Trump Did It: Executives & Administrators Are Increasingly Using TDI To Fight DEI

Authored by Jonathan Turley,

“Trump made me do it.”

Across the country, this is a virtual mantra being mouthed everywhere from businesses to higher education. Corporations are eliminating woke programs. Why? Trump did it. Universities are eliminating DEI offices and cracking down on campus extremism. Trump did it. Democratic politicians are abandoning far-left policies. Trump did it.

For those who lack both courage or conviction, the claim of coercion is often the next best thing. The “TDI defense” is born.

Of course, they did not invent Trump, but they needed him. For years, schools like Harvard and Columbia ignored warnings about the rising antisemitism on campuses. They refused to punish students engaged in criminal conduct, including occupying and trashing buildings. These administrators did not want to risk being tagged by the far-left mob for taking meaningful action.

Then the election occurred, and suddenly they were able to blame Trump for doing what they should have been doing all along.

Administrators are now cracking down on extreme elements on campuses.

At the same time, hundreds of schools are closing DEI offices around the country. Again, most are not challenging the Trump administration’s orders on DEI or seeking to adopt more limited responses. They are all in with the move, while professing that they have little choice.

In other words, schools are increasingly turning to TDI to end DEI.

The legal landscape has changed with an administration committed to opposing many DEI programs as discriminatory and unlawful. However, it is the speed and general lack of resistance that is so notable. In most cases, the Trump administration did not have to ask twice. Trump seemed to “have them at hello,” as if they were longing for a reason to reverse these trends.

Many will continue to fight this fight surreptitiously. For example, shortly before the Trump election, the University of North Carolina System Board of Governors voted to ban DEI and focus on “institutional neutrality.” Yet, even Administrators emboldened by the TDI defense are finding resistance in their ranks. For exsmple, UNC Asheville Dean of Students Megan Pugh was caught on videotape, saying that eliminating these offices means nothing: “I mean we probably still do anyway… but you gotta keep it quiet.”  She added, “I love breaking rules.”

The Board, perhaps not feeling the same thrill, reportedly responded by firing her.

The same pattern is playing out in businesses. Over the last few weeks, companies ranging from Amazon to IBM have removed references to DEI programs or policies. Bank of America explained, “We evaluate and adjust our programs in light of new laws, court decisions, and, more recently, executive orders from the new administration.”

Once established, these DEI offices tended to expand as an irresistible force within their institutions and companies. Full-time diversity experts demanded additional hirings and policies on hiring, promotion, and public campaigns. Since these experts were tasked with finding areas for “reform,” their proposals were treated as extensions of that mandate. To oppose the reforms was to oppose the cause.

While some executives and administrators supported such efforts, others simply lacked the courage to oppose them. No one wanted to be accused of being opposed to “equity” or being racist, sexist, or homophobic. The results were continually expanding programs impacting every level of businesses and institutions.

Then Trump showed up. Suddenly, these executives and administrators had an excuse to reverse this trend. They could also rely on court decisions that have undermined long-standing claims of advocates that favoring certain groups at the expense of others was entirely lawful.

This week, the Supreme Court added to these cases with its unanimous ruling in Ames v. Ohio Department of Youth Services, to remove impediments to lawsuits by members of majority groups who are discriminated against.

For many years, lower courts have required members of majority groups (white, male, or heterosexual) to shoulder an added burden before they could establish claims under Title VII of the Civil Rights Act. In a decision written by Justice Ketanji Brown Jackson, the court rejected that additional burden and ordered that everyone must be treated similarly under the law.

Many commentators noted that the ruling further undermined the rationales for disparate treatment based on race or other criteria within DEI.

In other words, more of these programs are likely to be the subject of federal investigations and lawsuits. Of course, if these executives and administrators were truly committed to the programs in principle, they could resolve to fight in the courts. The alternative is just to blame Trump and restore prior policies that enforce federal standards against all discriminatory or preferred treatment given to employees based on race, sex, religion, or other classifications.

Former Vice President Hubert Humphrey once observed that “to err is human. To blame someone else is politics.” That is evident among politicians. For years, many moderate Democrats voted to support far-left agendas during the Biden administration, lacking the courage or principles to oppose the radical wing of the Democratic Party. Now, some are coming forward to say that the party has “lost touch with voters.”

Rather than admit that their years of supporting these policies were wrong, they blame Trump and argue that the party must move toward the center to survive.

The calculus is simple: You never act on principle when you can blame a villain instead. It is not a profile of courage but one of simple convenience. No need for admissions or responsibility — just TDI and done.

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University and the author of “The Indispensable Right: Free Speech in an Age of Rage.”

Tyler Durden Mon, 06/09/2025 - 12:05

British Gov't: Western Cultural Concerns Are Signs Of "Right-Wing Terrorist Ideology"

Authored by Jonathan Turley,

Free speech in the United Kingdom has long been in free fall, with expanding criminalization and regulation of speech. Much of this effort is carried out to combat disinformation or radicalism.

The subjectivity of such “Prevent” standards is evident in a new media report that officers are being trained to look for “cultural nationalism,” including those people who are concerned that Western culture is under threat from mass migration.

Such concerns are now viewed as indicative of “right-wing terrorist ideology.”

Europe, like the United States, is showing a surge in political support for politicians seeking to limit and reverse mass immigration into their countries. That includes Great Britain.

The material is part of an online training course for British hospitals, schools, universities, and other public institutions that are expected to identify and report extremists to the government.

The training would subject a large number of British citizens to potential investigation as right-wing extremists. In 2023, a government report by William Shawcross concluded “populist conservative voices who have nothing to do with violent extremism” are often identified by investigators even though the overwhelming number of attacks committed in the UK were “Islamist in nature.”

There have also been warnings that by classifying “cultural nationalism” as an indication of extremism, the anti-terror scheme could be used to stifle public debate.

A Home Office spokesman insisted, however, that “Prevent is not about restricting debate or free speech, but about protecting those susceptible to radicalisation.”

That is a rationale already used in the UK to arrest those with dangerous thoughts or viewpoints.

For years, I have been writing about the decline of free speech in the United Kingdom and the steady stream of arrests, including in my book, The Indispensable Right: Free Speech in an Age of Rage.

A man was convicted of sending a tweet while drunk, referring to dead soldiers. Another was arrested for wearing an anti-police t-shirt. Another was arrested for calling the Irish boyfriend of his ex-girlfriend a “leprechaun.” Yet another was arrested for singing “Kung Fu Fighting.” A teenager was arrested for protesting outside of a Scientology center with a sign calling the religion a “cult.”

Nicholas Brock, 52, was convicted of a thought crime in Maidenhead, Berkshire. The neo-Nazi was given a four-year sentence for what the court called his “toxic ideology” based on the contents of the home he shared with his mother in Maidenhead, Berkshire. Judge Peter Lodder QC dismissed free speech or free thought concerns with a truly Orwellian statement:

“I do not sentence you for your political views, but the extremity of those views informs the assessment of dangerousness.”

Lodder lambasted Brock for holding Nazi and other hateful values:

“[i]t is clear that you are a right-wing extremist, your enthusiasm for this repulsive and toxic ideology is demonstrated by the graphic and racist iconography which you have studied and appeared to share with others…”

Recently, the UK effectively resumed blasphemy prosecutions and previously arrested a woman for silently praying to herself near an abortion clinic.

The training captures the potential chilling effect on speech where any publicly stated concerns over immigration and Western Civilization could lead to your being reported to the police. It reflects the cavalier approach to such speech regulations in not just the UK but throughout Europe.  However, this European model is being promoted by many in the United States, including some who are calling on the European Union to challenge the United States over the regulation of speech.

Tyler Durden Mon, 06/09/2025 - 11:25

Advance Into Central Ukrainian Region Is Part Of Putin's 'Buffer-Zone': Kremlin

We detailed Sunday that Russian forces have begun advancing into Ukraine's Dnipropetrovsk region for the first time in the three-year-plus long war, marking a significant territorial escalation amid stalled peace talks. The Kremlin on Monday described the expanded offensive as key to establishing President Vladimir Putin's buffer zone in a fresh statement.

The recent advance into Dnepropetrovsk Region, which borders Donetsk to the West, is part of the push establish a "buffer zone" on the front line, Putin spokesman Dmitry Peskov said.

War Memorial Dnipropetrovsk, Wikimedia Commons

"It is one of the goals, of course, but if we talk about the nuances of the military actions themselves, then your questions should be addressed to the Defense Ministry," Peskov said.

The defense ministry has confirmed that tank division of the battle group 'Center group' - the 90th Armored Division - reached the western border of Donetsk as of Sunday, and was advancing into the Dnepropetrovsk oblast.

In late May, Putin had announced before ministers and Kremlin officials that he's ordered a big buffer zone along Russia's southern border to protect the towns and populations there from cross-border strikes from Ukraine.

"We have approved the creation of a necessary security buffer zone along our borders. Our armed forces are actively working to accomplish this task," the Russian leader had stated.

April, May, and early June have seen thousands of drones launched from Ukraine onto southern oblasts, with some drones targeting as far as Moscow, which has resulted in commercial flight stoppages at several area airports.

The timing of Putin's buffer zone plan was very significant, given that President Trump is increasingly being perceived as 'stepping back' from pursuit of a final peace settlement, perhaps content to 'let them fight it out'.

The NY Times last month described that Trump is ready to throw his hands up in the air and say 'not my problem' as neither side is ready to compromise:

For months, President Trump has been threatening to simply walk away from the frustrating negotiations for a cease-fire between Russia and Ukraine.

After a phone call on Monday between Mr. Trump and President Vladimir V. Putin of Russia, that appears to be exactly what the American president is doing. The deeper question now is whether he is also abandoning America’s three-year-long project to support Ukraine, a nascent democracy that he has frequently blamed for being illegally invaded.

The Times concluded, "In a reversal, President Trump appears to have backed off joining a European push for new sanctions on Russia, seemingly eager to move on to doing business deals with it."

Also last month, hawkish top national security official Dmitry Medvedev warned that Russia could eventually extend the buffer zone across almost the whole of Ukraine.

Former Russian president Medvedev was being threatening and perhaps hyperbolic, given Russia has struggled to slowly solidify its hold over the Donbass, yet Putin has still held back on a full declaration of war and mobilization of the whole of society.

Tyler Durden Mon, 06/09/2025 - 11:05

Tether USDT Stablecoin Seen On Bolivian Store Price-Tags

Authored by Adrian Zmudzinski via CoinTelegraph.com,

Tether CEO Paolo Ardoino has shared photos of goods in a Bolivian airport shop priced in the company’s stablecoin, USDt, suggesting growing unofficial use of the cryptocurrency amid the country’s ailing economy.

In a Saturday X post, Ardoino shared images of items being priced in USDt in Bolivia, including sunglasses and sweets. One photo showed a notice to customers that prices were set in USDT:

“Our products are priced in USDT (Tether), a stable cryptocurrency with a reference price informed daily by the Central Bank of Bolivia, based on the rate from Binance (a cryptocurrency trading platform),” the notice read.

The notice said customers could pay in either local fiat currency, Bolivianos, or US dollars. USDT was used to establish the dollar-Bolivianos exchange rate.

Source: Paolo Ardoino

USDt making waves in Bolivia

The notice and the items were photographed at Duty Fly, an airport shop offering duty-free items to its customers. Neither Duty Fly nor Tether responded to Cointelegraph’s request for comment.

It’s unclear how widespread the use of USDT is as a pricing benchmark across Bolivia, but other reports suggest that the stablecoin is gaining considerable popularity in the country. In late October 2024, major local bank Banco Bisa began offering a custody service for USDT, stating that it would enable its clients to buy, sell and transfer the asset through the bank.

Bolivia’s economy crumbles

Bolivia’s economy has been in steep decline. The country’s usable foreign reserves fell from $15 billion in 2014 to $1.98 billion in December 2024, equivalent to only 2.9 months of imports. Of that amount, less than $50 million was in cash, and the rest was in gold.

Bolivia has a thriving black market for dollars, with the street rate reaching about 10 Bolivianos per dollar as of mid-2024. The current official exchange rate is approaching 7 Bolivianos per US dollar.

USD/BOB exchange rate chart. Source: Google Finance

The Bolivian government also spends about $56 million per week importing diesel and gasoline, yet it still faces nationwide shortages. The local Consumer Price Index inflation stood at 14.6% as of March 2025.

One of the photos shared by Ardoino showed a pack of Oreos priced between 15 and 22 USDT, underscoring the rapid erosion of the local currency’s purchasing power.

Tyler Durden Mon, 06/09/2025 - 10:45

Greta Thunberg Claims She's Been 'Kidnapped' By Israeli Forces

Authored by Ken Silva via Headline USA,

Climate alarmist turned humanitarian activist Greta Thunberg said Sunday that she’s been “kidnapped” after she and the rest of the crew aboard the The Madleen, a sailboat that’s trying to break Israel’s starvation blockade on Gaza, was intercepted and boarded by Israeli forces.

‘My name is Greta Thunberg and I am from Sweden. If you see this video, we have been intercepted and kidnapped in international waters by the Israeli occupational forces, or forces that support Israel,” she said. “I urge all my friends, family and colleagues to put pressure on the Swedish government to release me as soon as possible. ”

"My name is Greta Thunberg and I am from Sweden. If you see this video, we have been intercepted and kidnapped in international waters by the Israeli occupational forces, or forces that support Israel." pic.twitter.com/Ku7QILHpfd

— Prem Thakker (@prem_thakker) June 9, 2025

According to antiwar.com’s Dave Decamp, Israeli Defense Minister Israel Katz ordered the IDF to intercept the Madleen earlier on Sunday. DeCamp reported that the boat is carrying 12 civilian activists who are traveling unarmed, including Thunberg.

“I have instructed the IDF to act to ensure that the hate flotilla ‘Madleen’ does not reach the shores of Gaza—and to take all necessary measures to achieve this,” Katz wrote on X, as reported by DeCamp.

“A senior Israeli official told Israel’s Channel 12 that if the boat doesn’t turn around, it would be boarded by Israeli Navy commandos and brought to the port of Ashdod,” DeCamp reported.

Israel supporters in the U.S. have suggested Israel should sink the Madleen, including sports gambling mogul Dave Portnoy and Sen. Lindsey Graham (R-SC).

“Hope Greta and her friends can swim!” Graham said in a post on X.

Tyler Durden Mon, 06/09/2025 - 09:25

Key Events This Week: CPI, US-China Trade Talks, Treasury Auctions

The highlight this week will be US CPI on Wednesday and a resumption of trade talks between the US and China today in London. Bessent, Lutnick and Greer are set to meet Chinese representatives at the meeting today. So it's all the big guns from the US administration. DB's Jim Reid reminds us that the monthly 30-yr UST auction on Thursday will also be a heavy focus with all the attention on the long-end in recent weeks. There's a 10yr auction the day before as well. So a good test of demand as the fiscal bill meanders its way through Congress.

Before we preview the CPI release the other main highlights this week are the NY Fed 1-yr inflation expectations today; US NFIB small business optimism, UK employment data and Danish and Norwegian CPI tomorrow; that CPI, the 10yr UST auction and the UK Spending Review on Wednesday; US PPI, US jobless claims, UK monthly GDP, the 30yr UST auction and my birthday on Thursday; and the UoM consumer sentiment (including inflation expectations) on Friday. A fuller day-by-day diary of events is at the end as usual.

With regards to US CPI, DB's US economists expect weak seasonally adjusted gas prices to again keep the headline rate (+0.20% forecast vs. +0.22% previous) gain below that of core (+0.31% vs. +0.24%). This should help the YoY rate for both headline and core to rise two-tenths to 2.5% and 3.0%, respectively. Shorter-term trends for core would be mixed with the three-month annualized rate rising by three-tenths to 2.4% while the six-month rate would remain steady at 3.0%. DB's economists do expect tariffs to begin to impact core goods prices, especially in categories like household furnishings and supplies where we saw potential preliminary tariff impacts in the April data. On the services side, economists will be most attuned to the volatile categories like lodging away and airline fares that have been a meaningful drag of late. For PPI the following day, our economists expect a +0.27% increase in May which would reduce the YoY rate by a couple of tenths. As ever, how the subcomponents that feed into core PCE come out will be the most interesting part of the release. Note that the Fed are now on media blackout ahead of next Wednesday's (18th) FOMC.

It's not clear that the Fed will have learnt too much more than they already knew from Friday's payrolls data. May headline (+139k vs. 147k) and private (140k vs. 146k) payrolls were slightly above the 126k consensus but -95k of net revisions to the two previous months softened the beat. We now have very stable private sector hiring trends over the past three (133k), six (146k) and twelve (122k) months. However the narrow breadth in job growth as health care / social assistance (+78k) and leisure / hospitality (+48k) continued to drive the majority of private sector job gains in May and have accounted for 75% of private job growth over the past twelve months.

Staying on employment there will be increased attention on claims this week given the recent tick up. It's not clear whether its seasonals or evidence that there is some real time slipping in employment trends.

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

Monday June 9

• Data: US May NY Fed 1-yr inflation expectations, April wholesale trade sales, China May CPI, PPI, trade balance, Japan May Economy Watchers survey, bank lending, April BoP current account balance, BoP trade balance
• Central banks: ECB's Elderson speaks

Tuesday June 10

• Data: US May NFIB small business optimism, UK April average weekly earnings, unemployment rate, May jobless claims change, Japan May M2, M3, machine tool orders, Italy April industrial production, Sweden April GDP indicator, Norway and Denmark May CPI
• Central banks: ECB's Villeroy, Holzmann and Rehn speak
• Auctions: US 3-yr Notes ($58bn)

Wednesday June 11

• Data: US May CPI, federal budget balance, Japan May PPI, Canada April building permits
• Central banks: ECB’s Lane and Cipollone speak
• Earnings: Oracle, Inditex
• Auctions: US 10-yr Notes (reopening, $39bn)
• Other: UK Spending Review

Thursday June 12

• Data: US May PPI, Q1 household change in net worth, initial jobless claims, UK May RICS house price balance, April monthly GDP, Germany April current account balance, Italy Q1 unemployment rate
• Central banks: ECB's Muller, Escriva, Knot, Guindos and Schnabel speak
• Earnings: Adobe
• Auctions: US 30-yr Bond (reopening, $22bn)

Friday June 13

• Data: US June University of Michigan survey, Japan April capacity utilisation, Tertiary industry index, Germany May wholesale price index, Italy April trade balance, Eurozone April trade balance, industrial production, Canada April manufacturing sales, Q1 capacity utilisation rate

* * * 

Finally, looking at the US, Goldman notes that the key economic data releases this week are the CPI report on Wednesday and the University of Michigan report on Friday. Fed officials are not expected to comment on monetary policy this week, reflecting the blackout period ahead of the June FOMC meeting.

Monday, June 9 

• 11:00 AM New York Fed 1-year inflation expectations, May (last 3.6%) 

Tuesday, June 10 

• There are no major data releases scheduled. 

Wednesday, June 11 

• 08:30 AM CPI (MoM), May (GS +0.17%, consensus +0.2%, last +0.2%); Core CPI (MoM), May (GS +0.25%, consensus +0.3%, last +0.2%); CPI (YoY), May (GS +2.47%, consensus +2.5%, last +2.3%); Core CPI (YoY), May (GS +2.89%, consensus +2.9%, last +2.8%): We estimate a 0.25% increase in May core CPI (month-over-month SA), which would raise the year-over-year rate by 0.1pp to 2.9%. Our forecast reflects a decline in used car prices (-0.5%) reflecting a decline in auction prices, a slight increase in new car prices (+0.1%), and a more moderate increase in the car insurance category (+0.4%) based on premiums in our online dataset. We expect another soft month of travel services inflation based on higher frequency prices measures: we forecast unchanged hotel prices and unchanged airfares. We have penciled in moderate upward pressure from tariffs on categories that are particularly exposed (such as apparel, recreation, and communication) worth +0.05pp on core inflation. We expect the shelter components to decelerate on net (OER +0.31% vs. +0.36% in April; primary rent +0.31% vs. +0.34%). We estimate a 0.17% rise in headline CPI, reflecting higher food prices (+0.4%) but sharply lower energy prices (-1.2%).

Thursday, June 12 

• 08:30 AM PPI final demand, May (GS +0.3%, consensus +0.2%, last -0.5%); PPI ex-food and energy, May (GS +0.3%, consensus +0.3%, last -0.4%) ;PPI ex-food, energy, and trade, May (GS +0.3%, consensus +0.3%, last -0.1%); 
• 08:30 AM Initial jobless claims, week ended June 7 (GS 260k, consensus 241k, last 247k); Continuing jobless claims, week ended May 31 (consensus 1,910k, last 1,904k): We estimate that initial claims rose a further 13k to 260k in the week ended June 7, reflecting a boost from residual seasonality related to the timing of the Memorial Day holiday.

Friday, June 13 

• 10:00 AM University of Michigan consumer sentiment, June preliminary (GS 53.6, consensus 53.5, last 52.2); University of Michigan 5-10-year inflation expectations, June preliminary (GS 4.1%, consensus 4.2%, last 4.2%)

Source: DB, Goldman

Tyler Durden Mon, 06/09/2025 - 09:16

Futures Rise Ahead Of US-China Talks

US equity futures reverse earlier losses and trade near session highs, with small cap/Russell outperformance pointing to a further potential squeeze in high-beta names as investors monitor talks between the US and China in London to defuse tensions over rare-earth minerals and advanced technology. As of 8:00AM, S&P futures rose 0.2% after the main gauge broke through the 6,000 level for the first time since February at the end of last week. Nasdaq 100 futs gained 0.1%, with Mag7 names mixed premarket, Semis are higher, and cyclicals poised to outperform Defensives. Chinese shares trading in Hong Kong entered a bull market. European stocks barely budged, while a gauge for emerging-market equities was set for its highest close in more than three years. Bond yields are lower, and USD is weaker as commodities are led by Energy and precious metals; silver continues to close the gap to gold, although today it is platinum and palladium's turn to shine. Today’s focus is the US/China trade mtg in London: overnight, HK and HSTECH performed well into the summit. Macro data prints include NY Fed’s 1-year inflation expectations (3.63% prior print) which could affect the yield curve as the Fed is in its blackout window.

In premarket trading, Mag 7 were mostly higher with the exception of Tesla which isdown 2.3% after Baird downgraded the stock to neutral, noting that the recent share price rally followed a fundamentally poor quarter for the EV maker. Other names traded flat to up: Nvidia +0.4%, Apple +0.6%, Alphabet +0.6%, Amazon +0.4%, Meta Platforms +0.04%, Microsoft -0.1%. Warner Bros Discovery (WBD) rose 4% after saying it will separate the company into two publicly traded businesses, splitting its streaming and studios business and its TV networks operations by the middle of next year. Here are some other notable premarket movers: 

• Air mobility stocks are set to extend gains after President Donald Trump signed an executive action establishing an electric “Vertical Takeoff and Landing” integration pilot program, according to a White House fact sheet.
• Archer Aviation (ACHR) +9%, Joby Aviation (JOBY) +9%, Vertical Aerospace (EVTL) +7%
• EchoStar (SATS) falls 9% after the Wall Street Journal reported the company is weighing a potential chapter 11 bankruptcy filing amid a Federal Communications Commission review of certain of its wireless and satellite spectrum rights, citing people familiar with the matter.
• Etoro Group (ETOR) rises 3.3% after Mizuho, Jefferies and Citizens initiate the investment platform with a buy-equivalent rating, citing a growing retail-investor client base and potential for further growth in Europe and the US.
• Grab Holdings Ltd. (GRAB) inches 1% lower after the company said it isn’t in talks to acquire Southeast Asia internet peer GoTo Group “at this time,” signaling it’s halting or at least pausing a planned $7 billion acquisition of its Southeast Asia internet peer.
• Opendoor Technologies (OPEN) drops 13% after the company announced plans to seek holder permission for a reverse stock split between 1-for-10 and 1-for-50 at its special meeting on July 28.
• Robinhood (HOOD) falls 4% and AppLovin (APP) is down 4% after S&P Dow Jones Indices left the S&P 500 unchanged in its latest round of quarterly rebalancing on Friday.
• Sunnova Energy International Inc. (NOVA), one of the largest US rooftop solar companies, falls 33% after filing for bankruptcy in Texas following struggles with mounting debt and diminishing sales prospects.

As if the past two months never happened, the S&P is nearing all-time highs after shaking off the volatility that followed President Donald Trump’s sweeping tariff announcements in early April. Still, traders are searching for catalysts for sustained advances, as the full economic impact of the trade war has yet to fully manifest and key trade-related questions remain unresolved.

“We will break to new highs eventually,” Keith Lerner, co-chief investment officer at Truist Advisory Services, told Bloomberg TV. “The market is dealing with uncertainty around tariffs, it matters but it’s not the only thing that matters. Technology is back at the forefront.”

At a time when global investors are pushing back against long-term government debt, a $22 billion auction of 30-year bonds on Thursday is bound to be one of Wall Street’s most anticipated events this week. Traders will also focus on Wednesday’s US inflation report for May. Consumers probably saw a slightly faster pace of price increases as companies gradually pass along higher import duties, according to a Bloomberg survey of economists. 

“In May, when the 30-year went above 5%, we have seen buyers buying the dip,” Vasiliki Pachatouridi, head of BlackRock’s iShares fixed-income product strategy for EMEA, told Bloomberg TV. “We are underweight the long end of the curve, but there are people out there that still see value in US Treasuries at the right price.”

In Europe, the Stoxx 600 is little changed as stocks tread water with gains in real estate, leisure and travel being offset by losses in technology and banks. The DAX falls 0.5% as SAP shares provide a notable drag on the index. Among individual movers, Alphawave advances after Qualcomm agreed to buy the semiconductor company for about $2.4 billion in cash. Markets in Denmark, Switzerland, Turkey, Hungary and Norway are closed for a holiday. Here are the most notable European movers:

• Alphawave shares gain as much as 23.3% to reach 183.9 pence, after the semiconductor firm said US chipmaker Qualcomm agreed to take over the company for a price equating to 183p per share.
• The Blockchain Group rises as much as 25% after the company launched a €300m capital increase in a deal with asset management firm TOBAM.
• M&G shares rises as much as 2.8% as UBS raises its recommendation to buy from neutral, saying it expects the company to continue to deliver growth within asset management.
• Ageas shares gain as much as 3.2% to the highest since October 2008 after BofA raised its rating on the life insurance firm to buy.
• Carel shares rise as much as 5.5% to the highest since February 2024 after UBS initiated coverage on the HVAC and humidification manufacturercndes with a buy rating.
• European defense stocks are losing ground on Monday, dropping for a second consecutive session, as they fall further from recent record highs.
• Trustpilot Group’s shares fall as much as 8.9%, their biggest drop in two months, after Panmure Liberum resumed coverage with a sell recommendation, noting the consumer-review site faces high execution risk amid a complex multi-year business transition.
• Gaztransport et Technigaz shares drop as much as 9.5% after being given a new underweight rating from Morgan Stanley, while SBM Offshore gains as much as 2.3% after being initiated at overweight.
• Dunelm drops as much as 6.3%, the most in almost three months, as RBC downgrades to sector perform and says the homeware retailer’s qualities now seem reflected in the stock.

In FX, the dollar dropped 0.3%, pushing the currency to fresh two-year lows. New Zealand, Australian dollars led G10 gains; NZD/USD rose 0.8% to 0.6063, AUD/USD rose 0.6% to 0.6532; Australian financial market was closed on holiday. GBP/USD rose 0.3% to 1.3572, EUR/USD rose 0.3% to 1.1426. USD/JPY fell 0.5% to 144.07 before recouping losses to rise back to 144.50.

In rates, treasury yields are slightly lower across the curve, unwinding a small portion of Friday’s steep losses caused by May jobs report, ahead of the sale of 3-, 10- and 30-year Treasuries later this week. US front-end yields are richer by about 2bp, outperforming longer maturities and steepening 5s30s curve by about 1bp; 10-year around 4.49% is about 1bp lower on the day, German counterpart about 2bp lower. Italian government bonds are leading gains in European debt, with Italian 10-year borrowing costs falling 6 bps and further narrowing the spread with Germany to around 92 bps. Treasury auctions include $58 billion 3-year new issue Tuesday and $39 billion 10-year and $22 billion 30-year reopenings Wednesday and Thursday. This week’s focal points include May CPI data on Wednesday and Treasury auction cycle starting Tuesday. Fed officials are in an external communications blackout ahead of the June 18 policy announcement. 

In commodities, spot gold rises $8 to around $3,318/oz, while platinum breaks out to multi-year highs. Oil prices are steady with WTI near $64.60 a barrel.

Looking at today's calendar, we have April wholesale inventories (10am) and May NY Fed 1-year inflation expectations (11am). Also ahead this week are May CPI. PPI and the grotesquely laughable University of Michigan sentiment (of democrats).

Market Snapshot

• S&P 500 mini little changed
• Nasdaq 100 mini little changed
• Russell 2000 mini +0.8%
• Stoxx Europe 600 little changed
• DAX -0.5%, CAC 40 little changed
• 10-year Treasury yield -2 basis points at 4.48%
• VIX +0.8 points at 17.61
• Bloomberg Dollar Index -0.3% at 1207.96
• euro +0.4% at $1.1437
• WTI crude little changed at $64.64/barrel

Top Overnight News

• The US and China will resume trade talks today in London, with tariffs, rare-earth minerals and advanced technology at the top of the agenda. Each country has accused the other of reneging on a deal made in Geneva in May. BBG
• US President Trump thinks support has solidified for the tax bill over the last 24 hours and will take a look at Elon Musk’s government contracts, while he has no plans to speak to Musk and noted that DOGE helped a lot. Trump stated he is thinking about the next Fed Chair and it is coming out very soon, as well as suggested a good Fed Chair would lower rates.
• Trump warned Elon Musk of serious consequences if he backs Democrats who oppose the Republican tax bill. The president told NBC he’s “very confident” the bill will pass by July 4. BBG
• US Defense Secretary Hegseth said active-duty troops will be mobilised if violence continues in Los Angeles, while President Trump deployed the National Guard to LA immigration ‘riots’ after claiming state officials cannot do their jobs, according to Sky News. Furthermore, reports noted that as many as 500 Marines are “in a prepared-to-deploy status” should they be needed to protect federal property and personnel and US President Trump posted on Truth Social "Looking really bad in L.A. BRING IN THE TROOPS!!!"
• China’s trade numbers for May fall a bit short, including exports +4.8% (vs. the Street +6%) and imports -3.4% (vs. the Street -0.8%), w/exports to the US slumping by the most since the start of COVID. FT
• China's producer deflation deepened to its worst level in almost two years in May while consumer prices extended declines, as the economy grappled with trade tensions and a prolonged housing downturn. PPI (-3.3% vs. the Street -3.2% and vs. -2.7% in Apr) and CPI (-0.1% vs. the Street -0.2% and vs. -0.1% in Apr). RTRS
• Japan is considering buying back some super-long government bonds issued in the past at low interest rates, two sources with direct knowledge of the plan said on Monday, underscoring its focus on reining in any abrupt rise in bond yields. The move would come on top of an expected government plan to trim issuance of super-long bonds -- such as those with 20-, 30- or 40-year maturities -- in the wake of sharp rises in their yields. RTRS
• A US trade team currently in India for trade discussions has extended its stay, a sign talks are progressing ahead of a July deadline. BBG
• Iran will send a counteroffer “in the coming days” via Oman in response to a US proposal on Tehran’s nuclear program, a Foreign Ministry spokesman said. BBG
• Canadian PM Carney is to announce Canada's national defence spending will meet the 2% of GDP NATO goal: Globe & Mail.
• US state and local governments are selling municipal bonds at a record pace on fears that Congress could partially pay for President Trump’s “big beautiful bill” by cutting a tax break for airports, hospitals, and affordable housing projects. FT
• Apple’s WWDC gets underway today, with a focus on new software interfaces for the iPhone, iPad, Mac, Apple TV and Watch. But only minor AI changes are expected, offering little to investors worried it’s lagging behind in that space. BBG
• Citi expects the Fed to deliver 75bps of rate cuts this year, 25bps in September, October and December, comes after Friday's NFP data; expects Fed to deliver 50bps in 2026, via 25bps in Jan and March.
• Fed’s Musalem (voter) said he sees a 50-50 chance that Trump tariffs could either boost inflation for a quarter or two, or cause sustained inflation, according to an FT interview. Musalem said this means the Fed will likely face uncertainty right through the summer and political interference could make it harder for the Fed to lower interest rates.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly higher following last Friday's gains on Wall St, but with trade somewhat quietened amid the holiday closure in Australia and as participants digested mixed Chinese data. Nikkei 225 reclaimed the 38,000 level after last week's currency weakness and with upward revisions to Japanese GDP data. Hang Seng and Shanghai Comp gained amid some trade-related optimism with officials from the US and China set to meet in London today, although the gains in the mainland are capped as participants also digested key data releases which showed a continued deflation and mostly softer trade data.

Top Asian News

• BoJ Deputy Governor Uchida said central banks are shrinking their balance sheet but many of them are unlikely to return to conventional monetary adjustment methods, while he added that many central banks are likely to use interest payment on reserves to guide short-term interest rates while maintaining the balance sheet size that meets market demand.
• China sold 1.96mln passenger cars in May, +13.9% Y/Y, according to China's auto industry body CPCA.
• China to raise minimum wage standard and expand coverage of social insurance, via Xinhua.

European bourses (STOXX600 -0.1%) are broadly modestly lower across the board and with price action fairly muted, given parts of Europe are off today on account of Whit Monday. European sectors mixed and with the breadth of the market exceptionally narrow, given the holiday-thinned conditions for some parts of Europe. Real Estate leads given the relatively lower yield environment in Europe; Travel & Leisure follows closely behind.

Top European News

• NATO Secretary General Rutte will reportedly call for a 400% increase in air and missile defence in his London speech.
• UK Chancellor Reeves is to announce a transformative GBP 86bln in the Spending Review to turbo-charge the fastest growing sectors, from tech and life sciences to advanced manufacturing and defence, as part of the government’s plan to invest in Britain’s renewal through the Modern Industrial Strategy.
• BoE’s Greene said the disinflation process is ongoing and expects inflation to continue to come down to the target over the medium-term, while she noted their view is they can look through it but added there is a pretty big risk.
• ECB's Kazimir says he thinks the bank is nearly done with, if not already at the end of the easing cycle; sees clear downside risks to growth but would be a mistake to ignore upside inflation risks. Need to keep all options open. Data over the summer will indicate whether additional fine-tuning is required.
• ECB President Lagarde reiterated that the central bank is in a good position on rates and to deal with uncertainties ahead.
• ECB’s Escriva said the path of monetary policy easing in the eurozone could require further adjustments if the current macroeconomic and inflation outlooks are confirmed, while he added the central scenario of GDP growth around 1% and inflation of 2% could require some fine-tuning, according to Reuters.
• ECB’s Nagel said the ECB can take its time on interest rates with monetary policy now set at a neutral level that is no longer restrictive and that the central bank has maximum flexibility on rates.
• ECB’s Schnabel said do not expect a sustained decoupling between the ECB and the Fed, while she expects the trade conflict to play out as a global shock that’s working through both lower demand and supply.
• ECB’s Vujcic said a small deviation on either side of the 2% inflation target is not a problem and the central bank should not overreact to inflation edging below the target, while he added the bar for QE will be higher in light of past experience.
• EU was urged to exempt more companies from supply chain law although rules on curbing environmental and rights abuses should not be scrapped, according to Swedish conservative MEP Warborn cited by FT.
• Fitch cut Austria’s sovereign rating from AA+ to AA; Outlook Stable, while it affirmed Hungary at BBB: Outlook Stable, while S&P raised Slovenia’s rating from AA- to AA; Outlook Stable.

FX

• DXY has kicked the week off on the backfoot after being boosted on Friday post-NFP. Focus at the start of the week has been on the trade front ahead of an anticipated meeting between US-China officials in London to discuss the trade situation; note, Chinese Foreign Ministry spokesman avoided a question on the matter at a briefing today. Elsewhere, whilst the Fed is in its blackout period, US President Trump has teased over a potential imminent decision on who will replace Fed Chair Powell when his term expires next year. DXY has delved as low as 98.81 but is holding above Friday's trough at 98.65.
• EUR/USD has moved back onto a 1.14 handle following last Friday's NFP-induced selling. Fresh macro drivers for the Eurozone are lacking following the hawkish reaction to last week's ECB policy announcement. We have seen further commentary from Bank officials over the weekend with Nagel noting that the central bank has maximum flexibility on rates, whilst Schnabel stated we should not expect a sustained decoupling between the ECB and the Fed. EUR/USD has ventured as high as 1.1429 but is yet to approach Friday's 1.1457 peak.
• JPY is firmer vs. the USD and towards the top of the G10 leaderboard after suffering in the wake of last Friday's US jobs report. Newsflow out of Japan has been on the light side aside from an upwards revision to Q1 GDP and Japanese Economy Minister Akazawa continuing to urge the US again to reconsider tariff measures, whilst suggesting that further progress has been made in trade talks with the US. USD/JPY has crossed back below its 50DMA at 144.43 and is currently holding above the 144 mark.
• As is the case across G10 FX, GBP is firmer vs. the USD in a reversal of the price action seen post-NFP on Friday. Over the weekend, BoE's Greene remarked that the disinflation process is ongoing and expects inflation to continue to come down to the target over the medium-term. Cable remains on a 1.35 handle but sub-Friday's 1.3585 peak.
• Antipodeans are both firmer vs. the USD and towards the top of the G10 leaderboard. Newsflow for Australia and New Zealand has been light over the weekend, with the former away from market. Of note for both however, was the latest round of Chinese trade which saw both imports and exports fall short of expectations on account of the trade war.

Fixed Income

• US paper is attempting to atone for Friday's losses which were brought about by the firmer-than-expected US jobs report, which avoided the soft outcome that some in the market had been positioning for. Quiet schedule today, but focus will be on the US-China meeting in London today; time still not disclosed. Sep'25 UST contract has been as high as 110.05+ but is some way off Friday's peak at 110.29+.
• Bunds have very much started the week off on the front foot and are leading global fixed income markets higher. From a fundamental perspective, fresh macro drivers for the Eurozone are lacking following the hawkish reaction to last week's ECB policy announcement. We have seen further commentary from Bank officials over the weekend with Nagel noting that the central bank has maximum flexibility on rates, whilst Schnabel stated we should not expect a sustained decoupling between the ECB and the Fed. Sep'25 Bunds have eclipsed Friday's best at 130.77 with focus on a test of 131.00.
• Gilts are higher, being dragged up by the moves in German paper with fresh UK drivers lacking. Over the weekend, BoE's Greene remarked that the disinflation process is ongoing and expects inflation to continue to come down to the target over the medium-term. UK docket today is light, more focus on Wednesday's UK spending review. Sep'25 Gilts have moved back onto a 92 handle but thus far are respecting Friday's peak at 92.36.
• Japanese government is considering buying back some super-long JGBs issued in the past, according to Reuters sources.

Commodities

• Crude benchmarks are flat, with price action fairly muted in catalyst thin trade thus far. Some modest upticks on commentary out of Iran, which noted that Tehran will be proposing a counter offer to the US nuclear proposal by tomorrow (Tuesday). WTI and Brent reside within tight USD 64.20-64.86 and 66.07-66.69/bbl ranges respectively, and currently rest within the middle of these bounds.
• Spot gold is firmer, and benefitting from the softer dollar (DXY -0.3%), and subdued risk environment. The yellow-metal saw fleeting support on the aforementioned news from Iran, which pushed the metal towards session highs of USD 3,328/oz, before it faced resistance at this level.
• Copper is on the front foot, shrugging off mixed Chinese data, which showed Y/Y CPI remaining in deflationary territory. Elsewhere, LME data showed copper stocks fell 10k. The industrial metal was choppy on this update, though ultimately rose after ten minutes. 3M LME copper trades within a range of USD 9,670.75-9,738.1/t.
• Venezuela is planning to increase gasoline prices by 50% as it braces for a decline in oil revenue following the suspension of operations by Chevron (CVX) and other foreign energy firms, according to Bloomberg citing people familiar with the decision.

Geopolitics: Middle East

• Iran will reportedly propose a counter offer to the US nuclear proposal soon, according to state TV; will be sent by tomorrow.
• Israel’s military said it struck a Hamas member in southern Syria.
• US-based Gaza Humanitarian Foundation said it did not distribute aid on Saturday because Hamas made direct threats against its operations, while a Hamas official said he had no knowledge of alleged threats to the US-backed aid group in Gaza. Furthermore, Al Jazeera reported that Israeli attacks killed more than 40 in Gaza as aid seekers were shot dead.
• Israeli Defence Minister Katz threatened to “take all necessary measures” to prevent a humanitarian ship carrying climate campaigner Greta Thunberg from reaching Gaza, according to The Guardian. It was later reported that the Freedom Flotilla Coalition said it ship was 'under assault' and the Israeli Army had boarded the Gaza-bound ship.

Geopolitics: Ukraine

• Russian forces captured Zoria in Ukraine’s Donetsk region and reached the Dnipropetrovsk region in Ukraine, according to TASS and Interfax. However, it was later reported that Ukrainian General Staff spokesman Kovalev denied claims by the Russian Defence Ministry that its forces advanced into Ukraine’s eastern Dnipropetrovsk region for the first time since it launched its full-scale invasion.
• Head of the Russian delegation at talks with Ukraine in Istanbul said Russia handed over to Ukraine the first list of 640 POWs for exchange, according to TASS. Furthermore, the Russian Defence Ministry said Russia launched a large-scale humanitarian operation to repatriate more than 6,000 bodies of deceased Ukrainian military personnel and exchange prisoners of war, while Ukrainian officials rejected Russian claims that Ukraine was delaying the exchange of soldiers’ bodies.
• Ukrainian drone attack sparked a short-lived fire at the Azot chemical plant in Russia’s Tula region, although there was no threat to air quality near the plant, according to the regional governor.
• US believes Russian retaliation for Ukraine’s drone attack is not over yet and it expects a multi-pronged strike.
• Poland scrambled aircraft to ensure airspace security after Russia launches strikes on Ukraine.

Geopolitics: Other

• US expressed concern to the UK government about allowing China to build a large embassy in London that security officials believe would pose a risk to sensitive communications infrastructure serving the City, according to FT. It was also reported that the UK government promised to assess any security concerns related to the construction of a Chinese embassy near the City of London, which is an issue that could potentially complicate trade talks with the US, according to Bloomberg.
• Thai army said provocations by Cambodia and buildup of military forces show a clear intent to use force, and the Thai army is to control the opening and closing of all border checkpoints along the Thailand-Cambodia border, while it added that Cambodia enforced its military presence, equipment and constructed fortifications.

US Event Calendar

• 10:00 am: Apr F Wholesale Inventories MoM, est. 0%, prior 0%

DB's Jim Reid concludes the overnight wrap

This morning we've just published our latest annual default study, a document I first published in 1999. Over the years, it has evolved into a framework for presenting our structural, multi-year view on the default outlook. For over a decade until 2022, that structural view held that—aside from cyclical spikes—we were living in an ultra-low default environment. This was driven by factors such as low nominal and real yields, aggressive monetary intervention (e.g., QE), and a persistent global savings glut.

However, our 2022 edition marked a turning point. We argued that the ultra-low default world was ending, as inflation and term premia were pushing nominal and real yields structurally higher. While we haven’t yet seen a cyclical spike in defaults—largely due to the avoidance of a US recession—there are clear signs that higher-for-longer funding costs, especially in the U.S., are taking a toll. Leveraged loan issuer-weighted default rates are not far off COVID-era levels, and issuer-weighted defaults in the B and CCC rating buckets are now running above their post-2004 averages, even after two years of solid economic growth. In short, regardless of the cyclical backdrop, we believe the ultra-low default era that characterised much of this study’s first 25 years is now behind us.

After leading this report since its inception, I’ve handed the reins to Steve Caprio and his team, who have compiled this year’s edition. While the authorship has changed, the structural conclusions remain consistent. Marrying these with a cyclical view, Steve’s team projects that US spec-grade default rates should decline modestly from 4.7% today to 4.4% by year-end 2025, before rising again to an above consensus 4.8% by Q2 2026—with potential upside risk toward 5–5.5%. While Europe’s outlook is more benign, the region will not be immune to the structural shift underway. See the full report here including all the usual charts and tables showing how credit spreads compare to that required to compensate for default risk.

The highlight this week will be US CPI on Wednesday and a resumption of trade talks between the US and China today in London. Bessent, Lutnick and Greer are set to meet Chinese representatives at the meeting today. So it's all the big guns from the US administration. The monthly 30-yr UST auction on Thursday will also be a heavy focus with all the attention on the long-end in recent weeks. There's a 10yr auction the day before as well. So a good test of demand as the fiscal bill meanders its way through Congress. Before we preview the CPI release the other main highlights this week are the NY Fed 1-yr inflation expectations today; US NFIB small business optimism, UK employment data and Danish and Norwegian CPI tomorrow; that CPI, the 10yr UST auction and the UK Spending Review on Wednesday; US PPI, US jobless claims, UK monthly GDP, the 30yr UST auction and my birthday on Thursday; and the UoM consumer sentiment (including inflation expectations) on Friday. A fuller day-by-day diary of events is at the end as usual.

With regards to US CPI, our US economists expect weak seasonally adjusted gas prices to again keep the headline rate (+0.20% forecast vs. +0.22% previous) gain below that of core (+0.31% vs. +0.24%). This should help the YoY rate for both headline and core to rise two-tenths to 2.5% and 3.0%, respectively. Shorter-term trends for core would be mixed with the three-month annualised rate rising by three-tenths to 2.4% while the six-month rate would remain steady at 3.0%. Our economists do expect tariffs to begin to impact core goods prices, especially in categories like household furnishings and supplies where we saw potential preliminary tariff impacts in the April data. On the services side, our economists will be most attuned to the volatile categories like lodging away and airline fares that have been a meaningful drag of late. For PPI the following day, our economists expect a +0.27% increase in May which would reduce the YoY rate by a couple of tenths. As ever, how the subcomponents that feed into core PCE come out will be the most interesting part of the release. Note that the Fed are now on media blackout ahead of next Wednesday's (18th) FOMC.

It's not clear that the Fed will have learnt too much more than they already knew from Friday's payrolls data. May headline (+139k vs. 147k) and private (140k vs. 146k) payrolls were slightly above the 126k consensus but -95k of net revisions to the two previous months softened the beat. Our economists point out that we now have very stable private sector hiring trends over the past three (133k), six (146k) and twelve (122k) months. However they also point out the narrow breadth in job growth as health care / social assistance (+78k) and leisure / hospitality (+48k) continued to drive the majority of private sector job gains in May and have accounted for 75% of private job growth over the past twelve months. See our economists US employment chart book here that came out after the report on Friday for much more. Staying on employment there will be increased attention on claims this week given the recent tick up. It's not clear whether its seasonals or evidence that there is some real time slipping in employment trends.

Asian equity markets are building on Friday’s gains on Wall Street driven by optimism surrounding high-level trade discussions between China and the United States scheduled for later today. The lack of major weakness in payrolls is also helping. Across the region, the KOSPI (+1.51%) is outpacing its regional peers, extending last week’s rally after the Liberal Party won the presidential election. The Nikkei (+1.05%) is also strong after a positive revision in Q1 GDP data. Elsewhere, the Hang Seng (+1.02%) is also trading noticeably higher, driven by gains in technology shares, particularly following Meta's weekend announcement of plans to invest $10 billion in startup Scale AI, which focuses on data labeling to support the expansion of AI models as part of its broader AI development strategy. Elsewhere, Chinese stocks are more subdued after soft inflation data (more below), with the CSI (+0.22%) and the Shanghai Composite (+0.23%) both underperforming. S&P 500 (-0.22%) and NASDAQ 100 (-0.25%) futures are reversing some of Friday's gains though.

Coming back to China, consumer prices have decreased for the fourth consecutive month in May, registering a decline of -0.1% y/y (compared to an expected -0.2% and -0.1% in April). This trend might suggest that Beijing's stimulus measures have not yet been sufficient to enhance domestic consumption amid ongoing trade tensions. Furthermore, deflationary pressures are intensifying on some measures as the PPI fell by -3.3% year-on-year in May, surpassing the expected -3.2% and marking the most significant drop in nearly two years, exceeding April’s decline of -2.7%.

Interestingly Chinese exports to the US fell -34.4% in May whilst rising 11% to the RoW, showing that exports didn't recover that well to the US after the trade truce and also that China are finding other avenues to export goods.
In FX, the Japanese yen (+0.25%) is strengthening, trading at 144.49 against the dollar, recovering after two days of losses in response to an upward revision of Japan's Q1 GDP figures. 30yr JGBs are +4bps higher.

Recapping last week now and the risk-on move continued as the news of further US-China talks and a decent US jobs report boosted investor optimism. So that helped to outweigh the weak data from earlier in the week, and meant the S&P 500 rose +1.50% (+1.03% Friday), whilst Europe’s STOXX 600 was up +0.91% (+0.32% Friday). In fact, the Friday move took the S&P into technical bull market territory, having now gained +20.42% since its closing low on April 8. The jobs report contrasted with the ADP report on Wednesday, which hit a two-year low, as well as the contractionary ISM services print. And even though nonfarm payrolls saw downward revisions of -95k to the previous two months, those were mostly in March, before Liberation Day occurred.

The jobs report meant investors priced out the likelihood of Fed rate cuts this year, with just 44bps now priced in by December, down -10.6bps on the week (-9.4bps Friday). That’s the fewest cuts priced since February (we'd priced 60bps immediately after the weak claims data the day before), and it triggered a significant flattening in the US Treasury curve. For instance, the 2yr Treasury yield was up +13.9bps (+11.6bps Friday) to 4.04%, whilst the 30yr yield was only up +3.7bps (+9.0bps Friday) to 4.97%. The 10-year Treasury yield also rose +10.5bps (+11.5bps Friday) to 4.51%. Similar movements were echoed in Europe, as the 10-year Bund yield ended the week up +7.4bps (-0.6bps) at 2.57%. That also came as ECB President Lagarde indicated on Thursday that they were approaching the end of their easing cycle.

Elsewhere, oil prices performed strongly last week, as OPEC+ announced a production increase of 411,000 barrels per day, which was less than some had expected. This led to a rally in crude oil, with WTI posting its biggest weekly gain of 2025, up +6.23% (+1.91% Friday) to $64.58/bbl, whilst Brent crude was up +4.02% (+1.73% Friday) to $66.47/bbl.

Meanwhile, US credit spreads ended the week tighter, with IG tightening -3bps (-3bps Friday) to 85bps, its tightest in 3 months. And HY spreads tightened -15bps (-9bps Friday) to 300bps. European sovereign bond spreads also tightened, with the 10yr Italian-German spread down -5.4bps (-1.8bps Friday) to just 93bps, the tightest since February 2021.

Tyler Durden Mon, 06/09/2025 - 08:16

US, China Gear Up For High-Stakes Meeting In London

U.S. and Chinese delegations have arrived in the U.K. for talks aimed at patching up a fraying truce in an ongoing trade war between the world's two biggest economies. The US team leby The U.S. team led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer are due to meet with a Chinese delegation led by Vice Premier He Lifeng in London in a renewed effort to break the deadlock after last month’s Geneva talks failed to produce meaningful results.

The high-stakes meeting follows President Donald Trump’s call with Chinese leader Xi Jinping on June 5, after which Trump announced that the dispute over China’s rare earth export restrictions—a key obstacle in trade talks—had been resolved.

“There should no longer be any questions respecting the complexity of Rare Earth products,” Trump said on Truth Social following the call. “Our respective teams will be meeting shortly at a location to be determined.”

The hour-and-a-half-long conversation came after Trump publicly expressed frustration over Beijing’s negotiating tactics, calling Xi “very tough” and “extremely hard to make a deal with” in a Truth Social post the day before.

As Emel Akan reports for The Epoch Times, according to White House press secretary Karoline Leavitt, the U.S. trade officials will press their Chinese counterparts to fully comply with the terms of the May 12 trade agreement reached in Geneva, which included reciprocal tariff reductions. Under the deal, both countries agreed to reduce tariffs by 115 percent while maintaining an additional 10 percent levy.

“The administration has been monitoring China’s compliance with the deal, and we hope that this will move forward to have more comprehensive trade talks,” Leavitt told Fox News on June 8.

Treasury Secretary Scott Bessent, Secretary of Commerce Howard Lutnick, and U.S. Trade Representative Jamieson Greer will lead the American delegation in London.

Rare Earths Still in Focus

Despite Trump’s declaration that the rare earths dispute has been resolved, his officials remain cautious.

According to National Economic Council Director Kevin Hassett, while rare earth exports have resumed, they are still below the levels previously agreed upon.

“Those exports of critical minerals have been getting released at a rate that is higher than it was but not as high as we believe we agreed to in Geneva,” he told CBS’ “Face the Nation” on June 8.

“We want the rare earths, the magnets that are crucial for cell phones and everything else, to flow just as they did before the week of April, and we don’t want any technical details to slow that down, and that’s clear to them.”

In response to Trump’s Liberation Day tariffs, Beijing introduced export restrictions on critical rare earth elements, metals, and magnets effective April 4. Beijing has tightened export controls on seven rare earth elements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—straining supply chains critical to America’s defense, aerospace, and automotive sectors.

The latest restrictions follow a December 2024 export ban on three key minerals—antimony, gallium, and germanium—imposed in retaliation for former President Joe Biden’s technology curbs targeting the Chinese communist regime.

China dominates global rare earths supply chains, accounting for nearly 60 percent of worldwide production and almost 85 percent of processing capacity. The Chinese regime has turned that dominance into a strategic weapon against other countries in recent years.

While the terms of the deal are still being worked out, Hassett expressed optimism about the London meeting.

“I’m very comfortable that this deal is about to be closed,” he said.

Deeper trade issues continue to loom over the talks.

China’s Longstanding Trade Violations

In May, the U.S. Commerce Department issued a new rule banning the use of Huawei Technologies’ Ascend computer chips worldwide, arguing they were developed in violation of American export controls.

The move drew backlash from Beijing, which urged the U.S. government to undo the action.

The recent dispute reflected broader U.S. concerns over Beijing’s long-standing abusive trade practices that disadvantage American businesses and workers.

Communist China’s rise since joining the World Trade Organization in 2001 has been mainly fueled by such controversial trade policies, which include stealing intellectual property, attacking foreign firms operating in the country, manipulating its currency, and massively subsidizing domestic companies.

Some China hawks in Washington believe that Beijing is determined to maintain these mercantilist trade practices.

Even if Beijing comes to the negotiation table, it’s unwilling to bargain on these core problems that the United States wants resolved, according to Robert Atkinson, president of the Information Technology and Innovation Foundation, a science and technology think tank.

“They’ve never been willing to even acknowledge that these are problems,” he told The Epoch Times in an April interview.

It remains unclear to what extent Beijing’s unfair trade practices will be addressed or resolved during the London talks.

Beijing initially denied having violated the Geneva trade agreement on May 30. The regime escalated its rhetoric on June 2, when a spokesperson for the Chinese Commerce Ministry issued a statement through state media attacking Washington’s decision to revoke visas for Chinese students with ties to the Chinese Communist Party.

“The United States and China have strategic interests in one another’s markets, and the President is always going to put American workers and industries first,” Leavitt said during the Fox News interview. “And the talks in Geneva really set the table for that, but we need China to comply with their side of the deal. And so that’s what the trade team will be discussing tomorrow.”

The U.S. team will issue a readout after the meeting, she said.

Tyler Durden Mon, 06/09/2025 - 07:45

US Electric Vehicle Adoption Plummets

Authored by Tsvetana Paraskova via OilPrice.com,

• EV interest among U.S. drivers has dropped to 16%, the lowest since 2019.

• Key deterrents include high upfront costs, limited charging infrastructure, and concerns over long-distance suitability.

• Hybrid and plug-in hybrid vehicles are gaining favor as more practical alternatives.

Just 16% of American drivers say they are likely to buy an electric vehicle (EV) as their next car—the lowest share recorded in AAA’s annual surveys since 2019.

High battery maintenance costs, high purchase prices, and concerns about range continue to be major deterrents for U.S. consumers to consider buying an EV, according to AAA’s latest survey released earlier this month.

These key barriers have remained more or less the same in recent years.

But this year three other factors have also played a role to result in the smallest share of American drivers considering an EV purchase—lower gasoline prices, the increasingly uncertain future of EV incentives such as tax credits and rebates, and politics.

Only 16% of U.S. adults reported in AAA’s 2025 survey that they are “very likely” or “likely” to purchase a fully EV as their next car. This compares to 25% in 2022, when gasoline prices of $5 per gallon incentivized more buyers to consider an EV purchase.

This year, the percentage of consumers indicating they would be “unlikely” or “very unlikely” to purchase an EV rose to 63%, up from 51% last year.

“While the automotive industry is committed to long-term electrification and providing a diverse range of models, underlying consumer hesitation remains,” said Greg Brannon, director of automotive engineering for AAA.

Consumers cited high battery repair costs and purchase prices as key barriers to go fully electric, at 62% and 59%, respectively. Other top concerns identified in this year’s survey were the perceived unsuitability of EVs for long-distance travel (57%), a lack of convenient public charging stations (56%), and fear of running out of charge while driving (55%).

Other barriers cited by the Americans unlikely to buy an EV include safety concerns cited by 31%, challenges installing charging stations at their residences for 27%, and 12% who are concerned that the tax credits and rebates will be reduced or eliminated.

Saving on gasoline costs is a key reason for interest in EVs this year—77% of Americans likely to buy an EV cited gas savings as their top motivation to purchase.

The reason, of course, is quite simple. Gasoline prices this spring hit their lowest level ahead of Memorial Day weekend in four years. A large part of the strong demand over Memorial Day weekend was due to the fact that the typical seasonal spike in the spring didn’t materialize, because oil prices – the single-biggest driver of gasoline prices—have lingered in the low $60s per barrel for weeks.

Uncertainty about incentives for EV purchases has started to play a larger role in drivers’ hesitancy to consider fully-electric vehicle purchases. Interest in EVs to take advantage of tax credits and rebates has plummeted—from 60% of those saying last year they are likely to buy an EV to 39% this year, per the AAA survey.

Moreover, fewer Americans now believe that most passenger cars would be EVs within a decade. The share of U.S. drivers who believe that most cars will be electric within the next ten years has plunged from 40% in 2022 to 23% this year.

Despite the fact that the availability of EV models in the U.S. market has soared in recent years, with many legacy carmakers seeking to compete with Tesla, Americans remain hesitant about purchasing electric cars.

Public perception about the future of EVs remains uncertain, AAA says, despite the more than 75 EV models introduced in the past four years.

For many drivers, hybrid or plug-in hybrid vehicles could be more appealing than full battery EVs as they combine the advantages of traditional internal combustion engines with electric power, reducing range anxiety while providing an environmentally friendly alternative, AAA says. 

Tyler Durden Mon, 06/09/2025 - 06:30

US Manufacturing By State: Who Gains Most From 'Made In America'?

President Trump has championed the idea that a key part of making America great again is bringing back industries that left the country in recent decades. With his tariff-driven trade policy, the White House has promoted “Made in America” as a way to create jobs and boost the economy.

Based on April 2025 data from the Bureau of Labor Statistics, this map, via Visual Capitalist's Bruno Venditti, highlights the U.S. states leading and lagging in manufacturing employment.

California Leads in Manufacturing

Manufacturing remains geographically diverse across the U.S., with major hubs on both coasts and in the interior.

In terms of absolute numbers, California leads the nation, with 1.22 million manufacturing jobs. Texas follows with 970,600 jobs, while Ohio and Michigan maintain their traditional industrial strength with 687,500 and 597,600 jobs, respectively.

State Manufacturing Jobs Jobs per 100k California 1,222.9K 3094.0 Texas 970.6K 3101.9 Ohio 687.5K 5785.4 Michigan 597.6K 5893.2 Illinois 574.7K 4521.6 Pennsylvania 561.5K 4293.2 Indiana 523.3K 7557.5 Wisconsin 462.8K 7763.8 North Carolina 459.3K 4158.1 Florida 434.6K 1859.5 Georgia 426.5K 3814.5 New York 412.0K 2073.8 Tennessee 364.3K 5040.3 Minnesota 323.5K 5584.2 Alabama 287.5K 5574.2 Missouri 283.9K 4545.7 Washington 274.2K 3445.5 South Carolina 263.0K 4800.3 Kentucky 260.6K 5679.6 New Jersey 255.4K 2688.2 Virginia 243.5K 2763.5 Massachusetts 229.8K 3220.2 Iowa 217.2K 6700.6 Arizona 193.8K 2555.9 Oregon 181.7K 4252.9 Kansas 173.0K 5823.7 Arkansas 165.0K 5342.7 Utah 155.3K 4432.6 Connecticut 154.2K 4195.8 Colorado 150.1K 2519.5 Louisiana 143.8K 3127.6 Mississippi 140.8K 4784.2 Oklahoma 139.5K 3406.3 Maryland 110.4K 1762.7 Nebraska 103.3K 5150.9 Idaho 77.4K 3866.9 New Hampshire 68.2K 4840.2 Nevada 67.7K 2071.9 Maine 51.7K 3679.7 West Virginia 46.7K 2638.4 South Dakota 44.3K 4790.9 Rhode Island 40.1K 3605.1 New Mexico 29.5K 1384.8 North Dakota 27.9K 3502.5 Vermont 27.2K 4194.3 Delaware 26.7K 2538.2 Montana 20.8K 1829.0 Hawaii 13.1K 905.9 Alaska 11.9K 1607.8 Wyoming 10.6K 1803.9 District of Columbia 1.2K 170.9

Several Southern states have also built strong manufacturing bases. North Carolina (459,300), Georgia (426,500), and Tennessee (364,300) each rank among the top states, supported by industries such as automotive, aerospace, and food processing.

Wisconsin, ranked in the top 10 for total manufacturing employment, stands out for outperforming its size. Although it’s only the 20th most populous state, its manufacturing base remains strong, thanks in part to food and dairy processing. In per capita terms, it’s number one in the nation with 7,763.8 manufacturing jobs for every 100,000 people.

Florida, another top 10 state, has emerged as a growth story. Between 2019 and 2023, the state’s manufacturing employment grew by nearly 10%, highlighting the sector’s expansion in one of the country’s largest economies.

At the other end of the spectrum, Wyoming (10,600 jobs), Alaska (11,900), and Washington, D.C. (1,200) recorded the lowest levels of manufacturing employment. The latter (D.C.) also has the lowest numbers per capita.

To learn more about Trump’s impact in his first 100 days, check out this graphic that compares S&P 500 returns during post-WWII presidents’ first 100 days.

Tyler Durden Mon, 06/09/2025 - 05:45

US Manufacturing By State: Who Gains Most From 'Made In America'?

President Trump has championed the idea that a key part of making America great again is bringing back industries that left the country in recent decades. With his tariff-driven trade policy, the White House has promoted “Made in America” as a way to create jobs and boost the economy.

Based on April 2025 data from the Bureau of Labor Statistics, this map, via Visual Capitalist's Bruno Venditti, highlights the U.S. states leading and lagging in manufacturing employment.

California Leads in Manufacturing

Manufacturing remains geographically diverse across the U.S., with major hubs on both coasts and in the interior.

In terms of absolute numbers, California leads the nation, with 1.22 million manufacturing jobs. Texas follows with 970,600 jobs, while Ohio and Michigan maintain their traditional industrial strength with 687,500 and 597,600 jobs, respectively.

State Manufacturing Jobs Jobs per 100k California 1,222.9K 3094.0 Texas 970.6K 3101.9 Ohio 687.5K 5785.4 Michigan 597.6K 5893.2 Illinois 574.7K 4521.6 Pennsylvania 561.5K 4293.2 Indiana 523.3K 7557.5 Wisconsin 462.8K 7763.8 North Carolina 459.3K 4158.1 Florida 434.6K 1859.5 Georgia 426.5K 3814.5 New York 412.0K 2073.8 Tennessee 364.3K 5040.3 Minnesota 323.5K 5584.2 Alabama 287.5K 5574.2 Missouri 283.9K 4545.7 Washington 274.2K 3445.5 South Carolina 263.0K 4800.3 Kentucky 260.6K 5679.6 New Jersey 255.4K 2688.2 Virginia 243.5K 2763.5 Massachusetts 229.8K 3220.2 Iowa 217.2K 6700.6 Arizona 193.8K 2555.9 Oregon 181.7K 4252.9 Kansas 173.0K 5823.7 Arkansas 165.0K 5342.7 Utah 155.3K 4432.6 Connecticut 154.2K 4195.8 Colorado 150.1K 2519.5 Louisiana 143.8K 3127.6 Mississippi 140.8K 4784.2 Oklahoma 139.5K 3406.3 Maryland 110.4K 1762.7 Nebraska 103.3K 5150.9 Idaho 77.4K 3866.9 New Hampshire 68.2K 4840.2 Nevada 67.7K 2071.9 Maine 51.7K 3679.7 West Virginia 46.7K 2638.4 South Dakota 44.3K 4790.9 Rhode Island 40.1K 3605.1 New Mexico 29.5K 1384.8 North Dakota 27.9K 3502.5 Vermont 27.2K 4194.3 Delaware 26.7K 2538.2 Montana 20.8K 1829.0 Hawaii 13.1K 905.9 Alaska 11.9K 1607.8 Wyoming 10.6K 1803.9 District of Columbia 1.2K 170.9

Several Southern states have also built strong manufacturing bases. North Carolina (459,300), Georgia (426,500), and Tennessee (364,300) each rank among the top states, supported by industries such as automotive, aerospace, and food processing.

Wisconsin, ranked in the top 10 for total manufacturing employment, stands out for outperforming its size. Although it’s only the 20th most populous state, its manufacturing base remains strong, thanks in part to food and dairy processing. In per capita terms, it’s number one in the nation with 7,763.8 manufacturing jobs for every 100,000 people.

Florida, another top 10 state, has emerged as a growth story. Between 2019 and 2023, the state’s manufacturing employment grew by nearly 10%, highlighting the sector’s expansion in one of the country’s largest economies.

At the other end of the spectrum, Wyoming (10,600 jobs), Alaska (11,900), and Washington, D.C. (1,200) recorded the lowest levels of manufacturing employment. The latter (D.C.) also has the lowest numbers per capita.

To learn more about Trump’s impact in his first 100 days, check out this graphic that compares S&P 500 returns during post-WWII presidents’ first 100 days.

Tyler Durden Mon, 06/09/2025 - 05:45

The Fed Is Very Worried About Tariff Passthrough Onto Prices

Authored by Mike Shedlock via MishTalk.com,

The Fed, businesses, and consumers are all concerned over price hikes.

Worried About Prices?

Please consider the Atlanta Fed research article Worried about Tariff Passthrough onto Prices? So Are Business Execs.

Over the past couple of months, newswires have focused on the potential for elevated tariff rates to feed through into higher inflation and potentially affect output growth as well. Indeed, Chair Powell, in his last post-FOMC meeting press conference said, “What looks likely, given the scope and scale of the tariffs, is that…the risks to higher inflation, higher unemployment have increased.“

Recent research from economists at the Atlanta Fed suggests that if firms are able to pass through all the costs of tariffs, retail prices would increase significantly―as much as 1.6 percent (depending on how effective tariff rates evolve from here).

And even at a 50 percent passthrough rate, the impact on prices would be large enough to be felt in the aggregate (0.8 percent increase in retail prices). How plausible is full passthrough? Going back to the last episode with rising tariffs in 2018, research icon denoting destination link is offsite showed that the cost of the tariffs was almost entirely passed through onto domestic prices.

In this environment, where policy changes lead to sharp increases in costs for many firms, we were curious about how firms would respond, especially in light of a potential reduction in demand that typically accompanies a price hike. So, we turned to the Atlanta Fed’s Business Inflation Expectations survey (BIE), a monthly survey of Sixth District firms that is well positioned to ask timely questions on economic conditions facing firms. In gathering information for the April 2025 BIE survey, we asked firms about their ability to pass through increased costs caused by a new economic policy without a resulting reduction in demand.

The interesting twist in this line of questioning is the inclusion of the phrase “Based on current levels of demand.” The interpretation here is that firms are telling us how much of the cost increase they would be able to pass through to customers before it had a negative impact on demand for that good or service.

Although a diversity of views is apparent, on average firms tell us they expect to be able to pass through 51.1 percent of a 10 percent cost increase, and 47.3 percent of a 25 percent cost increase, without reducing current levels of demand. 

In sum, firms with about normal or greater-than-normal sales expect to be able to pass through more of the cost increases while maintaining the same levels of demand for their goods or services. And figure 3 shows us that those firms are more likely to be larger firms, due to their smaller sales gap compared to “normal.” In the aggregate, business executives see their current sales levels as about 8 percentage points below “normal,” which is much weaker than firms’ relative position entering 2018. In this environment, firms on average anticipate passing through a little more than half of a 10 percent cost increase without damaging demand. It’s not yet clear where the average tariff rate will ultimately settle, or how firms’ passthrough rates will evolve from here. However, it does appear that most firms anticipate sacrificing demand should they choose to fully pass a tariff-related cost increase on to customers.

Only Three Things Can Happen

1. Corporations can pass on the tariffs

2. Corporations can eat the cost

3. A combination of the above

The Results

• To the extent corporations pass on the costs, consumers will pay the tariff. That means consumers will cut back somewhere else, exhaust savings, or go into debt.

• To the extent corporations eat the costs, that’s a direct hit on corporate profits.

• If corporations misjudge how much they can pass on, they will also take a hit on profits.

Corporate Profits

If you are thinking tariffs are a huge drain on aggregate corporate profits, then you are thinking correctly.

Fed Beige Book Shows Only 3 of 12 Regions Growing, 6 Declining

On June 5, 2025, I noted Fed Beige Book Shows Only 3 of 12 Regions Growing, 6 Declining

This report reeks of stagflation, defined as rising prices and recession simultaneously.

Prices

Prices have increased at a moderate pace since the previous report. There were widespread reports of contacts expecting costs and prices to rise at a faster rate going forward. A few Districts described these expected cost increases as strong, significant, or substantial. All District reports indicated that higher tariff rates were putting upward pressure on costs and prices. 

ISM Services Dips Into Contraction as New Orders and Backlogs Plunge

On June 4, I noted ISM Services Dips Into Contraction as New Orders and Backlogs Plunge

“The Prices Index registered 68.7 percent in May, a 3.6-percentage point increase from April’s reading of 65.1 percent; the index has elevated 7.8 percentage points in the last two months to reach its highest level since November 2022 (69.4 percent). This is the first time the index has recorded this high of a two-month increase since a 9.2-percentage point gain in February and March 2021. The May reading is also its sixth in a row above 60 percent.”

What caught my eye was a plunge in new orders and backlog of orders, yet prices rose 96 consecutive months and just accelerated.

Should the Fed Cut? Hike? Do Anything?

Many say the Fed should cut because jobs are slowing and so is inflation.

But on the basis of tariffs and general disagreement about the rate of inflation, many others stating the Fed should hike rates.

Those who are open to either stagflation or economic collapse don’t think the Fed should do anything.

I am in that camp with the side note the free market should set rates, not the Fed, not Congress, not the President.

Is the Fed in a Good Spot?

That’s what the Fed says. I am not in that camp.

The economy can tip either way suddenly and severely. And Trump’s tariff whipsaws don’t make the Fed’s life easy.

Fear of Making Mistakes

The Fed does not want to make a policy error in the wrong direction especially after blowing the massive inflation response to Congressional free money coupled with inane QE by the Fed.

So, the Fed cannot be proactive now, even if it wants to, due to FOMMtm

Trumpian Howls

The Fed has its Covid mistake in the back of its mind but a howling Trump in the foreground.

Trump howled about Jerome Powell again on June 4, as noted in Trump Demands Fed Rate Cut After Weakest ADP Payroll Report in 2 Years

ADP reported a slim 37,000 private payroll rise for May.

The payroll report on Friday temporarily halted the howls.

For discussion, please see Nonfarm Payrolls Rise by 139,000 Employment Declines by 696,000

The Fed may easily overreact or underreact. Right now the Fed looks like a deer in headlights.

Finally, the Fed will take a lot of criticism no matter what it does. And it will still have its recent policy mistakes in mind, while also having to deal with Trump.

Is this really a good place for the Fed?

Tyler Durden Mon, 06/09/2025 - 05:00

The Fed Is Very Worried About Tariff Passthrough Onto Prices

Authored by Mike Shedlock via MishTalk.com,

The Fed, businesses, and consumers are all concerned over price hikes.

Worried About Prices?

Please consider the Atlanta Fed research article Worried about Tariff Passthrough onto Prices? So Are Business Execs.

Over the past couple of months, newswires have focused on the potential for elevated tariff rates to feed through into higher inflation and potentially affect output growth as well. Indeed, Chair Powell, in his last post-FOMC meeting press conference said, “What looks likely, given the scope and scale of the tariffs, is that…the risks to higher inflation, higher unemployment have increased.“

Recent research from economists at the Atlanta Fed suggests that if firms are able to pass through all the costs of tariffs, retail prices would increase significantly―as much as 1.6 percent (depending on how effective tariff rates evolve from here).

And even at a 50 percent passthrough rate, the impact on prices would be large enough to be felt in the aggregate (0.8 percent increase in retail prices). How plausible is full passthrough? Going back to the last episode with rising tariffs in 2018, research icon denoting destination link is offsite showed that the cost of the tariffs was almost entirely passed through onto domestic prices.

In this environment, where policy changes lead to sharp increases in costs for many firms, we were curious about how firms would respond, especially in light of a potential reduction in demand that typically accompanies a price hike. So, we turned to the Atlanta Fed’s Business Inflation Expectations survey (BIE), a monthly survey of Sixth District firms that is well positioned to ask timely questions on economic conditions facing firms. In gathering information for the April 2025 BIE survey, we asked firms about their ability to pass through increased costs caused by a new economic policy without a resulting reduction in demand.

The interesting twist in this line of questioning is the inclusion of the phrase “Based on current levels of demand.” The interpretation here is that firms are telling us how much of the cost increase they would be able to pass through to customers before it had a negative impact on demand for that good or service.

Although a diversity of views is apparent, on average firms tell us they expect to be able to pass through 51.1 percent of a 10 percent cost increase, and 47.3 percent of a 25 percent cost increase, without reducing current levels of demand. 

In sum, firms with about normal or greater-than-normal sales expect to be able to pass through more of the cost increases while maintaining the same levels of demand for their goods or services. And figure 3 shows us that those firms are more likely to be larger firms, due to their smaller sales gap compared to “normal.” In the aggregate, business executives see their current sales levels as about 8 percentage points below “normal,” which is much weaker than firms’ relative position entering 2018. In this environment, firms on average anticipate passing through a little more than half of a 10 percent cost increase without damaging demand. It’s not yet clear where the average tariff rate will ultimately settle, or how firms’ passthrough rates will evolve from here. However, it does appear that most firms anticipate sacrificing demand should they choose to fully pass a tariff-related cost increase on to customers.

Only Three Things Can Happen

1. Corporations can pass on the tariffs

2. Corporations can eat the cost

3. A combination of the above

The Results

• To the extent corporations pass on the costs, consumers will pay the tariff. That means consumers will cut back somewhere else, exhaust savings, or go into debt.

• To the extent corporations eat the costs, that’s a direct hit on corporate profits.

• If corporations misjudge how much they can pass on, they will also take a hit on profits.

Corporate Profits

If you are thinking tariffs are a huge drain on aggregate corporate profits, then you are thinking correctly.

Fed Beige Book Shows Only 3 of 12 Regions Growing, 6 Declining

On June 5, 2025, I noted Fed Beige Book Shows Only 3 of 12 Regions Growing, 6 Declining

This report reeks of stagflation, defined as rising prices and recession simultaneously.

Prices

Prices have increased at a moderate pace since the previous report. There were widespread reports of contacts expecting costs and prices to rise at a faster rate going forward. A few Districts described these expected cost increases as strong, significant, or substantial. All District reports indicated that higher tariff rates were putting upward pressure on costs and prices. 

ISM Services Dips Into Contraction as New Orders and Backlogs Plunge

On June 4, I noted ISM Services Dips Into Contraction as New Orders and Backlogs Plunge

“The Prices Index registered 68.7 percent in May, a 3.6-percentage point increase from April’s reading of 65.1 percent; the index has elevated 7.8 percentage points in the last two months to reach its highest level since November 2022 (69.4 percent). This is the first time the index has recorded this high of a two-month increase since a 9.2-percentage point gain in February and March 2021. The May reading is also its sixth in a row above 60 percent.”

What caught my eye was a plunge in new orders and backlog of orders, yet prices rose 96 consecutive months and just accelerated.

Should the Fed Cut? Hike? Do Anything?

Many say the Fed should cut because jobs are slowing and so is inflation.

But on the basis of tariffs and general disagreement about the rate of inflation, many others stating the Fed should hike rates.

Those who are open to either stagflation or economic collapse don’t think the Fed should do anything.

I am in that camp with the side note the free market should set rates, not the Fed, not Congress, not the President.

Is the Fed in a Good Spot?

That’s what the Fed says. I am not in that camp.

The economy can tip either way suddenly and severely. And Trump’s tariff whipsaws don’t make the Fed’s life easy.

Fear of Making Mistakes

The Fed does not want to make a policy error in the wrong direction especially after blowing the massive inflation response to Congressional free money coupled with inane QE by the Fed.

So, the Fed cannot be proactive now, even if it wants to, due to FOMMtm

Trumpian Howls

The Fed has its Covid mistake in the back of its mind but a howling Trump in the foreground.

Trump howled about Jerome Powell again on June 4, as noted in Trump Demands Fed Rate Cut After Weakest ADP Payroll Report in 2 Years

ADP reported a slim 37,000 private payroll rise for May.

The payroll report on Friday temporarily halted the howls.

For discussion, please see Nonfarm Payrolls Rise by 139,000 Employment Declines by 696,000

The Fed may easily overreact or underreact. Right now the Fed looks like a deer in headlights.

Finally, the Fed will take a lot of criticism no matter what it does. And it will still have its recent policy mistakes in mind, while also having to deal with Trump.

Is this really a good place for the Fed?

Tyler Durden Mon, 06/09/2025 - 05:00

'No ID, No Nudes': Pornhub Pulls Out Of France In Spat Over Age Checks

Vive la resistance - in reverse. Pornhub and its sister sites YouPorn and RedTube have gone dark in France, yanking access to their content Wednesday in a dramatic protest over a government crackdown on underage users.

A screen displays a “no under-18s” sign in front of the logo of a pornographic website as regulators consider requiring such sites to ensure they are preventing minors from being exposed to their content. Lionel Bonaventure/AFP via Getty Images

The move comes after Aylo - the firm behind the trio of X-rated titans - hit pause on its French operations rather than comply with a new law requiring porn platforms to verify users are 18 or older.

“I can confirm that Aylo has made the difficult decision to suspend access to its user-uploaded platforms... in France,” a Pornhub spokesperson said Tuesday. “We will be using our platforms to directly address the French public tomorrow.”

Aylo, which operates some of the world’s most trafficked adult sites, is now in a standoff with France’s digital watchdog, Arcom, which has the power to block sites and fine operators who fail to screen out minors.

French officials aren’t exactly begging them to stay.

“If Aylo would rather leave France than apply our laws, they are free to do so,” Clara Chappaz, France’s junior minister for artificial intelligence and digital technology, posted bluntly on X.

According to Arcom, some 2.3 million minors access porn sites every month in France - a clear violation of laws requiring age gating. The government has demanded stricter controls, like government ID or verified digital passports.

But Aylo claims the measures would compromise user privacy and create security risks, setting up a classic clash between data protection and content regulation.

Now, French users clicking over to Pornhub are getting nothing but a cold shower - a sudden blackout that leaves millions of adults scrambling for alternatives.

Whether the blackout is a temporary gambit or a long-term exit remains unclear. But one thing’s for sure: in France, the liberté to browse adult content just got a whole lot harder to come by.

Tyler Durden Mon, 06/09/2025 - 04:15

'No ID, No Nudes': Pornhub Pulls Out Of France In Spat Over Age Checks

Vive la resistance - in reverse. Pornhub and its sister sites YouPorn and RedTube have gone dark in France, yanking access to their content Wednesday in a dramatic protest over a government crackdown on underage users.

A screen displays a “no under-18s” sign in front of the logo of a pornographic website as regulators consider requiring such sites to ensure they are preventing minors from being exposed to their content. Lionel Bonaventure/AFP via Getty Images

The move comes after Aylo - the firm behind the trio of X-rated titans - hit pause on its French operations rather than comply with a new law requiring porn platforms to verify users are 18 or older.

“I can confirm that Aylo has made the difficult decision to suspend access to its user-uploaded platforms... in France,” a Pornhub spokesperson said Tuesday. “We will be using our platforms to directly address the French public tomorrow.”

Aylo, which operates some of the world’s most trafficked adult sites, is now in a standoff with France’s digital watchdog, Arcom, which has the power to block sites and fine operators who fail to screen out minors.

French officials aren’t exactly begging them to stay.

“If Aylo would rather leave France than apply our laws, they are free to do so,” Clara Chappaz, France’s junior minister for artificial intelligence and digital technology, posted bluntly on X.

According to Arcom, some 2.3 million minors access porn sites every month in France - a clear violation of laws requiring age gating. The government has demanded stricter controls, like government ID or verified digital passports.

But Aylo claims the measures would compromise user privacy and create security risks, setting up a classic clash between data protection and content regulation.

Now, French users clicking over to Pornhub are getting nothing but a cold shower - a sudden blackout that leaves millions of adults scrambling for alternatives.

Whether the blackout is a temporary gambit or a long-term exit remains unclear. But one thing’s for sure: in France, the liberté to browse adult content just got a whole lot harder to come by.

Tyler Durden Mon, 06/09/2025 - 04:15

Bulgaria Set To Join Eurozone In 2026

Authored by RFE/RL staff via OilPrice.com,

• The European Commission has given Bulgaria the green light to adopt the euro as of January 1, 2026, following a positive assessment of the country's economic convergence.

• Bulgaria's approval to join the eurozone represents a significant milestone in its broader integration into the European Union, following its recent entry into the Schengen Agreement.

• Despite facing political and economic challenges, Bulgaria has met the necessary criteria for euro adoption, with final decisions to be made by the Council of the EU.

The European Commission has given Bulgaria the go-ahead to join the eurozone single currency region as of January 1, 2026, the country's second major step in just one year on its path to full integration into the European Union.

The commission, which met on June 4 to convey its decision on the issue, said Bulgaria fulfils the four nominal convergence criteria that are used to evaluate whether a country is ready for euro adoption.

"The euro is a tangible symbol of European strength and unity," said European Commission President Ursula von der Leyen.

The European Central Bank (ECB) also gave a positive assessment of Bulgaria's application, saying it met the criteria of currency stability, inflation, public finances, and interest rates.

“This positive assessment of convergence paves the way for Bulgaria to introduce the euro as of 1 January 2026 and become the 21st EU Member State to join the euro area,” Philip Lane, a member of the ECB Executive Board, said.

“I wish to congratulate Bulgaria on its tremendous dedication to making the adjustments needed.”

The Council of the EU will take the final decisions on euro adoption for Bulgaria, basing its decision on the opinions of the EC and the ECB, as well as from talks with the Eurogroup and European Council.

While adoption of the euro was a condition for joining the European Union, legislative failures, including reforms to combat money laundering, concerns over inflation, and political gridlock -- Bulgaria has had seven elections in the past four years -- have made the path difficult for the country.

Mass protests took place in Sofia and other cities across the country last week, and politicians said after the decision that the task now is to make sure adoption provides benefits, not disruption.

Prime Minister Rosen Zhelyazkov said the government would work to make "the process of introducing the euro smooth, predictable, predictable" and to dispel "the fears that are instilled in people and that are used for political abuse."

Added Boyko Borisov, leader of the GERB party and a former prime minister: "A huge amount of work lies ahead, especially next year, because Bulgarians should feel the benefits of the eurozone."

The decision in favor of adoption is Bulgaria’s second big step in just one year on its path to full integration into the European Union.

In January, Sofia became a full member of Schengen agreement -- and Bulgaria’s borders with neighboring Greece and Romania are now fully open.

Tyler Durden Mon, 06/09/2025 - 03:30

73% Of Indonesian Men Smoke...

In 2025, smoking remains a persistent public health concern, with sharp disparities visible not only across countries but also between genders.

The World Health Organization estimates that tobacco use causes over 8 million premature deaths each year. Of these, more than 7 million are due to direct tobacco use, while around 1.3 million non-smokers die from exposure to second-hand smoke.

The graphic below, via Visual Capitalist's Marcus Lu, highlights the male and female smoking rates in ten major countries. The data is based on projections compiled by Statista.

Gender Disparities in Global Smoking Rates

The most striking contrast is seen in Indonesia, where nearly three-quarters (72.8%) of men are smokers, while just 1.8% of women partake.

This gender gap is also present in China (44.4% vs. 1.4%) and India (10.9% vs. 0.9%), reflecting cultural norms and targeted marketing practices.

In contrast, countries like France and Germany show much narrower disparities. France stands out with almost equal smoking rates among men (35.2%) and women (34.0%), suggesting a more gender-neutral culture around tobacco use.

Meanwhile, the U.S. and Japan fall in the mid-range, with moderate gender gaps and relatively lower overall smoking prevalence compared to Asian and European counterparts.

In Russia, 31.4% of men and 5.7% of women smoke, while in Brazil, smoking rates are lower, with 14.1% of men and 8.1% of women who smoke.

Raw tobacco production is a huge industry. In 2022 alone, around 5.8 million tons of tobacco were produced worldwide, roughly a third of which was in China. Learn more about tobacco production in this graphic on Voronoi, the new app from Visual Capitalist.

Tyler Durden Mon, 06/09/2025 - 02:45

EU Farmer Protests Far From Over As They Battle Threats From Mercosur Trade Agreement And Ukraine

Via Remix News,

Farmers in Spain and France were again protesting agricultural imports from Ukraine and South America under the Mercosur trade agreement ahead of Brazilian President Luiz Inacio Lula da Silva visiting France and the expiration of a free trade agreement with Ukraine, writes TopAgrar.pl.

Da Silva wants to convince President Emmanuel Macron to drop his opposition to the EU-Mercosur Agreement, and at a press conference with the French head of state, told press that he would not “leave the Mercosur presidency without having concluded the trade deal,” a position he will be taking up in a few weeks. 

Meanwhile, the French Federation of Agricultural Unions (FNSEA) has once again called on Macron to take action to create a minority in the EU to block the ratification of the Mercosur Agreement by the Council of the European Union.  

In a statement quoted by Reuters, the French organization warned that the agreement will be “devastating for the beef, poultry and sugar industries and compromise the EU’s ambitions in terms of food sovereignty.” 

“We are raising the alarm!” said Alain Carre, head of the French sugar industry group AIBS. 

If an agreement with Mercosur is reached, the French are demanding clear trade rules: “Our demands (for an EU-Mercosur deal) are simple: reciprocity of regulations, traceability of products abroad and much clearer labeling,” said Jean-Michel Schaeffer, head of French poultry industry group Anvol. 

In Spain, hundreds of farmers gathered in Madrid to protest excessive grain imports from Ukraine, which have resulted in grain prices below production costs.

“Spanish farmers will lose €1 billion this year,” Javier Fatas, leader of the farmers’ union COAG from the Aragon region in northeastern Spain, said. 

Spaniards also refuse to import genetically modified grain from Mercosur, which is cheaper than Spanish grain, into the EU.  

Similar sentiments are prevalent in Poland. In June, farmers took to the streets again to express opposition to trade liberalization with Ukraine, the Mercosur agreement, and the Green Deal, reminds TopAgrar.

“Our position should be firm and clear: the customs and limits from before the war must return. Otherwise, we will not be able to compete on the European market, and especially in Poland,” said Stanisław Barna from the grassroots All-Poland Farmers’ Protest.

At the protest in Krążkowy in Wielkopolska, another OOPR representative, Krzysztof Olejnik, called the provisions of the EU-Mercosur Agreement a “spit in the face” of farmers: “If we are talking about Mercosur, we still do not have detailed information about the terms of this agreement. We assume that the terms of this agreement will probably not be favorable for us,” said Krzysztof Olejnik.

The lack of hope for economic improvement in agriculture is combined with a sense of lack of action on the part of the Ministry of Agriculture, the Government and the European Commission. Maciej Zawadzki from the Association of Farmers of Southern Wielkopolska said, “We decided to take to the streets because our issues that were supposed to be resolved are still unresolved. The government remains passive. (…) Unfortunately, we do not see any actions that would improve our position and situation. Quite the opposite: what is happening is working to our disadvantage.”

Stanisław Barna says the only option for farmers now is to put pressure on decision-makers via protests. 

“We want to work with dignity, have a stable situation. Have a decent salary for our work (…) This is what we are reduced to, to make our farms fail. If you do not fight for yourselves, no one will do it for you! Thank you and God bless you for your determination and showing strength today. Let the government see, and Minister Siekierski will finally get down to work, because he has been talking to us for a year and a half, saying that he will prepare a position, but let him finally come to West Pomerania and talk,” he said.

Farmers also hope the newly elected president, Karol Nawrocki, will come through for them. “Mr. President, we are here, we are watching, we are waiting for your decision,” Barna added. “We farmers would like these promises to be fulfilled and not forgotten.”

Macron and Lula did not appear to make much headway on EU-Mercosur trade deal. Macron clearly wants to boost trade and relations with Brazil but he also made clear that he cannot accept the deal in its current form, emphasizing the need for “either mirror clauses or safeguard measures” to ensure Brazilian products conform with EU production standards.

Read more here...

Tyler Durden Mon, 06/09/2025 - 02:00

Restoring American Maritime Dominance: A National Imperative

Authored by Andy Thaxton via RealClearWire,

As a career Naval intelligence officer, I spent years observing China’s maritime ascent. Briefing after briefing warned of China’s increasingly aggressive intentions of seapower, and yet, all that analytical churn has had negligible impact on U.S. naval posture. Now, watching from the sidelines, I remain alarmed by the widening gap between the naval and shipbuilding capabilities of the United States and the People’s Republic of China. What once was a slow, methodical buildup by the Chinese People’s Liberation Army Navy (PLAN) has accelerated into a rapidly growing strategic threat to U.S. maritime supremacy—both commercially and militarily. Without exaggeration, the United States is facing an urgent national security crisis.

While the U.S. rested on the laurels of its past naval dominance, China has systematically executed a comprehensive, state-directed maritime strategy that is now reshaping the global balance of naval power.

If the U.S. fails to respond with urgency and scale, we risk ceding control of the seas—and with it, the geopolitical influence that flows from maritime power.

The data is staggering. According to the April 2025 Report to Congress on Chinese Naval Modernization, China’s navy currently operates over 370 battle force ships, a number projected to grow to 435 by 2030. Meanwhile, the U.S. Navy is struggling to maintain around 290 ships, with ambitions—still largely unfunded—of reaching 316 by 2053. Equally alarming, China’s shipyards possess more than 230 times the shipbuilding capacity of the U.S. According to a recent report by The Center for Strategic and International Studies (CSIS), China “built more commercial vessels by tonnage in 2024 than the entire U.S. shipbuilding industry has built since the end of World War II.” You might want to read that sentence again.

But the disparity is not merely in tonnage or hulls. China’s state-supported shipbuilding industry benefits from over 150 shipyards, including eight major naval production sites capable of building large warships, aircraft carriers, and amphibious assault ships in parallel. In stark contrast, the U.S. Navy is dependent on just seven private shipyards, several of which are overburdened, outdated, and struggling with workforce shortages. Further, the Congressional Report on U.S. Navy Force Structure indicated that nearly every major U.S. shipbuilding program is behind schedule and over budget.

Meanwhile, China’s maritime ambitions have expanded beyond the Indo-Pacific. As documented in the December 2024 U.S. Naval Institute Proceedings, China’s global maritime reach now spans 10,000 miles beyond Taiwan, including permanent naval bases in Djibouti and increasing influence in ports across Pakistan, Cambodia, and Equatorial Guinea. The foundation of this expansion is China’s merchant fleet—the world’s largest—which can be rapidly converted to military use in a real-world shooting war. Again, by contrast, the U.S. merchant fleet has dwindled to fewer than 180 international trading ships, severely limiting sealift capacity in a contested environment.

Taken together, this paints a picture of a maritime balance that is tipping rapidly and dangerously toward Beijing. Initiatives such as President Trump’s Executive Order on Restoring Maritime Dominance and the reintroduction of the SHIPS Act signal a growing recognition of the problem, but they are insufficient in both scale and urgency. Rebuilding a competitive naval force cannot be done incrementally or through bureaucratic half-measures.

The United States must enact a modern-day Marshall Plan for shipbuilding, one rooted in the understanding that maritime supremacy is the backbone of American global power. The plan must be bold, multifaceted, and sustained. Five critical priorities stand out:

1. Massive Industrial Investment: As proposed in the SHIPS Act, Congress must allocate $20–30 billion over the next decade to modernize and expand U.S. shipyards—revitalizing dry docks, increasing capacity, and restoring tiered supplier networks. Geographic diversification of shipyards is also critical to ensure resilience in a conflict.

2. Workforce Development: The U.S. faces a massive shortage of skilled labor in shipbuilding. The government should launch a unified Maritime Workforce Initiative, partnering with trade schools, unions, and community colleges to train tens of thousands of welders, electricians, engineers, and naval architects.

3. Procurement Reform: The Navy’s acquisition system must be radically—let me repeat, radically—overhauled. The complex, inefficient cost-plus contract system has made U.S. shipbuilding painfully slow and expensive. The Navy should adopt simpler, modular designs that speed up production, reduce costs, and make the fleet more adaptable.

4. Dual-Use Shipbuilding: The U.S. should incentivize the construction of commercial ships—tankers and container vessels—at domestic yards. This will boost shipyard throughput, maintain a steady workforce, and provide an auxiliary fleet in times of war.

5. Strategic Messaging and Public Buy-In: Maritime security is fundamental to national prosperity and defense. A public campaign, similar to the WWII-era “Victory Ship” program, could make shipbuilding a patriotic endeavor and reinvigorate public support for maritime dominance.

This is not hyperbole; the situation is dire. U.S. naval leaders have privately acknowledged a “worst-case scenario” in which the Navy may not be able to reliably contest Chinese aggression in the Western Pacific within the next five years. If the U.S. fails to act now, or fails to act boldly, we will not only lose our naval edge but forfeit our ability to shape the international order.

The oceans have always been the lifeblood of American power. In the 20th century, our shipbuilding might help win world wars and deter Soviet aggression. In the 21st century, it will determine whether we remain on the field as a superpower, or, like me, retire to the sidelines as an observer, in an era defined by Chinese maritime dominance. The time for incremental fixes is over. The clock is ticking—and only an “all-hands-on-deck” national response will suffice.

Tyler Durden Sun, 06/08/2025 - 23:20

Washington DC Dominates The US Gun-Deaths League

Gun violence remains one of the most pressing public health issues in the United States.

But as Visual Capitalist;s Bruno Venditti shws in the following chart, according to data from USAFacts as of December 2023, gun-related deaths vary significantly across states, reflecting long-standing regional and demographic differences.

Preliminary numbers show that between January and August 2024, an estimated 30,100 people died from gun-related injuries in the U.S., 5% fewer than during the same period in 2023.

The rate of gun-related deaths in the U.S. has shifted over time. In the early 1990s, the rate fluctuated between 14.5 and 15.0 deaths per 100,000 people. From 2000 to 2014, however, that figure declined and remained below 10.5 deaths per 100,000.

By 2023, the rate rose again to 13.7 per 100,000—still 8% lower than its peak in 1993.

States With the Highest Gun Death Rates

Washington, DC recorded the highest rate in the country in 2023, with 28.5 deaths per 100,000 residents, more than 60% above the next highest state.

States With the Lowest Gun Death Rates

At the other end of the spectrum, several states reported significantly lower rates. Those include Hawaii, Utah, and Nebraska.

Although they receive less public attention than gun-related homicides, suicides have consistently made up the majority of gun deaths in the United States. In 2023, suicides accounted for 58% of all gun-related fatalities, totaling 27,300 deaths, according to CDC data. By comparison, 38% were classified as murders (17,927 deaths).

The U.S. has more guns than people, with nearly 400 million in civilian possession. In this map, we rank states by the highest percentage of gun ownership for adults.

Tyler Durden Sun, 06/08/2025 - 22:45