Abrupt Sentiment Shift Rocks Gen Z: Restaurants Warn Of Spending Drop As Student Loan "Default Cliff" Arrives

The Trump administration faces a worsening macroeconomic backdrop for younger, lower- and middle-income consumers, burdened by student debt, costly auto loans, high apartment rents, and depleted savings amid a persistently high interest rate environment. 

Early signs of financial strain emerged at the tail end of the summer, outlined in our note:

• First Tricolor Subprime Meltdown, Now UBS Warns: Consumer Weakness Spreading From Low-Income To Middle-Class

We've been tracking this alarming trend, which was reinforced by the latest warning from Goldman Delta One, Rich Privorotsky, who has gone "Defcon 1" on the rapidly deteriorating consumer.

Early signs of strain have emerged across the restaurant and casual dining segment, where management teams are flagging a noticeable pullback in discretionary spending among younger consumers. This cohort is increasingly shifting from dining out to at-home consumption, opting for groceries over restaurants as they can no longer justify $8 Starbucks coffee and $15 Chipotle burritos.

Last week, Goldman's Consumer specialist Scott Feiler published a red alert on "The Shifting Health of the US Consumer," warning of acute deterioration among the US middle class. 

Feiler followed up the warning with a weekend note that said, "Something has clearly changed with the consumer. Commentary from restaurants and grocers last week made that clear." 

He noted that consumer stocks are massive underperformers year-to-date (Restaurant group -21% YTD, Housing -7% YTD, Retail -3% YTD). 

However, he said, "It is worth noting that November is the best month for Consumer Discretionary of the year.  The last 5 years, the group is +8.4% during November, on average, with an 80% hit rate.  It is the largest outperformance month vs the market, on average, as well." 

Consumer Discretionary (GSXUCOND Index) Average Price Action By Month. November is The Strongest Month of the Year on an Absolute & Relative Basis.

Feiler previously noted that more companies are warning of signs of a slowdown across the consumer space, with weakness mainly across middle-income consumers, particularly those aged 25 to 35. The brunt of this has been observed across the restaurant space: 

$CMG Chipotle CEO: "A particularly challenged cohort is the 25- to 35-year-old age group. We believe that this trend is not unique to Chipotle and is occurring across all restaurants as well as many discretionary categories. This group is facing several headwinds, including…

— The Transcript (@TheTranscript_) November 2, 2025

$CAVA CEO also flags decline in visit frequency among guests aged 25–35.

"When we look at the data, it's more that the younger cohort that 25 to 35.... they don't have the steam that they had last year in the way that they were visiting or their frequency of visiting." https://t.co/o01FmE7PlC

— The Transcript (@TheTranscript_) November 5, 2025

$MCD McDonald's CEO: Low-income traffic is still down double digits

"We continue to see a bifurcated consumer base with QSR traffic from lower income consumers declining, nearly double digits in the third quarter, a trend that's persisted for nearly two years..and we believe the… https://t.co/lluh7PneDN

— The Transcript (@TheTranscript_) November 5, 2025

There's been increasing chatter about the notable negative shift in sentiment among younger consumers, which happened quite abruptly. We spoke with a senior analyst at one of the world's largest U.S.-based beverage companies who attributed the slowdown to tariffs. However, we disagree and believe the actual shock was the student loan "default cliff" that hit in late summer.

There are about 5.3 million student loan borrowers in default, and another 4.3 million borrowers are in "late-stage delinquency," or between 181 and 270 days late on their payments, according to a recent Congressional Research Service report based on Education Department data. Payments 270 days past due are considered in default.

We don't disagree that a slowing jobs market and tariffs are compounding pressures on consumers, but the unfolding mess tied to the student loan default cliff hitting younger borrowers is clearly a major driver behind the sharp shift in sentiment.

Given that Democrats have shifted so far to the left by fully embracing socialism and a sprinkle of Marxism, promising those who vote for them free bus rides, government-run supermarkets, and other free stuff, the question becomes how the Trump administration will win some of these youngsters struggling to survive. We do note the Trump administration recently offered to bail out farmers with tariff revenues... The admin should start looking at the kids ahead of the 2026 midterms.

Tyler Durden Wed, 11/05/2025 - 15:40

How Long Does US Depositors' Nerve Hold?

Authored by Tuomas Malinen via GnS Economics Newsletter,

I am returning to work slowly and will start with an update to the Bank Run Warning we issued on Friday.

Not a single financial institution sought funding through the SRF today (Wednesday), but this does not lead me to conclude that the risk of a banking crisis in the U.S. has passed. It just did not start right now.

While the borrowing from the Standing Repo Facility of the Fed has eased, for now, it does not indicate that the cash-drought some financial institutions are experiencing will be over.

The banks could have sought funding from other counterparties of the repo, or the beginning of the month could have brought more cash in.

The problem the banks currently face, relating to the government shutdown, is two-fold:

1. Money is accumulating in the U.S. Treasury General Account, and

2. Loan delinquencies are likely to be mounting.

The former implies that money is not moving from the government to the accounts of some 1.4 million government employees. The latter implies that, as government employees are not getting paid, some of them are not paying back their loans (principal and/or interest) either. Both of these diminish cash flow to banks. Like we noted in the warning on Friday:

What makes the situation precarious is the fragility of banks, which we documented in the Black Swan Outlook.

There has been a massive increase in bank lending during the past few quarters.

It is possible (likely) that some banks have been overly optimistic in the credit boom and are suddenly cash-starved because interest payments and loan repayments have ceased (from their excessive lending).

This may start rumors about the survivability of a bank or a group of banks, which could trigger a bank run in the current uncertain environment.

If there’s no shock, we can assume that the banking system keeps on functioning normally, ensured, for example, by the SRF, from which banks can obtain short-term liquidity to cover for deposit withdrawals.

However, banks are always at risk of failing due to the business model we want them to have. That is, we want to deposit our money in the bank and have it provide loans at the lowest possible interest rate for us. We also want instant access to our funds (demand deposits) or, alternatively, a higher yield (interest rate) to compensate for the lack of immediate access, like in savings accounts.

A standard commercial bank is a business that receives deposits and covers them with assets to balance its balance sheet (most U.S. regional banks operate like this). These assets can be in the form of loans to households and businesses, corporate or government bonds, or central bank reserves. Therefore, if all or a very high share of deposits are withdrawn, there simply is no bank anymore. Its business model fails. This directly implies that if we lose trust in a bank, no amount of reserves can save it from failing.

For example, a slew of bad news broke the trust of depositors in the Silicon Valley Bank (SVB) in mid-March 2023, resulting in a cataclysmic run on 87% of its deposit base in just a few days. No amount of reserves (which the bank had plenty of) could have saved SVB from the devastating outflow of deposits impairing its balance sheet. Thus, the bank failed and was taken over by authorities.

When I understood the role the gargantuan increase of easily-withdrawable demand deposits played behind the runs on SVB and Signature Bank, I thought that a nationwide bank run would almost surely follow the failures of SVB and Signature Bank. However, authorities managed to return the trust to the regional banking system better than I thought (by throwing a proverbial kitchen sink at it). It reminded me of how difficult it is to anticipate the timing and length of bank runs, even though I had warned about the fragility of the U.S. banking system just three weeks before the runs started. But, while the runs were halted, the problems remained.

The fact is that the U.S. banking system has been “run-prone” since 2022 (after the gargantuan increase in demand deposits), and the cash-drought created by the government shutdown is making it worse every passing day.

Hence, the likelihood of a negative shock breaking the trust of U.S. depositors in one or more banks currently grows by the day.

I worry.

Tyler Durden Wed, 11/05/2025 - 15:20

Apple Taps Rival Google's 1.2-Trillion-Parameter AI Model To Power Siri

Remember when the iPhone 16 launched in September 2024 and Apple promised "Apple Intelligence" features, such as an AI-powered Siri upgrade capable of handling autonomous tasks, that never fully materialized. 

For now, Apple will integrate Google's 1.2 trillion-parameter Gemini model to overhaul Siri, the most alarming sign yet that Tim Cook has to rely on outside AI technology.

This AI agreement will cost Cook $1 billion annually until Siri's upcoming "Linwood" upgrade, targeted for iOS 26.4 next spring, will feature an in-house 1-trillion-parameter model, according to Bloomberg, citing people with knowledge of the matter.

Here are some key details on why Apple is turning to Google for AI support:

• Gemini will handle Siri's summarizer and planner functions, allowing for more complex reasoning and contextual understanding, while Apple's own smaller models continue managing simpler requests. 

• The Gemini model will operate on Apple's Private Cloud Compute servers, keeping user data isolated from Google.

• Apple tested OpenAI's ChatGPT and Anthropic's Claude but ultimately went with Google's model. 

Shares of Apple and Google initially jumped on the news, but the gains quickly faded.

In short, one of the world's largest tech giants missed the AI hype cycle - unable to deliver a viable product for consumers and forced to rely on a rival's technology instead. Whether this marks the peak of the AI hype cycle or the beginning of Apple's fading appeal, one thing is clear: Tim Cook now depends on Google, a sobering reality for the company worth nearly $4 trillion. 

Tyler Durden Wed, 11/05/2025 - 15:00

 

 

I’ve been thinking about the president’s second-term tariff policy for about 8 months now. Even before the April 2nd liberation day, they appeared unlawful to me. I wrote about it a few times; I tracked down Neal Katyal, the attorney who argued the appellate case to be a guest on Masters in Business.

It didn’t seem to me like enough of Wall Street was paying close attention to this.

Today, I listened to the arguments at the Supreme Court (via C/SPAN). I haven’t practiced law in three decades, but you don’t need to be an active attorney to recognize a beatdown when you hear one. Had this been a boxing match, it would have been stopped on a TKO (technical knockout).

I’m going to go out on a limb: All (or nearly all) of the Trump tariffs will be overturned by SCOTUS as unconstitutional. It should be 9-0, but several of the justices have given up any pretense of being neutral, nonpartisan arbiters; my guess is 7-2 or (maybe) 6-3 will affirm the Court of Appeals decision in favor of overturning the tariffs. If you surveyed Constitutional Law professors, I bet it is close to 95% agree tariffs are the province of Congress (as per the Constitution, Article 3, Section 8), and that these Executive orders are unconstitutional.

Considering the plaintiffs have won at both trial (Court of Trade) and at the full en banc hearing in the DC Court of Appeals, this isn’t a big surprise. I suspect any company that paid an unconstitutional tariff will be entitled to a refund. Look at the companies that suffered the largest stock price damage in the first weeks of April; I don’t imagine consumers will be able to easily get a refund.

Perhaps Wall Street has overlooked this, but the market has caught on. It’s very likely that a large part of the rally over the past 6 months was the market anticipating this outcome.

Before I get too far ahead of myself, let’s wait for the SCOTUS decision in Trump vs VOS Selections. Hopefully, we see this before the new year…

~~~

For those interested, lots of useful links follow, including audio of the SCOTUS arguments, interesting recent articles, and my prior discussions on the topic as well.

 

 

 

Previously:
Might Tariffs Get “Overturned”? (July 31, 2025)

The Muted Impact of Tariffs on Inflation So Far (July 17, 2025)

Are Tariffs a New US VAT Tax? (March 31, 2025)

MiB: Special Edition: Neal Katyal on Challenging Trump’s Global Tariffs (September 3, 2025)

Neal Katyal on Challenging Trump’s Global Tariffs (September 8, 2025)

Which States Could Suffer the Most From Trade War Tariffs? (September 16, 2019)

 

See also:
SCOTUS Bench Memo Trump Tariff Case: Separation of Powers, Delegation, Emergencies (Just Security, November 3, 2025)

The Court Must Decide If the Constitution Means What It Says (The Atlantic, November 5, 2025)

Mystery conservative donors bankroll opposition to Trump’s tariffs (Washington Post, November 5, 2025)

The Supreme Court should liberate us from ‘liberation day’ (The Hill, 11/04/25)

Striking Down the Tariffs Won’t Hurt Anybody (Cato, October 28, 2025)

 

 

~~~

Disclosure: Both I and RWM clients own the full run of these industrials via ETFs, mutual funds, or direct indexing, including individual stocks or options: Caterpillar, Deere, Ford, GM, etc.

 

 

 

The post Tariffs Likely To Be Overturned… appeared first on The Big Picture.

Biden-Appointed D.C. Judge Orders White House To Provide Sign Language Interpreters For Press Briefings

Authored by Aldgra Fredly via The Epoch Times,

A federal judge ruled on Nov. 5 that the White House must provide American Sign Language (ASL) interpretation during press briefings held by President Donald Trump and press secretary Karoline Leavitt.

The decision followed a lawsuit filed in May by the National Association of the Deaf (NAD) and Derrick Ford, a deaf individual, which alleged that the Trump administration “inexplicably stopped” using ASL interpreters since taking office, denying deaf Americans access to real-time White House communications.

In a 26-page order, President-Biden-appointed U.S. District Judge Amir Ali in Washington said the plaintiffs are likely to prevail on their claim that the administration’s actions violated the Rehabilitation Act, a federal law that aims to ensure people with disabilities have access to federal activities.

“White House press briefings engage the American people on important issues affecting their daily lives—in recent months, war, the economy, and healthcare, and, in recent years, a global pandemic,” Ali said in the order. “The exclusion of deaf Americans from that programming, in addition to likely violating the Rehabilitation Act, is clear and present harm that the court cannot meaningfully remedy after the fact.”

The judge said that English captions and transcripts alone are not enough to make briefings accessible to people who use ASL, as many deaf individuals do not communicate in English, according to the ruling.

The White House had argued that requiring the president to share his platform with ASL interpreters at all press briefings would cause a “major incursion on his central prerogatives.”

The judge rejected this argument, noting that ASL interpretation could be implemented without requiring interpreters to be in the same room as the speaker. Ali added that the White House did not clarify what “major incursion” it was referring to.

The plaintiffs also asked the court to mandate ASL interpretation for press briefings and events held by First Lady Melania Trump, Vice President JD Vance, and Second Lady Usha Vance, as well as for all videos posted on the White House’s websites and social media channels. Ali said they had not presented sufficient evidence to justify that request.

Ali ordered the Trump administration to file a status report by Nov. 7 that “apprises the court of their compliance with this order.”

Neither the NAD nor the White House responded to a request for comment by publication time.

The lawsuit marks the NAD’s second suit against the White House over access to ASL interpretation. In 2020, the NAD sued to require ASL interpretation for COVID-19-related press briefings.

That case was resolved when the White House implemented a policy to provide interpreters for all press briefings conducted by the president, vice president, first lady, second gentleman, and press secretary, according to the group.

The White House stopped providing ASL interpretation in January this year and has not included interpreters at any press briefings since, the NAD said in a May 28 statement.

Tyler Durden Wed, 11/05/2025 - 13:20

US Urges UN To Lift Sanctions On Syrian Leader Ahead Of Washington Visit

Authored by Kimberley Hayek via The Epoch Times,

The United States has put forth a draft resolution within the U.N. Security Council meant to end sanctions on Syrian President Ahmed al-Sharaa, leader of the Islamist militant and political group Hayat Tahrir al-Sham (HTS).

The proposal comes ahead of al-Sharaa’s anticipated meeting with President Donald Trump at the White House, set for next Monday.

The Security Council has regularly approved travel exemptions for al-Sharaa this year, meaning the White House meeting does not hinge on the outcome of the U.S. proposal.

The draft resolution, seen by Reuters on Tuesday, also advocates for the repeal of sanctions against Syria’s Interior Minister Anas Khattab.

The U.N. sanctions include a travel ban, asset freeze, and arms embargo.

It is unclear when a vote on the draft could be held. At least nine of the 15 council constituents need to vote in favor of the proposal for it to be enacted. However, Russia, China, the United States, France, and the UK each hold a veto.

Washington has for many months urged the Security Council to cease the sanctions on the regime in Syria.

President Bashar al-Assad was deposed in December 2024 after HTS-led militants effectively won a 13-year civil war in the country.

The country has languished since May 2014 on the U.N. Security Council’s sanctions list aimed at al-Qaeda and ISIS affiliates.

White House press secretary Karoline Leavitt announced al-Sharaa’s visit to the White House at a press briefing on Tuesday.

“When the president was in the Middle East, he made the historic decision to lift sanctions on Syria to give them a real chance at peace, and I think the administration, we’ve seen good progress on that front under their new leadership,” Leavitt said.

In July this year, Trump rescinded unilateral U.S. sanctions on Syria via executive order, saying it was “a chance at greatness” for the Syrian people, but he kept sanctions on Assad and other leaders.

The Trump administration also revoked the foreign terrorist organization designation for HTS.

U.N. monitors said there are no active al-Qaeda-HTS ties in a July report.

Trump last met with al-Sharaa in mid-May in Saudi Arabia’s capital, Riyadh, where the U.S. president urged the Syrian leader to join the Abraham Accords. According to the White House, Trump also asked al-Sharaa to “tell all foreign terrorists to leave Syria, deport Palestinian terrorists, help the U.S. prevent the resurgence of ISIS, and assume responsibility for ISIS detention centers in Northeast Syria.”

On Sept. 22, al-Sharaa addressed the U.N. General Assembly—the first time a Syrian president had done so since 1967—where he called for full sanctions relief and highlighted his country’s reconstruction needs.

[ZH: Of course, as we detailed here, this new 'friendship' has an ulterior motive...]

Tyler Durden Wed, 11/05/2025 - 12:40

"Contrary To Human Nature": VDH Reminds Us That Mamdani-Style Socialism Always Ends In Disaster

Victor Davis Hanson is warning that Democrats' move towards socialism and their embrace of figures such as Zohran Mamdani is not going to end well.

Mamdani, a socialist who's promised to redistribute wealth, and insists that "taxation isn't theft, capitalism is" - is pushing politics that VDH says are 'contrary to human nature.'

"Historically, socialists always come in after capitalists have made prosperity, and then they offer and improve prosperity," he told Fox News' Laura Ingraham. "And it’s contrary to human nature. People like initiative. They like pride in their property. Some people like to work a lot and get compensated."

According to Hanson, when the state is in control of human innovation and productivity, it it 'has to be repressive.'

"It gives you that freedom of opportunity. And then the society at large benefits, Laura, from all these millions of agendas and ideas that improve, that people are free to innovate and to take experiments and risk. But when the state monopolizes all of that, it’s contrary to human nature, and then it has to be repressive," Hanson said. "So all of these social experiments, even if they’re democratic, they end up repressive. At the worst form, it’s no accident that the greatest mass murderers in history were Mao [Zedong] and [Joseph] Stalin, 30 million, 60 million, and they were radical communists, and even people like Hitler, National Socialist Party."

And of course, whoever is running a communist regime is living a life of privilege.

"Talented people who can help the economy, who are successful or demonized, they flee. People who want things for nothing come in. There’s open borders," Hanson continued. "They destroy personal liberty, and they stamp out any dissent or criticism. And there’s always an elite, the billionaire Castro brothers, Chavez and Maduro. They always are never subject to their consequences, their ideology. Here in California, we are becoming socialist."

Tyler Durden Wed, 11/05/2025 - 12:20

Plugging One Goal With The Other

By Elwin de Groot, Head of Macro Strategy at Rabobank

Markets were in a risk-off mood yesterday, led by a sell-off in tech shares and growing investor concerns about valuations and policy risks. The US made the books with the longest government shutdown in its history. The S&P lost 1.2%, the Eurostoxx 50 index fell 0.4%. The risk-off tone resulted in lower yields across the board, albeit modestly (1-3 bp in US/Europe). Remarkably, Bitcoin plunged and gold prices dipped as well, an unusual move suggesting broader repositioning rather than just a classic safe-haven bid.

Talks between EU environment ministers yesterday confirmed that the bloc remains committed to its headline goal of cutting greenhouse gas emissions by 90% by the 2040, but with greater flexibility built in. This flexibility introduces a higher risk that targets may not be fully met, or not within the set timeframe. Ministers agreed to include so-called brake clauses, which would allow targets to be adjusted if natural carbon sinks underperform, and to permit offsetting, meaning that part of the reductions could come from foreign carbon credits. They also discussed enabling emissions to be traded between domestic sectors such as industry and agriculture.

This shift in tone is not surprising and reflects the recalibration of priorities between economic and environmental goals advocated in the 2024 Draghi report on competitiveness. That report did not call for abandoning climate objectives, but it urged integrating decarbonization with competitiveness through a “Clean Industrial Deal” and a major investment push. The EU intends to present a unified view next week at the COP30, but many details remain unresolved and attention may already be shifting toward another critical issue: raw material supply security.

On that front, tensions between China and the Netherlands –and by extension the EU– remain unresolved. The US announced on Saturday that China would allow Dutch chipmaker Nexperia BV to resume shipments from its Chinese facilities, easing fears of disruptions to auto production. However, China escalated pressure yesterday. Beijing criticized the Dutch government’s “unilateral” actions and urged it to stop interfering in Nexperia’s internal affairs and find a constructive solution.

The broader economic impact on European or even global industry is still hard to gauge at this stage. Nexperia chips are widely used, especially in automotive applications. Since Nexperia halted wafer exports to China, supply disruptions could also affect production of consumer goods there. Automotive experts note that substitutes exist, but switching would take weeks at minimum – raising the risk of temporary production halts given low inventories in Europe. Some companies, such as Robert Bosch GmbH in Germany and Honda in the US, have already announced production reductions, while others, including Volkswagen AG, have warned they may have to follow suit.

There is little precedent for assessing the impact. The post-COVID chip shortage, which partly caused a 40% decline in motor vehicle production between November 2020 and August 2021, offers some perspective. That shortage stemmed from a perfect storm of factors: surging demand for consumer electronics during lockdowns, automakers cancelling chip orders early and then scrambling as demand rebounded, factory shutdowns, and staffing shortages at semiconductor fabs, natural disasters such as droughts in Taiwan and fires in Japan, and later raw material shortages linked to the Russia–Ukraine war.

If so, it probably requires more financial resources from governments as well, which are in short supply, as the IMF warned yesterday. The institution argues for “a rethink of the role of government […] in some countries” and notes that “if reforms and medium-term consolidation are insufficient, then more radical fiscal measures could include reassessing the scope of public services and other government functions, potentially affecting the social contract.”

Tyler Durden Wed, 11/05/2025 - 12:00

Things Aren't Looking Great For Trump In Supreme Court Tariff Arguments

Odds of the Supreme Court siding with Trump over tariffs tumbled on Wednesday, after conservative justices Kavanaugh, Gorsuch, and Coney Barrett asked tough questions during oral arguments in two cases. 

After the first hour of argument, the Trump administration's case justifying tariffs looked to be in serious trouble - specifically his claim that a 1977 economic emergency law grants the president unilateral power to impose tariffs at will. 

Chief Justice John Roberts, Justice Neil Gorsuch and other conservatives raised against Solicitor General John Sauer one of the legal principles they used to strike down big priorities for the Biden administration: the Major Questions Doctrine, which holds that the executive can’t find extraordinary powers in statutes that don’t contemplate major policy changes. -WSJ

More:

• Gorsuch hammered Solicitor General John Sauer over separation of powers - suggesting that if the court were to accept Sauer's argument that Congress can delegate sweeping power to the president, there might be no limit to what other powers they could "hand off."

• The Justice then launched into a "series of skeptical - and at times openly hostile - questions at the solicitor general." (WSJ)

• Justice Brett Kavanaugh also focused on Trump's assertion of power - noting that he's the first president in US history to invoke wartime law to impose sweeping global tariffs. 

• Justice Amy Coney Barrett asked Sauer to explain how the global tariffs were necessary to respond to an "unusual and extraordinary threat."

That said, the Trump admin has a plan if things don't go their way with the Supremes.

As the WSJ notes; 

Trump's team for months has weighed using other laws as contingency plans to replace the Ieepa tariffs if they lose in court. That includes potentially deploying a never-before used provision in the Trade Act of 1974-Section 122- which allows for tariffs of up to 15% for 150 days to address trade imbalances with other countries. That would buy time for Trump to devise individualized tariffs for each major trading partner under a different provision of the same law, Section 301, which is used to counter unfair foreign trade practices.

That plan could be more legally defensible. The U.S. Court of International Trade, which ruled against Trump's tariffs, pointed to Section 122 as a more reasonable legal defense for global tariffs. Section 301, meanwhile, has long been used to address unfair foreign trade practices, and was deployed to underpin Trump's first-term tariffs on China. Additionally, the administration could also seek to use Section 338 of the Tariff Act of 1930, which allows the president to impose tariffs up to 50% on nations that discriminate against U.S. commerce.

The clawbacks here are going to be a shitshow... 

*  *  *

Authored by Sam Dorman via The Epoch Times (emphasis ours),

The Supreme Court is set to hear oral arguments on Nov. 5 in a landmark case over the legality of President Donald Trump’s global tariffs.

Illustration by The Epoch Times, Getty Images, Madalina Kilroy/The Epoch Times

More specifically, the justices are expected to hear two cases—Learning Resources, Inc. v. Trump, and Trump v. V.O.S. Selections, Inc.—for at least 80 minutes with input from various parties. According to the court, oral arguments will include 40 minutes from the Trump administration and 20 minutes each for both the private businesses and states challenging Trump’s policy.

Whatever the ruling, the case could have major implications for the nation’s economy and determine how much future presidents can alter trade. Here’s what you need to know heading into oral arguments.

1. What Are the Cases About?

The cases center on two groups of tariffs that the Trump administration imposed earlier this year. One group targeted Mexico, Canada, and China over their alleged failure to address fentanyl trafficking, and the other set included a lengthy list of reciprocal tariffs on countries worldwide.

The tariffs were imposed under a 1977 emergency powers law—the International Emergency Economic Powers Act. Trump is the first president to impose tariffs under this law, although President Richard Nixon used an identical provision in a predecessor law in 1971—the Trading with the Enemy Act of 1917—to declare a trade emergency and issue 10 percent tariffs on all imports.

Trump established the fentanyl tariffs in February in response to the three countries’ failure to stem the flow of illegal opioids into the United States, which created a national emergency, including a public health crisis, according to his executive orders.

The president cited the hundreds of thousands of overdose deaths of Americans and the drug crisis’s impact on the health care system, communities, and families. Mexico and Canada were also penalized for failing to stem illegal immigration.

In enacting the reciprocal tariffs in April, Trump declared an emergency over large and persistent U.S. trade deficits caused by decades of unfair trade practices by other countries in the form of tariffs and nontariff barriers.

The persistent trade imbalance has threatened national and economic security, Trump’s executive order states, by hollowing out the country’s manufacturing capacity, undermining critical supply chains, and causing the defense industry to be dependent on foreign adversaries.

Trucks enter the United States from Canada at the Pacific Highway Port of Entry in Blaine, Wash., on Feb. 1, 2025. Earlier this year, the Trump administration imposed 25 percent tariffs on Mexico and Canada. The Supreme Court will hear arguments on Nov. 5 in a landmark case over the legality of the administration’s global tariffs. David Ryder/Getty Images 2. The Stakes

Trump has said that winning the case will be “vital to the interests” of the United States. Tariffs have been used against the country for years, causing the United States to lose its domestic industries, he said in an October interview with Fox Business.

The president noted that he was able to stop several wars by using the threat of tariffs as leverage, including one earlier this year between Pakistan and India.

As of Sept. 23, revenue from tariffs imposed under the emergency law hit nearly $90 billion in fiscal year 2025, according to data by U.S. Customs and Border Protection. That’s nearly half the total tariff revenue collected in the fiscal year.

The United States faces a trade deficit of more than $1 trillion, and the Congressional Budget Office has estimated that the tariffs will reduce federal deficits by $4 trillion, according to a Justice Department (DOJ) filing.

So far, the Trump administration has reached trade deals with several countries, including the U.K., the European Union, Japan, and South Korea. These deals have led to more than $2 trillion in purchases and investment commitments in the United States.

Should the administration lose the case, Treasury Secretary Scott Bessent has said that the government could invoke other authorities to implement tariffs, although they are “not as efficient, not as powerful.”

Private companies have urged the Supreme Court to rule against the Trump administration, arguing that the tariffs represent hundreds of billions of dollars in new taxes. Some outside estimates have also been critical of the tariffs.

For example, the Peterson Institute for International Economics stated in September that U.S. businesses had absorbed much of the tariff costs through July, and consumers could see higher prices.

APEC leaders pose for a group photo before a dinner honoring U.S. President Donald Trump (4th-L) during APEC meetings at the Hilton Gyeongju in Gyeongju, South Korea, on Oct. 29, 2025. The Trump administration has secured trade deals with several countries, including the United Kingdom, the European Union, Japan, and South Korea. Andrew Harnik/Getty Images 3. Emergency Powers Law

The Supreme Court is set to review whether the tariffs are authorized by the International Emergency Economic Powers Act (IEEPA). The law authorizes the president to take a range of actions in response to emergencies.

It allows the president to declare a national emergency to deal with any “unusual and extraordinary threat” to the country’s national security, foreign policy, or economy.

In court, the DOJ has defended the Trump administration’s invocation of the law to impose tariffs by pointing to a section that allows presidents to regulate imports.

That provision allows the president to “investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest.”

In arguing that the levies were not authorized by the law, challengers have highlighted that the provision doesn’t include the word tariffs.

The justices are expected to consider not only whether the law allows the tariffs but also whether the law was constitutional.

Because the Constitution grants tariff power to Congress, there is a question over whether the emergency law violated the nation’s separation of powers by unconstitutionally delegating expansive tariff authority to the president.

President Donald Trump signs an executive order after remarks on reciprocal tariffs during a Rose Garden event at the White House on April 2, 2025. The Supreme Court is set to review whether the tariffs are authorized under the International Emergency Economic Powers Act. Saul Loeb/AFP via Getty Images 4. What Did Lower Courts Decide?

So far, multiple federal courts—including the U.S. Court of International Trade and the U.S. District Court for the District of Columbia—have stated that Trump’s tariffs are unlawful, but delayed the effects of their orders blocking the tariffs.

The U.S. Court of Appeals for the D.C. Circuit halted oral arguments for one of the cases after the Supreme Court granted certiorari, or took it up for further consideration. The Supreme Court is expected to review that case, as well as one that the U.S. Court of International Trade ruled on in May. That ruling against Trump’s tariffs was affirmed by the U.S. Court of Appeals for the Federal Circuit in August.

Both the district court in Washington and the Federal Circuit have noted that the law does not use the term tariffs. According to the court in Washington, regulating imports entails controlling them through rules, whereas tariffs are taxes on imports or exports.

Read the rest here...

Tyler Durden Wed, 11/05/2025 - 11:48

Today, in the Calculated Risk Real Estate Newsletter: Q3 NY Fed Report: Mortgage Originations by Credit Score, Foreclosures Increase Slightly

A brief excerpt:

The NY Fed released the Q3 Quarterly Report on Household Debt and Credit this morning. Here are a few charts from the report.

The first graph shows mortgage originations by credit score (this includes both purchase and refinance). Look at the difference in credit scores in the recent period compared to the during the bubble years (2003 through 2006). Recently there have been almost no originations for borrowers with credit scores below 620, and few below 660. A significant majority of recent originations have been to borrowers with credit score above 760.

There is much more in the article.

Trump Drafting Executive Order On Election Integrity After Alleging Ballot Fraud In California

Authored by Tom Ozimek via The Epoch Times,

White House press secretary Karoline Leavitt said an executive order is being drafted to strengthen U.S. elections and curb mail-in ballot fraud, after President Donald Trump alleged that California’s mail voting system “is rigged” and parts of it are under “legal and criminal review.”

“The White House is working on an executive order to strengthen our elections in this country and to ensure that there cannot be blatant fraud, as we’ve seen in California with their universal mail-in voting system,” Leavitt told reporters during a Nov. 4 briefing. “It’s absolutely true that ... there is fraud in California’s elections. It’s just a fact.”

Leavitt’s comments followed a Truth Social post by Trump earlier in the day, in which he renewed his criticism of mail-in voting and suggested criminal investigations were underway.

“The Unconstitutional Redistricting Vote in California is a GIANT SCAM in that the entire process, in particular the Voting itself, is RIGGED,” Trump wrote.

“All ‘Mail-In’ Ballots, where the Republicans in that State are ‘Shut Out,’ is under very serious legal and criminal review.”

When asked what evidence the White House had to support those claims and which authorities were conducting the purported reviews, Leavitt said she would provide evidence of fraud to reporters after the briefing, alleging that “fraudulent ballots are being mailed in the names of other people, in the names of illegal aliens who shouldn’t be voting in American elections.”

The White House has not disclosed details of the upcoming executive order. The president has repeatedly promised sweeping changes to election procedures, including a nationwide ban on universal mail-in voting and electronic voting machines.

Redistricting Vote Sparks Clash

On Nov. 4, California voters approved Proposition 50, a ballot measure championed by California Gov. Gavin Newsom and state Democrats that allows lawmakers to temporarily bypass the state’s nonpartisan redistricting commission to redraw congressional maps.

Supporters said the measure was a needed counterweight to Republican-led redistricting in states such as Texas, while critics—including Trump—characterized it as an unconstitutional power grab.

Newsom described the referendum as “California’s chance to save democracy,” saying it would help Democrats regain momentum ahead of next year’s elections.

“At the end of the day, it’s about the future of our country,” he told supporters at a Los Angeles rally on Nov. 1.

Republican state Sen. Tony Strickland told The Epoch Times that the measure could ultimately backfire on Democrats.

“If Prop 50 passes, it becomes a rally cry nationally,” he said. “The biggest winner tonight will be [President] Donald Trump.”

California Gov. Gavin Newsom speaks at a "Yes on Prop 50" volunteer event at the LA Convention Center in Los Angeles on Nov. 1, 2025. Jill Connelly/Getty Images

After Trump posted on Truth Social that the redistricting vote was unconstitutional and that some of California’s mail-in ballots are under criminal review, Newsom responded by dismissing the comments as the “ramblings” of someone who “knows he’s about to LOSE.”

Trump has long criticized mail-in voting, calling it a source of widespread fraud. In August, he told reporters that his legal team was drafting an executive order to ban mail-in voting nationwide and to phase out electronic voting machines in favor of paper ballots.

Constitutional experts have said that any such move would face immediate legal challenges. Under the U.S. Constitution, states control the “times, places, and manner” of elections, though Congress retains the power to alter those regulations.

“The president has no power to dictate to states how they conduct national elections,” Rick Pildes, a political science professor at New York University, told The Epoch Times in an earlier interview. He said such changes would likely require congressional approval.

Trump’s forthcoming order would mark the latest in a series of White House efforts to tighten federal election rules.

In March, the president signed an executive order directing agencies to update election security protocols, voter registration processes, and mail-ballot deadlines.

While portions of that order were blocked by a federal judge who found the action exceeded presidential authority, a directive tightening mail-in ballot deadlines was allowed to stand.

Tyler Durden Wed, 11/05/2025 - 11:20

Consumer Squeeze Hits Home Renovation Spending As Leading Deck-Maker Shares Collapse

Shares of Trex Company, best known for its wood-alternative composite decking, plunged the most since the Dot Com bust in premarket trading after the company's fourth-quarter net sales forecast came in below Bloomberg Consensus estimates. Analysts warned that soft consumer spending trends and a deteriorating home-improvement backdrop are weighing on demand. 

Trex reported adjusted EPS of $.51 (vs. $.57 est.) and net sales of $285 million, up 22% year-over-year but millions below the $302 million consensus. EBITDA increased 27% to $86.4 million, missing the $96.8 million estimate. 

Analysts focused on weaker outlooks. For Q4, Trex expects net sales of $140 million to $150 million, well below the $199 million consensus. For the full year, the company now sees EBITDA margins of 28% to 28.5%, down from prior guidance of above 31% and the 31% analyst estimate, signaling further margin compression.

"Given the lackluster outlook for consumer spending and 'marketing war' that has popped up in the industry, we lack confidence in our estimates and valuation," William Blair analyst Ryan Merkel wrote in a note to clients. He downgraded the stock to market perform from outperform. 

Merkel noted, "Our take is that Trex is protecting its share by matching marketing spending and channel incentives that competitors are offering in a soft market. This is a major business model reset for a category that was viewed as having secular growth and rational competitors."

Truist analyst Keith Hughes warned, "The stock will take a substantial hit after a weak year already and the potential for M&A around TREX is now growing.  We remain Buy on the long term secular growth story."

The earnings showed "evidence of cracks in near-term fundamentals and a preview of competitive share dynamics to come," Barclays analyst Matthew Bouley wrote. He said there's a significant risk that "real share loss has not even begun" after James Hardie's acquisition of Azek. 

Trex shares plunged to early-2020 lows amid the dismal outlook.

Shares are down 32% in premarket trading, the most since the Dot-Com bust in late 2000. 

Trex is often viewed as a home-improvement indicator within the discretionary spending segment tied to outdoor living and remodeling, given how expensive its composite decking boards can be, sometimes upwards of $140 for a 16-foot board, compared with about $18 for a treated lumber board of the same length.

Tyler Durden Wed, 11/05/2025 - 11:00

From the NY Fed: Household Debt Balances Grow Steadily; Mortgage Originations Tick Up in Third Quarter

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The report shows total household debt increased by $197 billion (1%) in Q3 2025, to $18.59 trillion. The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel. It includes a one-page summary of key takeaways and their supporting data points.

“Household debt balances are growing at a moderate pace, with delinquency rates stabilizing,” said Donghoon Lee, Economic Research Advisor at the New York Fed. “The relatively low mortgage delinquency rates reflect the housing market’s resilience, driven by ample home equity and tight underwriting standards.” Mortgage balances grew by $137 billion in the third quarter and totaled $13.07 trillion at the end of September 2025. Credit card balances rose by $24 billion from the previous quarter and stood at $1.23 trillion. Auto loan balances held steady at $1.66 trillion. Home equity line of credit (HELOC) balances rose by $11 billion to $422 billion. Student loan balances rose by $15 billion and stood at $1.65 trillion. In total, non-housing balances rose by $49 billion, a 1.0% increase from Q2 2025.

The pace of mortgage originations increased with $512 billion newly originated in Q3 2025. There was $184 billion in new auto loans and leases appearing on credit reports during the third quarter, a small dip from the $188 billion observed in Q2 2025. Aggregate limits on credit card accounts continued to rise by $94 billion, representing a 1.8% increase from the previous quarter. Home equity lines of credit (HELOC) limits rose by $8 billion, continuing the growth in HELOC limits that began in 2022.

Aggregate delinquency rates remained elevated in Q3 2025, with 4.5% of outstanding debt in some stage of delinquency. Transitions into early delinquency were mixed with credit card debt and student loans increasing, while all other debt types saw decreases. Transitions into serious delinquency mostly increased across debt types, although mortgages saw a slight decrease.
emphasis added

Click on graph for larger image.

Here are two graphs from the report:

The first graph shows household debt increased in Q3.  Household debt previously peaked in 2008 and bottomed in Q3 2013. Unlike following the great recession, there wasn't a decline in debt during the pandemic.

From the NY Fed:

Aggregate nominal household debt balances increased by $197 billion in the third quarter of 2025, a 1% rise from 2025Q2. Balances now stand at $18.59 trillion and have increased by $4.44 trillion since the end of 2019, just before the pandemic recession.

The second graph shows the percent of debt in delinquency.

The overall delinquency rate increased in Q3.  From the NY Fed:

Aggregate delinquency rates remained elevated in the third quarter of 2025. The share of outstanding debt balances in some stage of delinquency was largely flat in 2025Q3; 4.5% of outstanding debt was in some stage of delinquency, 0.1 percentage points higher than the previous quarter. 

There is much more in the report.

"Mad Max For Years?" Bill Holter Warns There's More Risk In The System Now Than Ever

Via Greg Hunter’s USAWatchdog.com,

Financial writer and precious metals expert Bill Holt (aka Mr. Gold) said a month ago that rising “gold and silver prices were sniffing out risk.”  

Looks like the Federal Reserve is also smelling some risk.  

It recently, quietly flooded the banks with $125 billion injection in just five days.  The cash went into the repo market.  Mr. Gold says, “This is just a tremor, the cash going into the repo market."

"  Understand that there are more derivatives outstanding, and there is more debt outstanding.  Whatever metric you want to use to measure it, there is more risk in the system now than any time ever. 

Go back to 2008 and 2009, and we were very close to a complete meltdown with markets not opening up on Monday morning. 

They started handwringing over $700 billion in TARP, while behind the scenes, the Federal Reserve created $16 trillion or $17 trillion and lent it all over the world. 

It didn’t right the ship, but it did stop it from sinking.  I ask you, has anything changed or has anything been fixed? 

Did they address any of those problems we had back in 2008 and 2009? 

The answer is no. 

In fact, they double, triple and quadrupled down on those same policies.”

Mr. Gold goes on to say, “They are trying to fix a debt problem with liquidity.  The liquidity is like a Novocaine shot..."  

"It makes things feel better temporarily, but it does not fix the problem.  The problem is there is too much debt outstanding by any metric. 

Whether you look at debt to cash flow or debt to equity, a perfect example is the US dollar.  The United States is now 130% debt to GDP, and, oh, by the way, the dollar is still the world reserve currency.  In 1982 when I graduated from college, if debt got to 100% of GDP, it was considered a banana republic. 

That being said, you could say the entire world is a banana republic because they use as a reserve currency something that is issued by a bankrupt entity.  It is insolvent because look at the Fed’s balance sheet. 

The Fed has negative equity now.  They lost so much on bonds they bought in 2008 and 2009, and interest rates have gone up.  That means their portfolio has dropped. . .. two or three years back, they were operating with only $65 billion in equity. 

They had trillions of dollars, and if you want to count derivatives, they had quadrillions of dollars (of debt) dancing on the head of a $65 billion pin.”

Mr. Gold is not worried about the most recent correction with gold and silver prices.  Holter says:

“Watch out for a possible ‘failure to deliver’ of physical gold and silver at the end of the year...

Failure to deliver physical metal will end the fraud, and it will be game over for the metal contracts.  More and more people are now standing for delivery.”

With the government shutdown and SNAP food benefits being cut off, where does this end?   Mr. Gold says,

“You’ve got people on line saying if they cut off the food that they are going to go out and steal to feed their families...

Mad Max, this is where this ends.  Is it going to be Mad Max for years?  It might be two weeks or two months. 

God forbid it goes on for six months because the skills are gone with hunting and farming. 

What people know how to do is get in their car and go to the corner store.”

In closing, Holter says, “Get your capital out of the system.” 

Buying physical gold and silver is getting cash out of the system and putting it under your direct control.

There is much more in the 45-minute interview.

Join Greg Hunter of USAWatchdog as he goes One-on-One with financial writer and precious metals expert Bill Holter/Mr. Gold for 11.4.25.

Tyler Durden Wed, 11/05/2025 - 10:45

WTI Holds Losses After Big Crude Build, Record US Production

Oil prices weakened for a second session early on Wednesday as a report showed an unexpected surge in U.S. oil inventories, keeping demand and over-supply concerns top of mind for traders.

"API data indicated the largest US crude inventory build in more than three months, with stockpiles rising by 6.5 million barrels last week. If confirmed by the EIA later today, it would mark the biggest gain since late July," Saxo Bank noted.

The unexpected rise in stocks comes amid persistent warnings the oil market is oversupplied as rising production from OPEC+ and Western Hemisphere producers climbs above demand growth. The concerns were amplified by OPEC+'s weekend decision to hike supply for a third month by 137,000 barrels per day in December, following on the September end to the return of 2.2-million bpd of production cuts.

The question now, is will the official data confirm API's worrying build.

API

• Crude +6.5mm

• Cushing +400k

• Gasoline -5.7mm

• Distillates -2.5mm

DOE

• Crude +5.2mm - biggest build since July

• Cushing +300k

• Gasoline -4.7mm

• Distillates -643k

The official data confirmed API's large crude build (biggest weekly addition since July) but we are also seeing product inventory drawdowns for a fifth straight week

Source: Bloomberg

There was a fairly chunky lurch in the adjustment number last week.

While the outright value from both weeks isn’t massive, there was a positive swing of 874,000 barrels a day (from -481k to +393k). 

Source: Bloomberg

US Crude production rose once again to a new record high of 13.65mm b/d despite recent rig count stability...

Source: Bloomberg

Oil price are holding at the lows of the day after the official data with WTI finding support at $60 for now...

Finally, as MT Newswires reports, rising output comes as the global economy slows with U.S. tariff policies hampering global trade and cutting into demand. Economic data this week showed slowing manufacturing activity in the United States, China and Japan, pushing investors away from over-heated risk assets.

"Japan's manufacturing sector shrank at its fastest pace in 19 months. Tepid new orders in the US led to the eighth consecutive monthly contraction in factory activity. A private survey reached the same conclusion in China, where expansion slowed last month, while manufacturers across other Asian economies are clearly feeling the impact of US tariffs in the form of declining orders," PVM Oil Associates noted.

Still, concerns over Russian supply is offering support for the energy complex, as Ukraine continues its strikes on Russian oil infrastructure. Reports said Ukrainian drones on Tuesday struck at a Lukoil oil refinery in Russia, the second attack on Russian refineries this week, while Russia suspended exports from its main Black Sea oil export port following a Ukrainian attack.

Tyler Durden Wed, 11/05/2025 - 10:35

Yields Rise, Rate-Cut Odds Slide As ISM Services Survey Signal Inflation Fears

After yesterday's mixed picture on Manufacturing (PMI up, ISM down), analysts expected both Services surveys this morning to show an upward bounce.

• S&P Global's Services PMI disappointed but did rise from September's 54.2 to 54.8 (but that was less than expected and less than the 55.2 preliminary print)

• ISM's Services PMI beat expectations, rising from 50.0 to 52.4, well above the 50.8 expectations.

And this is happening amid a rise in 'hard' data (though admittedly based on housing and marginal labor data given the vacuum since the shutdown)

Source: Bloomberg

Across the PMI surveys, only ISM Manufacturing saw a decline MoM in October...

Source: Bloomberg

Under the hood, Prices surged to their highest in three years, new orders expanded at their fastest pace in a year and employment improved (though remained below 50)...

Source: Bloomberg

“October’s final PMI data add to signs that the US economy has entered the fourth quarter with strong momentum," according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

"Growth in the vast services economy has picked up speed to accompany an improved performance in the manufacturing sector.

In total, business activity is growing at a rate commensurate with GDP rising at an annualized pace of around 2.5% after a similarly solid expansion was signalled for the third quarter."

While growth is being driven principally by the financial services and tech sectors, Williamson says the survey is also picking up signs of improving demand from consumers.

However, the surge in prices paid is having some consequences

“However, there are signs that new business is coming at the cost of service providers having to soak up continued high input price growth to remain competitive.

Customers are often pushing back on price rises, especially in consumer-facing markets.

While good news in terms of inflation, this lack of pricing power hints at weak underlying demand and lower profits. "

Business expectations about the year ahead have also fallen sharply and are now running at one of the lowest levels seen over the past three years, as Williamson notes "signs of spending caution from customers is accompanied by heightened political and economic uncertainty."

However, Williamson points out that lower interest rates have helped offset some of the drags to business confidence, for which the October FOMC rate cut will have likely helped further.

Treasury yields are on the rise (likely driven by the inflation jump) and rate-cut odds are lower...

Hopefully we will get some 'hard' data reality (Payrolls and CPI) if the government reopens before the next FOMC meeting but for now we would say, this should not be weighted enough to warrant The Fed veering from its easing path.

Tyler Durden Wed, 11/05/2025 - 10:05

(Posted with permission). The ISM® Services index was at 52.4%, up from 50.0% the previous month. The employment index increased to 48.2%, up from 47.2%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 52.4% October 2025 ISM® Services PMI® Report

Economic activity in the services sector returned to expansion in October, say the nation’s purchasing and supply executives in the latest ISM® Services PMI® Report. The Services PMI® registered at 52.4 percent and is in expansion territory for the eighth time in 2025.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In October, the Services PMI® registered a reading of 52.4 percent, 2.4 percentage points higher than the September figure of 50 percent. The Business Activity Index also returned to expansion territory in October, registering 54.3 percent, 4.4 percentage points higher than the reading of 49.9 percent recorded in September. The New Orders Index remained in expansion in October, with a reading of 56.2 percent, up 5.8 percent from September’s figure of 50.4 percent and its highest reading since October 2024 (56.7 percent). The Employment Index contracted for the fifth month in a row with a reading of 48.2 percent, a 1-percentage point improvement from the 47.2 percent recorded in September.

“The Supplier Deliveries Index registered 50.8 percent, 1.8 percentage points lower than the 52.6 percent recorded in September and 0.7 percentage point below its 12-month average of 51.5 percent. This is the 11th consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM® PMI® Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index registered 70 percent in October, its first time at or above that threshold since a reading of 70.7 percent in October 2022. The October figure was a 0.6-percentage point increase from September’s reading of 69.4 percent. The index has exceeded 60 percent for 11 straight months.
emphasis added

Employment was in contraction for the 5th consecutive month, and prices paid was high.

The post New York Times Pushes Blatant Lies About Neoliberalism appeared first on CEPR.

Britain "Doomed" Under Labour As Wealthy Scramble To "Get The Hell Out Of London", Ryanair Boss Warns

Authored by John-Paul Ford Rojas via ThisIsMoney.co.uk,

The UK is doomed under Labour, the boss of Ryanair has warned as he claimed wealthy people were scrambling to ‘get the hell out of London’ before being hit by a Budget tax raid.

Michael O’Leary said he had no faith in the Chancellor’s ability to restore growth and branded her tax policies ‘dumb’.

The comments came amid reports that Rachel Reeves is planning to target the wealthy with a mansion tax in the Budget later this month.

He told the Guardian: ‘The UK economy under the current leadership is doomed.'

‘The UK badly needs growth, but the way to deliver growth is through selective tax cuts… you are not going to grow the UK economy by taxing wealth or taxing air travel.’

Mr O’Leary’s comments add to a chorus of criticism of Labour from UK business leaders – following warnings about tax from the likes of Marks & Spencer boss Stuart Machin and Asda’s Allan Leighton.

Michael O'Leary branded Labour's policies 'dumb'

The Ryanair boss said: ‘I hold very little faith in Rachel Reeves or the current economic strategy of the Labour government.'

‘Rich people are fleeing… as they are trying to find low-fare flights to get the hell out of London before Rachel Reeves taxes their mansions, their income and inheritance.’

Mr O'Leary has also taken umbrage at Labour’s decision to hike air passenger duty – a tax on flights – and said further increases in the Budget would prompt the carrier to shift capacity to other countries with lower tax burdens such as Sweden or Italy.

He told Bloomberg: ‘She hasn’t a rashers how to deliver growth. She puts up employment taxes, puts up APD.’

Mr O’Leary said Ryanair had written to the Treasury describing the increase in the air tax as ‘the dumbest idea even you lot have come up with’.

He said that a further increase at the Budget would mean 10 per cent of Ryanair’s capacity, or about five million seats, is moved to lower tax countries.

‘Eventually even a dumb Labour government will work out that for an island on the periphery of Europe, the way to grow – and the way to increase tax revenue – is to get tourists onto the island first and then tax them,' he added.

‘The way to grow is not by increasing entry taxes, which is what APD is.’

Mr O’Leary made the comments as the airline revealed a surge in half-year profit amid a hike in fares. It was also helped by aircraft deliveries helping it fly more passengers.

The low-cost airline reported a pre-tax profit of £2.6 billion for the six months to the end of September, 40 per cent higher than the same period last year.

It flew 119 million passengers, 3 per cent more than last year

Average airfares rose by 13 per cent year on year to 58 euros (£50.90), Ryanair revealed, having spiked during the Easter period.

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

Yields Spike After Treasury Refunding Unexpectedly Warns Bessent Considering "Increases To Future Auction Sizes"

Superficially, there were no surprises in the quantitative aspects of this morning's Treasury refunding announcement: as previewed earlier, the Treasury just announced a total quarterly refunding size of $125 billion, just as expected, and furthermore indicated it’s not looking to boost sales of notes and bonds "for at least the next several quarters", in a decision that will see the government increasingly rely on bills to fund the budget deficit. However, the big surprise was the announcement that "looking ahead, Treasury has begun to preliminarily consider future increases to nominal coupon and FRN auction sizes, with a focus on evaluating trends in structural demand and assessing potential costs and risks of various issuance profiles." Translation: no bond auction increases for a few months, and then we blast off, and the bond market reacted appropriately sending 10Y yields to session highs. 

Here are the details.

In  its refunding statement Wednesday, the department said it anticipated keeping auction sizes unchanged for nominal notes and bonds “for at least the next several quarters.” That form language, which has been used since early last year, reflects the higher cost of issuing longer-dated securities compared with bills, which mature in up to a year.

Next week’s auctions of 3-, 10- and 30-year maturities will total $125 billion, the same amount going back to May last year. Dealers had widely expected the move, and most don’t see an increase in issuance of notes and bonds until mid-2026 or later to help finance federal deficits, which have declined slightly in part because of tariff revenue.

For next week’s refunding auctions, they will be made up of:

• $58 billion of 3-year notes on Nov. 10
• $42 billion of 10-year notes on Nov. 12
• $25 billion of 30-year bonds on Nov. 13

The balance of Treasury financing requirements over the quarter will be met with regular weekly bill auctions, cash management bills (CMBs), and monthly note, bond, Treasury Inflation-Protected Securities (TIPS), and 2-year Floating Rate Note (FRN) auctions.

The Treasury issuance forecast table below, which shows actual auction sizes for the August to October 2025 quarter and the anticipated auction sizes for the November 2025 to January 2026 quarter, is identical to the preview we posted earlier (see below), confirming no surprises.

As an aside, the Fed's rate cuts have pulled down yields on the shortest-dated US debt, making it more attractive for the Treasury to sell those maturities. While 10-year yields are currently a bit above 4%, bills due in 12 months are around 3.5%. That's why the Refunding statement said that while it "expects to maintain the offering sizes of benchmark bills into late-November" and to "implement modest reductions to short-dated bill auction sizes during the month of December", thereafter, "by the middle of January 2026, Treasury anticipates increasing bill auction sizes based on expected fiscal outflows."

The share of bills compared with overall outstanding debt is set to rise unless the Treasury boosts longer-dated issuance. The ratio is on course to climb past 26% by the end of 2027, Citigroup estimates.

Last year, the Treasury Borrowing Advisory Committee — a panel of dealers, investors and other market participants — recommended it average around 20% over time. As of September, the ratio was over 21% and will keep rising for the foreseeable future. 

But it's not just Bill sizes that will spike: here is the sentence that sent TSY yields spiking by 3 bps so far:

“Looking ahead, Treasury has begun to preliminarily consider future increases to nominal coupon and FRN auction sizes, with a focus on evaluating trends in structural demand and assessing potential costs and risks of various issuance profiles."

While dealers had expected the Treasury start laying the groundwork for an increase in sales of longer-dated obligations at some poin - given that the government continues to run historically large fiscal deficits, boosting the overall debt load - today's announcement by the Treasury came as a surprise. It shouldn't have: as securities sold during the record deficits of the pandemic era, in 2020 and 2021, come due in coming years, Treasury note sales would only suffice to repay what’s maturing, meanwhile the US deficit remains at $2 trillion and rising.

Some Wall Street firms have pushed off forecasts for when they expect boosts to longer-dated issuance, given how Treasury Secretary Scott Bessent has signaled he prefers not to lock the government into higher borrowing costs at a time when bills are cheaper. And yet, that is precisely what he now intends to do in early 2026 based on today's announcement. 

This led to lots of confusion: in April, JPMorgan rates strategists expected officials to boost coupon sizes by this refunding announcement. But in the bank’s latest projection for when that would occur, ahead of Wednesday’s statement, that date had shifted to November 2026. Now JPM will have to adjust again. 

In a separate note, the Treasury Borrowing Advisory Committee said current projections could "warrant increases in coupon issuance in FY 2027" to wit: 

In terms of issuance, the Committee recommended keeping nominal coupon sizes as well as TIPS issuance unchanged. The Committee discussed potential changes to coupon issuance in the future, and the timing thereof. Given the uncertainty of potential financing needs, the Committee was mixed on how Treasury should approach adjustments to its current forward guidance. The Committee believes that current projections could warrant increases in coupon issuance in FY2027

The committee in a letter to Treasury Secretary Scott Bessent said that the current issuance mix appears to be near the “efficient frontier” while the Treasury’s move toward a higher share of T-bills in recent years somewhat reduced expected costs but also increased volatility, based on the committee’s refreshed Optimal Debt Model, one of many tools the Department uses to inform issuance decisions.

“While the current mix seems appropriate in a ‘Productivity Boom’ scenario, the other scenarios highlighted additional risks for Treasury,” TBAC wrote. “The Model suggests that a decrease in bill issuance, increase in belly issuance, and a decrease in bonds lowers volatility for a negligible cost increase in the adverse scenarios.”

Committee had an “extensive debate” around the tradeoff between solving for the lowest debt service costs versus limiting funding volatility, and how Treasury should think about risk tolerance and mitigation. When thinking about potential changes to coupon issuance in the future and timing, the Committee was mixed on how Treasury should approach adjustments to its current forward guidance.

Finally, the Refunding statement touched on the recent increase in Treasury buybacks, noting that in both the 10- to 20-year and 20- to 30-year nominal coupon buckets, Treasury plans to conduct four operations over the refunding quarter, each for up to $2 billion.  In the other nominal coupon buckets, Treasury plans to conduct one liquidity support buyback of up to $4 billion. Treasury also plans to conduct two operations in the 1- to 10-year TIPS bucket, each for up to $750 million, and one operation for up to $500 million in the 10- to 30-year TIPS bucket. 

Treasury also anticipates that over the course of the upcoming quarter it will purchase up to $38 billion in off-the-run securities across buckets for liquidity support and up to $25 billion in the 1-month to 2-year bucket for cash management purposes.

As announced at the last quarterly refunding, in the first half of 2026 Treasury plans to offer direct buyback access to a limited number of additional counterparties based on their participation in Treasury auctions. 

In response to the refunding statement's surprising notice of coming coupon increases, 10Y yields spiked not only to session highs, but are just shy of the highest level in the past week. 

Earlier:

Treasury Refunding Preview

The US Treasury announced it expects to borrow $569BN in privately-held net marketable debt in the Oct-Dec quarter down from the $590BN it projected for Q4 in July. The lower estimate is due to higher start of quarter cash balance, partially offset by lower projected net cash flows. The projection still assumes an end-Dec cash balance of $850BN, albeit some had been looking for this to increase to $900BN. Looking ahead to Q1 '26 (Jan-Mar), the Treasury expects to borrow $578BN, assuming an end-March cash balance of $850BN.

During the July-September 2025 quarter, the Treasury borrowed $1.058TN in privately-held net marketable debt and ended the quarter with a cash balance of $891BN. In July 2025, Treasury estimated borrowing of $1.007TN and assumed an end-of-September cash balance of $850BN. The $50BN difference in privately-held net marketable borrowing resulted primarily from the higher end-of- quarter cash balance and lower net cash flows. Excluding the higher-than-assumed end-of-quarter cash balance, actual borrowing was $10BN higher than announced in July.

Turning to the Quarterly Refunding Announcement, Newsquawk notes that for the refunding, the Treasury maintained guidance that it expects to maintain nominal coupon and FRN auction sizes for at least the next several quarters; any change to this would be of note. However, Morgan Stanley expects current coupon sizes to remain steady until February 2027, with guidance expected to be maintained. Regarding TIPS, Morgan Stanley expects the Treasury will continue with incremental increases to the TIPS auction sizes, expecting the $19BN of 10yr TIPS re-opening auction to be maintained, with a $1BN increase to both the 5yr TIPS re-opening and the 10yr TIPS new issue.

We will have a look at the upcoming buyback operations too for any changes. The prior refunding saw the Treasury state in H1 2026, it plans to offer direct buyback access to a limited number of additional counterparties, based on their participation in Treasury auctions. Morgan Stanley "interpret this statement to mean that the additional eligible participants for buyback operations will be the largest participants in auctions by risk taken down".

One thing to bear in mind is the Fed's end of QT. From December 1st, the Fed will start to reinvest all maturing Treasury security holdings on its balance sheet, while it will continue to let mortgage-backed securities roll off the balance sheet; however, the payments will be reinvested into Treasury bills instead of MBS. Morgan Stanley writes that after QT ends, the Fed will deem an across-the-curve reinvestment strategy as most optimal, meaning more front-end UST demand relative to the status quo.

Providing the nominal coupon auction sizes are left unchanged as per guidance, this is what the auction sizes would look like.

 

Tyler Durden Wed, 11/05/2025 - 08:30