Zero Hedge

Trump Again Issues Veiled Regime Change Threat: "Make Iran Great Again"

Trump Again Issues Veiled Regime Change Threat: "Make Iran Great Again"

(Update1618ET): President Trump in a widely circulating photo held up a ballcap which says "Make Iran Great Again" cap in a photo alongside Republican Senator Lindsey Graham on Monday, and he also posted this message:

Indeed these are some bizarre times we're living in. Let's hope he doesn't spend too much time with Graham, who is probably lobbying hard for 'muscular action' against Tehran...

And there's this unexpected and rare headline today:

Israeli PM Netanyahu asked President Putin to reassure Iran, "We will not attack them": KANN

The Iranians have every reason not to believe Netanyahu.

* * *

Three Iranian officials have told Reuters that Tehran leadership believes the United States or Israel may take military action against the Islamic Republic soon, coming off the heels of the US intervention to remove Venezuela's Maduro.

There are reports of Iranian 'emergency meetings' of top leadership to examining options for self-defense, and the country overnight engaged in fresh ballistic missile drills to signal its preparedness. 

Office of the Iranian Supreme Leader/West Asia News Agency/Reuters

The NY Times has separately cited Iranian officials who view the country as being in "survival mode" - amid a week of economic protests driven largely by the impact of US sanctions: currency collapse and soaring prices.

The past two years has seen Hezbollah leadership decimated, Assad removed in Syria, and now Iran-ally Maduro taken out - he's now facing federal charges in a New York court. 

Islamic Republic leadership is fully aware that it remains in a very delicate position:

Ali Gholhaki, a hard-line pundit in Iran, said in a phone interview that the dire state of the economy had played a central role in the downfall of the leaders in both Venezuela and Syria, creating a maelstrom of public discontent and dispirited security forces. “The lesson for Iran is that we must be extremely careful that the same scenario does not happen here,” Mr. Gholhaki said. “When the anti-riot police, security forces and the military are struggling for their livelihood, the defense lines collapse.”

The large-scale internal protests come at the worst possible time, the NY Times continues:

The three officials said that as the protests raged, senior officials in private meetings and conversations had acknowledged that the Islamic Republic had been thrust into survival mode. Officials appear to have few tools at their disposal to deal with either the pressing challenges of a tanking economy fueling unrest or the threat of further conflict with Israel and the United States. President Masoud Pezeshkian has repeatedly said as much publicly in recent weeks, at one point announcing that he had “no ideas” for solving Iran’s many problems.

“Any policy in the society that is unjust is doomed to fail,” Mr. Pezeshkian said in a speech on Thursday, his first public address since the protests began. “Accept that we must listen to the people.”

While at least a dozen people have died amid clashes with police (including at least one security forces member), the ongoing protests still aren't as big as the 2022 wave.

But Iran also has to always be on the lookout for subversion from the outside, as even Israeli media has increasingly acknowledged...

Mossad has long acknowledged that it has many assets inside Iran, and already Israeli officials have expressed that they 'stand with' the Iranian people. Of course, even the protesters themselves are wary of being coopted by outside intelligence. And then there's the professional activists and subversives of the People's Mojahedin Organization of Iran (MEK) - which is believed to frequently coordinate action with the Israelis and Americans.

Tyler Durden Mon, 01/05/2026 - 16:19

US Dept Of War Secures Silver Smelter Deal To Process LatAm Metals

US Dept Of War Secures Silver Smelter Deal To Process LatAm Metals

Authored by GoldFix's Vincent Lanci via ScottsdaleMint.com,

Financed by JPMorgan, Jointly Owned by US DoD

Under the plan, the U.S. Department of Defense will hold a 40% stake in the JPM Financed smelter joint-venture.

GFN – WASHINGTON: Korea Zinc plans a $7.4 billion investment to construct a large-scale non-ferrous metals smelter in Clarksville, Tennessee, a project U.S. officials say will materially expand domestic critical minerals processing capacity and strengthen supply chain security.

Proposed site of the Clarksville, Tennessee smelter

The project, known as the “U.S. Smelter,” is expected to require approximately $6.6 billion in capital expenditures, with total investment reaching $7.4 billion including financing costs. It is being developed in coordination with the U.S. Department of War and the U.S. Department of Commerce, according to project materials and government statements.

Deputy Secretary of War Steve Feinberg said the investment reflects a strategic shift in U.S. industrial and defense priorities.

“President Trump has directed his Administration to prioritize critical minerals as essential to America’s defense and economic security,” Feinberg said.

“The Department of War’s conditional investment of $1.4 billion to build the first U.S.-based zinc smelter and critical minerals processing facility since the 1970s reverses decades of industrial decline. The new smelter in Tennessee creates 750 American jobs and expands access to strategic minerals across aerospace, defense, electronics, and advanced manufacturing.”

Timeline of U.S. metals refining capacity since the 1970s

The Tennessee facility will be the first zinc refinery built in the United States in more than 50 years and will operate as an integrated smelter capable of producing 13 non-ferrous metals. Most of these materials are designated as critical minerals by the U.S. government due to their role in defense production, advanced electronics, and energy systems.

Under the current framework, the Department of War will arrange approximately $2.15 billion in financing alongside private investors. The Department of Commerce will provide $210 million in funding under the CHIPS Act to support domestically sourced equipment, with JPMorgan assisting in structuring the financing.

IEA outlook for global critical minerals demand under STEPS, APS, and NZE scenarios

U.S. officials have described the project as an example of allied cooperation to secure supply chains amid rising competition for strategic resources. Josh Phair, founder and CEO of Scottsdale Mint, said in a recent Yahoo Finance interview, “We’re in a metals war’. and securing supply is crucial now

Secretary of Commerce Howard Lutnick said the investment would expand U.S. production of strategically important minerals.

“Korea Zinc’s critical minerals project in Tennessee is a transformational deal for America,” Lutnick said.

“The United States will produce, in volume, 13 critical and strategic minerals vital to aerospace and defense, semiconductors, AI, quantum computing, autos, industrials, and national security.”

Korea Zinc plans to deploy technical personnel and operational expertise from its Onsan Smelter in Ulsan, South Korea, during early project phases. Onsan is the world’s largest single-site non-ferrous smelting complex and is known for processing low-grade and complex materials, including scrap with high impurity content.

North America’s role in global critical minerals mining and refining

Company officials said transferring this integrated zinc-lead-copper processing capability is intended to reduce commissioning risk and position the Clarksville facility among the most advanced smelters globally. Producing within the United States is also expected to reduce exposure to trade restrictions and logistics disruptions while enabling local sourcing of scrap and raw materials.

Despite government backing, the project has prompted shareholder resistance. An alliance led by MBK Partners and Young Poong has opposed the U.S.-backed joint venture, citing concerns over potential share dilution and governance control. The group has indicated it may seek legal action to block new share issuance.

Korea Zinc shares rose more than 26% following the project announcement before declining by over 13% as shareholder opposition became public.

Once fully operational, the U.S. Smelter is expected to process approximately 1.1 million tons of raw materials annually and produce roughly 540,000 tons of finished products.

Smelter output mapped to U.S. critical minerals list

Planned output includes base metals such as zinc, lead, and copper; precious metals including gold and silver; strategic minerals such as antimony, indium, bismuth, tellurium, cadmium, gallium, germanium, and palladium; and chemical products including sulfuric acid and semiconductor-grade sulfuric acid.

According to project disclosures, 11 of the 13 metals qualify as critical minerals under the 2025 U.S. Geological Survey list. Several, including indium and gallium, are fully import-dependent in the United States.

Site preparation is scheduled to begin in 2026, followed by full construction in 2027.

Phased commercial operations are expected to start in 2029, initially focused on zinc, lead, and copper production.

Clarksville was selected due to existing industrial infrastructure, including Nyrstar’s current zinc smelter, the only operating zinc refinery in the United States. Korea Zinc plans to acquire Nyrstar’s U.S. operations, subject to conditions, dismantle the existing facility, and replace it with a larger, modern plant.

Project planners also cited strong transportation links, favorable site conditions, a skilled local workforce with decades of smelting experience, and relatively low electricity costs, a key factor in smelting economics.

Chairman Yun B. Choi said the project aligns with long-term U.S. and South Korean economic security objectives.

“With its project in the United States, Korea Zinc will strengthen its role as a strategic supplier of essential minerals for aerospace and defense,” Choi said.

“This project will serve as a model for U.S.–ROK economic security cooperation at a time of heightened geopolitical risk.”

GoldFix Analysis: Why the Tennessee Smelter Matters

The Korea Zinc investment fits into a broader pattern across commodities, trade policy, and financial market structure. Recent developments point toward a renewed emphasis on supply security and domestic control over critical industrial inputs.

U.S. policy has increasingly focused on securing domestic processing capacity for materials already designated as critical. Mining location remains relevant, but refining and smelting capacity determines throughput control, resilience under stress, and bargaining leverage. The Tennessee project expands that capacity inside the United States for materials that have largely been processed offshore.

Josh Phair, CEO of Scottsdale Mint has previously linked metals availability to industrial positioning, noting that the rapid build-out of U.S. data centers and infrastructure requires reliable access to physical inputs.

“These data centers that are getting created so fast in the United States, the U.S. has to have it [silver] to protect its position in the world.”

The investment also aligns with policy actions aimed at reducing reliance on China-centered supply chains. Export controls, strategic stockpiling, and industrial subsidies have moved in the same direction. The smelter adds physical infrastructure to that framework, supported by defense and commerce financing and built in cooperation with an allied producer.

The financing structure adds another layer. JPMorgan Chase is involved in arranging financing for the project. Over recent months, JPMorgan has also reduced silver held in COMEX registered inventories and sourced physical metal from Latin America. These actions reflect activity in physical markets where logistics, jurisdiction, and custody increasingly influence procurement decisions.

Why JPMorgan’s 232 Advice Matters

JPMorgan sits at the center of the global silver ecosystem as demonstrated above. Its role as custodian, intermediary, and counterparty across physical markets, derivatives, and sovereign channels places it at the intersection of nearly all meaningful silver flows. Activity associated with JPMorgan therefore carries informational value.

Under Section 232 the United States does not restrict commodities it still needs to accumulate. Tariffs follow supply security, not the other way around.

Once domestic and hemispheric supply chains are deemed sufficient, pricing mechanisms change. Tariffs need not target silver explicitly to reshape its price. Broad commodity measures are enough. But tariffs could come anyway

Because the United States remains the marginal buyer at scale, if it did implement tariffs, its pricing decisions propagate globally. The tariff level becomes the reference price, as sellers rationally seek the highest available bid. JPMorgan is helping the US position itself as self sufficient in metals and at some point, price will rise even further pursuant to rule 232 if it is implemented for Copper (likely) and Silver (perhaps)

Tyler Durden Mon, 01/05/2026 - 15:25

US Mainstream Media Had Prior Knowledge Of Trump's Venezuela Assault But Withheld Coverage

US Mainstream Media Had Prior Knowledge Of Trump's Venezuela Assault But Withheld Coverage

Via The Cradle

The two largest US newspapers learned in advance of the secret US raid to abduct Venezuelan President Nicolas Maduro, but chose not to publish what they knew to avoid endangering US troops, Semafor reported on 4 January, citing two people familiar with the matter.

Despite their hostility toward US President Donald Trump regarding domestic issues, the New York Times (NYT) and Washington Post cooperated with his administration ahead of the operation to attack Venezuela.

via The Associated Press

US forces deployed more than 150 aircraft to eliminate air defenses, clearing the way for helicopters to insert troops who then moved on to President Maduro’s location.

After Maduro and his wife were abducted, President Trump and top administration officials praised the operation, citing both the lack of US casualties and the total secrecy surrounding it, including from the media.

"The coordination, the stealth, the precision, the very long arm of American justice - all on display in the middle of the night," Pentagon chief Pete Hegseth said.

Trump approved the assault at 10:46 pm Friday. Though aware of the decision, the NYT and Washington Post waited several hours before reporting it because the White House had warned that doing so would expose US troops performing the operation to danger.

However, the decision also showed disregard for the lives of Venezuelans.

US airstrikes accompanying the commando operation killed 40 people, including civilians and military personnel, a senior Venezuelan official told the NYT on Saturday.

One strike targeted a three-story civilian apartment complex in Catia La Mar, a poor coastal area just west of the Caracas airport, killing an 80-year-old woman, Rosa González, and seriously wounding a second person.

Following the airstrikes, US President Donald Trump announced that US forces had "captured" Maduro and his wife, also telling reporters that Maduro had “offered everything” to the US, from Venezuelan oil and natural resources to mediation, according to reporters.

Spokespersons for the White House, the Pentagon, and the Washington Post declined to comment on the conversations between journalists and officials Friday night. A NYT spokesperson did not immediately respond to an inquiry.

Tyler Durden Mon, 01/05/2026 - 14:45

Watch: Dems Screeched For Maduro's Ouster... Until Trump Delivered It

Watch: Dems Screeched For Maduro's Ouster... Until Trump Delivered It

Authored by Steve Watson via Modernity.news,

Senate Minority Leader Chuck Schumer is rushing to block President Trump’s successful operation to arrest Venezuelan dictator Nicolás Maduro, labeling it “lawlessness” and a violation of congressional authority—despite Schumer himself and a string of Democrats and their media mouthpieces previously blasting Trump for failing to end the Maduro regime.

With Maduro now in custody and the U.S. overseeing a transition in Venezuela, Democrats have immediately cried foul, with Schumer appearing on ABC’s “This Week” to decry the move as unauthorized nation-building that will cost American lives and dollars.

Schumer declared, “The American people this morning are scratching their heads in wonderment and in fear of what the president has proposed,” adding, “We have learned through years when America tries to do regime change and nation building in this way, the American people pay the price in both blood and in dollars.”

Schumer further accused the Trump administration of bombing civilian sites and vowed to introduce a War Powers Act resolution, co-sponsored with Tim Kaine and Rand Paul, to halt further actions without congressional approval. “If it’s voted positively in both houses, then the president can’t do another thing in Venezuela without the OK of Congress,” Schumer stated.

Yet, this is the same Schumer who, in 2020, ridiculed Trump’s Venezuela policy for not going far enough. In a Senate floor speech, he declared, “The President brags about his Venezuela policy? Give us a break. He hasn’t brought an end to the Maduro regime.”

The contrast couldn’t be starker: back then, Democrats demanded action against the narco-terrorist indicted on drug trafficking charges; now, they defend the status quo to spite Trump.

Democrats and their media allies are suddenly Maduro apologists, despite the fact that during Trump’s first term and beyond, they relentlessly pushed for the dictator’s removal, tying Maduro’s survival to Trump’s alleged weakness.

Watch: Sen. Chris Murphy just last year urging action against Maduro, only to flip and call Trump’s operation to remove him corrupt and unrelated to U.S. security.

Murphy has been beating this drum since 2019. Now suddenly, he’s against it? Clown.

Watch: Sen. Chris Van Hollen echoed the call in 2024, declaring Maduro “absolutely lost the election, is not legitimate, and has to be removed from power.” His about-face now is laughable.

Watch: Rachel Maddow, in September 2024, lumped Maduro with dictators like Putin and Kim Jong Un, saying, “They want no one anywhere to think it is possible let alone desirable to throw a strong man out.” Now, with Trump succeeding where Biden failed, Maddow’s silence speaks volumes.

Leftists and Dems all over MSNBC and CNN repeatedly claimed Maduro’s hold on power proved Trump was “Putin’s puppet,” ignoring how Biden’s policies later empowered the regime.

Flash back to 2019: Bipartisan applause in Congress when Trump recognized Venezuela’s legitimate leader over Maduro. Democrats cheered then; now they whine.

The hypocrisy peaks in Democrats’ past smears portraying Trump as Maduro’s ideological twin, craving the same authoritarian control.

The talking point was relentlessly hammered: Trump supposedly wants to be like Maduro, depriving people of freedom. They insisted Trump praises leaders like Maduro for their iron-fisted rule. Where are they now?

“Fascism expert” Ruth Ben-Ghiat claimed in 2024 that Trump admires Maduro’s deprivation of freedoms. Her “expertise” crumbles now that Trump freed Venezuelans from that very tyranny.

Even Rep. Jamie Raskin joined in last year, demanding the world oppose Maduro’s “right-wing attack on democratic institutions.”

Predictably, Biden’s weakness invited this mess. In 2023, his admin eased sanctions on Venezuela for Maduro’s empty promise of fair elections—which he promptly stole in 2024, arresting opponents and clinging to power.

Then after it became clear what was happening, the Biden administration moved to pave the way for Maduro to be ousted.

This is all about blind opposition to Trump. Democrats would now rather prop up dictators than admit Trump’s policies are working. With Maduro gone, the U.S. secures its borders, cuts off narco-flows, and weakens globalist foes.

Their blatant hypocrisy exposes the Democrats’ terminal case of Trump Derangement Syndrome: they oppose anything Trump does, even if it aligns with their past demands, simply because it’s him doing it and they have no other direction to steer their sinking rat infested husk.

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

Tyler Durden Mon, 01/05/2026 - 14:05

Hegseth Censures Sen. Kelly For Participation In Video Calling On Troops To Defy Orders

Hegseth Censures Sen. Kelly For Participation In Video Calling On Troops To Defy Orders

Defense Secretary Pete Hegseth announced Monday that he will issue a letter of censure to Sen. Mark Kelly (D-Ariz.) over the senator’s participation in a video released in November urging U.S. troops to resist “unlawful orders” made by the president. Sen. Elissa Slotkin and Reps. Chris Deluzio, Maggie Goodlander, Chrissy Houlahan, and Jason Crow, all veterans of the military and intelligence community, also participated in the video.

“We want to speak directly to members of the Military and the Intelligence Community,” Sen. Slotkin said in a post accompanying the video. “The American people need you to stand up for our laws and our Constitution. Don’t give up the ship.”

“Our laws are clear, you can refuse illegal orders,” Kelly and others state in the video, without explaining how the Trump administration had violated the Constitution.

“Six weeks ago, Senator Mark Kelly — and five other members of Congress — released a reckless and seditious video that was clearly intended to undermine good order and military discipline,” Hegseth said in a post on X.

“As a retired Navy Captain who is still receiving a military pension, Captain Kelly knows he is still accountable to military justice. And the Department of War — and the American people — expect justice.”

The Department of War has begun retirement grade determination proceedings under 10 U.S.C. § 1370(f), which could result in a reduction of Kelly’s retired rank and corresponding pay. Hegseth also issued a formal Letter of Censure, citing Kelly’s “reckless misconduct” and placing it permanently in his military personnel file.

“Captain Kelly has been provided notice of the basis for this action and has thirty days to submit a response,” Hegseth explained. “The retirement grade determination process directed by Secretary Hegseth will be completed within forty-five days.”

According to Hegseth, it wasn’t just Kelly’s participation in the video that prompted this censure. “These actions are based on Captain Kelly's public statements from June through December 2025 in which he characterized lawful military operations as illegal and counseled members of the Armed Forces to refuse lawful orders,” Hegseth explained. “This conduct was seditious in nature and violated Articles 133 and 134 of the Uniform Code of Military Justice, to which Captain Kelly remains subject as a retired officer receiving pay.”

He added that “Captain Kelly’s status as a sitting United States Senator does not exempt him from accountability, and further violations could result in further action.”

Even members of the mainstream media acknowledged that Kelly, Slotkin, and the others had implied that President Trump had already issued illegal orders. However, when pressed on this issue by ABC’s Martha Raddatz, Slotkin not only admitted that Trump had never issued any illegal orders, but that she couldn’t define what “illegal orders” meant. 

 “It was basically a warning to say, like, if you’re asked to do something particularly against American citizens, you have the ability to go to your JAG officer and push back,” Slotkin explained to Raddatz.

But that’s not what the members of Congress said in the video. Raddatz called her out for this.

“Couldn’t you have done a video saying just what you just said?” Raddatz asked. “If you are asked to do something—if you are worried about whether it is legal or not—you can do this. It does imply that the president is having illegal orders, which you have not seen.”

Slotkin also admitted that even though she and the other members of Congress who participated in the video told troops to defy “illegal orders” that she couldn’t define what that meant.

“It is very clear that no one should follow an illegal order, but it’s very murky when you look at what is an illegal order.”

Sen. Chuck Schumer (D-N.Y.) responded to the censure by calling Kelly a “hero and a patriot” in a post on X.

“Mark Kelly is a hero and a patriot committed to serving the American people. Pete Hegseth is a lap dog committed to serving one man – Donald Trump,” he claimed. “This is a despicable act of political retribution. I stand with Sen. Kelly, who will always do the right thing no matter the consequences.”

 

Tyler Durden Mon, 01/05/2026 - 13:45

Mamdani's NYC Tenant Czar Called To 'Seize Private Property,' Calls Home Ownership "White Supremacy"

Mamdani's NYC Tenant Czar Called To 'Seize Private Property,' Calls Home Ownership "White Supremacy"

NYC Mayor Zorhan Mamdani's newly appointed tenant advocate called to "seize private property" and called home ownership a "weapon of white supremacy" in several posts on her now-deleted X account.

"Seize private property!" tweeted Cea Weaver on June 13, 2018. 

In another tweet from August 2019, she said "Private property including any kind of ESPECIALLY homeownership is a weapon of white supremacy." 

via archive.is

In December, she pushed to "Elect more communists" while a street in Harlem was being renamed after former communist Rep. Vito Marchantonio of Manhattan. 

In May of 2020 she slammed law enforcement following the death of George Floyd, writing "The Police Are Just People The State Sanctions To Murder W[ith] Immunity." 

Weaver is a member of the Democratic Socialists of America, and was formerly a campaign coordinator for Housing Justice For All before serving as an adviser to Mamdani's campaign last year, the NY Post reports.

In 2019 she lobbied the state's Democratic-run legislature to tighten the city's rent stabilization laws, which one major property told the Post was misguided. 

"Without landlords how to do you build and maintain housing? You think the government is going to do it? Look at NYCHA [New York City Housing Authority complexes]," said Humberto Lopes, founder and CEO of the Gotham Housing Alliance.

"You put a system in place to destroy landlords. Why are you shitting on us?"

Tyler Durden Mon, 01/05/2026 - 13:05

Social Security Will Be Insolvent In Six Years. What's Congress Going To Do?

Social Security Will Be Insolvent In Six Years. What's Congress Going To Do?

Authored by Mike Shedlock via MishTalk.com,

Congress last made major Social Security changes 43 years ago...

The Wall Street Journal reports The Next Class of Senators Won’t Be Able to Dodge the Social Security Crunch

After years of Congress sidestepping and postponing the issue, the lawmakers will have to confront the program’s challenges before their new six-year terms conclude. Recent projections pegged late 2032 as the moment when Social Security’s reserves and incoming tax revenue won’t yield enough money to pay full benefits.

Failure to act would trigger automatic benefit cuts. Acting is no picnic either, because raising revenue or reducing promised payments could be politically painful.

The math is brutal for the program known for many years as the third rail of American politics. Social Security owes lifetime benefits to the huge generation of baby boomers who are already retired or almost there. That commitment locks in costs that are virtually impossible to dislodge and puts younger workers and future retirees on course for tax increases, benefit reductions or both.

Congress last made major Social Security changes 43 years ago in a less partisan Washington, staving off insolvency with just months to spare by adopting tax increases and benefit cuts intended to make the program last 75 years. Since then, Americans have been bracing for more changes, with polls showing many doubt they will get their full checks.

Sen. Lindsey Graham (R., S.C.), seeking his fifth term this year, said the 1983 agreement between Republican President Ronald Reagan and Democratic House Speaker Tip O’Neill is the model. 

“I’m willing to do my part,” Graham said. “You’ve got to look at age adjustments, you know, means-testing benefits. You’ve got to put it all on the table.” Asked about taxes, he repeated: “All on the table.”

President Trump has repeatedly ruled out Social Security benefit cuts, breaking from many Republicans’ openness to the idea. The debate has been mostly dormant for a decade, and the program now requires larger changes to preserve solvency because smaller options that accumulate over time no longer yield enough money.

Huge program runs short

Congress and Democratic President Franklin Roosevelt created Social Security during the Great Depression to prevent poverty among older Americans; it is now the largest federal program. In the latest fiscal year, the U.S. paid $1.6 trillion in Social Security benefits, which is 22% of federal spending and almost double the military budget.

Social Security is funded largely with payroll taxes split between workers and employers. People receive payments after retiring or becoming disabled, getting amounts linked to their earnings history. The program also pays survivor benefits to spouses and children of workers who die. The average monthly retiree payment is about $2,000.

Tax increases and benefit cuts?

Social Security is excluded from the simple-majority budget process Congress used for recent partisan fiscal laws such Trump’s tax cuts, meaning any bill would require 60 votes in the Senate. Any durable bipartisan solution will likely have tax increases and cuts to future payouts.

There is no shortage of ideas. On the tax side, the prime target is the cap on the 12.4% payroll tax. Currently, wages and self-employment income above $184,500 are exempt from the tax, with the figure rising annually with inflation. That tax now covers about 83% of earnings, down from about 90% just after the 1983 changes.

Just eliminating the cap would cut Social Security’s long-run deficits in half. Taxing earnings above $250,000 and tying no new benefits to those earnings would remove about two-thirds of the shortfall, but that approach would change Social Security’s basic architecture that links taxes paid with benefits earned. Both options would sharply raise top marginal tax rates.

Raising the cap and devoting the money to Social Security is probably one of the few palatable ways Congress could get significant revenue from high earners outside the top 1%, said Kathleen Romig, director of Social Security and disability policy at the progressive Center on Budget and Policy Priorities

On the benefit side, the system is progressive, replacing a greater share of income for workers with lower lifetime earnings than higher earners. Lawmakers trying to protect people who rely on Social Security as their main income source could alter calculations so higher earners get less money than under current rules. 

“It makes sense to rethink what the benefit formula looks like,” Romig said, especially because higher-income retirees likely have significant savings in 401(k)-style plans.

Lawmakers could also increase the basic retirement age. The 1983 changes pushed that to 67 from 65. Romina Boccia, director of budget and entitlement policy at the libertarian Cato Institute, said she would keep that going up to 70, then link the retirement age to longevity.

Other ideas are out there too. Sen. Bill Cassidy (R., La.) is pitching a $1.5 trillion sovereign-wealth fund. General revenue would pay Social Security benefits for the next 75 years, then the new fund would reimburse those costs. 

“Let’s get it done before it is too late,” said Cassidy, who is running for his third term.

Amid concerns about solvency, some Democrats have proposed minimum benefit increases. Warner said one possibility could be raising benefits for the bottom 20% of workers. That could be a political sweetener for any deal—but it would require more money that needed to simply make the fund solvent.

Sen. Jeff Merkley (D., Ore.), who is running for a fourth term this year, has co-sponsored a bill from Sen. Bernie Sanders (I., Vt.) that would increase minimum benefits and expand the payroll tax to cover high earners and investment income. In his town halls, Merkley said, raising the tax cap is particularly popular.

“We will solve this problem because it has to be solved,” Merkley said. “Even if it is in the ugliest possible fashion at the last second, it will be solved.”

Social Security Fairness Act

Instead of reforming Social Security to make it more solvent, this Congress made Social Security less solvent by extending benefits to the least deserving, that being public unions.

The bill was inappropriately named the Social Security Fairness Act. Cynics may suggest the name was perfect on grounds bills generally do the opposite of their name.

CATO discusses What the Social Security Fairness Act Tells Us About the Likely Future of Social Security Reform

Passing the so-called Social Security Fairness Act sends a clear message about how Washington approaches Social Security reform—and it’s a disturbing one. Congress and President Biden have chosen to ignore all expert advice, cater to organized special interest groups, and burden younger taxpayers with increasingly unaffordable costs.

Instead of sensible policy reforms that better align Social Security benefits with the ability of workers to pay for them, Congress will want to take the path of least resistance. Without significant public pressure to do the right thing, expect a multi-trillion-dollar general revenue transfer (meaning added borrowing) come trust fund depletion, and perhaps superficial fixes like the federal government borrowing money today to ‘invest’ to generate revenue from speculative gains tomorrow.

The Social Security Fairness Act increases the program’s financing gap yet further. Funding this policy with additional payroll taxes would burden 180 million workers with an additional $68 in annual taxes to fund higher benefits for 3 million public sector workers and their spouses by unfairly manipulating the Social Security benefit formula to their advantage. This is a textbook example of Mancur Olson’s theory of collective action, where small, concentrated groups secure disproportionate benefits at the expense of a diffuse majority.

The repeal of the Windfall Elimination Provision and Government Pension Offset creates outsized benefits for workers who had significant earnings that were exempt from payroll taxes compared to those who paid Social Security taxes over their entire careers. For example, economist Larry Kotlikoff highlights a schoolteacher whose lifetime benefits will soar by $830,625 (!) under this law, with her annual retirement benefit more than doubling and her widow’s benefit nearly tripling.

Congressional Republicans’ support for this expensive change likely stems from a political calculation. For a long time, backing the bill seemed like a low-cost way to curry favor with police and firefighter unions, key constituents in many members’ voter base without serious worry that the bill would pass. It took 24 years from when a version of the Social Security Fairness Act was first introduced in 2001 (with a congressional hearing held in 2003) to it being signed by President Biden on January 5, 2025. 

The Wall Street Journal suggests the timing—a post-election passage—points to a political payoff for groups like the International Association of Fire Fighters, which lobbied heavily for the measure and declined to endorse Kamala Harris for president (after endorsing Joe Biden in 2020).

If Congress can’t say no to popular and shortsighted benefit increases, how will it tackle the tougher job of making Social Security long-term solvent? The sad truth is that politicians probably won’t even try—at least not until the crisis is too close to ignore.

It’s easy to blame Biden for this but Republicans had to go along or the unfairness act would never would have cleared the Senate.

And as for doing something now, Trump does not want to do anything.

What Will Happen?

A strong possibility is free money. By that I mean no changes other than to guarantee benefits without raising revenue.

Don’t worry. CATO reports the cost would only be $25 trillion over the next 75 years—after taxpayers have repaid the payroll tax surpluses that previous Congress squandered, with interest.

Basically, Congress would simply tell the Treasury to keep selling bonds to finance Social Security benefits, even after the so-called trust fund is depleted.

US Population 2010 vs 2024

US Population in 2010 and 2024. Data from Population Pyramid, chart by Mish.

Lasting Until 2032 is Optimistic

Nobody has factored in recession and the accompanying reduction in FICA tax collection.

Insolvency in 5 years would not at all be surprising.

Tyler Durden Mon, 01/05/2026 - 12:45

The 2025 Tax Game-Changer: What Retirees Need To Know Now

The 2025 Tax Game-Changer: What Retirees Need To Know Now

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

Usually, tax laws are tweaked as we enter a new year. However, 2025 isn’t just another tax year for retirees; it’s expected to be among the most consequential in recent history.

Inna Kot/Shutterstock

As a result of new legislation, such as the One Big Beautiful Bill Act (OBBBA), and continuing changes from the SECURE 2.0 Act (SECURE refers to Setting Every Community Up for Retirement Enhancement.), these updates will present both opportunities and challenges. While some retirees will enjoy extra relief, others may need to adjust their financial strategy.

Understanding how these new rules will affect you is essential if you live on a fixed income, manage your retirement savings, or plan your legacy. As such, to achieve a secure and confident retirement, your planning must be informed.

With that said, here are the biggest 2025 tax changes—and what they mean for retirees.

The Big Headline: A New $6,000 ‘Bonus’ Deduction for Seniors

Easily one of the most talked-about changes for 2025 is a new deduction specifically for seniors.

In addition to existing deductions, anyone 65 or older will be able to claim an additional $6,000 deduction in 2025. For married couples at least 65 years of age, that amount can be doubled to $12,000.

So, who qualifies? You can take this “bonus” deduction even if you itemize your deductions or take the standard deduction. It is, however, phased out at higher income levels:

  • Single filers. When modified adjusted gross income (MAGI) reaches $75,000, it gradually phases out until it disappears at $175,000.

  • Married filing jointly. The starting point is $150,000, with a maximum of $250,000.

Since this deduction stacks with the existing senior and standard deductions, retirees can lower their taxable income and possibly eliminate their federal tax liability.

A quick example:

Say you’re over 65 and a single filer. If you qualify, you may be eligible for:

  • Standard deduction: $15,750

  • Age 65+ addition: $1,750 (approx.)

  • New senior “bonus” deduction: $6,000

  • Total: More than $23,500 in deductions.

In a married couple with both spouses over 65, that amount can be $46,000, which moves many retirees into the zero-tax bracket, mainly if they rely primarily on Social Security and modest individual retirement account (IRA) withdrawals.

(Note: This new deduction is temporary and currently set to expire after the 2028 tax year.)

Income Tax Brackets and Rates: Stability at Last

Although deductions are rising, tax rates are also improving. In the new tax system, seven tax brackets will be permanent: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.

In other words, retirees will be able to plan long-term with greater security, since there will be no sudden hikes or sunset provisions in 2026.

Bonus tip: With today’s tax rates still relatively low, 2025 may be a good time to consider a Roth conversion. By converting pre-tax traditional IRA or 401(k) funds to Roth accounts, you will pay taxes at today’s rates and then withdraw those funds tax-free in the future. By making this move, you can hedge against future tax increases or the eventual expiration of that senior “bonus” deduction.

Itemized Deductions: A SALT Cap Adjustment

Furthermore, the OBBBA temporarily increases the limit on state and local tax deductions (SALT) from $10,000 to $40,000 through 2029. By itemizing again rather than taking the standard deduction, many retirees can reap significant benefits.

Here’s how it works:

Higher SALT Cap

From 2025 to 2029, you can deduct up to $40,000 in state and local taxes—$20,000 if married and filing separately. And in 2030, the $10,000 limit will return.

Income Phaseout

  • The full $40,000 deduction applies if your MAGI is under $500,000.

  • An annual MAGI of $500,000–$600,000 will be phased out by 30¢ per dollar.

  • The MAGI cap will again be set at $10,000 when the MAGI exceeds $600,000.

  • Through 2029, these thresholds will rise by 1 percent per year.

Whether you itemize or not, retirees aged 65+ can claim an additional $6,000 deduction per person (2025-2028), which is not subject to the SALT cap. It is possible for a couple with both spouses over 65 to claim an extra $12,000 in deductions.

Additionally, this phase-out begins at $75,000 MAGI (single) and $150,000 (joint).

That’s a lot to take in. To help you plan for the year 2025, here are a few tax planning tips:

  • In addition to any senior deductions, compare your total itemized deductions (with the higher SALT limit) against the $31,500 standard deduction for married couples.

  • To maximize your deduction for 2025, consider prepaying your 2026 property taxes before the end of the year.

  • When approaching phaseout levels or planning Roth conversions, be sure to manage your MAGI carefully.

  • Due to AMT rules, SALT deductions are not applicable.

The SECURE 2.0 Act: Big Retirement Account Updates

Several key provisions of the SECURE 2.0 Act take effect in 2025, reshaping how retirees and near-retirees can save, give, and plan for income in later life.

‘Super’ Catch-Up Contributions (Ages 60–63)

There’s a powerful new savings boost coming to people between 60 and 63 in 2025. By introducing “super” catch-up contributions, the limit on annual catch-up contributions is raised to $10,000 or 150 percent of the standard catch-up amount. According to the 2024 limits, that’s $11,250.

By doing so, older workers can maximize savings during their final years of employment before retirement. Starting in 2026, the $10,000 base will be adjusted for inflation.

Expanded Qualified Charitable Distributions (QCDs)

For those who are 70½ and older, QCDs remain the most tax-efficient way to give. In 2025, you’ll be able to donate up to $108,000 (indexed) directly from your IRA to qualified charities—satisfying your required minimum distribution and avoiding taxes as well.

In addition, higher-income retirees can contribute a one-time $54,000 QCD to a charitable remainder trust or gift annuity, giving them more flexibility to support causes they care about while maintaining their income.

More Flexibility for Qualified Longevity Annuity Contracts (QLACs)

QLACs, which provide guaranteed income later in life, now have higher limits and fewer restrictions. In addition to the increase in maximum premiums (indexed), the old rule capping contributions at 25 percent is no longer in effect, allowing retirees to receive a higher level of guaranteed lifetime income.

Other Key 2025 Updates

Here are some other updates to keep on your radar.

Social Security Cost of Living Adjustment (COLA)

It’s estimated that in 2025, COLA will be around 2.5 percent, adding modestly to beneficiaries’ incomes.

However, higher benefits may cause an increase in your provisional income, resulting in a higher tax rate—up to 85 percent. As a result, deductions like the new $6,000 senior bonus are more valuable.

Estate Tax Exemption

In 2026, the OBBBA will permanently increase the federal estate tax exclusion to $15 million per individual, from $13.99 million. Combined, this amounts to $30 million in exclusions for married couples.

As a result of this law, the higher exclusion amount established by the 2017 Tax Cuts and Jobs Act (TCJA) will not expire.

Ultimately, retirees with high net worth should consider major gifts or estate transfers now before today’s limits expire.

The Bottom Line: Plan Your 2025 Pivot

It’s a mixed bag for retirees in 2025, with some big breaks and some ticking clocks.

Here are some tips for making the most of these opportunities:

  • Recalculate your deductions. Determine how much income you can shield from taxes by adding up your standard, age-based, and “bonus” deductions.

  • Review Roth conversions. Prevent future increases in tax rates by locking in today’s historically low rates.

  • Max out catch-up contributions. Use the new $11,250 catch-up limit if you’re 60–63 and still working.

  • Use QCDs wisely. By distributing your IRA funds to charities, you can reduce your taxable income and support a cause you believe in.

With these changes in place in 2025, you will be able to benefit from greater flexibility and security in your retirement plan.

The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.

Tyler Durden Mon, 01/05/2026 - 12:05

China-Bound 'Dark' Crude Tankers Make It Out Of Venezuelan Waters

China-Bound 'Dark' Crude Tankers Make It Out Of Venezuelan Waters

There's a continued microscope on Caracas, and world media is also currently heavily focused on New York City where forcibly deposed President Nicolas Maduro is appearing Monday before a federal court.

But amid all the fast-moving developments, about a dozen tankers loaded with Venezuelan crude and fuel have 'snuck out' of Venezuelan waters in recent days, reportedly in dark mode - or with tracking transponders off.

Illustrative file image

Reuters says that all of the vessels are under US sanctions, with the publication pointing out that "The departures could be a relief for Venezuela's state-run oil company PDVSA, which had accumulated a very large inventory of floating storage amid the U.S. blockade, begun last month, dragging the country's oil exports to a standstill."

The 'rogue' tankers and their being able to evade the US naval blockade were first flagged by maritime monitor TankerTrackers.com:

At least four of the departed tankers left Venezuelan waters through a route north of Margarita Island after briefly stopping near the country's maritime border, TankerTrackers.com said, after identifying the vessels is satellite images.

A source with knowledge of the departures' paperwork told Reuters that at least four supertankers had been cleared by Venezuelan authorities in recent days to leave Venezuelan waters in dark mode.

There's been some degree of confusion related to the possibility that with Maduro now having been removed from power and in US custody, Washington might have altered or revised its full force "oil embargo" on Venezuela. 

But this means that these some dozen tankers will be offloaded to the Latin American country's largest customers, foremost among them China.

With Maduro out, has there indeed been a quick shift in US posture?

For now, China's impacted Venezuelan imports will be cushioned by the significant amount of tankers still at sea, per fresh reporting from Bloomberg:

"The loss of Venezuelan barrels hurts teapots the most," said Michal Meidan, director of the China Energy Program at the Oxford Institute for Energy Studies. They account for roughly half of China’s imports from the South American nation, with state-owned firms taking about a third, and bigger independent refineries buying only limited volumes, she said. 

While the future of Venezuela and its oil sector is still very murky, a hoard of sanctioned crude in floating storage will cushion Chinese buyers in the coming months. Almost 82 million barrels is currently on tankers in waters off China and Malaysia, according to data intelligence firm Kpler. More than a quarter is Venezuelan and the rest is Iranian, it said. 

Also, on Monday there are reports of US-bound oil as well, with a Chevron-chartered vessel carrying Venezuela crude currently en route to the US Gulf coast, shipping data shows.

Tyler Durden Mon, 01/05/2026 - 11:25

$8,500 Gold And Other 2026 Sound Money Predictions

$8,500 Gold And Other 2026 Sound Money Predictions

 Submitted by QTR's Fringe Finance

My buddy Larry Lepard (whose gold fund was up over 150% last year) joined me today to unpack the current macro environment — from Bitcoin’s volatility and gold’s historic breakout to what may be the most important question of the decade: is the global monetary system on the brink of a reset?

Bitcoin vs. Gold: Sound Money in Two Different Gears

The discussion opened settling an argument Larry and I were having on X the other day, when he took exception with me comparing Peter Schiff’s EPGIX to Saylor’s MSTR on a year-to-date basis at EOY 2025.

That went into an exchange over Bitcoin’s recent underperformance versus gold. While acknowledging Bitcoin’s painful drawdowns, Lepard stressed that the asset’s long-term thesis remains intact:

“Bitcoin has good years, exceptionally good years, and really awful years… that’s exactly what you expect from a new network that’s still being adopted.”

He framed Bitcoin and gold as complementary forms of sound money — gold thriving in crisis and uncertainty, while Bitcoin responds more to liquidity and risk-on conditions. Importantly, he warned new investors about Bitcoin’s extreme volatility and the necessity of proper position sizing:

“Buy an amount where if it went down, your first instinct would be to say ‘it’s cheap, I should buy more,’ not ‘I made a mistake.’”

Gold and Silver: A Structural Shift Underway

Lepard believes the surge in precious metals is not merely speculative but reflects deep structural changes in global finance. Tight physical supply, de-dollarization, and rising distrust in government finances are converging:

“We are in the first or second inning of a nine-inning game… this is a secular trend.”

With silver breaking multi-decade resistance and physical premiums emerging across global markets, Lepard argued these moves signal a fundamental repricing of monetary assets rather than a temporary blow-off.

The Bond Market: The Real Fault Line

One of the most sobering segments of the discussion centered on the bond market. Lepard outlined a scenario where persistently negative real yields eventually force the Federal Reserve into full-scale yield-curve control — triggering an inflationary shock far larger than anything seen during COVID:

“If the bond market revolts and the Fed caps yields… the inflation that comes out of that will blow your socks off.”

In his view, the long end of the bond market is structurally broken, and the consequences for currencies and asset pricing are enormous.

Are We Heading for a Monetary Reset?

Perhaps the most important question of the interview: is the U.S. already preparing for a reset of the global monetary system?

Lepard pointed to mounting evidence — including growing official interest in gold-linked instruments, shifting geopolitical alignments, and rising distrust in fiat currencies — suggesting that such a reset is at least being discussed at the highest levels of government.

“They know the system is broken… and if inflation continues, the political cover for a reset may finally exist.”

What This Means for Investors

The core takeaway from the conversation was clear: we are entering a period of profound financial transition. Inflation, debt, and monetary mismanagement are colliding, and traditional portfolios are not positioned for what’s coming.

Lepard’s conclusion was simple and direct:

“Protect yourself in things they can’t print — gold, silver, Bitcoin, and real assets.”

As always, the full interview offers far more depth and nuance, but one thing is certain: the world is changing, and the era of sound money is no longer theoretical — it’s unfolding in real time.

WATCH THE FULL ONE HOUR INTERVIEW HERE

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

Tyler Durden Mon, 01/05/2026 - 11:05

Key Events This Week: JOLTS And Jobs

Key Events This Week: JOLTS And Jobs

While all eyes will be on geopolitical developments, whether in Venezuela or Iran, as speculation erupts that a Trump "intervention" here is next, or even Taiwan, there also are quite a few macro events this week, and the main highlight will be the US jobs report for December on Friday. That’s an important one because there’s been more weakness in the labor market over recent months, with the unemployment rate rising to a 4-year high of 4.6% in November. As DB's Jim Reid writes this morning, the deterioration in the labor market is why the Fed has delivered 3 consecutive rate cuts since their September meeting, and futures are still pricing in a 53% chance of another cut by the March meeting. So investors still think a Q1 rate cut is in the balance, and Friday’s report will go some way to determining if that happens. In terms of what to expect, DB economists think that nonfarm payrolls will rise by +50k in December, with the unemployment rate declining a tenth to 4.5%.

Over in Europe, the main highlight will be the flash CPI prints for December, with Germany and France reporting on Tuesday, ahead of the Euro Area-wide print on Wednesday. This isn’t a print expected to have too many implications for near-term ECB policy, with markets expecting them to keep rates on hold for the rest of the year. However, headline inflation is expected to fall below the 2% target early this year, largely driven by energy base effects.

DB economists think that if the decline for headline inflation is large enough, that could spill over to weaken core and inflation expectations too, which would lower the bar for further policy easing.  So that’ll be a key theme for H1. In terms of this print for December though, our economists expect Euro Area headline inflation to fall back to +2.0% thanks to those falling energy prices, down from +2.1% in November. And for core CPI, they expect that to remain at +2.4%.

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

Monday January 5

  • Data: US December ISM index, total vehicle sales, China December services PMI, UK November net consumer credit, M4, Japan December monetary base

Tuesday January 6

  • Data: UK December official reserves changes, new car registrations, Germany December CPI, France December CPI, Italy December services PMI
  • Central banks: Fed’s Barkin speaks, ECB’s Villeroy and Cipollone speak

Wednesday January 7

  • Data: US December ADP report, ISM services, November JOLTS report, October factory orders, China December foreign reserves, UK December construction PMI, Japan November labor cash earnings, Germany November retail sales, December construction PMI, unemployment claims rate, France December consumer confidence, Italy December CPI, Eurozone December CPI, Australia November CPI

Thursday January 8

  • Data: US Q3 nonfarm productivity, unit labor costs, December NY Fed 1-yr inflation expectations, November consumer credit, October trade balance, wholesale trade sales, initial jobless claims, Japan December consumer confidence index, November household spending, Germany November factory orders, France November trade balance, current account balance, Italy November unemployment rate, Eurozone December economic confidence, November PPI, unemployment rate, Canada October international merchandise trade, Switzerland December CPI, Sweden December CPI
  • Central banks: ECB November consumer expectations survey

Friday January 9

  • Data: US December jobs report, January University of Michigan survey, October building permits, housing starts, China December CPI, PPI, Japan November leading index, November coincident index, Germany November industrial production, trade balance, France November consumer spending, industrial production, Italy November retail sales, Eurozone November retail sales, Canada December labour force survey, Norway December CPI
  • Central banks: Fed’s Barkin speaks, ECB’s Lane speaks

Finally, looking at just the US, Goldman writes that the key economic data releases this week are the November JOLTS job openings report on Wednesday and the December employment report on Friday. There are two speaking engagements by Richmond Fed President Barkin this week. 

Monday, January 5 

  • 10:00 AM ISM manufacturing index, December (GS 48.0, consensus 48.4, last 48.2): We estimate that the ISM manufacturing index edged down by 0.2pt to 48.0 in December, reflecting the decline in our manufacturing survey tracker (-1.6pt to 49.9).
  • 05:00 PM Lightweight motor vehicle sales, December (GS 15.8mn, consensus 15.6mn, last 15.6mn)

Tuesday, January 6 

  • 08:00 AM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will deliver a speech on the economic outlook and monetary policy at the Economic Forecast 2026 conference held by the Raleigh Chamber of Commerce in Raleigh, North Carolina. Speech text is expected.
  • 09:45 AM S&P Global Services PMI, December final (consensus 52.9, last 52.9)

Wednesday, January 7 

  • 08:15 AM ADP employment change, December (GS +55k, consensus +48k, last -32k)
  • 10:00 AM ISM services index, December (GS 52.0, consensus 52.3, last 52.6): We estimate that the ISM services index declined 0.6pt to 52.0 in December, reflecting sequential softening in our non-manufacturing survey tracker (-0.7pt to 52.2).
  • 10:00 AM JOLTS job openings, November (GS 7,600k, consensus 7,715k, last 7,670k)
  • 10:00 AM Factory orders, October (GS -1.4%, consensus -1.0%, last +0.2%); Durable goods orders, October final (GS -2.2%, consensus -2.2%, last -2.2%); Durable goods orders ex-transportation, October final (consensus +0.2%, last +0.2%); Core capital goods orders, October final (consensus +0.5%, last +0.5%); Core capital goods shipments, October final (last +0.7%)

Thursday, January 8 

  • 08:30 AM Nonfarm productivity, Q3 preliminary (GS +4.3%, consensus +3.8%, last +3.3%); Unit labor costs, Q3 preliminary (GS -0.2%, consensus +0.5%, last +1.0%)
  • 08:30 AM Initial jobless claims, week ended January 3 (GS 220k, consensus 220k, last 199k); Continuing jobless claims, week ended December 27 (last 1,866k)
  • 08:30 AM Trade balance, October (GS -$52.0bn, consensus -$58.4bn, last -$52.8bn)  

Friday, January 9 

  • 08:30 AM Nonfarm payroll employment, December (GS +70k, consensus +55k, last +64k); Private payroll employment, December (GS +75k, consensus +50k, last +69k); Average hourly earnings (MoM), December (GS +0.25%, consensus +0.3%, last +0.1%); Unemployment rate, December (GS 4.5%, consensus 4.5%, last 4.6%)
  • We estimate nonfarm payrolls increased 70k in December. On the positive side, big data indicators indicated a moderate pace of private sector job growth. On the negative side, we expect a 5k decline in government payrolls—reflecting a 5k decline in federal government payrolls and unchanged state and local government payrolls—and sequentially slower construction employment growth after an outsized increase the prior month and unusually poor weather early in the survey period. We estimate that the unemployment rate edged down to 4.5% in December from 4.6% in November: the bar for rounding down to 4.5% is not high from an unrounded 4.56% in November, continuing claims have declined slightly, and the furloughed federal workers that likely contributed to the spike in workers on temporary layoff (+171k in November vs. September) and unemployed government workers (+193k, SA by GS) that explained most of the increase in overall unemployment in November would have returned to work. We estimate average hourly earnings rose 0.25% month-over-month in December, reflecting negative calendar effects.
  • 08:30 AM Housing starts, October (GS +1.0%, consensus +1.4%, last -8.5% [August]); Housing starts, September (GS +0.3%) 
  • 10:00 AM University of Michigan consumer sentiment, January preliminary (GS 54.1, consensus 53.4, last 52.9): University of Michigan 5-10-year inflation expectations, January preliminary (GS 3.3%, last 3.2%)
  • 01:35 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will deliver a speech on the economic outlook at the Maryland Bankers Association First Friday Economic Outlook Forum in Baltimore, Maryland. Speech text is expected.

Source: DB, Goldman

Tyler Durden Mon, 01/05/2026 - 10:55

US Manufacturing Sector Ends 2026 At Weakest In Over A Year

US Manufacturing Sector Ends 2026 At Weakest In Over A Year

The US Manufacturing sector ended 2026 on a down-note as yet another 'soft' survey data disappointed with ISM reporting at 47.9 (below the 48.4 expected) - the 10th consecutive month below 50 (contraction)...

Source: Bloomberg

Despite strong 'hard' data, that is the weakest print for ISM Manufacturing since Oct 2024.

The decline in the measure reflected producers drawing down their raw materials inventories at the fastest rate since October 2024. That indicates many firms are relying on existing stockpiles to satisfy tepid demand.

Plus, materials costs remain elevated.

The ISM prices-paid index, which held at 58.5 last month, is 6 points higher than it was at the end of 2024.

New orders contracted for a fourth month and export bookings remained weak, based on the ISM data. Headcount shrank for an eleventh straight month, albeit at a slower pace, amid modest production growth.

The ISM's gauge of imports shrank to a seven-month low, while supplier delivery times slowed and order backlogs continued to shrink.

Respondents remain focused on the 't' word...

“Morale is very low across manufacturing in general. The cost of living is very high, and component costs are increasing with folks citing tariffs and other price increases. It’s cold in our area of the country, absenteeism is worse around the holidays, and sales were lower than we expected for November. So, things look a bit bleak overall.” [Electrical Equipment, Appliances & Components]

“2025 revenue was down 17 percent due to tariffs. The lost revenue has inhibited our ability to offer bonuses to employees or create and hire for new positions.” [Miscellaneous Manufacturing]

“Things are quieter regarding tariffs, but prices for all products remain higher. Our costs have increased, so we have increased prices for our customers to compensate. Margins have deteriorated, as full pass through (of cost increases) is not possible.” [Computer & Electronic Products]

"Winding up the year with mixed results. It has not been a great year. We have had some success holding the line on costs; however, real consumer spending is down and tariffs are ultimately to blame. I hope for some return to free trade, which is what consumers have ‘voted for’ with their spending." [Chemical Products]

"Trough conditions continue: depressed business activity, some seasonal but largely impacted by customer issues due to interest rates, tariffs, low oil commodity pricing and limited housing starts." [Machinery]

But looking ahead, abating tariff uncertainty and the passage of the One Big Beautiful Bill Act are anticipated to offer a tailwind to capital expenditures this year.

Will the soft data catch up to the hard data? Or vice versa?

Tyler Durden Mon, 01/05/2026 - 10:06

Iran Protest Deaths Rise As Trump Warns Tehran It Could "Get Hit Very Hard" By US

Iran Protest Deaths Rise As Trump Warns Tehran It Could "Get Hit Very Hard" By US

Over the weekend as the world watched Trump's Venezuela intervention unfold, the Iran protests reached a full week. While AFP and others have reported in some locales clashes between demonstrators and police, which have after entering day nine have left 12 people dead, including members of security forces, it is clear that this wave of largely economic-driven protests have yet to reach the size of the 2022 'anti-hijab' protests.

Protests have hit 26 of Iran's 31 provinces, leading to around 1,000 arrests - and there have been some signs of the usual mayhem: in some instances cars or buildings burned, governors' offices broken into, and sporadic reports of live fire. Still mainstream Western press has admitted the following in reference to the prior 2022 'anti-hijab' protests: "While smaller in scale, the latest protests pose a fresh challenge to the 86-year-old Supreme Leader Ayatollah Ali Khamenei, following a brief war with Israel in June that damaged nuclear facilities."

Deutsche Welle cites Norway-based rights groups Hengaw and Iran Human Rights who newly report that four Kurdish protesters were killed on Saturday in Malekshahi county (in Ilam province), with dozens more injured.

Screengrab: AFP

Iranian media has been focused on the killing of at least one member of the security forces by "rioters" - and details surrounding the deaths and injuries of other protesters remain murky. While there have clearly been some isolated instances of violence, it must be remembered that the Islamic Republic is geographically large for the region and has 90+ million people.

The lingering big question of whether the protests will be sustained or spread, amid a collapsing currency and soaring prices, has not stopped President Trump from reiterating tough threats directed at Tehran leaders. He told reporters aboard Air Force One that Iran will get "hit very hard" by the United States if further protesters were killed.

"We’re watching it very closely. If they start killing people like they have in the past, I think they're going to get hit very hard by the United States," he said without providing further details.

This time, the warning hinted more strongly in the direction of a military response, after last week he said something similar but somewhat vague - that he would come to the protesters "rescue" if they start being killed. Big on everyone's mind following Venezuelan President Maduro's capture is: will Iran be next?

There's little question that Israel's Netanyahu hopes so, after reports that in last month's Mar-a-Lago meeting, the Israeli prime minister lobbied Trump to go after Iran's ballistic missile program. For this reason and others, Tehran authorities continue to allege a foreign hidden hand which seeks to exploit the current crisis.

Iran's head of the judiciary has released a fresh statement warning of no leniency to "rioters" while saying that peaceful individuals have a right to air their grievances in public.

"I instruct the attorney general and prosecutors across the country to act in accordance with the law and with resolve against the rioters and those who support them… and to show no leniency or indulgence," Gholamhossein Mohseni Ejei was cited in the judiciary's Mizan news agency as saying.

At the same time authorities have cast a cloud of suspicion over the protests, linking them to the US and Israel:

Spokesperson Esmail Baghaei said statements by some American and Israeli officials amounted to interference in Iran’s internal affairs and incitement to violence under international norms and rejected what he described as foreign efforts to present themselves as supportive of the Iranian public.

"Actions or statements by figures such as the Israeli prime minister or certain radical and hardline US officials regarding Iran’s internal affairs amount, under international norms, to nothing more than incitement to violence, terrorism, and killing."

But interestingly this type of 'foreign influence' accusation has been somewhat softened (compared to in prior waves of protests that rocked Iran) - perhaps given Iranian leaders' fearing more backlash from Trump. 

After all, they have have watched Maduro get taken out of power (and whisked out of the country) by the US in rapid fashion, and have to be careful not to provoke Washington.

* * *

Hawks now salivating over regime change options in Iran?...

Tyler Durden Mon, 01/05/2026 - 09:45

The "Don-Roe Doctrine" Has Already Set The Tone For 2026

The "Don-Roe Doctrine" Has Already Set The Tone For 2026

By Bas van Geffen, Senior Macro Strategist at Rabobank

Happy New Year! Brace yourselves, we’re in for a rough ride.

In our last Monthly Outlook for 2025, we looked ahead to this year. We warned that it would be foolish to assume that this year would be any calmer. President Trump wasted no time to make that prediction accurate.

You will undoubtedly have seen the headlines. This weekend, President Trump launched a military operation in Venezuela and in a matter of hours, Venezuelan President Maduro was in US custody. He faces charges for “pushing drugs into the United States.”

It is the first time the US moves to oust a Latin American leader since Bush moved against Noriega in 1989. Coincidentally, the Panamanian leader was also wanted for drug trafficking, but the US had other geopolitical reasons to dethrone him. Drug trafficking charges may be Trump’s official reason for this weekend’s operation in Venezuela, as his voter base did not elect him on a platform of active foreign policy. Still, the move fits with a modern-day Monroe Doctrine.

Throughout 2025, Trump had already taken an interest in politics in other Latin American countries. He has been a supporter of Argentina’s Milei, who largely shares Trump’s ideas. And Trump has not shied away from punitive tariffs on Brazil, as retribution for a criminal investigation against former president and Trump-ally Bolsonaro and arguably Brazil’s deepening ties with Russia and China.

Is this a warning of more to come? Recall that last year, Trump threatened to take control of the Panama Canal and he said “something could happen with Greenland.” This weekend, the US president repeated that the country “needs Greenland from the standpoint of national security.” And, Trump warned that Colombia could be next after Venezuela. He accused the Colombian president of making and selling drugs to the United States, adding that “he’s not going to be doing it very long, let me tell you.”

Unsurprisingly, several Latin American leaders condemned the move. Brazil’s Lula said that an unacceptable line had been crossed, just as relations between the two presidents had started to defrost. Mexico strongly rejected the attack, and Chile and Colombia expressed their concerns.

The capture of Maduro also puts another strain on US relations with Russia and China, who both supported Venezuela. In fact, Maduro had met with Chinese envoys just hours before his capture.

Meanwhile, the response of US allies was divided as leaders weigh politics and international law. French President Macron chose the political route of commending Trump’s achievement: “Venezuelan people are rid of Maduro’s dictatorship and can only rejoice.” His German counterpart noted that the legal assessment is “complex.” But, above all, Merz called for a transition to a government that is legitimised by elections, warning against political instability.

Opinions vary how Venezuela may get there. Macron suggested that Maduro’s main political opponent –and presumed winner of the previous elections– could lead this transition: “President Edmundo González Urrutia, elected in 2024, can swiftly ensure this transition.” Venezuelan opposition leaders have called for the same.

But President Trump has other plans. According to the US president, the opposition leaders lack the “respect” of the country to govern effectively. Instead, Trump suggested that Maduro’s vice president would be the best candidate for the job: “She is essentially willing to do what we think is necessary to make Venezuela great again.” Trump added that the US would “run” Venezuela until a “safe, proper and judicious” transition of power can be done.

Rodríguez initially showed defiance of US intervention, arguing that “the US attack only had one objective: regime change and the capture of Venezuelan natural resources”. Yet that could be a façade as she juggles US demands with those of Maduro’s supporters. Indeed, on Sunday, she extended an invitation to “work together on a cooperation agenda,” as Trump threatened her with a fate worse than Maduro’s “if she doesn’t do what’s right.” For now, everything remains in flux.

It is equally unclear how Trump will ensure a smooth transition of power, or how he exactly plans to lead Venezuela in the interim. The US does not have a military presence or even an embassy, but it has blockaded the country for about a month now. So, Trump may have some economic pressure over any new leader. And he has warned that follow up strikes could still happen, if necessary.

If the US administration manages to impose its power over Venezuela, that could reshape the world. The country’s oil reserves could ensure low energy prices for US consumers and secure fuel for US shipping and military, whilst undercutting geopolitical rivals’ abilities to fund themselves with energy sales and/or disrupting flows to China. However, Venezuelan oil production is a fraction of what it was, and our energy strategists estimate that it would take at least five to ten years before capacity can be restored to what it once was.

Geopolitically, it shows that Trump means what his administration wrote in its National Security Strategy: a greater focus on the Western Hemisphere; a “Donroe Doctrine.” Control over Venezuela reinforces that message, and would make it easier for the US to then lean on resource-rich countries in the region.

But none of this is without risks. Imposing a stable, pro-US regime is much more difficult than toppling the former. And how will China and other geopolitical rivals respond? Has Trump set a precedent with his claim that the attack was legitimate because Maduro had been indicted in the US?

We’re just a couple of days into 2026 and the tone has been set. Buckle up!

Tyler Durden Mon, 01/05/2026 - 09:25

Berenson: Just How Insane Did Democrats Become On Immigration?

Berenson: Just How Insane Did Democrats Become On Immigration?

Authored by Alex Berenson via Unreported Truths,

Almost six years ago, Democrats published the world’s longest political suicide note — their 2020 election platform on immigration.

CREATING A 21ST CENTURY IMMIGRATION SYSTEM has now vanished from the Democratic Party Website. But the Internet is forever, and the archived document remains easily findable. It makes a fascinating read.

In almost 2,000 words, the platform does not mention “border security” once. It does use the word “illegal” — referring to “President Trump’s illegal, chaotic, and reckless changes” to immigration. “Undocumented” comes up once too, in a promise to offer citizenship to “millions of undocumented workers, caregivers, students, and children.”

Among the platform’s other high notes:

We will protect and expand the existing asylum system and other humanitarian protections… Democrats will end Trump Administration policies that deny protected entry to asylum seekers… we will end prosecution of asylum seekers at the border and policies that force them to apply from “safe third countries,” which are far from safe.

We will also eliminate unfair barriers to naturalization…

Democrats believe family unity should be a guiding principle for our immigration policy. We will prioritize family reunification for children still separated from their families…

[W]e will end workplace and community raids. We will protect sensitive locations like our schools, houses of worship, health care facilities, benefits offices, and DMVs [Note: this may be the first time anyone has ever called a DMV office a “sensitive” place] from immigration enforcement actions…

We believe detention should be a last resort, not the default. Democrats will prioritize investments in more effective and cost-efficient community-based alternatives…

—

(You want reckless? We’ll give you reckless!)

(SOURCE)

—

In other words: Come on in. The water’s fine.

The platform promises an interlocking series of guarantees and policy changes that would not merely reduce but as a practical matter end any restrictions against immigration, legal or otherwise.

Basically, the Democratic Party vowed that if it ran the federal government, it would open American borders to anyone and everyone in the world who could reach them.

The asylum promises were especially important.

As even the “American Immigration Council” — which despite its anodyne name is funded by immigration lawyers and relentlessly pushes open borders — has explained:

Since the second term of the Obama administration, however, U.S. asylum policy has become hopelessly entangled with border management. As part of global displacement challenges, many more people than ever before started coming to the United States to request asylum; at the same time, those people came from places beyond Mexico and had more complex needs than the working-age adults who had made up most migration in the past.

“More complex needs” is a polite way to say “people uninterested in working.”

The Democratic platform explicitly encouraged those arrivals. All they had to do was make an asylum claim, with or without credible evidence. How could border officials possibly check their stories? At that point they would be allowed in — and would not face any meaningful enforcement, ever.

—

Given these incentives, it is no surprise immigrant caravans started moving north only weeks after Election Day in 2020 — even before Joe Biden was officially sworn in.

And the flood continued, as migrants very quickly realized the Democrats had meant every word. They understood they would be greeted with open arms — and checkbooks. An increasingly professionalized industry of smugglers emerged to organize and transport them.

Supply creates its own demand, whatever the product.

In January 2023, the Biden Administration took the inevitable final step, a creating what it called a “Humanitarian Parole Program.” The plan allowed in another 360,000 migrants a year from Cuba, Haiti, Nicaragua, and Venezuela without even requiring them to reach the southern border or have any legal basis for admission. If they could afford a plane ticket and find someone — anyone — in the United States to sponsor them, they could fly in.

The goal of the Bidenites was nakedly political. They hoped to make the border look better. But as a practical matter the program eliminated the last barrier to entry — that would-be migrants physically arrive at the border. Even the 2020 Democratic platform hadn’t (explicitly) gone that far.

—

(Sometimes the truth, like the devil, is in the details. Help me explain them.)

How the Democrats got to this point is its own story, and worth exploring. So is the question of what happens next.

But for now it is simply worth understanding that the collapse of any immigration restrictions was a feature, not a bug. Nearly 10 million people came to the United States under the Biden Administration — the largest surge either in raw numbers or as a percentage of the population at least since the Civil War.

The only surprise is that the total wasn’t even higher.

Tyler Durden Mon, 01/05/2026 - 08:55

Meet Mamdani's Biden Expats

Meet Mamdani's Biden Expats

Authored by David Dayen via prospect.org,

Last week, Zohran Mamdani was sworn in as the 111th mayor of New York City. This would have been scarcely thought possible just one year ago. The spirit with which Mamdani organized and beat an avatar of the state political establishment—twice—sustained progressives during the long winter of 2025 and provided some hope that charisma, expert use of modern communications, and a laser focus on the cost of living could produce a winning formula.

Sam Levine speaks to the press after being appointed by New York City Mayor-elect Zohran Mamdani as the incoming commissioner of the NYC Department of Consumer and Worker Protection. Credit: Derek French/SOPA Images/Sipa USA via AP Images

But as campaigning shifts to governing, those skills in isolation are unlikely to enable Mamdani to solidify public goodwill. The experience of the past several years, with presidents of both parties, has reinforced that delivering tangible results that people can feel is the only thing that earns chief executives lasting support. Taking on fights and naming villains and demonstrating who you care about can get you far, but that must be accompanied by follow-through.

That reality makes Mamdani’s choices of people implementing his agenda quite interesting. Increasingly, he has turned to refugees from the Biden administration who (too quietly) carried out some of the more effective pieces of the former president’s agenda. New York City will have a Biden cabinet member in a deputy mayor role, and a top consumer protection official leading a local agency. Lina Khan, the former Federal Trade Commission chair, co-chaired Mamdani’s transition team and may have a role in his government; that is to be determined, sources tell the Prospect.

The more conventional trajectory for these kinds of public officials after a presidential term is congressional or statewide elected office, or in the worst-case scenario, a high-paying position at one of the entities they used to regulate. That these individuals would step down from the U.S. executive branch to municipal management speaks to how much left-wing populists want to help Mamdani succeed and are thrilled by a government that leads with concern for its working-class constituents.

“It’s something I really felt like I had to do,” said Julie Su, the acting labor secretary for nearly two years under Biden, who will serve in the new position of deputy mayor for economic justice, something she relished. “Not economic development, not economic growth. Justice! The idea that you can care about just outcomes is huge, and that it’s the responsibility of government to make that happen.”

The Biden expats have an important role in the Mamdani administration. Much of his first-term agenda, from universal child care to faster fare-free bus service, hinges on getting the necessary funding through higher taxes on the wealthy. Functionally speaking, that battle will be fought in Albany, against a skeptical governor and the bureaucracy of the legislature. But existing laws on the books give Mamdani the opportunity to make immediate progress through rigorous enforcement, buying time and building momentum for the bigger fights to come.

Take Sam Levine’s new role as head of the Department of Consumer and Worker Protection (DCWP). Levine was the lead consumer protection official at Khan’s FTC, and since that ended he has engaged in research about the increasing sophistication of technology-fueled pricing, including an excellent report about how companies use loyalty cards to entice customers and scrape their data to use in maximizing profits.

Tyler Durden Mon, 01/05/2026 - 08:45

Stocks, Gold, Bitcoin All Jump As Venezuela Concerns Outweighted By AI Optimism

Stocks, Gold, Bitcoin All Jump As Venezuela Concerns Outweighted By AI Optimism

Global stocks, US futures, gold, the dollar and bitcoin all rose after the purge of Venezuela’s President Nicolas Maduro fanned geopolitical risk, while renewed momentum in the AI trade powered tech heavyweights in Asian hours. As of 8:15am ET, S&P futures were up 0.3% while Nasdaq futures gained 0.6%, with chip stocks such as AMD, Micron Technology and Intel gaining more than 3% in premarket trading. . In Europe, the Stoxx 600 rose 0.4% and was on course for a record close with most of the upside coming from a handful of sectors. Tech stocks are leading, as they did in Asia overnight. Spot gold advanced nearly 2% to climb above $4,410 an ounce, while silver jumped more than 3%. A gauge of the dollar headed for its biggest gain in two weeks. The US economic calendar includes December ISM manufacturing at 10am; ahead this week are S&P Global US services PMI, ADP employment change, ISM services index, JOLTS job openings, factory orders and December employment. No Fed speakers are scheduled for Monday; Richmond Fed’s Barkin is set to speak on the economic outlook on Tuesday.

In premarket trading, Mag 7 stocks are mostly green (Tesla +1.5%, Nvidia +1.5%, Amazon +0.4%, Alphabet +0.2%, Microsoft +0.1%, Apple -0.2%, Meta -0.1%).

  • Energy names including Chevron (CVX +6%) and Baker Hughes (BKR +6%) are rallying after President Donald Trump said a team of US officials will “run” Venezuela and that Washington requires “total access” to the country, including its oil reserves.
  • Gold stocks, including Newmont (NEM +1.7%) and Barrick Mining (B +1.8%) are higher as precious metals advance while investors weigh elevated geopolitical risks.
  • Memory and semiconductor equipment stocks rise amid continued optimism over the rollout of AI. Micron (MU) +3%, and Sandisk (SNDK) +4%
  • Centene (CNC) rises 1.8% and Oscar Health (OSCR) gains 3% after Barclays upgraded both health insurance names. Barclays writes that Centene has “attractive” margin upside from the Affordable Care Act exchange, while Oscar is “priced attractively and the market is currently over-discounting the negative outcomes from expiring subsidies.”
  • Estee Lauder (EL) gains 4% after Raymond James analyst Olivia Tong raised her recommendation on the beauty company to strong buy. Her price target of $130 is the highest of all analysts tracked by Bloomberg.
  • Fortive Corp. (FTV) falls 1.5% premarket after Mizuho Securities analyst Brett Linzey cut the recommendation on the industrial technology company to underperform, expecting “a slow start to ‘26 across more than half of its portfolio (government, medical, retail/consumer) as funding delays and uncertainty persists.”
  • GH Research (GHRS) soars 36% after saying that the FDA has lifted the clinical hold on its investigational new drug application for GH001, allowing US subject enrollment and advancing the company toward initiating its global Phase 3 program in 2026.
  • Mobileye (MBLY) rises 7% after saying an unnamed US-based automaker has chosen its EyeQ6H chip powered solution as standard across mass-market to premium vehicles.
  • QXO (QXO) climbs 4% after the company confirmed that funds managed by Apollo Global and other investors agreed to invest $1.2 billion through a new series of convertible perpetual preferred stock to strengthen the company’s financial flexibility for acquisitions.
  • Zenas Biopharma (ZBIO) slumps 49% after detailing results from a Phase 3 trial of obexelimab in immunoglobulin G4-related disease.

In corporate news, Musk’s Grok is facing mounting criticism and threats of government action around the world. The AI chatbot created sexualized images, including of minors, on the social media platform X in response to user prompts. Saks is said to be in talks for a $1 billion bankruptcy loan to keep the business running. 

Trump’s assertion that the US will run Venezuela, at least temporarily, means the country has a shot at restoring democracy and prosperity, according to Latin America Geo-economics analyst Jimena Zuniga. Hedge Fund Tribeca eyes a “massive gold rush” of investment opportunities in the country. On the geopoltical front, Secretary of State Rubio said the US will use leverage over oil to force further change in Venezuela and demanded it sever ties with Iran, Hezbollah and Cuba. Social media users in China are pointing to the US attack as providing a template for a possible move against Taiwan. 

Brent crude swung between gains and losses as oil traders weighed the fallout from the developments in Caracas. Chevron Corp. rose more than 6% in early trading, alongside sharp gains across US oil majors, after President Donald Trump floated plans for a US-led revival of Venezuela’s industry.

“The economic impact of what happened in Venezuela is too small to weigh on equity markets,” said Christopher Dembik, senior investment adviser at Pictet Asset Management. “That’s also true when it comes to oil: people have had the time to take a look at the data and in the most optimistic scenario, it will take two or three years to have a significant impact.”

Meanwhile, AI remains the hot topic for equity traders this Monday. Nvidia partner Hon Hai’s quarterly sales beat estimates after global tech firms accelerated their build-out of data centers, TSMC jumped after Goldman analysts lifted their price target by 35% and a Chinese national investment fund raised its stake in SMIC. And while some investors are asking if the AI boom is a bubble waiting to pop, history suggests the answer isn’t easy to gauge as the following table from Bloomberg shows.

The buoyant mood in big tech stocks was most prevalent in Asia, where a regional gauge hit an all-time high. Technology and mining equities led gains in Europe. 

AI “absolutely stays the most dominant factor in the markets right now,” Charu Chanana, chief investment strategist at Saxo Markets, told Bloomberg TV. “Tech optimism continues to overpower any of the other narratives.”

Elsewhere, the Fed’s Paulson said modest additional rate cuts could be appropriate later this year, but conditioned that outcome on a benign outlook for the economy. Former Treasury Secretary and Fed Chair Yellen warned of a growing “fiscal dominance” threat to the US economy when she spoke at the AEA’s weekend meeting.

  • In Europe, the Stoxx 600 is up 0.4% and on course for a record close with most of the upside coming from a handful of sectors. Tech stocks are leading, as they did in Asia overnight. And defense stocks have benefited from the US capture of Venezuela’s President Nicolás Maduro. Oil prices erased an earlier fall to trade slightly higher. Sentiment around artificial intelligence got another boost after a broker upgrade for ASML. Miners also outperform, tracking gains across the metals complex. Here are some of the biggest movers on Monday:
  • Ashmore shares surge as much as 14%, the steepest gain in more than three years, as analysts expect the emerging-market fund manager’s Venezuelan assets to benefit following the capture by US forces of President Nicolas Maduro.
  • Saab shares climb as much as 7.1% to a record high as US military strikes on Venezuela lift European defense stocks.
  • Syensqo shares climb as much as 4.7% after the chemical manufacturer announced a new CEO, and Morgan Stanley seperately said the stock was a top chemicals pick.
  • Johnson Matthey shares rise as much as 8.1%, hitting their highest level since early 2023, after the chemicals company was upgraded at Berenberg on potential for earnings consensus to rise this year.
  • ASML shares rally as much as 4.5% to a record high after Bernstein upgraded its rating to outperform from market perform, saying the AI-driven memory-chip super cycle will benefit the chip-equipment firm.
  • Eurofins shares rise as much as 6.8%, the most since April, after the laboratory-testing company was double upgraded to outperform at BNP Paribas on receding governance concerns.
  • Next shares drop as much 2.4%, the most since November, as Barclays analysts warn updated guidance due to be issued in Tuesday’s Christmas trading update may be cautious, weighing on sentiment for the stock.

Earlier in the session, Asian equities rose to a record high, supported by gains in tech-heavy markets such as Taiwan and Japan, as investors look past geopolitical risks surrounding Venezuela. The MSCI Asia Pacific Index advanced for a third session, rising as much as 1.7%. TSMC was the major contributor to the index’s gains, after Goldman Sachs raised its price target by 35% on AI opportunities. Samsung Electronics and Alibaba also led gains. Japan’s Nikkei 225 stock gauge jumped nearly 3%, while benchmarks in South Korea and Taiwan notched new record highs. China’s onshore benchmark CSI 300 Index rose 1.9% on its first trading day of 2026, marking its strongest start to a year in over a decade, as technology shares gain. Asian traders brushed off geopolitical risks sparked by US’ capture of Venezuelan President Nicolas Maduro due to the perception of their limited impact to global supply chains. Attention is shifting back to fundamentals, including earnings, while interest in the artificial intelligence theme remains strong. 

Emerging-market stocks are on track to hit a record, buoyed by persistent strength in Asian technology shares and a broad rally globally. The MSCI Emerging Markets Index rose as much as 1.5% Monday, poised to surpass a peak notched five years ago.

In FX, the Bloomberg Dollar Spot Index is up 0.1%, having pared gains, with the yen now top of the G-10 FX leaderboard. The pound has also turned positive against the greenback.

In rates, treasury futures hold small gains accumulated during London morning as gilts advanced, with yields near session lows as US day begins. US yields are 2bp-3bp richer across tenors with belly-led gains steepening 5s30s spread by about 1bp. 10-year near 4.165% is 2.6bp richer on the day with UK counterpart outperforming marginally.  Coupon auctions resume next week. IG dollar bond issuance slate contains several offerings to begin a week anticipated to be among the year’s busiest; Treasury coupon supply resumes next week with 3-, 10- and 30-year auctions.

“There are too many uncertainties to contend with,” wrote Mohit Kumar, chief economist and strategist for Europe at Jefferies. “Near-term drivers are likely to shift back to macro - the AI debate, unemployment and inflation picture and the large supply in government and corporate bonds in January.”

In commodities, spot silver climbs 3%, having briefly topped $76/oz. Gold and most base metals are also in the green. Oil prices are up slightly after paring losses, showing muted impact from weekend US capture of Venezuela’s president. US session includes December ISM manufacturing gauge. Bitcoin climbs 1.8% to about % $93,000.

Today's US economic calendar includes December ISM manufacturing at 10am; ahead this week are S&P Global US services PMI, ADP employment change, ISM services index, JOLTS job openings, factory orders and December employment. No Fed speakers are scheduled for Monday; Richmond Fed’s Barkin is set to speak on the economic outlook on Tuesday

Market Snapshot

  • S&P 500 mini +0.3%
  • Nasdaq 100 mini +0.7%
  • Russell 2000 mini little changed
  • Stoxx Europe 600 +0.4%
  • DAX +0.8%
  • CAC 40 little changed
  • 10-year Treasury yield -2 basis points at 4.17%
  • VIX +0.6 points at 15.13
  • Bloomberg Dollar Index +0.2% at 1206.8
  • euro -0.3% at $1.1687
  • WTI crude little changed at $57.33/barrel

Top Overnight News

  • Venezuela's deposed leader Nicolas Maduro was due in a New York court on Monday to face drug charges while the U.N. was to scrutinize the legality of U.S. President Donald Trump's extraordinary operation to capture him. After first denouncing Maduro's capture as a colonial oil-grab and "kidnapping", Venezuela's acting president Delcy Rodriguez changed her tune on Sunday, saying it was a priority to have respectful relations with Washington. RTRS
  • Trump on Sunday predicted Cuba’s government could soon collapse and threatened Colombia’s president, a stark warning that underscored his administration’s increasingly aggressive posture toward leftist governments across Latin America. Trump reiterated his desire to annex Greenland, as well. Politico
  • White House is considering giving Homeland Security Adviser Stephen Miller a greater role in overseeing operations in post-Maduro Venezuela, according to Washington Post.
  • China asked its policy banks and other major lenders to report their lending exposure to Venezuela, people familiar said. BBG
  • Moscow accused Kyiv on Monday of trying to strike a residence of Putin in Russia's northern Novgorod region with 91 long-range attack drones, and said Russia would review its negotiating position in ongoing talks with the U.S. on ending the Ukraine war. Trump said he did not believe that an alleged Ukrainian strike on President Vladimir Putin's residence took place as claimed by Russia. RTRS
  • Volodymyr Zelenskiy said the US will join the EU for talks in Paris tomorrow on security guarantees for Ukraine. Meanwhile, Trump said he’s “not thrilled” with Russian leader Vladimir Putin because he’s “killing too many people.” BBG
    Chinese social media users suggest Maduro’s capture as a potential template for Beijing to handle Taiwan. But Taiwanese officials expect the US action will act as a deterrent against China attacking the island, a person familiar said. BBG
  • Bank of Japan Governor Kazuo Ueda said on Monday the central bank will continue to raise interest rates if economic and price developments move in line with its forecasts. BBG
  • The Fed’s Anna Paulson said modest rate cuts may be appropriate later in 2026. She expects inflation to continue easing, the labor market to stabilize and growth to run near 2%. BBG
  • OPEC+ agreed to pause supply increases through the first quarter amid a looming surplus. Delegates said Venezuela was not discussed at the brief meeting yesterday. BBG
  • Fed’s Paulson (2026 voter) said she sees inflation moderating, the labour market stabilising and growth coming around 2% this year, while she added that if all of that happens, then some further adjustments to the Fed Funds Rate would likely be appropriate later in the year. Paulson said she views the current level of rates as still restrictive and sees a decent chance that they will end the year with inflation that is close to 2% on a run-rate basis, as tariff-related price adjustments will likely be completed. Furthermore, she stated that while the labour market is bending, it is not breaking and that the baseline outlook for the economy is pretty benign.
  • Nomura CEO sees the Fed cutting rates twice this year.

Trade/Tariffs

  • US President Trump said could raise tariffs on India if they don't help on Russian oil issue.
  • US President Trump blocked HieFo Corp's USD 3mln acquisition of assets in New Jersey-based aerospace and defence specialist Emcore on Friday and ordered HieFo to divest all interests and rights in Emcore assets due to national security and China-related concerns, according to Reuters.
  • Irish PM Martin arrived in Beijing as part of a five-day visit aimed at boosting trade between the two countries, according to Chinese state media. There were later reports that Chinese President Xi said in a meeting with Ireland's PM that China and the EU should take a long-term view and adhere to the positioning of partnership, while Xi also commented that unilateral bullying is undermining the international order.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly higher as the region shrugged off the US strike on Venezuela and resumed last year's semiconductor-led rally which lifted the KOSPI to a record high, while TSMC shares also notched firm gains after Goldman Sachs raised its price target by 35% and its ADR's jumped late last week to become the sixth-largest company in the world by market cap. ASX 200 was flat as gains in mining and material stocks were counterbalanced by losses in the tech and consumer sectors.
    Nikkei 225 rallied on its first trading session of 2026 with notable strength in the heavy industries and semiconductor stocks. Hang Seng and Shanghai Comp traded mixed as the Hong Kong benchmark lagged and with the mainland buoyed on return from the New Year holiday closure, which saw the Shanghai Comp reclaim the 4,000 status, while participants digested the latest RatingDog Services PMI, which matched estimates at 52.0 (prev. 52.1) and the Composite figure slightly accelerated to 51.3 (prev. 51.2).

Top Asian News

  • Japanese PM Takaichi said will pursue economic growth relentlessly.
  • Japanese PM Takaichi said 2026 can be a major turning point for Japan, adds Rapidus holds key to Japan's chip revival.
  • Chinese President Xi said unilateral bullying is undermining international order, according to Bloomberg.

European bourses (STOXX 600 +0.4%) are broadly on a stronger footing this morning (ex-SMI), with sentiment seemingly boosted by the US strike on Venezuela. A move which has pressured energy prices, and perhaps boosts optimism surrounding cheaper oil for global firms. European sectors are mixed, with Tech, Industrials and Basic Resources forming the top three; Tech lifted by ASML, Industrials by defence names and Basic Resources benefits from stronger copper prices. Food Beverage & Tobacco lags, hampered by Nestle. ASML (+3%) has been boosted after Bernstein named the Co. as its top pick for 2026, citing a combination of accelerating memory investment and a more attractive valuation backdrop; its updated PT of EUR 1300/shr (prev. EUR 800/shr), implies a circa 30% gain from current levels.

Top European News

  • UK PM Starmer said the UK should move to closer alignment with the European single market on an "issue-by-issue" basis if it is in the national interest, according to Reuters.
  • Chinese President Xi said in a meeting with Ireland's PM that China and the EU should take a long-term view and adhere to the positioning of partnership and view, according to Xinhua.

FX

  • Dollar benefitted overnight from the mild losses in its major peers and with some haven appeal following the US intervention in Venezuela, with President Trump stating that the US will 'run' Venezuela and 'fix oil infrastructure', while he also signalled potentially widening their focus in the region to Cuba and Colombia.
  • "Given the uncertainty about how the next few days will pan out, investors will probably prefer the liquidity of the dollar", suggests the analysts at ING, whilst adding that "Away from Venezuela, the dollar could also be enjoying some delayed buying interest after the blow-out 4.3% quarter-on-quarter annualised US third quarter GDP figure released on 23 December."
  • Aside from that, little to mention on FX during the European session thus far. JPY sees shallower losses than other peers on haven appeal, although the CHF has plumbed the depths, although no obvious catalysts to explain the downside. GBP narrowly outperforms the as the cross fell under 0.8700 for the first time since Oct 2025. AUD and NZD are both subdued by the Buck, although the AUD/NZD cross remains above 1.1600 amid firmer copper prices.

Fixed Income

  • A slightly firmer start for Bunds and USTs. All focus on the geopolitical situation re. Venezuela, with newsflow otherwise a little light.
  • Bunds up to a 127.31 peak with gains of 20 ticks at best. However, the benchmark has since trimmed to unchanged but remains clear of the overnight 126.98 low. Within Europe, focus on Dutch pension reform as while the switch in the pension system has been long flagged, the full scale of the impact is not yet known.
  • USTs similar, hit a 112-12 peak with strength of six ticks at best before fading to just above unchanged but above the 112-05 base.
  • JGBs sold overnight as the 10yr yield hit another multi-year high amid outperformance in domestic stocks.
  • Ahead, US ISM Manufacturing is the main scheduled event. However, any fresh updates on the geopolitical situation will undoubtedly take centre stage.

Commodities

  • Crude benchmarks was choppy in APAC trade, but then moved lower in the early portion of this morning, as traders digest the US strike on Venezuela and the capturing of President Maduro. US President Trump commented that they are going to run Venezuela and “get oil flowing like it should be”. This hints of further addition of oil into an already-oversupplied market, causing Brent to fall below USD 60/bbl. Since, the complex has trimmed earlier losses to now trade around unchanged; Brent Mar in a USD 59.75-61.24/bbl parameter.
  • Spot XAU gapped higher, opening at USD 4357/oz, and continued to trend higher to an APAC session high of USD 4420/oz. Currently, XAU is trading at session highs of USD 4432/oz, with demand for safe havens rising, following the Venezuela strike, but also potential further rate cuts by the Fed and continued concerns over US fiscal debt
  • 3M LME Copper gapped above the range formed in the past 2 trading sessions, opening at USD 12.68k/t and driving to a high of USD 12.88k/t as the APAC session got underway. The red metal consolidated before briefly extending to a new session high of USD 12.91k/t. However, price pulled back but 3M LME Copper remains above USD 12.8k/t and just shy of ATHs at USD 12.97k/t.
  • OPEC+ agreed to keep the group’s output unchanged as expected following a brief meeting on Sunday.
  • Venezuela's oil exports, which had dropped to a minimum amid the US blockade of sanctioned tankers, are said to now be paralysed as port captains have not received requests to authorise loaded ships to set sail, according to four sources close to operations cited by Reuters.
  • Former top Chevron executive is raising USD 2bln for Venezuelan oil projects as investors race to heed Trump’s call to pour “billions of dollars” into the country, according to FT.
  • Goldman Sachs said Venezuela's oil production could increase in the long term and that scope for higher Venezuelan oil output could eventually pressure prices, according to Bloomberg.

Geopolitics

  • US President Trump announced on Saturday that the US successfully carried out a large-scale strike against Venezuela, while he added that President Maduro and his wife were captured and flown out of Venezuela. Trump also commented that they are going to run Venezuela until such a time that they can do a safe, proper and judicious transition, while he added they are going to run Venezuela with a group and will get oil flowing like it should be, with Trump anticipating US oil producers spending billions in Venezuela.
  • US President Trump said they are ready to stage a second strike if necessary and had assumed a second wave was needed, but now probably not. Furthermore, he said the US is not afraid of boots on the ground in Venezuela, and commented that they will be ‘reimbursed’ and will be selling large amounts of oil to other countries. It was separately reported that President Trump signalled the US could widen its focus in the region to Cuba, and he will be meeting with House Republicans in a closed-door meeting on Tuesday, following mixed reactions to the Venezuela attack including praise from top Republicans regarding the operation and questions by some lawmakers regarding the legal authority.
  • US President Trump said it sounds good to him regarding whether there will be an operation in Colombia, while he added that Colombia is very sick as the country is being run by a sick man, but he won't be doing it very long. Trump also commented that Cuba looks like it is ready to fall and looks like 'its going down for the count'. Furthermore, Trump said if Venezuela doesn't behave, the US will do a second strike on Venezuela and noted that troops on the ground in Venezuela depend on how they act, while it was separately reported that Trump warned of dire consequences if Venezuela fails to meet US demands.
  • Venezuela’s VP Rodriguez was granted temporary presidential powers, while she called for the return of Maduro and said the capture of Maduro has a ‘Zionist tint’. Furthermore, she said that they will not be anyone’s colony and that what is being done to Venezuela is barbaric.
  • US Secretary of State Rubio and Defense Secretary Hegseth are among the Trump administration officials to brief some lawmakers regarding Venezuela on Monday, according to Punchbowl and The Hill.
  • US Transportation Secretary Duffy said original restrictions around the Caribbean airspace were expiring and flights could resume.
  • World leaders responded to the situation in Venezuela and largely called for restraint and an orderly transition to a legitimate government. Furthermore, German Chancellor Merz said the legal assessment of US strikes in Venezuela was complex, while Spanish PM Sanchez said they will not recognise a US intervention in Venezuela that violates international law, and UK PM Starmer said the UK sheds no tears about the end of Maduro's regime.
  • China said the US should immediately release Venezuela’s Maduro and his wife and resolve the situation in Venezuela through dialogue and negotiation, according to Reuters. It was separately reported by Bloomberg that China was deeply shocked and strongly condemned the hegemonic acts by the US and that threaten peace and security in Latin America and the Caribbean region, while other allies of Venezuela’s allies including Brazil denounced the US attack, and Russia also criticised it as an 'unacceptable violation of the sovereignty of an independent state'.
  • UN Security Council is to convene an emergency meeting on Monday to discuss the US operation in Venezuela.
  • US President Trump said he is not thrilled with Russian President Putin regarding the war in Ukraine and said that too many people are dying, according to Bloomberg. Trump separately commented that there is no deadline on a Russia-Ukraine deal, while he thinks they will have a deal on Russia and Ukraine in the not-too-distant future.
  • Moscow claims Ukraine is escalating drone attacks on Russia and has targeted Moscow with drones every day of 2026 so far, according to The Guardian.
  • US President Trump said could raise tariffs on India if they don't help on Russian oil issue.
  • US President Trump said it sounds good to him regarding whether there will be an operation on Colombia, adds Colombia is very sick as the country is being run by a sick man... but he won't be doing it very long. said:. If they don't behave, we will do a second strike on Venezuela, also noted that troops on the ground in Venezuela depend on how they act. No deadline on Russia-Ukraine deal. Think we'll have a deal on Russia and Ukraine in the not-too-distant future. Cuba looks like it is ready to fall and looks like 'its going down for the count'.
  • Large-scale fire broke in the area of the "Energiya" plant in Russia's Lipetsk region following a drone attack.
  • Iran’s Supreme Leader Khamenei labelled protestors ‘enemy mercenaries’, while he approved a crackdown and said that rioters must be put in their place, according to Iran International. It was separately reported by Reuters that US President Trump warned Iran on Friday that the US would come to the aid of protesters in Iran if security forces fired on them and said that the US is ‘locked and loaded and ready to go’. In relevant news, Iran’s Revolutionary Guards began a military exercise including missile launches and testing of air defence systems, according to correspondent Amichai Stein on X.

US Event Calendar

  • Dec Wards Total Vehicle Sales, est. 15.75m, prior 15.6m
  • 10:00 am: Dec ISM Manufacturing, est. 48.44, prior 48.2
  • 10:00 am: Dec ISM Prices Paid, est. 58.7, prior 58.5

DB's Jim Reid concludes the overnight wrap

As we return for the first full week of 2026, the main story this morning remains the weekend developments in Venezuela, whose President Nicolás Maduro was captured by US forces and taken to New York. To bring you quickly up to speed, events moved rapidly from Saturday morning when reports came through of explosions in the Venezuelan capital Caracas. Then shortly after, President Trump posted that Maduro had been “captured and flown out of the country”. And later on, at a Saturday news conference, Trump said that the US would “run Venezuela” until there was a transition.

This morning there’s still a lot of uncertainty, and for markets, there’s a debate about the extent to which any short-term oil supply disruption from the upheaval will end up being outweighed by a longer-term supply boost from higher Venezuelan production. After all, the US Energy Information Administration have said that Venezuela has the world’s largest proven crude oil reserves, at 17% of the global total. But despite those reserves, production has declined significantly over recent years, with crude oil production in 2023 down 70% from its 2013 levels. So the prospect of a long-term supply recovery would serve to lower oil prices, and Trump himself said over the weekend that US oil companies would “go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country”. Indeed, those expectations have already brought down oil prices this morning, with Brent crude falling -0.43% to $60.49/bbl, whilst WTI is down -0.54% to $57.01/bbl. Meanwhile, US equity futures have risen slightly, with those on the S&P 500 up +0.12%.

In terms of Venezuela itself, it’s also not entirely clear what’s happening next in terms of potential US involvement in the country’s administration. Venezuela’s Supreme Court have granted the VP Delcy Rodríguez presidential powers on an acting basis, and Trump said that Secretary of State Marco Rubio had spoken with her. But although there hasn’t been direct US administration over Venezuela thus far, Rubio said on CBS that there was “an oil quarantine that allows us to exert tremendous leverage over what happens next”. And Trump said he was “not afraid” for there to be US boots on the ground in the future. Overnight, acting President Rodríguez said in a statement that they “extend an invitation to the US government to work together on a cooperation agenda, aimed at shared development, within the framework of international law, and to strengthen lasting community coexistence”.

From the perspective of global markets, it’s worth noting that geopolitical shocks historically don’t tend to have much of a lasting impact. That might seem surprising, but that’s because markets generally trade on macro variables like growth and inflation, rather than geopolitical shocks per se. We’ve seen this pattern again this morning, with US and European equity futures both higher, whilst US Treasuries have rallied slightly across the curve. Another recent example of this pattern have been events in the Middle East in the last few years, where markets outside the Middle East have seen a consistent pattern of quick recoveries from initial selloffs. For instance, at each point when tensions between Israel and Iran escalated, in April 2024, October 2024, and most recently in June 2025, the wider impact was limited outside of commodities and Middle Eastern equities.

This isn’t to say that geopolitics can’t have a lasting market impact, but when it’s done so, it’s been those events which affected key macro variables. Examples of that include the stagflation shocks after the 1970s oil crises, the Gulf War in 1990, and Russia’s invasion of Ukraine in 2022. In each case, they had a big impact because they caused a sufficiently big oil price shock that led to a sustained rise in inflation, whilst also having a meaningfully negative impact on growth outside the areas directly affected. By contrast today, we haven’t seen those kind of effects yet.

Otherwise this morning, Asian equity markets have risen sharply across the board. For instance, the KOSPI (+3.17%) is up to another record high, alongside gains for the Nikkei (+3.09%), the CSI 300 (+1.53%), the Shanghai Comp (+1.11%) and the Hang Seng (+0.09%). Tech stocks have done particularly well, with Samsung Electronics (+6.03%) as one of the top performers in the KOSPI this morning. But Japanese government bonds have continued to struggle, with the 10yr yield (+6.4bps) up to 2.12%, its highest level since 1999. Separately in China, the RatingDog Services PMI fell to a 6-month low in December at 52.0, although the composite PMI ticked up slightly to 51.3, a tenth higher than November.

In terms of the week ahead, clearly geopolitical developments will be top of mind. But otherwise, one of the main highlights will be the US jobs report for December on Friday. That’s an important one because there’s been more weakness in the labour market over recent months, with the unemployment rate rising to a 4-year high of 4.6% in November. So that’s seen the Fed deliver 3 consecutive rate cuts since their September meeting, and futures are still pricing in a 53% chance of another cut by the March meeting. So investors still think a Q1 rate cut is in the balance, and Friday’s report will go some way to determining if that happens. In terms of what to expect, our US economists think that nonfarm payrolls will rise by +50k in December, with the unemployment rate declining a tenth to 4.5%.

Over in Europe, the main highlight will be the flash CPI prints for December, with Germany and France reporting on Tuesday, ahead of the Euro Area-wide print on Wednesday. This isn’t a print expected to have too many implications for near-term ECB policy, with markets expecting them to keep rates on hold for the rest of the year. However, headline inflation is expected to fall below the 2% target early this year, largely driven by energy base effects. And our economists think that if the decline for headline inflation is large enough, that could spill over to weaken core and inflation expectations too, which would lower the bar for further policy easing. So that’ll be a key theme for H1. In terms of this print for December though, our economists expect Euro Area headline inflation to fall back to +2.0% thanks to those falling energy prices, down from +2.1% in November. And for core CPI, they expect that to remain at +2.4%.

Finally, before the weekend developments in Venezuela, markets had got the year off to a steady start last Friday, with a risk-on move on both sides of the Atlantic. Indeed, the S&P 500 (+0.19%) had its first positive start to a year since 2022, whilst Europe’s STOXX 600 (+0.67%) closed at an all-time high. Admittedly, there were some points of weakness, and the Mag 7 (-0.95%) posted a further decline after Tesla (-2.59%) reported Q4 deliveries that missed analyst estimates. But as we mentioned on Friday, we really shouldn’t extrapolate the day one moves, as the first trading day has often been a reverse indicator for the rest of the year. Indeed, 2023-25 all saw a negative start for the S&P before it then recorded a double-digit annual gain. By contrast, the last time we had a positive start in 2022, that year then saw a bear market and the index’s worst performance since 2008.

Meanwhile, the selloff among long-end bonds also continued last Friday, with yields hitting new milestones across several countries. That was particularly notable in Europe, where the 10yr bund yield (+4.5bps) closed at 2.90%, its highest level since October 2023, whilst the 30yr German yield (+6.4bps) moved up to its highest since 2011, at 3.54%. Similarly in the US, the 10yr Treasury yield (+2.4bps) moved up to 4.19%, and the 30yr yield (+2.7bps) rose to 4.87%, which in both cases was their highest since early September. And it also that meant the US 2s10s yield curve closed above 70bps on Friday for the first time since January 2022.

Those moves capped off a mixed week for financial markets, with lots of key assets struggling to gain much traction. For instance, the S&P 500 was still down -1.03% for the week, despite Friday’s recovery. In large part, that was driven by weakness among the Mag 7, which fell -2.46%, with other cyclical sectors also struggling. Sovereign bonds also struggled, with the 10yr Treasury yield up +6.3bps last week, whilst the 10yr bund yield was up +3.9bps. European equities were a key outperformer however, with the STOXX 600 up +1.26% over the week to a new high, whilst the FTSE 100 was up +0.82% and even crossed the 10,000 mark on an intraday basis for the first time. Finally in credit, US HY spreads (-3bps) and Euro HY spreads (-2bps) both tightened last week. But US IG spreads (+2bps) moved wider, whilst Euro IG spreads were unchanged.

Tyler Durden Mon, 01/05/2026 - 08:38

Production For Security 2026

Production For Security 2026

Submitted by Peter Tchir of Academy Securities

ProSec 2026

We will do a “traditional” outlook for 2026, covering all major markets, but we really wanted to highlight ProSec and define more carefully what we think it means for you as corporations, policy makers, and asset managers.

Production for Security:

  • RESILIENCY. We haven’t used the word “resiliency” as much as we could have and will use it more going forward. Being resilient, whether at the nation, state, or corporate level, will become a fixture in decision making.

  • ProSec is already in the process of supplanting “traditional” ESG as an overarching theme in decision-making and planning.

  • As much as we’ve tried to instill our view on how big, broad, and important the scope of ProSec is, we have failed to do that – so far.

  • While not critical to ProSec we do believe that as the world adopts a “Pre-War” mentality, it helps accelerate ProSec as it imbues a degree of “sacrifice for the greater good” while also imparting a sense of “urgency.”

  • ProSec is already going global and getting left behind on this initiative will be problematic for countries, companies, and investors.

Resiliency as a Driving Force Behind ProSec

To some degree we can describe ProSec as being the answer to “What If?”

  • What if global shipping is disrupted?

    • It has happened for reasons “out of our control.” COVID was not on anyone’s radar screen. Even the Evergreen blocking the Suez Canal was an “unforeseen” accident. Will markets react the same the next time around to companies exposed to that risk? What if some companies have “planned” for this and have more robust supply chains – less use of shipping, using a variety of shipping lanes, only shipping with countries they are very close to – physically or politically? If a “competitor” has prepared and you haven’t, and it occurs again, it is difficult to see markets being as “understanding” as they were when it was deemed farfetched.

      • Legend has it that the disaster recovery plan for one incredibly large hedge fund was to use other offices as disaster recovery sites. It had the advantage of being global, so if something happened in a region that took out the main office, and the disaster recovery site, it would still be covered. It had the advantage of all sites being up to date. Nothing worse than getting to the disaster recovery site and realizing that the internet is too slow and you were running obsolete versions of software. The plan made a lot of sense. It did not cover the contingency of grounding all U.S. flights for days. To the extent the story is true (and I have no reason to doubt it), I can assure you that this fund revamped their plans to cover even more contingencies as well as other highly unlikely, but still possible scenarios. They increased their RESILIENCY as they absorbed new information.

  • It happened because a “bad actor” behaved badly. Prior to the invasion of Ukraine by Russia, we could explain being “asleep at the switch” in terms of this type of risk. Iran and its proxies attacking more aggressively in the Middle East has not caused major disruptions, but it has caused some level of disruption, and seemed like a more foreseeable event than Russia’s invasion. The U.S. has just “blockaded” Venezuela. Actually, we did not “blockade” Venezuela as that is an act of war according to international law, but we have changed the nature of doing business with Venezuela.  

    • The People’s Armed Forces Maritime Militia (PAFMM). We used GROK for some of this information, but it is all very consistent with topics we’ve discussed in the past. Let’s start with this map from GROK attributed to npr.org to explain some potential risks.


      It (PAFMM) often operates in coordination with the PLA Navy (PLAN) and China’s Coast Guard (CCG) as part of a "joint defense" approach involving military, law enforcement, and civilian elements. In peacetime, it contributes to gray-zone tactics—coercive actions short of open warfare—such as swarming disputed features, harassing foreign vessels,  or establishing a de facto presence to bolster territorial claims in the South China Sea and East China Sea. Western analyses describe it as enabling China to advance its interests while maintaining plausible deniability, as vessels appear to be civilian. Chinese sources emphasize its role in leading fishing activities, collecting oceanic information, supporting island/reef construction, and participating in drills for national defense and disaster relief.  

      They have had as many as 400 ships active at any one time. According to GROK the “professional” component consists of 100-200 purpose-built boats (presumably larger and more sophisticated ones). There have been estimates that the total number of ships available is in the thousands. While not set up to attack, in the traditional sense, they can make sea travel perilous, not only by getting in the way, but also by dumping things like nets and logs overboard to foul propellors, etc. 

      The main focus today is Taiwan, because of our dependance on Taiwan for chips (a recurring theme of our 2026 Outlook), but it seems almost naïve to believe that there isn’t a bigger risk to shipping than just the concern around Taiwan’s chips (which in and of itself is a risk unless we become more “resilient” or diverse in our chip businesses). 

      We didn’t even touch on China’s control, ownership, and equipment in many ports across the globe as a potential future risk, but it certainly is.

  • While we might not lose sleep every night worrying about shipping lanes, it seems prudent to plan for the worst if the cost to diversifying shipping lanes is small. 

    Considering the latest National Security Strategy, the potential safety of shipping should be a consideration when building new facilities. That gives the nod to North, South, and Central America, especially if you are not already overly exposed to the region.
     
  • What if the flow of processed or refined rare earths and critical minerals is cut off?
     
    • Clearly this would be a risk if shipping with China is disrupted. But given what we’ve seen with the trade negotiations, it seems easy to play out scenarios where China decides to curtail shipments of their own volition. 

      These scenarios are by no means the base case, but do you really believe they have a zero probability of occurring? That there is no set of circumstances in the next few years under which China decides it is in their best interest to reduce shipments of these materials? Antimony is used in every munition and we remain highly dependent on China for this. 

      I am more focused on the refined and processed versions. China controls about 60% of the extraction/mining of what is broadly categorized as rare earths and critical minerals. They control about 90% of the processing and refining. 

      They can shut us off from the raw resources, but we could, in most cases, source them elsewhere. However, what good does it do if we have to ship them to China to be refined and processed? 

      I know I don’t always do a good job of highlighting the importance of these “things.” It is almost easy to dismiss some as they are “only a small part” of a bigger item. When we think “big picture,” it is easy to forget the importance that these little parts play in the grand scheme of things. Often, they are not just a little portion, but a large portion – when you are talking about batteries for instance. 

      With the help of OpenAI I have tried to bring the CEO of Whirlpool’s comments (made during COVID) to life. 

      This is maybe too “casual” or even too “obvious” as of course a washing machine needs a door, but that doesn’t make the point irrelevant (just my choice of graphics). 

      So much of our industrial production could grind to a halt, just because some small amount of processed/refined rare earths or critical minerals (that we depend on China for) doesn’t make it to our factories. It doesn’t only have to be to our “domestic” factories; this applies to factories anywhere around the globe, maybe even within China, if they decide to go down this path. 

      Again, it isn’t our base case, but becoming more RESILIENT, aka ProSec, goes a long way towards mitigating this risk. 

      While we don’t need to be completely “self-sufficient,” the more we can produce on our own, the more likely China won’t try to cut us off.

  • Energy and electricity production.  

    • Germany and Russian Natural Gas. Enough said.

We need to think about resiliency. We need realistic and cost effective contingency plans. The “irony” of this is the more independent one becomes, the less chance one becomes the target of an adversary or competitor. It is effectively Economic Deterrence.

Maslow’s Hierarchy of Economic Needs

Of all the things I learned in college, being able to open a bottle of beer with another beer and Maslow’s Hierarchy of Needs might be the two most useful things I learned (though to be honest, growing up in Canada, I think we learned the beer bottle thing in high school, but I digress).

I don’t know what “self-actualization” really is, but Universal Basic Income seems right up there. I previously thought we were in the “Esteem” stage. That let us think about things differently. The concern I have is that we were being overly “altruistic” in our vision because we thought we had the levels below us covered. The crumbling foundation is what has become apparent, first gradually, and then suddenly.

We have published on many of these themes going back to 2018. They aren’t completely new.

COVID did change a little of how we think and behave, especially towards China.

The Biden administration saw the need for the CHIPS ACT.

But all of these things seemed more like an attempt to patch a crack, rather than determining that the entire foundation might be crumbling and needs to be completely redone!

ProSec and ESG are Compatible

Despite how the previous section might come across, much of what “we” were trying to achieve with ESG will remain in place. But the lens through which we look at ESG will be changing with “true” Sustainability (Resiliency, Independence, Security, etc.) taking center stage.

The ProSec Industries.

Let’s take a “quick” look at how we see the ProSec economy developing around specific industries.

This chart is intended to do a few things:

  • Make you wish that I’d figured out how to use AI to make this chart more professional.

  • Highlight the industries with some sense of relative importance (column width).

  • Highlight how much can be done easily (green), with some effort (yellow), facing some real hurdles (orange), and some that might not be achievable (red).

Biotech and Pharma.

  • As a “talking point,” reducing healthcare costs is easy. The complexity of the system makes it difficult. Same for “manufacturing at home.” On the surface it is “easy,” but there are a lot of difficulties. Hundreds, and even thousands of drugs are produced. We can kind of get away with saying “steel” and it covers the topic reasonably well (though purists would argue about the type of steel, etc.). But “drugs” is just too vague. There are the components, the base, and precursor drugs. There are the complex drugs we actually ingest or take. There are drugs with multiple delivery methods. The delivery methods themselves are sometimes separated from the drug itself. Patents. There is a focus here, but it is so complex that I think only slow progress will be made.

  • For the “green” section of this industry, look no further than the GLP-1 drugs. They have the benefit of being topical and potentially have incredibly widespread application. Certainly, interest in them is widespread. The combination of “big and public” makes them an ideal candidate for an administration to focus on. Lots of headlines and manageable. Away from that, it seems like it will be a slog to get a lot of manufacturing done here. It will happen over time (we had immense success getting the COVID vaccines produced here – regardless of your view on the vaccines themselves).

  • My best guess is that the admin will focus on the pharmacies next, rather than the manufacturers, as that industry is concentrated, and well known to the public, so easier to get a lot of “bang for the buck” on the political front. While I think this is an incredibly important ProSec industry, I think it will not be front and center in 2026 for opportunities.

Chips, Data Centers, and AI.

  • These industries are doing incredibly well in their own right. Demand is there. In terms of ProSec™ the goal of the administration will be to bring more and more production home. There are a lot of opportunities in this space. The industry leaders should continue to do well and get government support. That support might come in many forms. Some of it may be through increased government use of the services. The government (in all facets, including state, local, defense, and healthcare) will spend in this sector.

  • Regulatory help is another avenue the government will pursue. Whether paving the way for data centers, the power generation required, or even allowing products to be exported, to earn money, and to fund domestic growth, there will be support from the administration.

  • INTC continues to stand out in this sector. While I would like rules in place to regulate state investments, those are not really in place (and would likely be pushed to the limit by this admin, even if they were in place). I find it difficult to see a world where the government doesn’t try to support the taxpayers’ investment in this company. For full disclosure, INTC was my biggest single stock holding in 2025 and will be again in 2026. It was up 86% in 2025. Can it repeat that? Who knows, but while I think any stock in this space has potential, with those focused on manufacturing in the U.S. getting the most government support, the direct investment leads me to suspect that extra support will be given here.

  • Much of this chart is “green” and even “yellow” as a lot remains in our control. Look for a “shift” in the industry as it moves to where the energy (electricity) and fresh water are located. Tasks that require low latency will remain in locations that can offer that speed, but applications that allow for more latency will move to where the electricity is.

  • The administration is likely going to take a closer look at quantum computing. I briefly pulled up WQTM (a quantum ETF) and some of their holdings jumped out at me – QBTS, IONQ, RGTI, and ARQQ to name a few. I have not spent much time on this, but some of these stocks seem to fit the “lottery ticket” theme in ProSec™ (companies with a small enough market cap, that a direct investment by the U.S. taxpayers could help the stock “pop,” similar to the investment in MP – though that stock is well off of its highs).

Electron Production.

  • There will be a focus on not only producing the electricity needed for AI, Data Centers, EVs, and industry, but also getting it to where it needs to go (transmission).

  • All forms of electricity generation will be used. Okay, maybe all forms other than wind, which this administration seems to really dislike.

    • Fusion. This is more the “future” and I haven’t poked around for tickers, but makes sense.

    • Fission. This is an area we have focused on a lot. The government is clearly promoting the growth of the nuclear power business. From allowing nuclear to be built on Army bases, to chatter about using Navy reactors more broadly, the government is working hard to jumpstart the nuclear industry. It has the longest lead time to build. There remains a “fear” factor associated with nuclear (I wonder what the world would look like had the nuclear industry hired the Bitcoin marketing team ). Despite those risks (too long and too much negative public opinion) I think the opportunities remain very good in this space.

      • URA is an ETF that focuses on Uranium. One way to bet on the rise of nuclear, here and abroad (Canada for example is ramping up efforts in this area), is through Uranium. The commodity itself, the miners, and the refiners could all do well if the nuclear industry really takes off. Worth looking through the holding of ETFs like this to assess what stocks might make sense.

      • Personally, I’m fascinated with the Small Nuclear Reactor space. It has been a roller coaster ride, and we need to see projects completed, in scale, but this fits our theme extremely well.

    • Coal and Natural Gas. While nuclear might become the backbone years from now, we are going to need rapid expansion of coal and natural gas burning facilities. Maybe not as clean as “we would like” but it is necessary (ProSec™ is trumping ESG – pun intended). Companies like GEV will continue to do well as will other companies that can step in and produce turbines and other equipment that these facilities will need. That industry compressed, as it was out of favor with “traditional” ESG, but will do well again as we try to harness all sources of electricity production.

      • One of the issues with coal and nat gas is getting it to where the electricity generation is. It is often one of the more difficult logistical issues that companies face when developing new facilities (less so when increasing size of existing facilities). It is right up there with regulatory approval, which remains an issue. So, maybe we will build the facilities where the resources are? We mentioned this earlier and will mention it again. When generating power for a city, you cannot really move the city. When generating power for something like a data center, maybe building the data center close to the power source is best?

    • Solar. From all the discussions I’ve had, it seems difficult to see the admin suddenly agreeing that wind is necessary. On solar, there is that real possibility. It seems impossible to believe that the electricity production industry isn’t telling the President and his team that solar needs to be part of his overall plan. Elon Musk literally tweets about the need for solar almost every day. While the solar plays may not have the upside of say nuclear, they should have less downside. Since they are “under-owned” as the government cuts back on subsidies, they could actually surprise to the upside. I like some of the more solar-focused companies.

    • Transmission and the Grid. We will need to make improvements to our transmission lines and the grid. Not just in terms of capacity but also “hardening” it – better cyber- threat security and possibly even better physical-threat security. Companies involved in transmission and the grid should do well.

    • Batteries. The use of batteries is only going to increase (especially if the admin reverses course on solar, where battery power is more of a necessity, due to the potential timing mismatches of power production versus use).

    • Utilities. Unregulated utilities probably have the edge here as more “traditional” utility users (individuals like you and me) are becoming concerned, perturbed, or even angry about the use of electricity by the AI/Data Center business.

    • Much of this sector is green and yellow as so much is in our control. Regulations might be the biggest hurdle to achieve the power needs, but I expect that hurdle will be lowered in an effort to ensure that the U.S. wins the AI and Data Center race.

  • Rare Earths and Critical Minerals. I need to connect with Michael Rodriguez, Academy’s Head of Sustainable Finance (where he has always focused on resiliency), to do a more thorough dive into this sector – plus this report is already getting long for you to read, and my fingers are starting to hurt from typing so much. We are trying to analyze the importance of the material, alongside potential commercial application/profitability. Some are crucial to the U.S. but not viable domestically. The reason this sector has some orange and red coloring has less to do with the “willingness” and more to do with the “ability.”

    • Focus on REFINING over Extraction.

      • Extraction is important. We will see more mining. We will see more facilities to do things like pumping out fracking water with high concentrations of lithium, and then evaporating the water to “extract” the lithium. But there are also markets where we can purchase the commodities themselves. South America and Africa come to mind, along with the “stans.” The latest National Security Strategy and the “transactional” nature of the admin fit this view well. Please see last weekend’s Africa T-Report for more thoughts.

      • Make no mistake, processing and refining is more important. The real bottleneck we face is that China controls so much of the processing and refining of these rare earths and critical minerals. Just like oil itself is relatively useless (gasoline and diesel are much more useful), the rare earths and critical minerals themselves are relatively useless. China did a good job of securing supplies of the raw resources. What China did a better job of (in my opinion) is convincing the world that “letting China do the dirty work” was somehow “greener” than doing the dirty work ourselves. Cynical? Yes, but out of sight, out of mind seems to have helped this industry flourish in China (also, China adopted their own version of Production for Security a long time ago).

      • Look for patents and unused mining rights. When we lived in an age where only price mattered and regulatory approval would have been the equivalent of a minor miracle, projects were not pursued. But that is so 2024. Whether you are private equity or a corporation, now is the time to revisit some ideas or proposals you saw or heard about that made no sense in a Pre-ProSec™ world.

  • Commodities. Similar to the above section, but with a lower priority. First, we need to “fix” our rare earths and critical minerals problem, then we can focus on commodities more generally. Some will get done, but that won’t be the highest priority. Again, focus on refining and processing over extraction. Commodities have less green and more yellow and orange than rare earths – precisely because the will and urgency aren’t there.

    • I like the “servicers” better than the producers. The producers should do well, but if ProSec works properly, other areas should too.

  • Heavy Industry. Steel. Aluminum. Chemicals. Nice to have, but gets complicated quickly. Also, project lead time is typically at the long-end of the spectrum. This seems more like a Phase 2 ProSec™ idea rather than something that will create immediate opportunities.

  • Defense. I will defer to our GIG members to opine on this more fully, but there will be a lot of opportunities with small/private companies developing “cutting edge” technology. There will remain a place for the “platforms” (aircraft carriers, state of the art fighter planes, etc.), but there are indications that drones, space, and anything autonomous are going to be the big beneficiaries of a Department of War that is to some extent repositioning itself (if not reinventing itself). 

  • Ship Building. We need to make more ships. The U.S. Navy (as per my latest understanding) has plans to grow its fleet, albeit by small numbers. But despite that “plan,” the size of the Navy has been decreasing as ships are being retired faster than the replacements are being built. That is just the “traditional” Navy. Surface and underwater drones are going to play a major role going forward in shore defense (and attack). The Jones Act prevents non-U.S. built and flagged ships from shipping goods and commodities between two U.S. ports (one reason the Northeast imports a lot of gasoline while the South exports a lot of gasoline). I’ve been told the President doesn’t like the cruise ships in and around Florida (where he regularly sees them) flying foreign flags (on non U.S.-made ships). This industry is poised for government support.

    • Despite that rousing endorsement of this industry, very little is in green or even yellow. This will be a HEAVY LIFT. The skills, the materials, and the facilities are not readily available. This is more complex than ramping up electricity or getting a mine up and running. There are a lot of problems, not just hurdles, and shortages of skill and expertise will make this one more difficult to achieve. That could slow the admin down, as there isn’t quite the “easy” win we can see in some other areas. Yet it is critical and the “photo op” of breaking a bottle of champagne across the bow of the first ship built in a new yard would be impressive (though I suspect it will be the next President who would get to do that, given the time it is likely to take).

    • There are ways to invest in this sector, some of which would include defense stocks. I will also toss out BC (which I own) as a potential fit – especially if I’m correct on surface drones and other small watercraft being part of the defense plan going forward.

    • Maybe Ship Building should have just been a subset of Defense? Probably, but it probably deserves its own special section (and I don’t feel like re-organizing everything).

  • The Big Industrial, Transportation, and Infrastructure Companies. If we are even remotely correct on the importance of ProSec™ the build out will allow many companies to prosper.

    • While it might take time to get many projects on line, the build out will create jobs and wealth immediately. From railways, to massive vehicles, to pipelines, to equipment makers of all types, the opportunities will be there. The jobs and wealth will start with those building the facilities, as much as with the final projects. Accelerated Depreciation works great with this concept.

The X, Y, and Z of America First

I’m losing steam quickly (and I assume you the reader are too). So, we won’t belabor the point.

X is what can be done domestically and “reasonably” efficiently.

  • X will be a different percentage for each and every resource. Maybe in the U.S. potash can grow from the 10% range to the 25% range? But how much beyond this? There are limitations on how much can be produced domestically. While bananas are not part of ProSec™ we learned from tariff policy that it was kind of pointless tariffing them since we couldn’t supply significant quantities ourselves. While the goal might be 100% - that is highly unlikely. X also kind of represents the green and yellow in the charts above.

  • X will vary by country. Yes, today’s T-Report has been very focused on the U.S., but each country is headed in this direction and how much of a given thing you can produce yourself will vary greatly.

Y is what likely needs to be done in conjunction with partners.

  • Some things are just not available domestically.

  • Some things, while available, may be prohibitively expensive.

  • Economies of scale exist for a reason.

  • America First is NOT the same as Only America

    • Australia is striking deals with the U.S.

    • As USMCA negotiations begin, there are many clear and easy paths to see the U.S. working with Canada and Mexico (independently or collectively) to achieve ProSec™ related goals.

    • America First is the X. America not alone, is the Y.

Z is whatever is expedient.

  • Some things will be purchased as they fit the need. For some things, that may need to be very small. The size of Z will depend on the importance of the item and the relationship with the country producing the item.

  • It also allows me to revert from zee to zed depending on the audience.

There still will be plenty of global trade, but for ProSec related items, that trading relationship will be anything but transactional. It will be part of an overall plan to achieve true sustainability and resiliency.

Sovereign Wealth Fund

D.C. has gone quiet on the potential for a sovereign wealth fund. Can the idea of selling gold at spot prices to create “income” that can be invested in American companies get traction again? I certainly think so. I’d rather have that than a Bitcoin reserve.

Bottom Line

ProSec or Production for Security will:

  • Drive U.S. government policy.

  • Shape investor’s allocations and return profile.

    • Change how corporations (and banks) allocate their resources.

    • Change how governments across the globe think about their policy.

The one “sad” truth is to some extent all we need to do is look at how China has shaped their economy, and we have a pretty decent roadmap for what we need to do. It will vary by country, by company, and asset manager, but ProSec™ will be a dominant factor in 2026.

The exciting part is that it incorporates AI and Data Centers (because you cannot ignore those industries) and it also sets us up for a pivot or rotation into new sectors and companies and should spur a wave of not just M&A activity, but also a lot of private equity activity as well!

Tyler Durden Mon, 01/05/2026 - 04:15

Germany's Fiscal Illusion: Bond Markets Rebuke Merz's Debt Spiral

Germany's Fiscal Illusion: Bond Markets Rebuke Merz's Debt Spiral

Submitted by Thomas Kolbe

Germany was long seen as a bastion of fiscal stability in the Eurozone. But the erratic fiscal policy of the Merz government is now creating tensions in the bond market. Risk premiums on traditional periphery sovereigns like Italy, Portugal and Spain relative to German Bunds are shrinking.

For months, something remarkable has been happening in European debt markets. Risk spreads on the key ten year sovereign bonds of countries such as Italy, Portugal and Spain versus the economic anchor Germany have been steadily falling. Spanish yields now sit only about 0.4 percentage points above German Bunds; Italian paper — from a country with around 125% debt to GDP — trades just about 0.7 points wider.

Capital is clearly shifting out of Germany into other European bond segments. Is the market pricing in catastrophic German fiscal policy?

Repricing German Policy 

Germany’s debt strategy is unmistakably being reassessed by markets. With the so called special fund, Berlin has effectively thrust the country into a debt spiral virtually overnight. Over the next decade, more than €850 billion in new debt is to be issued — on top of a core budget already running a 2.5 – 3% deficit.

By decade’s end, Germany’s debt burden will likely hover near 85 – 90% of GDP — and nothing suggests an economic miracle will pull the nation out of this spiral. Miracles happen in fairy tales and children’s books — but even children’s book co author Robert Habeck didn’t achieve such an economic feat as Economics Minister.

Implicit obligations from pension and social systems aren’t even factored in — in Germany or elsewhere. What matters in the move in bond yields isn’t the absolute level, but the relative jump in German indebtedness, and markets are pricing exactly that. All this meets an economic reality with no meaningful extra value creation. German policy is pumping state credit — which will later surface as higher taxes and inflation — into an economic vacuum, just like centrally planned systems do.

Looking Ahead 

Investors are watching German policy with hawkish scrutiny: the nuclear exit, sky high energy prices crushing industry, a migration policy that drains the welfare state like a vampire — all feed into German bund pricing. Bond markets are always a bet on the future — a judgment on national stability.

The consequence is clear: yields are rising. And they’ll keep rising. A mounting debt pile becomes ever more expensive — that’s how markets must respond.

These hard facts cannot be spun away by Kanzleramt spin doctors or orchestrated party media. German productivity has flatlined since 2018 — and is now declining. Industrial output has collapsed by about a fifth. Hundreds of thousands of manufacturing jobs have vanished while only the public sector expands, with the state’s share of the economy above 50%.

Germany is gearing toward a wartime economy that yields near zero benefits for real economic output. Alongside an already failed “eco economy,” this parasitic sector consumes resources, fosters make work, and feeds a nexus of extraction firms. It’s funded by ever rising levies that increasingly burden productive workers. Prosperity and economic substance are being systematically — purposefully — undermined by central planners in Berlin and Brussels.

This downward spiral is knowingly and ideologically accelerated by Chancellor Friedrich Merz’s government. The crisis is engineered as the solution — to bend the populace toward the climate socialist agenda and secure political power even as social stress rises. An ideological crash course — without doubt.

What seems lost on climate socialist planners like Merz is this: economic action and potential prosperity fundamentally depend on cheap, reliable energy. Germany’s current crisis — productivity collapse and industrial decay — speaks for itself. It happened without necessity and stands in economic history as a unique act of self inflicted vandalism.

That Merz and fellow climate socialists, using media plays, escalating censorship, and constant business bashing at events like employer forums, are trying to steer their political core through crisis shows only one thing: they fail to see this is a one way street. Climate socialism is the problem, not the solution — and markets along with German output are proving it.

Yet this mindset is typical for career politicians trapped in ideological echo chambers. We saw this with Economics Minister Robert Habeck — a party functionary mythologized by state affirming green media, utterly unversed in economics, and intellectually overwhelmed. He failed to understand how the crisis of subsidized sectors he inflated with bailouts came about.

Socialism is a recurring phenomenon in new guises. Climate socialism, like its predecessors, will fail through mass impoverishment. Harsh years lie ahead for Germany, and nothing seems able to prevent green vulgar socialism from metastasizing here. EU capitals have become adjunct outposts of Brussels’ cancerous core.

Some shifts are already visible. Italy, for example, has begun transferring gold reserves from its central bank to state vaults and is pursuing independent energy security via North African gas. At the bond market, this is rewarded: yields and risk premiums there are falling. Investors apparently see Italy as a “First Survivor” in a severe Euro crisis. Germany has no similar narrative.

Compounding this is Berlin’s almost unfathomable commitment to the Ukraine conflict without democratic mandate, accelerating fiscal decay. Merz plans to funnel around €11.5 billion from the 2026 federal budget directly into the Kiev black hole — a stance shared by Paris, London and Brussels — utterly detached from reality and dismissing even the possibility of a full U.S. pullback from the European theater.

This geopolitical folly echoes in bond markets. Germany’s leaders are playing Vabanque — without historical sense, responsibility, or foresight.

Those who hope that rising French and Belgian debt ratios (soon above 120% of GDP) can defuse hyper state growth via bond markets may be disappointed. Japan shows that even heavily domestically financed debt — at historically extreme ratios around 235% of GDP — can float for a while, though future obligations aren’t counted. Markets price in that the ECB will protect Eurozone debt by buying excess bonds — delaying collapse. But how exactly it intervenes now — since the “bazooka” of 2020 — is opaque and hidden. Risk premiums tell the tale.

That U.S. Treasuries trade at around a 1.3% premium over German bonds — and 60bp above Greek and Italian paper — is grotesque given Europe’s structural weaknesses. This stark mismatch between economic reality and bond pricing screams manipulation by Frankfurt central bankers.

Predicting when markets will finally downgrade a Eurozone pillar — likely France first — and bring the whole debt house of cards down is impossible. As Hemingway wrote in The Sun Also Rises:

“How did you go bankrupt?” “Two ways,” Mike said. “Gradually, then suddenly.”

* * * 

About the author: Thomas Kolbe is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Mon, 01/05/2026 - 03:30

Which US Foods Are Banned In Europe?

Which US Foods Are Banned In Europe?

From growth hormones in meat to controversial chemicals and artificial dyes, Europe's precautionary approach to food safety stands in strong contrast to America's more permissive stance.

This divide isn't just about science and risk management; it's become a flashpoint in the broader trade tensions between the U.S. and EU, where food standards often clash with economic interests.

As Statista's Tristan Gaudiat details below, for years, Europe has blocked imports of American foods containing substances like artificial growth hormones, brominated vegetable oil (BVO), titanium dioxide and potassium bromate, citing potential human health risks and animal welfare concerns.

The EU's stricter regulations on food safety, rooted in the "precautionary principle", prioritize consumer safety over industrial convenience - a philosophy that has repeatedly put Brussels at odds with Washington.

Yet, the tide may be (slowly) turning.

Which U.S. Foods Are Banned in Europe? | Statista

You will find more infographics at Statista

In 2024, the U.S. finally banned BVO, a synthetic emulsifier linked to neurological issues, after decades of use in soda and sports drinks.

And by 2027, Red Dye No. 3, a colorant long suspected of causing cancer, will also be phased out.

These moves mark rare moments of alignment with EU standards, even if several decades behind European legislators.

Critics argue that America's regulatory system, often influenced by powerful food and chemical lobbies, lags behind Europe's proactive bans.

Meanwhile, others point out that the EU's strict rules have become a trade barrier, with U.S. farmers and food producers pushing back against what they see as protectionism disguised as public health.

Tyler Durden Mon, 01/05/2026 - 02:45

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