kennedy Center board, ousting Carlyle Group co-founder David Rubenstein. Trump fired board members and filled vacancies with allies like Vice President JD Vance's wife, Trump chief of staff Susie Wiles, the wife of the Commerce secretary, and the wife of New England Patriots owner Robert Kraft. They voted Trump in, while giving the boot to Kennedy Center president Deborah Rutter and tapping Ric Grennell as her replacement. Grenell's most noteworthy experience in managing theater was his service as acting Director of National Intelligence.

The statute that created the center states that it will be "designated as the John F. Kennedy Center for the Performing Arts." It includes no explicit provision delegating to the board of trustees the authority to rename it. "The Kennedy Center Board has no authority to actually rename the Kennedy Center in the absence of legislative action, and we're going to make that clear," said Jeffries on Thursday. He noted the issue wouldn't be his top priority, stressing that the restoration of Affordable Care Act tax credits ranks higher.   

More than just a named venue, the building was designated to serve as the sole national memorial -- a living memorial -- to Kennedy, in lieu of something like the temple that is the Lincoln Memorial. “We never considered or were permitted to name any part of the building for another human being because it was the official memorial for President Kennedy,” former Kennedy Center president Michael Kaiser told the New York Times. Similarly, Joe Kennedy III, grandson of JFK's brother Robert, said, "It can no sooner be renamed than can someone rename the Lincoln Memorial, no matter what anyone says.”

LBJ breaks ground for JFK's national memorial-- John F. Kennedy Center for the Performing Arts--December 1964, a year after the assassination (RFK in rear): pic.twitter.com/TGM1fD8FP6

— Michael Beschloss (@BeschlossDC) December 18, 2025

The Kennedy Center board includes various ex officio members -- people who serve by virtue of their offices -- including Ohio Rep. Joyce Beatty, who said she was shocked as fellow board member and Trump crony Sergio Gor made the proposal. “It was such a surprise to me when they said we’re going to rename it,” she told the Times. “I said, ‘Oh my gosh,’ and pushed my button. But then I was muted.” Separately, Beatty said, "As I continued to try to unmute to ask questions and voiced my opposition to this, I received a note saying that I would not be unmuted."

Kennedy Center PR VP Roma Daravi disputed Beatty's account. "The entire board was invited to attend in person and the privilege of listening in on the meeting was granted to all members, even those without a vote, such as ex-officio member Joyce Beatty," she said. 

As Trump attacked woke programming, this freakish Kennedy Center director posted a strip-rant on social media in March -- only to be stripped of his job

The ascendancy of Trump and his allies at the Kennedy Center prompted a wave of cancellations by artists themselves, as well as resignations of people associated with the venue. In a bizarre March incident, a woke leftist and former program director at the Kennedy Center’s Opera Institute was fired after bizarrely stripping down in a 35-minute video posted on YouTube and X, during which he ranted against President Trump's takeover. 

To its credit, the new Trump-led JFK Center has scrubbed drag shows and other degenerate programming from the schedule. In February, leftists gasped as a gay men's chorus performance was yanked off. With the National Symphony Orchestra, the Gay Men's Chorus of Washington DC was set to put on a show called "A Peacock Among Pigeons: Celebrating 50 Years of Pride." Timed for late May, the show was meant to kick off Pride month. It was replaced by the Wizard of Oz.

Of course, all these political theatrics on the DC stage are just one act in the dark comedy of an American empire in accelerating decline -- an empire hurtling toward insolvency, losing its morality and social cohesiveness, and subordinating its interests to those of foreign powers.    

Tyler Durden Fri, 12/19/2025 - 12:40

Should The U.S. Overthrow The Maduro Regime With Military Force?

With political insiders like Tucker Carlson claiming that Congress has been briefed on the prospect of an imminent war with Venezuela, tensions are high among Republicans in what may be the most contentious policy divide for the party since President Trump took office.

To some, Nicolás Maduro’s regime represents an illegitimate dictatorship that must be removed—by sanctions, covert pressure, or outright regime change—before Venezuela can recover. To others, U.S. intervention has only entrenched authoritarianism, collapsed living standards, and transformed a regional crisis into a geopolitical stalemate with Russia, China, and Iran.

Should the United States pursue regime change in Venezuela — or should Trump cut a deal with Maduro?

Tonight at 9 pm ET, ZeroHedge hosts a live debate moderated by former Congressman Matt Gaetz.

Meet the Debaters

Emmanuel Rincón ('Maduro Must Go' position):

Translation: “The world when Trump finishes off Maduro”

El mundo cuando Trump acabe con Maduro https://t.co/XEKaJCcwMF pic.twitter.com/kZmgAf0kzI

— Emmanuel Rincón (@EmmaRincon) December 18, 2025

A Venezuelan journalist, political activist, and vocal critic of Nicolás Maduro, Rincón argues that Venezuela’s crisis cannot be resolved without the removal of the current regime. He supports international pressure, U.S. involvement, and decisive action to restore democratic governance—framing Venezuela as a humanitarian and geopolitical emergency that demands intervention rather than patience.

Curt Mills (Strongly Opposes Regime Change):

“no different than what Bush did”

For Graham, that’s a good thing!

But weird for a White House whose whole raison d’être is moving on from Bush https://t.co/LzyvERduwA

— Curt Mills (@CurtMills) December 16, 2025

As Executive Director of The American Conservative, Mills represents the realist, non-interventionist school of foreign policy. He argues that U.S.-backed regime change has repeatedly destabilized nations, empowered adversaries, and harmed civilians—while failing to produce democracy. On Venezuela, Mills contends that sanctions and intervention have worsened the crisis and entrenched Maduro rather than weakening him.

Host, Matt Gaetz
Former U.S. Congressman and prominent critic of Washington’s foreign policy consensus, Gaetz brings a confrontational style and first-hand experience from Capitol Hill to moderate what is likely to be a contentious exchange on intervention, sovereignty, and American power abroad.

When & Where

Date: Tonight
Time: 9 pm ET
Where:

• Live on the ZeroHedge homepage
• X (Twitter)
• YouTube
• Rumble

Political hegemony. Oil. Democracy promotion.
Is regime change in Venezuela moral, effective—or just another forever war?

We’ll see you tonight.

Tyler Durden Fri, 12/19/2025 - 10:50

"No One Is Above The Law": Milwaukee Judge Hannah Dugan Found Guilty Of Felony Obstruction

Authored by Jonathan Turley,

A jury in Milwaukee this week proved that it takes more than a robe to act like a judge. On Thursday, Judge Hannah Dugan was found guilty of the most serious count brought against her in a case that captivated many in the nation. Dugan famously told a fellow judge to wear her robe in the hallway to confront federal officers seeking to arrest a suspect.

A jury found Dugan guilty of obstruction in helping an illegal migrant evade arrest by Immigration and Customs Enforcement officers. She was acquitted of the misdemeanor charge of concealing Flores Ruiz.

Judge Dugan was lionized by the left, including attorneys and politicians, for her effort to facilitate the escape of Eduardo Flores-Ruiz.  She had a prominent legal team, including former Solicitor General Paul Clement and  former U.S. Attorney Steve Biskupic. Retired Supreme Court Justice Janine Geske agreed to be the trustee over a large defense fund.

This week, we discussed how Dugan’s colleague Judge Kristela Cervera delivered a heavy blow to her defense in testifying how Dugan pulled her into the dispute with the agents and how she acted improperly in the matter.

Cervera said that Dugan specifically told her to keep her robe on and that she was reluctant to do so: “I didn’t want to walk in the hallway with my robe on.” Dugan, however, allegedly wanted the agents to see them in their robes as a sign of authority.

She said that the agent remained respectful but that Dugan was getting upset in the confrontation: “Her irritation seemed to progress to anger. I thought she could have been a little more diplomatic.”

That coincides with the testimony of FBI Special Agent Jeffrey Baker, who stated, “I would say angry is the best way to describe it.”

Likewise, U.S. Customs and Border Protection officer Joseph Zuraw stated that Dugan ordered him to “get out” of the public hallway and told him to go to the chief judge’s office. She then allegedly helped the suspect escape through a side door.

Cervera also testified that she was “shocked” by Dugan’s later conduct and that “judges should not be helping defendants evade arrest.” She added, “I was mortified. I thought that someone may think that I was part of some of what happened.”

Cervera said she was shocked by attorneys praising her for helping Flores-Ruiz escape.

She described attorneys pumping their fists and telling her, “You go, Judge,” and saying, “Judge, you’re ‘goated’ now.”

She said that she avoided Dugan but ran into her in an elevator. She noted that Cervera told her she was “in the dog house” with the Chief Judge for trying to help Flores-Ruiz.

Cervera delivered a particularly devastating line before the jury in stating categorically that “Judges shouldn’t help criminal defendants evade arrest.”

The testimony supported the allegation that Dugan knowingly sought to help Flores-Ruiz and that her actions were outside her role as a judge in the courthouse.

We discussed how Dugan could not have had a better jury pool in the liberal district or a more fortunate choice as presiding judge. Indeed, I previously wrote that it would take jury nullification to acquit Dugan on the strong case against her. If that was the strategy, it collapsed under the testimony of Cervera and others.

Her fate may have been set by her decision not to testify. It also likely reflected how damning the evidence was against her. If she took the stand, she would have been forced to address glaring inconsistencies in her position as well as public comments that she made before trial.

I previously wrote about my surprise that she posted a videotape statement on her actions and how she was the champion for the rule of law. The statement included assertions that she would send defendants through the door whenever she felt it was warranted.

The jury did not agree with Democratic politicians and pundits who heralded her actions. MSNOW regular Norm Eisen and the executive chair of Democracy Defenders Fund declared, “this case is a five-alarm fire for our democracy and one of its foundations: judicial independence. Prosecuting a judge for how she runs her courtroom is  outrageous and unlawful.”

Abbe Lowell, who represented Hunter Biden, declared

“Judge Dugan’s arrest and prosecution are a blatant attack on judicial independence.  By targeting a state judge for her courtroom management, this Administration is signaling its alarming willingness to coerce state courts into executing its federal immigration agenda –  an unacceptable assault on federalism and a grave threat to the public’s trust in our court system. Protecting judges from such intimidation is paramount to upholding the rule of law for every American.”

Monica Isham, a circuit judge in Sawyer County, not only defended Judge Hannah Dugan in an email to other state judges but added that she “has no intention of allowing anyone to be taken out of my courtroom by [Immigration and Customs Enforcement agents] and sent to a concentration camp.”

Dozens of judges signed statements in support of Dugan, including Judge Michael Luttig, U.S. Circuit Judge, U.S. Court of Appeals for the Fourth Circuit (Ret.).

I strongly disagreed with those views, excusing the clearly injudicious and unlawful conduct of Judge Dugan.

Ultimately, Judge Lynn Adelman, a liberal long-standing jurist on the court, rejected half-baked arguments of judicial immunity in such actions.  Twelve jurors in Milwaukee then rejected all of the atmospherics and bluster in ruling according to the law.

They did what Dugan did not: they followed the rule of law rather than any personal or political impulse.

Dugan could now face up to five years in prison, though such a sentence is highly unlikely in her case.

Tyler Durden Fri, 12/19/2025 - 10:35

UMich Survey Sees 'Current Conditions' In America As The Worst In 47 Years

The final print for UMich's sentiment survey for December was a doozy...

While the headline sentiment gauge and Expectations ticked up, Current Conditions slipped further...

...to an all-time record low... yes... worse than during Oct 1987's crash, 9/11, the GFC, and COVID...

This - as you might guess - is very unusual with stocks at record highs and as we have labored extensively this year, UMich's survey seems rife with bias

UMich claims that post-pandemic frustration with high prices persists...

Which is incredible since inflation expectations are plunging...

As Democrats realize their TDS-driven hyperinflation fears were utter bullshit after all (shame on all those MSM pundits)...

Buying conditions for durable goods fell for the fifth straight month, whereas expectations for personal finances and business conditions rose.

“Despite some signs of improvement to close out the year, sentiment remains nearly 30% below December 2024, as pocketbook issues continue to dominate consumer views of the economy,” Joanne Hsu, director of the survey, said in a statement.

Labor market expectations lifted a bit this month, though a solid majority of 63% of consumers still expects unemployment to continue rising during the next year.

Hsu concludes: "This year, we saw a spike in inflation expectations that softened very quickly, while high-price mentions have remained consistently high. It appears that consumers have yet to internalize the post-pandemic level of prices as a new normal, which influences how they view the economy."

Tyler Durden Fri, 12/19/2025 - 10:26

Loss Of Credibility: Yen Craters, Yields Surge After BOJ Hikes Rates To Highest Since 1999

In the last central bank decision of 2025, the BOJ lifted its key rate to 0.75% from 0.50% in a widely anticipated and telegraphed move, taking borrowing costs to their highest level in three decades. It wasn't enough, however, and after an initial kneejerk move, the yen plunged while yields soared as the market concluded that what Ueda did was too little, too late, and the hike was too vague to press the hawkish case.

As such, the market doves are back in control, and forcing the BOJ to either double down and puts Japan's money where its mouth is, or lose control of either the currency or the bond market, or eventually, both.

In a recap of what the BOJ did, Bloomberg writes the following:

• Ueda said risks tied to the impact of US tariffs appear to be easing and pointed to solid wage growth momentum next year year, a condition for more sustained inflation.
• Both the BOJ statement and Ueda’s remarks implied there’s room to raise rates further, while offering assurance that conditions would remain accommodative. That reinforces expectations of a gradual and data-dependent tightening path.
• Ueda also said the policy rate remains some distance from the lower-end of a neutral range and added he would like to recalculate that if the opportunity arises, signaling openness to further tightening but also a desire for greater confidence in the framework before moving more decisively.

As BBG notes, by lifting the policy rate to a three-decade high of 0.75% on Friday, Ueda continued his historic march toward restoring normality to Japan’s monetary policy and the economy after decades of unconventional steps and underperformance. The only problem: Japan will never survive in a world where monetary policy is even remotely "normal " and as a result, government bond yields immediately climbed to the highest levels since the 1990s, an indication that the BOJ policy space is now narrower than ever. 

And indeed, Bloomberg admits that while Ueda had telegraphed Friday’s move ahead of time, he didn’t offer similar clarity about what comes next,  and that’s left yen bears chomping on the currency instead of backing away. The yen slid more than 1% against the dollar, to around 157.40, in the hours after Ueda’s press conference.

“Listening to what he said, I honestly couldn’t tell at all when the next rate hike might be,” said Teppei Ino, Tokyo head of global markets research at MUFG Bank. “He didn’t really say anything about the neutral rate — there was simply no guidance at all.”

Addressing the hawkish side, Goldman's Kai Wen Lim writes that the statement removed language that growth and inflation will stagnate due to tariffs, coupled with hawkish voices on the board and a clear acknowledgement that real rates are still low, all leaned on the more hawkish side despite a lack of new details. The reaffirmation bolstered bearish sentiment causing futures to sell off ~4bps while BOJ pricing also inched higher across the curve from March onwards, with June and July seeing the most traction implying market expectation of the next hike being ~6 months away.

On the other hand, classic “buy the rumor, sell the fact” phenomenon was observed in USDJPY, with the pair initially weakening a touch on initial headlines before surging and swiftly breaking past the 156 handle (and then 157) with investors likely thinking interest rate differentials remain very high, coupled with the disappointment over the lack of clearer guidance on the timing of the next hike.

A rather pragmatic take was shared by Goldman Delta One head, Rich Privorotsky who pointed to the breakout in Japanese 10 year yields above 2% - rising 5bps to 2.02%, the highest since 1999 - as the market was convinced the BOJ remains behind the curve. 

But the latest twist - which is what the cartoonish BOJ is so known for - was the lack of a pre-commitment to future hikes, and the continued vagueness on timing.

“The market had expected a hawkish hike from the BOJ, with the expectation of clarifying its stance on narrowing the neutral rate range and future rate hike path,” ING Bank’s Min Joo Kang and Chris Turner wrote in a note. “However, both the BOJ and Ueda remained quite vague on this matter, which likely caused disappointment in the market.”

As a result, the whole JGB curve twisted higher and bear steepening while the JPY is weakening, precisely the opposite of what the BOJ wanted to achieve!  According to Privo, on the margin "the price action would suggest BOJ still behind the curve (run it hot)."  Japan equities are higher led by Japan banks, momentum and construction.  Keep an eye on longer dated rates for hints on whether the BOJ is about to lose control of the bond market. 

Many market players had been expecting the governor to back up their consensus view that Ueda will keep raising rates every six months. 

Some of them even thought he might hint at how far the BOJ wanted to hike rates, by referring to the neutral interest rate. Instead, the professor-turned-central bank governor struck a pragmatic note, saying the bank would edge closer to neutral rather than trying to pinpoint in advance where it is.

That creates a headache for Japan’s Finance Ministry, which spent some $100 billion last year to prop up the currency when it weakened to around 160 per dollar — not far from where it is now.

“The yen’s slide is likely to heighten caution about the risk of intervention,” Ino said.

The market moves point to some of the difficulties Ueda faces in the second half of his term. In his first two-and-a-half years, the governor exceeded expectations by transforming policy at the BOJ and raising rates. 

Ueda now risks damaging that reputation even more - and infuriating Prime Minister Sanae Takaichi - if he hikes rates too fast and the economy collapses, while the yen craters. But moving too slowly could prolong the inflation damage for households, and leave the Finance Ministry with work to do in the currency market.

What’s more, a return to yen intervention may also prompt further blowback from President Donald Trump’s administration in the US, which sometimes appears frustrated by Japan’s cautious monetary policy. 

Nobuyasu Atago, chief economist at Rakuten Securities Economic Research Institute and a former BOJ official, notes that US Treasury Secretary Scott Bessent is clearly in favor of correcting yen weakness through BOJ policy rather than intervention.

“Governor Ueda likely thinks that yen weakness will enable him to keep raising rates,” said Atago. “But that takes him further away from policy normalization that responds to the bedding-in of inflation based on domestic demand, not external shocks.”

For now, the only thing that’s clear is that rates are likely to increase again unless of course the economy collapses next.

According to Bloomberg, the question now is how far Ueda can go. Just two years ago, economists projected that the bank would only reach 0.5% in this hiking cycle. Now, if the central bank can hike every six months, Ueda would be walking out of the BOJ building in April 2028 with the rate at 1.75% and a reputation for working miracles in Japan.

“The hurdle just gets higher and higher,” Kazuo Momma, a former BOJ executive director in charge of monetary policy, told Bloomberg. Although the BOJ doesn’t know where the neutral rate is, each hike brings the bank closer to it, he said. Among 48 economists surveyed in December, the median forecast points to two more hikes. But more than 20 of them expect three or more. 

Ueda has repeatedly said that he prefers to hike and monitor the impact rather than map out his endgame. And he’s reiterated time and again that he will continue to raise rates if the economy and prices play out as the bank expects. 
In Friday’s policy statement, the BOJ stated that the real rate remains at a “significantly” low level.

“That suggests the next rate hike will still be an adjustment of monetary easing and that’s hugely important,” Momma said. “This implicitly says that the BOJ thinks 1% isn’t the neutral rate.”

In other words, as long as the BOJ keeps referring to rates at “significantly” low levels, the central bank remains a ways off the neutral rate. That also fits in with Ueda’s view that his rate hikes aren’t yet tightening moves, but are instead the adjustment of accommodative conditions. With inflation still way above borrowing costs, it’s hard to argue otherwise.   

Commenting on the paradoxical plunge in both the yen and yields, Bloomberg FX strategist Vassilis Karamanis said that this was "not a paradox but a reflection of positioning and timing" (well, maybe it was a little bit of a paradox). He explains why:

Yen weakness after the Bank of Japan’s interest rate increase shouldn’t surprise. Neither should the risk of intervention if thin liquidity turns an orderly grind into a disorderly move.

The BoJ did what yen bulls have been long waiting to see, but it didn’t hand them a clear victory. The central bank raised its benchmark rate by a quarter point to 0.75%, the highest in 30 years, and kept the door open to further increases if the outlook holds. The message was that officials are growing more confident inflation can be sustained around target.

And yet the first price reaction looked like a reminder that FX is rarely polite. The yen weakened, with USD/JPY pushing through the 156 area even as Japanese yields rose, with the 10-year yield topping 2% for the first time since 2006. That’s not a paradox but a reflection of positioning and timing.

Above all, this was widely expected. When the market walks into a meeting already priced for 25 basis points, “hawkish BOJ” has to mean more than just delivering the hike. It needs to mean conviction on the pace, and right now, the bar for that conviction is high because the BOJ communicates gradualism given there was no upgraded assessment of the economy. Governor Kazuo Ueda said that it’s difficult to determine the neutral rate ahead of time, and that the pace of adjustment of easing depends on the economy and prices.

This gradualism matters because the yen’s core problem isn’t whether Japan can hike, but whether it can hike fast enough to overwhelm the funding-currency reflex. Carry and hedging behavior have inertia. You can tighten policy and still watch USD/JPY grind higher if the market thinks the next move is “sometime in 2026” rather than next quarter, especially while the US-Japan rate gap remains wide enough to keep the carry trade alive.

Options were flagging that risk into the meeting. The chart below shows USD/JPY skew flattening versus last week, a sign traders were less willing to pay up for yen strength protection across the front end. And CFTC positioning tells a similar story: hedge funds weren’t in a rush to cover shorts.

The macro backdrop isn’t giving the yen a clean runway either. Fiscal stimulus expectations and Japan’s heavy debt load keep the bond market sensitive, and currency weakness can still function as a release valve rather than a red line. Which brings us to the part yen traders need to respect into year end: intervention risk.

The market loves to talk about 160 as if it’s a magic number but I’m not so sure officials also do so. While in theory their framework is supposed to be about speed, disorder and volatility, and not a single level, recent episodes show thresholds can be blurry in practice. And as holiday conditions can turn a routine move into an ugly one quickly, levels and volatility may not matter much, and we could see a preemptive move from the Ministry of Finance as the one in November 2024.

Liquidity is thinning into year-end. If USD/JPY starts to gap on air pockets rather than fundamentals — remember, the rate gap has been narrowing for three years now — the theme can turn from BOJ gradualism to MOF tolerance. That’s why the post-hike yen selloff is not the shocking part. That would be assuming officials will wait patiently for 160 or above if the market hands them disorder first.

Tyler Durden Fri, 12/19/2025 - 10:18

Year-Over-Year Existing Home Sales Disappoint In November, Decline Most In 6 Months

With mortgage rates tumbling, housing market participants have been disappointed by the lack of enthusiasm by homebuyers to apply for mortgages (though there was a decent bounce in refi activity)...

This morning's existing home sales data (admittedly for November) will give us a further glimpse into the reality oh home-buying vs home-selling as the gap between current mortgage rates and the average existing mortgage rates is narrowing (but remains vast)...

But, analysts (rightfully, given the slide in mortgage rates) expected the recent trend of existing home sales growth to continue in November and it did... but only a mere +0.5% MoM (vs +1.2% MoM exp). October was revised up to +1.5% from +1.2%. More problematically, the disappointment pulled existing home sales down 1% YoY (the first negative print since May)...

Source: Bloomberg

Meantime, the median sales price increased 1.2% from a year ago to $409,200. That was one of the weakest gains since mid-2023.

“Existing-home sales increased for the third straight month due to lower mortgage rates this autumn,” NAR Chief Economist Lawrence Yun said in a statement.

“However, inventory growth is beginning to stall.”

Source: Bloomberg

In November, the supply of previously owned homes on the market fell from the previous month to 1.43 million, roughly flat in recent months.

Source: Bloomberg

Yun said that’s because sellers aren’t desperate and are choosing to de-list and try again in the popular spring-selling season instead.

At the current sales pace, inventory is equivalent to 4.2 months’ supply, the weakest since March.

Sales rose in the Northeast and South, the nation’s biggest home-selling region. The pace of closings in those two regions were the highest since early this year. Activity was flat in the West and declined in the Midwest.

And, arguably, there is more room for existing home sales to run here as mortgage rates hit three year lows...

Source: Bloomberg

NAR sees sales rising 14% next year, higher than most other forecasts but a figure that Yun said he feels “confident” in. That assumes more inventory will come on the market, mortgage rates will hover around 6% and the Federal Reserve will cut interest rates another two times, compared to policymakers’ median projection for one.

Tyler Durden Fri, 12/19/2025 - 10:10

More Islamic Terror Attacks Against Christmas Markets Foiled In Europe

Authored by Steve Watson via Modernity.news,

Authorities across Europe have thwarted two more Islamist-inspired terror plots targeting Christmas markets in as many days, with arrests in Germany and Poland adding to a relentless wave of threats that has placed the West under daily assault from radical extremists intent on exploiting open borders and soft security measures.

German authorities have arrested a 21-year-old man from Central Asia on suspicion of plotting an Islamist-motivated terror attack against large crowds at a Christmas market in Magdeburg—the same location where a Saudi national carried out a deadly vehicle ramming last year, killing six and injuring hundreds.

The suspect, who entered Germany as an au pair in 2024 and reportedly received military training, faces deportation amid a pattern of threats targeting Europe’s holiday traditions.

UPDATE: The 21-year-old terror suspect from Central Asia entered Germany in 2024 as an Au Pair. He also completed nursing training while in Germany.

A security source told Welt that the man is believed to have had military training. https://t.co/Vvz0xGJuPG

— Remix News & Views (@RMXnews) December 16, 2025

The Saxony-Anhalt Interior Ministry confirmed the detention occurred on Friday following a tip received the previous day, with the suspect not previously on security radars. Officials believe he was driven by Islamist ideology and had expressed plans to target gatherings, prompting immediate action to prevent execution. Deportation proceedings are underway, based on assessments deeming him a direct terrorist threat to Germany’s security.

According to reports from DW, the migrant arrived in Germany in June 2024. Additional details from Welt, cited in Remix News updates, reveal he entered as an au pair, completed nursing training during his stay, and is believed to have prior military training—raising profound concerns about screening failures for entrants from high-risk regions.

This incident marks the second foiled Christmas market plot in Germany within days. As we highlighted yesterday, five foreigners—an Egyptian imam, a Syrian, and three Moroccans—were arrested in Lower Bavaria for allegedly scheming to ram a vehicle into crowds and “kill as many people as possible” under Islamist directives, with planning tied to a local mosque.

The threats extend beyond Germany. Polish authorities today announced they thwarted an ISIS-linked plot involving explosives and firearms aimed at a Christmas market, as detailed by the Daily Mail and Euronews. The suspect, a 19-year-old Polish law student, was in contact with IS representatives and gathering explosive materials for a mass-casualty strike.

'Christmas market ISIS 'mass terror attack' plot' foiled in Poland https://t.co/MLUOWGs2IP

— Daily Mail (@DailyMail) December 16, 2025

Such attacks exploit the vulnerability of open holiday events, forcing communities to adopt extreme measures. Last month, we highlighted how one German town resorted to deploying recycled anti-tank barriers around its market to counter potential vehicle assaults, reflecting ballooning security costs that have led to outright cancellations in smaller locales unable to bear the financial burden.

Unchecked migration has transformed cherished traditions into fortified zones, with countries maintaining stricter borders—like Poland and Hungary—sparing their citizens similar fortifications or disruptions.

The pattern echoes further global incidents, including the recent Bondi Beach shooting in Australia, where a Pakistani father-son duo killed 16 during a Hannukah event.

These repeated plots underscore a critical failure: Europe’s permissive migration policies have imported individuals from unstable regions prone to radicalization, endangering public safety and cultural heritage.

Without rigorous vetting, swift deportations, and border enforcement prioritizing citizens’ security, such threats will continue to undermine the freedoms and traditions that define the West.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Fri, 12/19/2025 - 09:15

Polling Signals Serious Trouble For Democrats in Upcoming Midterms

Voters are delivering Democrats in Congress a brutal verdict heading into the 2026 midterm cycle, with just 18 percent approving of their performance and a staggering 73 percent disapproving, the worst rating Quinnipiac has recorded for them since it began asking the question in 2009. 

Even Democrats themselves are in open revolt: only 42 percent of Democratic voters approve of how their own party’s members in Congress are doing, while 48 percent now disapprove, a sharp slide from October when approval stood at 58 percent.

Among independents, things descend from terrible to apocalyptic for the Democrats. The gap between approval and disapproval is a huge 61 points, leaving Democrats almost universally despised among this key demographic. But the more shocking revelation came from within their own ranks: for the first time in Quinnipiac’s history, even Democrats themselves are giving congressional Democrats a thumbs down. Support among party voters has cratered 28 points since October—swinging from a positive 22 to a negative 6 in just two months. 

"A family squabble spills over into the holidays. Democratic voters want their party to hold the reins of the House but are not the least bit happy about what they are doing at the moment," Quinnipiac University Polling Analyst Tim Malloy said in a statement.

Meanwhile, Republican voters are much more satisfied with how their party’s members in Congress are doing, with 77 percent expressing approval, and only 18 percent expressing disapproval.

The numbers are so bad for the Democrats that CNN’s chief data analyst, Harry Enten, couldn’t favorably spin this for the party. 

 “Democrats, in the minds of the American public, are lower than the Dead Sea,” Enten put it, twisting the knife with a geological metaphor that unfortunately fits. According to new Quinnipiac polling data, congressional Democrats are languishing at a net approval rating of -55 points, an almost comical nosedive that marks their worst showing in over twenty years of tracking. “They have never found Democrats, at least those in Congress, in worse shape than they are right now.”

Enten tried to diagnose how it all went so wrong so fast. He pointed back to October’s government shutdown, when Democrats saw what turned out to be their last flicker of momentum. “I think during the shutdown, there was a bit of a boost for Democrats, right? There was a rallying around the flag effect going on,” he said. “But Democrats did not like how that shutdown turned out.” In short, they got the brief sugar high, then the crash—and now they’re nursing a severe case of political hangover.

The fallout is already reaching individual lawmakers.

“One of the reasons that Dan Goldman is in trouble right now and a potential primary against Brad Ladner is because at this point, the Democratic base is so upset with Democrats,” Enten explained, adding his parting shot: “So even if the Democrats take back Congress, don’t be surprised if Dan Goldman ain’t there because of numbers like this one.”

Translation: victory might come, but not without casualties.

Even the supposedly good news isn’t really all that good. Democrats currently hold a four-point lead on the generic congressional ballot with a Republican president in office, a figure Enten conceded was “pathetically weak” by historical standards. For example, when they won back control of Congress in 2008 and 2018, Democrats led by double digits. Now, their advantage is less than half the normal cushion they’ve enjoyed in similar cycles.

Enten, ever the numbers guy, encouraged some patience while gently deflating any premature triumphalism.

“Yes, you’re on your way to a congressional majority… but it’s still a long time,” he cautioned.

“And with numbers like this, considerably weaker than historically speaking, it might be a tougher road to hoe than normally you would think.”

The data paints an unflattering portrait: a party so strategically dependent on Donald Trump’s unpopularity that it’s ignoring its own. Democrats appear to be counting on Trump’s toxicity to do the heavy lifting, but if their own negatives stay this high, his may not be enough to carry them over the finish line in next year’s midterm elections.

 

Tyler Durden Fri, 12/19/2025 - 08:55

Futures Rise Ahead Of Record $7 Trillion Opex, Yen Tumbles After BOJ Rate Hike

Stocks look set toclose out a choppy week on a steady note, building on Thursday’s gains, spurred by cooler inflation that backs the case for lower borrowing costs. As of 8:00am, S&P 500 futures were 0.1% higher while Nasdaq 100 contracts were up 0.2% after the WSJ reported that OpenAI is set to raise $100BN in fresh capital (from sov wealth funds) removing near-term funding pressures across the AI sector. In premarket trading Oracle is up 6%, off session highs, with the rest of the Mag 7 complex mostly higher. In a risk-on set-up, bitcoin is also higher, while Treasuries are down. Gold is hovering near its highest ever, and a separate Goldman team reckons its record-setting rally still has legs, and could push the yellow metal above $5000. US economic calendar includes November existing home sales, December University of Michigan sentiment (10am), and Kansas City Fed services activity (11am). Fed’s Williams is scheduled to appear on CNBC at 8:30am.

In premarket trading, Mag 7 stocks are mostly higher (Nvidia +1%, Tesla +1%, Amazon +0.4%, Alphabet (GOOGL) +0.2%, Microsoft +0.1%, Apple -0.2%, Meta Platforms -0.1%). Cloud infrastructure stocks including CoreWeave (CRWV) are staging a rebound after the sector sold off on financing concerns in the AI supply chain. CoreWeave climbs 5%.

• AGCO (AGCO) slips 1% after Barclays cut the recommendation on the agriculture equipment company to underweight, saying that tariffs threaten its ability to meet margin estimates.
• Defense stocks remain in focus after European Union leaders reached an agreement to loan Ukraine €90b ($105b) for the next two years, aiming to strengthen Kyiv’s hand at the negotiating table and keep the war-torn country afloat. 
• KB Home (KBH) falls 5% after the company’s fiscal fourth-quarter profit missed analysts’ estimates. The mid-point of the outlook range for fiscal 2026 housing revenue also lagged expectations
• Nike (NKE) slumps 11% after the sportswear retailer’s third-quarter guidance disappointed investors, with its turnaround hampered by weak sales in China and the Converse brand.
• Oracle (ORCL) is 5.6% higher after TikTok told employees that its parent company, ByteDance, had signed binding agreements to create a US joint venture majority owned by American investors, led by the cloud computing giant. 
• WhiteFiber (WYFI) gains 20% following the announcement of a 10-year co-location agreement between its subsidiary Enovum Data Centers Corp. and Nscale Global Holdings.

As noted yesterday, individual stock prices could be erratic on Friday during the largest options expiry day ever, with $7.1 trillion of notional open interest rolling off across the US options market, according to data from Citigroup. Trading volumes may be inflated by index rebalances at the close. 

The December opex tomorrow will be the largest ever with over $7.1 trillion of notional options exposure expiring, including $5.0 trillion of SPX options and $880 billion notional of single stock options. pic.twitter.com/amb3HDbcwX

— zerohedge (@zerohedge) December 18, 2025

Oracle, which in recent months emerged as a fulcrum point of concerns that the AI rally had become overheated, rose more than 5% in premarket trading. The company is leading a group of investors that signed binding agreements to bring TikTok’s US operations under an American-controlled venture. It would also be a direct beneciciary of OpenAI tapping Abu Dhabi sovereign wealth funds. 

Stocks have swung in recent weeks as optimism over the outlook for Fed rate cuts and a robust economy have clashed with fears that the AI-driven rally is vulnerable to a correction. Some strategists warn that while the broader backdrop remains favorable, volatility may persist. “While the conditions for a Santa rally are broadly in place, markets may need a fresh catalyst,” said Francisco Simón, European head of strategy at Santander Asset Management. “In that context, a renewed positive trigger — potentially linked to encouraging news in the AI space — could help reignite momentum.”

Global stocks that rose higher than ever in 2025 are set for further gains next year, according to Goldman Sachs strategists; but don’t expect returns to be quite as strong. Company earnings should drive dollar returns of 13% from a broadening bull market in 2026, rising to 15% if you include dividends, according to a Goldman team led by Peter Oppenheimer. Fed rate cuts and positive growth should extend the economic cycle and support risk assets, though the rally’s next phase may be choppier.

Still, investors are showing little sign of losing their appetite for equities, with the US seeing a 14th week of inflows, at $77.9 billion, in the week ended Dec. 17, according to Bank of America. Tech contributed to inflows for the first time in three weeks, suggesting that fears over potentially overblown AI stock valuations have diminished. Michael Hartnett said investors are positioned for “run-it-hot” acceleration in PMIs and EPS on easing rates, drops in tariffs and tax cuts (more on that later). 

At the same time, gold is hovering near its highest ever, and a separate Goldman team reckons its record-setting rally still has legs. Commodities analysts including Daan Struyven and Samantha Dart also forecast weakness in oil prices to persist next year.

In the biggest central bank decision overnight, the BOJ lifted its key rate to the highest level in more than three decades - as expected - and signaled that further hikes could be in the offing. Japan’s 10-year yield climbed to the highest level since 1999, with the BOJ making clear that the tightening cycle will continue if the economy performs as expected. 

“The market had expected a hawkish hike from the BOJ, with the expectation of clarifying its stance on narrowing the neutral rate range and future rate hike path,” ING Bank’s Min Joo Kang and Chris Turner wrote in a note. “However, both the BOJ and Ueda remained quite vague on this matter, which likely caused disappointment in the market.”

European equities tread water, with the Stoxx 600 flat despite solid gains in Asia, including a 1% advance in the Nikkei. European markets hover near a record on Friday, as optimism around further monetary policy easing buoyed sentiment in the final full trading week of the year. Utilities stocks outperform while consumer stocks lag after US peer Nike warned of weak China sales. Here are some of the biggest movers on Friday:

• Semapa shares rises as much as 25%, the most in more than three years, after the Portuguese conglomerate agreed to sell its cement unit Secil to Spain’s Cementos Molins.
• DCC shares climb as much as 4%, the most since October, after the company said it successfully completed a £600 million tender offer.
• Puma shares dip as much as 3.5%, leading sportswear stocks lower, after US giant Nike warned sales will decline this quarter, partly due to weakness in China and its Converse brand.
• WH Smith shares drop as much as 6.2% after pretax profit guidance for 2026 came in below analysts’ expectations and the the travel retailer said it was under investigation in the UK over an accounting error in its North American business.
• Ipsen shares fall as much as 3.8% after the company said a mid-stage trial evaluating its experimental oral drug for an ultra-rare bone disease did not meet its primary endpoint.
• Computacenter shares tumble as much as 1.5% after the IT company was downgraded at Peel Hunt, with analysts saying the current valuation already bakes in much of the upside potential over the next 12 months.

Earlier in the session, Asian equities rose, paring weekly losses, as cooling US inflation data reinforced bets on Federal Reserve interest-rate cuts and lifted technology stocks. The MSCI Asia Pacific Index rose as much as 0.8% on Friday, on course for its biggest gain since Dec. 12, as markets across the region advanced. Tencent Holdings, SoftBank Group Corp. and Toyota Motor Corp. led the gains. For the week, the gauge was down 1.9%, marking its worst five-day period in a month. Meanwhile, the Bank of Japan hiked borrowing costs to 0.75%, the highest level since 1995, as expected. Stocks rose.

In FX, the yen slid to the bottom of the G-10, with dollar-yen at 157, as the BOJ’s 25-bps rate hike and Ueda’s presser failed to deliver the stronger tightening message traders expected. The Bloomberg Dollar index is up 0.2%.

Rates follow Japan, where the 10-year yield broke above 2% for the first time since 1999. US 10-year rates climb 3bps with the curve bear steepening, while gilts lag bunds after the BOE’s hawkish cut.  US yields cheaper by 1.5bp to 3bp across the curve in a bear steepening move, with 2s10s and 5s30s spreads wider by 1.2bp and 1bp on the day. US 10-year yields trade up to around 4.15%, with bunds and gilts cheaper by an additional 1.5bp and 2bp in the sector. Elsewhere, French 30-year yields hit their highest level since 2009 after budget talks were pushed into 2026. There were more losses seen across bunds and gilts after a flood of European data which included France and Germany PPIs and UK retail sales

In commodities, o\il climbs on reports that Ukraine has hit a Russian shadow fleet oil tanker. Spot gold falls roughly $6 to near $4,327/oz. Silver climbs 0.8% to ~$66. Bitcoin ekes out more gains, up some 3.2% to around $88,000. 

US economic calendar includes November existing home sales, December University of Michigan sentiment (10am), and Kansas City Fed services activity (11am). Fed’s Williams is scheduled to appear on CNBC at 8:30am

Market Snapshot

• S&P 500 mini +0.3%
• Nasdaq 100 mini +0.5%
• Russell 2000 mini +0.3%
• Stoxx Europe 600 +0.1%
• DAX +0.2%
• CAC 40 +0.1%
• 10-year Treasury yield +2 basis points at 4.14%
• VIX -0.7 points at 16.17
• Bloomberg Dollar Index +0.2% at 1209.44
• euro little changed at $1.1715
• WTI crude -0.6% at $55.84/barrel

Top Overnight News

• What will 2026 bring? Goldman economists expect another year of 2.8% growth, above the Bloomberg consensus of 2.5% and with individual forecasts that are at or above consensus for most major economies. As has typically been the case since the pandemic, the bank is most optimistic (relative to consensus) in the US. Growth is likely to average 2.6% in 2026, well above the consensus of 2.0% and up from an estimated 2.1% in 2025. Just under 0.2pp of the pickup reflects the mechanical impact of the government shutdown, which depresses the level of GDP in 2025 Q4 and boosts 2026 Q1 growth. GS also expects a fundamental acceleration because of three forces: Reduced tariff drag, tax cuts, and easier financial conditions.
• Homeland Security Secretary Noem said at President Trump's direction, she is immediately directing the USCIS to pause the DV1 program.
• Trump to make an announcement at 13:00ET on Friday and deliver remarks on the economy at 21:00ET.
• OpenAI is seeking up to $100 billion in new funding at a valuation as high as $830 billion, above earlier estimates. WSJ
• Trump’s administration has launched a review that could result in the first shipments to China of Nvidia's second-most powerful AI chips. Trump this month said he would allow sales of Nvidia's H200 chips to China, with the U.S. government collecting a 25% fee, and that the sales would help keep U.S. firms ahead of Chinese chipmakers by cutting demand for Chinese chips. RTRS
• The BOJ raised its benchmark rate to 0.75%, the highest in 30 years, and said more increases are in the pipeline if conditions allow. Former BOJ official Kazuo Momma said rates may hit 1.5% in 2027. Ten-year JGB touched their highest since 1999, and the yen weakened. BBG
• UK government borrowing fell in November, with the budget deficit standing at £11.7 billion — £1.9 billion less than a year earlier. Separately, retail sales fell for a second straight month. BBG
• EU leaders committed to lend Ukraine 90 billion euros, or around $105 billion, to help the country keep fighting Moscow’s invasion but failed to agree on a plan to use frozen Russian assets for the loan. WSJ
• Americans seeking jobs face another tough year in 2026, with unemployment staying high despite solid growth, according to economists’ predictions. The unusual mix probably reflects AI-driven investment that isn’t adding jobs. BBG
• The world is awash with oil, and prices are poised to keep falling. Producers are ramping up output, putting a record 1.3 billion barrels in open seas. The glut may push average WTI down to $52 next year. BBG
• TikTok’s long-delayed split from ByteDance is underway, with the company saying it signed binding deals to form a US joint venture controlled by American investors led by Oracle. ORCL +475bps premkt. BBG
• Nike shares slumped premarket (-10.5% premkt) after the company projected a sales decline this quarter amid persistent weakness in China and at its Converse brand. BBG

BOJ

• BoJ raised rates by 25bps to 0.75%, as expected, with the decision unanimous, while it stated interest rates are expected to remain at significantly low levels and will continue to raise policy rate if the economy and prices move in line with forecasts.
• BoJ Governor Ueda (post-policy press conference) said Japan's economy is recovering moderately, albeit with some weakness. Will make a decision on rate hike after checking the impact on the economy. Will conduct market operations swiftly, under exceptional circumstances in market. Delaying a rate hike could force a significant hike later. There is still some distance to lower the limit of neutral rate estimate. Several BoJ members mentioned that recent JPY weakness may affect prices going forward, and warrants attention. Members suggested that the weak JPY is possibly affecting underlying inflation.
• Japanese Economy Minister Kiuchi said they respect the BoJ's decision but they need to be mindful of economic outlook.
• Japanese Economy Minister Kiuchi said FX is affected by various factors, determined at markets. Important for currencies to move in stable manner reflecting fundamentals. Closely watching market moves with a high sense of urgency, including long-term yields.

Other Central Banks

• BoE Governor Bailey said he is confident that inflation will be close to target by late spring, giving a good reason to expect a bit more downward path on rates.
• ECB's Escriva says there are no reasons for any change in interest rates in any direction.
• ECB's Sleijpen says policy is in a good place but we must maintain a data-dependent and meeting-by-meeting approach.
• ECB's Muller said it is too early to speculate what will happen in six months, imagines a scenario that weaker growth and further disinflation could justify more easing but the opposite could also be imagined, via Econostream.
• ECB's Kocher said they have not decided what course to take on rates, when asked if there are no more rate cuts coming. Rates could be cut or raised, depending on developments.
• ECB's Rehn said outlook for growth and inflation remains highly uncertain due to trade war and geopolitical tensions. Reiterates meeting-by-meeting approach and ECB maintains full freedom of action and optionality.
• ECB's Kocher said there are many risks to growth and inflation to the up and downside. said they want to keep all options open to be able to react to the volatile situation. They are where they want to be on rates.
• ECB Wage tracker suggests lower wage growth and gradual normalisation of negotiated wage pressures in 2026. ECB wage tracker with unsmoothed one-off payments at 3.0% in 2025 and 2.7% in 2026.

Trade/Tariffs

• US President Trump told NBC "We're making so much money with tariffs", people would start getting the payments "very soon". "Within the next few days, it’ll all be out".
• US President Trump administration initiated multi-agency review of NVIDIA (NVDA) H200 licenses for sales to China, according to sources cited by Reuters.
• China's Commerce Ministry urges India to correct wrong practice on Telecom tariffs. China files WTO case against India over ICT tariffs and Photovoltaic subsidies.
• China's Commerce Ministry has launched an investigation into some rubber products from the US, South Korea and the EU. Adds to keep anti-dumping duty rate of up to 222%. Will terminate anti-dumping measures against UK rubber imports from December 20th.
• EU's von der Leyen said "we have reached out to our Mercosur partners and agreed to postpone slightly the signature", adds she is confident EU has sufficient majority to approve the Mercosur trade deal.
• French President Macron said work must continue on EU-Mercosur deal after delay, adds safeguards clause must be adopted by EU Parliament and accepted by Mercosur nations. He said, with new safeguard and mirror clauses to be implemented in January, it would be a "new" Mercosur-EU deal. France asked for CAP budget to be maintained.
• Chinese auto parts company Wangxiang agrees to pay USD 53mln to resolve US Justice Department lawsuit over imported components.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly higher as the region took impetus from the positive handover from Wall Street, where the major indices gained following softer CPI data and strong Micron earnings, while the attention overnight turned to the BoJ, which unsurprisingly hiked rates for the first time since January. ASX 200 was underpinned by outperformance in tech and financials, but with gains capped as mining, resources and materials sat at the other end of the spectrum. Nikkei 225 rallied amid tech strength and with some banks supported as yields gained amid the widely-expected BoJ rate hike, in which the central bank raised its key rate by 25bps to 0.75%, which is the highest in 30 years. Hang Seng and Shanghai Comp conformed to the upbeat mood amid tech strength, and after the PBoC continued to opt for a double-pronged liquidity operation, while it was also reported that TikTok signed a deal to sell its US entity to a joint venture controlled by American investors.

Top Asian News

• Japanese Finance Minister Katayama said will consider fiscal sustainability to some extent in compiling next fiscal year's budget, adds aim to boost market confidence by lowering debt to GDP ratio.

European bourses (STOXX 600 U/C) opened around the unchanged mark, and have remained on either side of the mark since. European sectors hold a slight positive bias. Autos leads, followed by Insurance whilst Consumer Products lags; the latter pressured in tandem with post-earning losses in Nike (-10.5%).

Top European News

• Bundesbank cuts growth forecast for 2026 to 0.6% (prev. 0.7%) and raises 2026 inflation forecast for Germany to 2.2% (prev. 1.5%). Nagel: "Starting in the second quarter of 2026, economic growth will strengthen markedly, driven mainly by government spending and a resurgence in exports." and adds that "....while progress will be subdued initially, it will then slowly pick up.".
• French Prime Minister Lecornu said parliament will be unable to vote on a budget for France before the end of the year. Starting on Monday, he will meet with key political leaders to consult with them on the steps to be taken.
• Joint Committee from French National Assembly and Senate cannot reach compromise text on 2026 budget, according to a Committee member.
• Swedish Think Tank NIER sees 2025 GDP at 1.6% (sept. fcst. +0.9%), 2026 GDP 2.9% (sept. fcst. 2.6%).

FX

• DXY is mildly firmer and trades at the upper end of a 98.41 to 98.70 range. Really not much driving things for the USD this morning, and with the upside largely facilitated by the JPY weakness. On that note, the BoJ raised rates by 25bps to 0.75% as expected. The decision was unanimous, and it stated that interest rates are expected to remain at significantly low levels, and the bank will continue to raise the policy rate if the economy and prices move in line with forecasts. The presser thereafter, spurred another bout of pressure in the JPY where Ueda avoided explicitly guiding markets towards another rate hike. Though he did highlight that the BoJ will conduct market operations swiftly, under exceptional circumstances in market. Interesting comments from the Governor came as he stated that several BoJ members mentioned that recent JPY weakness may affect prices going forward, adding that this warrants attention, given some believe that it could be affecting inflation. This spurred some very slight strength in the JPY at the time, which later pared.
• EUR is essentially flat and trades within a 1.1704 to 1.1728 range. Markets have had a slew of ECB speakers to digest this morning, but really not adding much to the agenda. ECB's Kocher suggested that they are where they want to be on rates, a comment reiterated by Sleijpen.
• GBP is also flat, within a 1.3364 to 1.3387 range. Traders seemingly taking breather following the upside seen in the prior session, following a hawkish cut at the BoE. Since, Governor Bailey has provided some commentary. On Thursday he said that he is "very" encouraged by the process in returning inflation to target; comments which were largely reiterated once again earlier this morning.

Fixed Income

• JGBs began the overnight session on a slightly firmer footing, but then came under marked pressure after the BoJ policy decision, where the Bank hiked rates by 25bps as expected. The decision was unanimous, with the accompanying commentary reiterating that it will continue to raise the policy rate if the economy and prices move in line with forecasts. Bond traders appear to be focused on the BoJ’s comments related to higher wages heading into the new year – and ultimately on remarks that the Bank will continue to raise rates in line with expectations. Perhaps focus for JGBs focus on the fiscal side of things, with the BoJ seemingly waiting for economic developments, which will be subject to volatility under PM Takachi’s cabinet.
• USTs traded rangebound throughout the overnight session and have continued to trade sideways throughout the European morning. Currently lower by a handful of ticks and within a 112-17+ to 112-23 range. Ahead, US President Trump is scheduled to make an announcement at 13:00EST/18:00GMT on Friday and will deliver remarks on the economy at 21:00EST/02:00GMT.
• Bunds and Gilt action has also been exceptionally lacklustre; currently holding a slight downward bias, within a 127.16 to 127.52 and 90.94 to 91.20 range, respectively. A few ECB speakers this morning, but not really any pertinent commentary thus far; Kocher reiterated that interest rates are at a good place. Back to the UK, Gilts mildly underperform – continuing the post-BoE hawkish move seen in the prior session. Some remarks from BoE Governor Bailey earlier who suggested that he is confident that inflation will be close to target by late spring, giving a good reason to expect a bit more downward path on rates. Ultimately, no move in Gilts on the remarks.

Commodities

• Crude benchmarks remain contained in tight ranges as the European session gets underway amid a lack of crude-specific newsflow. WTI oscillates in a USD 55.67-55.99/bbl range while Brent holds below USD 60/bbl comfortably as European trade continues. Recent comments via US President Trump, who said that "I do not rule out a war with Venezuela", according to NBC, had little impact on the complex.
• Spot XAU saw initial downside at the start of the APAC session, continuing the reversal lower after failing to hold beyond USD 4350/oz during Thursday’s US session. XAU fell to a trough of USD 4310/oz and since, remains in a c.USD 40/oz band throughout the European morning.
• 3M LME Copper lead the gains across the metals complex as the risk tone stateside rebounded, which boosted Asia-Pac equities. The red metal opened unchanged but gradually rose, in line with APAC equities. This helped 3M LME Copper break Thursday’s high of USD 11.79k/t and continue to a peak of USD 11.83k/t as the European session gets underway.
• Phillips 66 (PSX) reported emissions event at Sweeney refinery and petrochemical complex in Texas on December 17th.

Geopolitics

• Russian President Putin said we do not see Ukraine being ready for talks, ready and want to end the conflict via peaceful means. Continue to create a safe zone on the border with Ukraine.
• Belarus said "We are preparing to start the combat shift of the Russian Oryshnik missile system", via Al Arabiya.
• Russia's Dmitriev said regarding EU summit decision that it was a 'major blow to EU warmongers led by failed Ursula' and voices of reason in the EU blocked the illegal use of Russian reserves to fund Ukraine.
• EU's Costa said leaders agreed to roll over sanctions against Russia, adds Ukraine will only repay EU loan once Russia pays reparations and the EU reserves its right to make use of the immobilized assets to repay loan.
• German Chancellor Merz said Ukraine will receive an interest-free loan of EUR 90bln with these funds sufficient to cover military and budgetary needs for the next two years, and the EU will keep Russian assets frozen until Russia has compensated Ukraine. said: We expressly reserve the right to use Russian assets for repayment if Russia fails to pay compensation in full compliance with international law.
• EU's Costa said we have a deal to finance Ukraine, and the decision to provide EUR 90bln of support to Ukraine for 2026-2027 was approved.
• EU official said it seems there is the possibility of unanimity to use headroom of EU budgets to provide funding for Ukraine. EU leaders want work to continue on the technical and legal aspects of the instruments establishing a reparations loan.
• EU considers using joint debt to loan up to USD 106bln dollars to Ukraine, according to Bloomberg.
• European Council President Costa proposed to EU leaders to address Ukraine's immediate pressing financial needs through an EU borrowing solution, according to two EU diplomats.
• Russia's President Putin says US President Trump is making frank efforts to end the conflict in Ukraine. Says Russia has been asked to make compromise on Ukraine, in which Russia agreed to. The ball is on the West and Ukraine's court.
• Ukraine has hit Russian shadow fleet tanker in the Mediterranean sea for the first time, according to Reuters citing SBU source. SBU's aerial drones hit the Qendil vessel, causing critical damage. However, vessel was empty at the time of the attack.
• Contacts between Israel and Syria have not made much progress, according to Al Arabiya quoting US sources.
• Germany's Competition Authority approves the merger of Palo Alto (PANW) and Israel's Cyberark software.
• US ambassador to Israel said the US is not considering supplying Turkey with F-35 jets (LMT), which is not on the table under current US laws, via Sky News Arabia.

US Event calendar

• 8:30 am: Fed’s Williams Appears on CNBC
• 10:00 am: Nov Existing Home Sales, est. 4.15m, prior 4.1m
• 10:00 am: Nov Existing Home Sales MoM, est. 1.22%, prior 1.2%
• 10:00 am: Dec F U. of Mich. Sentiment, est. 53.5, prior 53.3

DB's Jim Reid concludes the overnight wrap

This is my last EMR of 2025, but Henry will keep it going for a couple of days next week. Thank you for reading and interacting this year and for all the votes in the Extel survey which went well for us again when results were published last week. See you in 2026 for another fun-packed ride through markets. As is tradition, I've listed my favourite TV shows of the year at the end alongside my film and album of the year. My wife and I try to watch an hour's TV when I'm not travelling. It's getting more difficult as the kids get older and have to be taxied around in the evening, a trend I fear will only get worse. I look forward to hearing your disagreements with the list! 

Before I sign off for the year, it's fair to say that it’s been an incredibly eventful 24 hours in markets, and overnight there’s been no let-up as the Bank of Japan have just delivered a 25bp hike that’s taken rates to a 30-year high of 0.75%. That follows a decision from the ECB to hold rates yesterday, which cemented expectations that they’d finished cutting, along with a hawkish BoE cut that led investors to dial back the prospect of rapid rate cuts next year. But even as those central banks had various hawkish elements, it was a completely different story for the US, as the CPI print was beneath all expectations, leading to a decent Treasury rally as investors priced in faster rate cuts for 2026, even if there were huge doubts about the data's validity given the shutdown. So it was a day of competing narratives, but for risk assets, the prospect of more Fed cuts and the reaction to Micron’s earnings helped the S&P 500 (+0.79%) rebound after 4 consecutive declines, whilst Europe’s STOXX 600 (+0.96%) hit a new record.

We’ll start with that overnight news from Japan, where the BoJ delivered the 25bp rate hike that was widely expected, and pointed to more ahead. For instance, their statement said that real interest rates were “at significantly low levels”, and if their outlook was realised, they would “continue to raise the policy interest rate”. So that’s pushed Japanese bond yields higher this morning, with the 10yr yield (+4.8bps) currently at 2.01%, which would be its highest closing level since 1999. Indeed, we also had the latest CPI print overnight for November, which showed headline CPI at 2.9% as expected, having now been above 2% consistently since April 2022. That landscape of above-target inflation has provided the BoJ the space to deliver multiple rate hikes now, and they said that “it is highly likely that the mechanism in which both wages and prices rise moderately will be maintained”.

Nevertheless, equities in Asia have still rallied overnight, given the BoJ hike was expected and investors think Fed cuts are more likely following the CPI print. So that’s supported gains across the major indices, including for the Nikkei (+1.11%), the KOSPI (+1.07%), the Hang Seng (+0.66%), the CSI 300 (+0.51%) and the Shanghai Comp (+0.50%). And looking forward, US equity futures are stable, with those on the S&P 500 down just -0.01%. 

All that follows a hugely eventful session yesterday, with a big boost thanks to that weak US CPI report, which featured the lowest year-on-year core CPI print since early 2021. However, it’s worth noting that there were several pieces of missing data because of the shutdown, and the methodological issues meant that investors treated it with some caution. For instance, a lot of people looked at the shelter numbers with serious doubt, as they saw a huge drop-off that’s more usually consistent with recessions. For instance, the 2-month annualised change for Owners’ Equivalent Rent (so accounting for the missing October report and this November print) came in at just +1.6%, the lowest since the Covid-19 pandemic. Similarly, the 2-month annualised change for rents of +0.8% was the weakest since the aftermath of the GFC in 2010. 

However, even with those data issues, the print was still viewed as soft enough to make Fed rate cuts more likely next year. Indeed, headline CPI was still down to +2.7% year-on-year (vs. +3.1% expected), whilst core CPI was at +2.6% (vs. +3.0% expected). The weak print meant investors priced in more Fed rate cuts, with the amount expected by the December 2026 meeting up +1.6bps on the day to 62bps. So that helped Treasuries to rally across the curve, with the 2yr yield (-2.3bps) down to 3.46%, whilst the 10yr yield (-3.1bps) fell to 4.12%.

Moreover, that offered a big support to equities, with a further boost from Micron (+10.21%) after its earnings announcement the previous day, making it the top performer in the S&P 500. So collectively, that saw the S&P 500 (+0.79%) bounce back from its recent selloff, alongside gains for the NASDAQ (+1.38%) and the small-cap Russell 2000 (+0.62%). Just over 50% of the S&P's constituents traded higher on the day, with gains led by consumer cyclical subsectors like Autos (+3.2%), Media (+1.6%), and Consumer Discretionary Retail (+1.6%). The laggards were the more defensive names that had a bid in recent days like Consumer Products (-1.5%) and Staples (-0.7%). Finally, Energy (-1.4%) also saw a pullback as oil prices fell nearly -1.4% intraday to finish flat after opening higher on more Venezuela headlines. By the close, Brent crude was only slightly higher (+0.23%) at $59.82/bbl.

Earlier in Europe, the main headlines came from the ECB, who left their deposit rate at 2% as expected. Nevertheless, there was a hawkish tone, and the updated forecasts showed stronger growth and stickier core inflation (at 2.2% for 2026), so that was seen as outweighing the expected undershoot of headline inflation, which wasn’t mentioned at all by President Lagarde. Yet despite recent speculation around an ECB hike next year, this shifting macro tone didn’t translate into a more hawkish policy signal, with Lagarde repeating the line that they were keeping all policy options open. And later in the day, Bloomberg reported that ECB officials expected that the cycle of rate cuts was most likely done, with talk of rate hikes seen as premature. So the decision reaffirmed our economists’ view that the easing cycle is likely over, and they see the Governing Council as determined to retain a neutral policy signal for now. Looking forward, they maintain their view that the ECB’s next move will be a hike, but they don’t see that as likely to materialise in 2026

Against this backdrop, European bonds rallied across the continent, thanks to the soft US CPI print and the absence of more hawkish ECB rhetoric. So that helped yields on 10yr bunds (-1.4bps), OATs (-1.6bps) and BTPs (-2.9bps) move lower. And for equities there was also a strong performance, with both the STOXX 600 (+0.96%) and Spain’s IBEX 35 (+1.15%) at new records, alongside gains for the DAX (+1.00%) and the CAC 40 (+0.80%) as well.

Shortly before the ECB, the Bank of England delivered a 25bp cut as expected, taking their own policy rate down to 3.75%. Yet even though the decision was a cut, it was interpreted in a hawkish light by markets. First, because it was only passed on a narrow 5-4 vote, with the rest wanting to leave rates unchanged. And second, in the statement they added that “further policy easing will become a closer call.” So that suggested the bar was rising to further cuts, and front-end gilt yields sold off in response, with the 2yr gilt yield up +4.2bps, whilst the 10yr yield saw a smaller increase of +0.6bps. See our economist’s review here. 

To the day ahead now, and US data releases include existing home sales for November, and the University of Michigan’s final consumer sentiment index for December. Meanwhile in Europe, there’s UK retail sales for November, and the European Commission’s preliminary consumer confidence indicator for the Euro Area in December. Otherwise from central banks, we’ll hear from the Fed’s Williams, and the ECB’s Wunsch, Kocher, Rehn, Simkus, Kazaks, Sleijpen, Pereira, Cipollone and Lane.

Tyler Durden Fri, 12/19/2025 - 08:29

Goldman Turns "Incrementally Cautious" On Nike As China Sales Plunge

Nike shares tumbled the most in eight months in premarket trading in New York after a mixed third quarter, reigniting concerns that turnaround efforts are being slowed by soft demand trends in China and ongoing problems at Converse.

North America was a bright spot in second-quarter earnings. Citi analyst Paul Lejuez noted that product liquidations contributed to the growth. As those actions expired, underlying sell-through trends softened.

China remained the most challenging sales market for the world's largest sportswear company in the quarter. This prompted Piper Sandler analysts to cut their price target on the stock due to a lackluster recovery in the world’s second-largest economy.

Sales in China last quarter plunged 17%, while Converse sales imploded by 30%.

Key earnings in the quarter:

• Top line: Revenue of $12.43 billion rose .6% year over year, beating consensus. Nike brand revenue increased 1.5%, also ahead of expectations.

• Channel mix: Direct revenue declined 8%, missing estimates, while wholesale revenue rose 8.7% and exceeded consensus, underscoring the ongoing shift toward wholesale.

Here's a snapshot of regional performance in the second quarter:

• North America was the standout, with revenue up 8.8% and EBIT slightly ahead of estimates.

• EMEA delivered modest growth but was roughly in line with expectations, with margins under pressure.

• China remained the largest drag, with revenue down 17% and EBIT nearly halved versus last year.

• Asia Pacific and Latin America also declined modestly and missed estimates.

Overall results in the second quarter at the headline level were driven by North America, wholesale, and apparel strength, but the weakness in China, direct-to-consumer, and Converse weighed heavily on the turnaround narrative.  

Nike has yet to issue longer-term guidance, which merely reflects its attempts to regain control of its turnaround plan and rebuild ties with retailers and sports teams.

Further Wall Street commentary on the earnings came from Goldman analysts led by Brooke Roach. She penned a note to clients outlining the good, the bad, her initial take on the results, and the key takeaways.

A mixed quarter amidst low expectations: NKE shares underperformed in the after-market session on Thursday, where a 2Q beat was offset by a weaker 3Q guide, softer China commentary, mixed channel trends in North America, and promotions in EMEA.

The good: NKE remained upbeat regarding progress made against its Win Now Strategy and its Sport Offense repositioning, highlighting strong results in Performance product. Running grew >20% for the second consecutive quarter (strength across wholesale, NIKE Direct, and owned stores). Training, Basketball, and Kids also contributed to growth. Order books into spring and summer are improving. Importantly, as the company looks to extend success in Running to other sports, we were encouraged to hear that NKE is seeing stronger growth in Global Football preorders ahead of the World Cup (+40% higher units vs. WC 2022). Franchise management actions are still set to moderate into F2H. On margins, gross margins came in at the high end of the company's prior guidance range despite incremental obsolescence charges on Nike China inventory, meaning that underlying results were stronger, and SG&A was well-controlled as a result of operational efficiencies.

The bad: We believe this quarter's results will fuel several key long-term bear concerns regarding the business. The most notable incremental is the significant outperformance in North America wholesale, with the gap vs. DTC widening meaningfully this quarter. While this is technically driven by NKE's core strategy of putting product in front of the consumer, the magnitude of this outperformance will likely drive investor concerns that NKE could be oversupplying the channel ahead of brand momentum inflection and/or that NKE's growth next year will need to step back as the company digests this year's outperformance. In a backdrop where many turnarounds seek to limit distribution to build brand heat, NKE's strategy is notably different for the total brand. Looking further across the world, Greater China remains the most challenged geography (-16% ex-FX), and management's commentary here suggests that significant actions will be needed to improve long-term brand health in the region. Timing here is uncertain, though the company did guide F3Q similar to F2Q, and highlighted that they have cut both sell-in for spring and summer orders as a result, with further shifts ahead. EMEA and APAC were also mixed, with EMEA missing Factset consensus and management highlighting elevated promotional activity in Western Europe, while APLA is still undergoing pockets of inventory cleanup. Near-term, we highlight that F3Q was guided below consensus.

Our take: We step away from the quarter incrementally cautious on the timeline and cadence of recovery at NKE. We remain optimistic on the company's Win Now actions and Sport Offense strategy, and continue to be upbeat on the strength emerging in NKE's product assortment where actions have had more time to cure (particularly running, but also emerging signs of greenshoots in Global Football). That said, we acknowledge the updates today regarding Greater China are disappointing, and limited disclosure regarding the core drivers of North America wholesale outperformance provides fodder for debate. We believe that trends will remain choppy as the company executes its strategic plan, and thus patience will be needed, but that improvement is ahead. Additionally, we believe the underlying message of an uneven path to revenue and margin improvement is well-appreciated by investors.

The rest of the note is available in full in the usual place.

In markets, Nike shares fell sharply, down about 11% in premarket trading in New York. If those losses carry into the cash session and the stock closes near the lows, it would mark the worst decline since early April. Year to date, shares are down 13.3% as of Thursday's close. The last time the stock traded in the low $60s was during the Covid crash.

How long until an activist investor leaks a headline to a major financial outlet? A headline yesterday in the WSJ said Elliott Investment Management had built a $1 billion position in another struggling clothing brand, Lululemon.

Tyler Durden Fri, 12/19/2025 - 08:00

All The Dominant Models Are Collapsing

Authored by Charles Hugh Smith via OfTwoMinds blog,

Every nation is operating on models that are collapsing without those at the controls being aware that the implicit assumptions of their models no longer map reality.

A recent article lays out the collapse of the dominant geopolitical model of "rising powers generate conflict": The Stagnant Order And the End of Rising Powers (Foreign Affairs, paywalled). The basic idea is that the foundations of "rising powers"--demographics and productivity gains--no longer support grandiose planetary dominance.

Rather, demographics is already baked in as a crushing liability to all existing powers, and despite endless claims that technology will jumpstart productivity, the reality is productivity gains have flatlined for decades. "Growth" is a function of expanding debt, not productivity gains.

This dynamic extends beyond geopolitical models: all the models being used to explain and control the world are all collapsing: economic, social, political, they're all collapsing because they are all constructs assembled in eras that no longer map the present.

As I explained in The Entire Bubble Economy Is a Hallucination, models collapse because of two limitations that define all models:

1. All models are self-referential, as they "train" (i.e. generate current analysis) on a limited spectrum of metrics that are presumed to summarize the immensely complex "real world." The model is blind to its own self-referential feedback loop and the limits of the metrics it bases its output on.

Over time, this self-referential "training" degrades the output--the analysis and the decisions based on that analysis--to the point of hallucination: the model is generating output of how the world works that has drifted to far from authentic understanding that it is a hallucination, one that is taken to be "real" by those controlling the model.

2. The metrics being measured leave out enormous fields of the real world, but what's been left out isn't explicit, as it's all based on what is considered "knowable" and "known," as I explained in What We "Know" Is More Dangerous Than the Unknown: these assumptions are hidden limitations of the model, as we only manage what we measure.

I break this down in my book Investing In Revolution.

The collapse of the dominant models is visible everywhere, but perhaps most painfully in economics, which has become the dominant model of how the world works due to the dominance of statistical models of finance and the policies those models generate.

I addressed this failure of economics to accurately predict outcomes back in 2013: Why Isn't There a Demonstrably Correct Economic Theory? (August 16, 2013)

"This system is intrinsically unstable, as the financial claims of credit and fiat money on limited real-world resources and wealth eventually far exceed real-world resources, and the system of claims collapses in a heap.

Although economics doesn't recognize it, the operative phrase here is systemic injustice."

Why Economics Will Never Be a Legitimate Science (December 24, 2013)

All the extant economic models are artifacts of bygone eras. The economic models of the 19th century--all based on the implicit assumption that resources were endless--were modified in the 1930s into Keynesian hallucinations still based on endless resources: let's just pay people with freshly printed "money" to dig holes and fill them. This presumes endless resources to squander on digging holes and filling them, as if that is a productive use of labor and resources.

This hallucination continues to be the dominant paradigm: resources are endless because we're clever and there will always be a substitute for whatever is depleted, so the "solution" is just print "money" to pay people to dig holes and fill them.

The "problem" is "growth" of consumption, and so if we "solve" that problem by goosing consumption by any means available, we enter "Mouse Utopia," an artificial world of never-ending abundance.

The book Money, Blood and Revolution: How Darwin and the Doctor of King Charles I Could Turn Economics into a Science takes a stab at turning economics into "science," but that's not actually "the problem." The real problem is all models have intrinsic limits and end up hallucinating, but those controlling the gearing of the model depend on it to maintain their own power, so they are blind to the failure of their precious model to track the real world and generate authentic understanding.

So we're told that all is well because GDP and the stock market are rising, and since we have lots of natural gas to power AI data centers, we're entering a "Mouse Utopia" of endless abundance. That these are all hallucinations is lost on those clinging to collapsing models as the means of maintaining their power.

That the hallucinations are sustainable is itself a hallucination:

That the inhabitants of "Mouse Utopia" are not focused on how natty gas and AI are going to make Utopia even more utopian is lost in the current model collapse: antisocial behaviors are accelerating due to the the artificial nature and exploitive structure of our "Mouse Utopia," but these realities aren't measured and so they don't exist in the current model's self-referential hallucinations:

All the dominant models are collapsing at once, and no nation is immune to the consequences, as every nation is operating on models that are collapsing without those at the controls being aware that the implicit assumptions of their models no longer map reality.

*  *  *

My new book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free). Check out my updated Books and Films. Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free

Tyler Durden Fri, 12/19/2025 - 07:45

Did Abu Dhabi Just Deliver A Santa Rally: OpenAI To Raise $100BN From Sovereign Wealth Funds

While the broader stock market has meandered both higher and lower in the subsequent two months, the Mag 7 trade peaked on Oct 31 and has been drifting sideways - and lower - ever since.

What happened on that date? That was the day of the infamous All Things podcast, in which Brad Gerstner (an OpenAi investor) pointed out that the emperor is, indeed, naked and asked Sam Altman how a company with $13BN in revenue can afford $1.4 Trillion in commitments. Altman's non-reply? “Happy to find a buyer for your shares.” Translation: No answer... and how could Sam possibly answer: after all there is no way on earth that OpenAI could ever grow into its future obligations absent a miracle, an act of God... or uncle Sam.

A few days later, Altman delivered a far more troubling answer, and one which connected the mathematical dots for everyone, when it was reported that OpenAI was seeking a government guarantee, which would help "attract the enormous investment needed for AI computing and infrastructure." But far more concerning was the other implication of the report: without a government guarantee, there was no way that OpenAI could satisfy the $1.4 trillion in commitments, which also meant that the entire AI bubble, which was built on circular deals where rehypothecated promises for capex investments among the hyperscalers were contingent on some nebulous future revenue stream, was about to burst.

Also, with OpenAI tacitly conceding the need for a government guarantee, the entire AI sector came under immediate and immense scrutiny, and as a result of analysts finally doing elementary math (which we had done months earlier) and realizing that the AI cycle would need trillions in debt, suddenly the weakest credits in the space like CoreWeave and Oracle (see "Oracle Is First AI Domino To Fall After Barclays Downgrades Its Debt To Sell") saw not only their bond (and stock) prices tumble, but their odds of bankruptcy in just 5 years soar, pushing their CDS to record wides.

AI CDS refresh pic.twitter.com/bmQCFga7G7

— zerohedge (@zerohedge) December 17, 2025

And yet maybe the market, in its passion to punish the weakest AI links, had gone too far: we suggested as much last night when we showed just how much ORCL CDS has underperformed the company's stock. After all, was it truly realistic that Oracle, one of the biggest tech giants in the world, would go bankrupt in the next 5 years?

ORCL CDS may have gone a bit too far pic.twitter.com/Pt7I7XVMRI

— zerohedge (@zerohedge) December 17, 2025

Well, if the company continued to lever up massively and invest its cash into dead end capex projects, while OpenAi and its peers failed to provide Oracle with the much needed cash the company needed to keep growing its market share and fund its growth (via capex), the answer apparently was a resounding yes. 

Unless... there was a miracle.

Well, late on Thursday a miracle may have finally arrived. Because in a time when it was increasingly unclear how OpenAI et al, would generate the required revenue to pay their hyperscaler partners for the data centers they needed to impress the world with their chatbot wares, while stable sources of private credit such as Blue Owl had suddenly closed shop when it comes to Oracle, a government guarantee appears to have finally emerged.

Only it wasn't the US (at least not yet), but rather the emirate of Abu Dhabi that may have not only averted the bursting of the AI bubble, but also delivered the 2025 Christmas Rally in the last possible moment.

According to the WSJ, OpenAI - desperate to secure funding for its cash incinerating years which are expected to conclude around 2030 during which time more than $200 billion will be spent - is aiming to raise as much as $100 billion as it seeks to pay for ambitious growth plans in a market that has cooled recently on the artificial-intelligence boom.

The fundraising round could value the company at as much as $830 billion, if it raises the full amount it is targeting. Of course, the implied enterprise value is meaningless: it's just a number; what is all too real, however, is the actual amount of cash Sam Altman would get (in exchange for a sizable chunk of equity, confirming just how problematic using far cheaper debt capital raising has become for OpenAI). And that's a doozy: $100 billion should be more than enough to provide OpenAI with the cash it needs to bridge the period until it is profitable all the while rolling out increasingly more lifelike AI models (especially now that Google's Gemini 3 has taken the lead from OpenAI). More importantly, the cash invested into OpenAI, and promptly spent on compute, will fund such clients as Oracle, Core Weave and others as it percolates across the entire budding AI industry.

Here, the WSJ adds the usual disclaimer, that the startup aims to complete the round by the end of the first quarter at the earliest, and that terms of the deal could still change; it is also unclear whether there will be sufficient investor demand to reach the goal.

The round will present one of the biggest tests the company has faced since the public market’s exuberance for AI spending waned. Chief Executive Sam Altman has already scoured the world to build the pool of OpenAI’s investors and the company is now weighing a potential initial public offering, The Wall Street Journal previously reported.

Of course, Sam Altman had already found some gullible investors to throw good money after bad, most notably Masa Son's SoftBank, which agreed to invest $30 billion in OpenAI earlier this year and last month sold its Nvidia stake for $5.8 billion to fund the OpenAI bet. OpenAI is expected to secure the remaining $22.5 billion in planned financing from SoftBank by the end of the year. 

But that's not nearly enough: after all, recall that we are talking a whopping $1.4 trillion in commitments in the next five years. 

So who is the next most gullible source of capital after SoftBank these days? Why Gulf cash of course. 

Which brings us to the source of the government guarantee: as we said, it's not the US (just yet); instead it is the United Arab Emirates. 

As the WSJ reports, OpenAI is expected to recruit sovereign-wealth funds to invest in the financing, given the scale. The company has previously secured funding from United Arab Emirates-based MGX; it will likely get even more funding from the UAE because considering how much money has already been sunk into OpenAI, UAE companies don't really have a choice to not keep investing - and risk the collapse of Altman's venture. They have to keep throwing good money after bad; such is the curse of the Too Big To Fail, which was banks in 2008... and now it's AI firms. 

The company has faced skepticism over computing deals it has forged that are worth hundreds of billions of dollars and issued a “code red” to beat back a growing threat from Google. While OpenAI is set to burn more than $200 billion in cash through 2030, Google has low levels of debt and robust profits, which could make it easier to invest further in AI. 

And since OpenAI is private, the market has instead turned its attention to such OpenAI partners as Oracle and CoreWeave, who have seen their market values plunge in recent months as shareholders soured on the possibility of capital shortfalls and bold plans for data-center build-outs that appear to face financing headwinds.

But now, the looming $100 billion equity investment from the likes of UAE sovereign wealth funds has changed all that, and with OpenAI set to prefund 2 years (or more) of growth (while materially diluting existing investors) not only are OpenAI's chances to emerge as the ultimate AI victory suddenly much higher, but so are the odds of Oracle and CoreWeave to survive the next few years without filing for bankruptcy. 

Which is why not only has ORCL stock soared after hours...

... but why we expect that tomorrow ORCL CDS will plunge from its 16 year high of ~156bps, since not only will OpenAI have billions in cash to spend around on the likes of Oracle, but the cost of holding on to the negative carrying ORCL CDS will suddenly seem excessive, and we expect a short covering frenzy across all AI-linked credit default swaps.

Over/Under on ORCL CDS tomorrow at -20 https://t.co/erupObw6Zz

— zerohedge (@zerohedge) December 18, 2025

And now that the biggest risk factor for AI is suddenly no longer a near-term concern - courtesy of all that Abu Dhabi housing bubble cash which just has to be reinvested somewhere - it is possible that the UAE may have just delivered a broad market rally just in time for Santa. 

Tyler Durden Fri, 12/19/2025 - 07:35