Treasury To Keep Debt Sales Unchanged For "Next Several Quarters", Prepares To Drop Issuance Forward Guidance

In the first refunding announcement under Trump's new Treasury Secretary Scott Bessent, the US Treasury unveiled that it will keep sales of longer-term debt unchanged well into 2025, despite Bessent's criticism of Janet Yellen's issuance strategy before he was picked for the job.

Just two weeks into the most important job at the US Treasury, Bessent left intact former Secretary Janet Yellen’s agenda. As widely expect, the Treasury will next week sell $125 billion of debt in its quarterly refunding auctions, which span 3-, 10- and 30-year maturities, the same amount as in the past several quarters. The gross issuance will refund $106.2 billion of privately-held Treasury notes and bonds maturing on February 15, 2025, and will raise new cash from private investors of approximately $18.8 billion.  The securities are:

• A 3-year note in the amount of $58 billion, maturing February 15, 2028;
• A 10-year note in the amount of $42 billion, maturing February 15, 2035;
• A 30-year bond in the amount of $25 billion, maturing February 15, 2055.

The table below presents the auction sizes for the November 2024 to January 2025 quarter and the anticipated auction sizes for the February to April 2025 quarter:

In its refunding statement, the Treasury said that it believes "its current auction sizes leave it well positioned to address potential changes to the fiscal outlook and to the pace and duration of future SOMA redemptions." It added that based on current projected borrowing needs, "Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters."

Similar language has been in place since the last bump up in auction sizes at the start of last year. Bessent, a former hedge fund manager, had accurately charged Yellen of engaging in so-called Activist Treasury Issuance - holding down longer-dated debt sales in order to depress long-term borrowing costs and aid the economy before the election. Of course, he was right. Alas, reversing Yellen's catastrophic policies can't and won't happen overnight absent a meltdown in the bond market, hence why the issuance schedule is as it is.

The forward guidance was maintained even as the Treasury Borrowing Advisory Committee — a key panel of Wall Street advisers composed of dealers, fund managers and other market participants — issued a separate letter in which “uniformly encouraged Treasury to consider removing or modifying" the language at this meeting, and “Some members preferred dropping the language altogether to reflect the uncertain outlook, though the majority preferred moderating the language at this meeting."

However, the reason why there was no change - yet - is that the committee felt that any shift in language shouldn’t be read to indicate an expected near-term increase in nominal coupon auction sizes, consistent with the TBAC recommended financing tables and Treasury’s aim to be regular and predictable. TBAC members also noted "elevated uncertainty regarding macroeconomic developments and the fiscal trajectory and observed that current primary dealer assumptions and issuance levels imply a $1.5T cumulative funding shortfall over the next three years."

According to Bloomberg, a senior Treasury official told reporters, when asked about that guidance, that TBAC offers recommendations, but they are just that, and it’s the department that decides.

The Treasury also said it was keeping issuance of floating-rate debt unchanged, while continuing to nudge sales of some Treasury Inflation Protected Securities, or TIPS, higher. Over the coming three months, the Treasury said it plans to use bills — which mature in up to a year — to address any seasonal or unexpected variations in borrowing needs. With regard to TIPS, the Treasury detailed the following adjustments for the February-to-April period:

• Increase the April 5-year TIPS new issue to $25 billion
• Boost the March 10-year TIPS reopening by $1 billion, to $18 billion
• Maintain the size of the February 30-year TIPS new issue auction size at $9 billion

Separately, we remind readers that since the start of this year, the Treasury has been constrained by the federal debt limit, which kicked back in after being suspended in mid-2023. The department has begun to use extraordinary measures to keep from a debt-ceiling breach. That means that even as the US piles on about $1 trillion in new debt every 100 days, the public won't see the actual balance until some time in July when the next debt ceiling deal is implemented, after much kicking and screaming by so-called conservatives, who fold - as they always do - when realizing there is no other option.

“Until the debt limit is suspended or increased, debt limit-related constraints will lead to greater-than-normal variability in benchmark bill issuance and significant usage” of cash management bills, the department said.

Another complication for the Treasury’s debt sales in coming months and quarters is uncertainty when the Federal Reserve will halt, or slow further, its steady reduction in holdings of Treasuries — currently running at up to $25 billion a month.

When the Fed does fully phase out its so-called quantitative tightening, it will reduce the amounts the Treasury needs to borrow from the public, a process which will coincide with the drainage of the Reverse Repo facility which has been aggressively used to fund the US government through Bill issuance.

As Bloomberg notes, dealers now see QT as ending in the summer, rather than spring, “slightly increasing the expected need for borrowing from the private sector in 2025,” TBAC reported to the Treasury. “Market participants viewed risks as skewed towards a later finish,” although factors including debt-limit dynamics may complicate the Fed’s assessment of whether there’s an “ample” magnitude of reserves in the system, TBAC said.

Finally, Wednesday’s statement also detailed a new schedule of buybacks for the early February through May. As the schedule indicates, the Treasury plans to conduct weekly liquidity support buybacks of up to $4 billion per operation in nominal coupon securities. Treasury also plans to resume cash management buybacks around the April 2025 tax date.  Amounts purchased in cash management buybacks temper reductions to bill auction sizes that would otherwise occur over the same timeframe.

Tyler Durden Wed, 02/05/2025 - 09:20

US Trade Deficit Soars As Firms Front-Ran Trump Tariffs In December

The US trade deficit widened dramatically at the end of 2024 on a surge in imports prior to the start of President Trump’s second term and his follow-through on the promise of sweeping tariffs.

The December shortfall in goods and services trade grew nearly 25% from the prior month to $98.4 billion (slightly bigger than expected), Commerce Department data showed Wednesday.

Source: Bloomberg

That culminated in a full-year deficit of $918.4 billion after the gap narrowed in 2023 by the most in 14 years...

Source: Bloomberg

The value of imports, unadjusted for inflation, increased 3.5% in December, while exports fell 2.6% as firms appeared to front-run the tariffs and loaded up on inventory...

Source: Bloomberg

Not a good sign for Q4 GDP but the 'front-running' pre-loaded inventories shift should be over by the end of January.

Tyler Durden Wed, 02/05/2025 - 08:45

Biden-Era Climate Rule Dead After Court Grants Dismissal Of Appeal

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A climate rule issued during the Biden administration is officially dead after judges on Feb. 3 granted the new administration’s request to drop an appeal.

Cars travel along Interstate 80 in Berkeley, Calif., on Jan. 16, 2024. Justin Sullivan/Getty Images

Three judges of the U.S. Court of Appeals for the Sixth Circuit, acting on a recent request from the Federal Highway Administration (FHWA), dismissed the government’s appeal of a ruling that found the FHWA administrator overstepped his authority in issuing the rule, which forced states to take steps to reduce carbon dioxide emissions from vehicles.

The judges cited a court rule that lets appealing parties dismiss appeals voluntarily if doing so would not create injustice or unfairness. The states that sued over the rule did not oppose the dismissal.

U.S. District Judge Benjamin J. Beaton ruled in 2024 that the rule went beyond the authority that lawmakers had given the FHWA administrator.

“Congress supplied a clear and sensible instruction: the Administrator may set standards and measures that states use to plan and assess the National Highway System. The Administrator, who retains significant delegated authority over the federal spending program, may review state planning reports for compliance and potentially even withhold conditional federal funding,” the judge said at the time.

“But what the Administrator may not do is step into the shoes of sovereign states, which set their own targets for any standards and measures established by the agency.”

The government lodged an appeal to try to overturn the ruling.

Before the Sixth Circuit could rule on the case, though, President Joe Biden exited the White House, and Donald Trump became president.

The attorneys representing the FHWA then informed the court that the agency “no longer wishes to pursue appellate review of the district court’s decision in this case.”

The states that sued over the rule, including Indiana and Kentucky, told the court that they did not oppose the request for dismissal.

“Dismissal of this appeal leaves in place the district court’s judgment, supported by its thorough opinion. It confirms that the States will not be subject to this unlawful Rule regardless of whether this appeal is withdrawn. And it is therefore an important victory for the States and the rule of law,” the states said.

U.S. lawmakers who had filed a brief opposing the rule celebrated the dismissal.

“This dismissal reinforces the fundamental principle: federal agencies do not have authority Congress doesn’t grant them,” Sen. Kevin Cramer (R-N.D.) said in a statement.

Sen. Shelley Moore Capito (R-W.Va.) added, “The decision from President Trump’s FHWA to end the previous administration’s attempt to continue this unlawful rule is an important step in reversing the extreme climate agenda of the past four years, and I’m thrilled that the court has now officially dismissed the appeal.”

Tyler Durden Wed, 02/05/2025 - 08:35

American Goods-Producers Suffer Biggest Job Loss In 2 Years, Services Employment Soars

The US economy added 183k jobs in January according to ADP - the biggest addition since October. Additionally, December's +122k print was revised dramatically higher to +176k...

Source: Bloomberg

... above January's print was above all analysts' expectations.

Source: Bloomberg

But...

"We had a strong start to 2025 but it masked a dichotomy in the labor market. Consumer-facing industries drove hiring, while job growth was weaker in business services and production," said Nela Richardson, Chief Economist, ADP.

With Goods-producers seeing 6k job losses (the worst since Nov 2023) as Services soared 190k (the most since July 2023)

Source: Bloomberg

With Manufacturing hit hard once again...

Source: Bloomberg

Additionally, for the first time since March 2023, Job-Stayers saw wage growth accelerating...

Source: Bloomberg

So, does Powell care about manufacturing jobs or just all jobs? None of this signals a more dovish 'data dependent' Fed will move soon.

Tyler Durden Wed, 02/05/2025 - 08:26

Futures Fall As Google, AMD Tumble; Dollar Slide Continues

US equity futures slumped, dragged by tech following disappointing earnings from two tech giants (AMD, GOOG) and concerns that an escalation of the Trade War 2.0 will lead to negative revenue impacts for MegaCap Tech (AAPL, Mag7). Further, USPS suspends mail deliveries from China/HK as small parcels that were previously exempt from tariffs are coming under the new Executive Order; impacts about 4mm parcels per day (AMZN; Shein; Temu). As of 8:00am ET, S&P futures were down 0.4%, suggesting Wall Street’s rebound may be short-lived, while Nasdaq 100 futures dropped 0.8% as Google parent Alphabet and AMD plunged in US pre-market trading after disappointing results, and dragged the entire Mag7 lower (GOOGL -7%, AMZN -1%, AAPL -2%, MSFT -0.3%, META -0.4%, NVDA +0.4% and TSLA -1%).  Bond yields slide again, dropping 6bps to 4.46%, and down some 14bps from Tuesday's highs as rates react to the negative growth impact rather than the expected inflationary impact. The USD is weaker again and commodities mixed as goal soars to a new record high approaching $2900 while energy is sold, and Ags particularly Softs move higher. Today’s macro data focus is on ADP, Mtge Apps, and ISM-Srvcs though the Trade Balance details may pique the Market’s interest. US companies reporting results on Wednesday include Uber, Disney, Ford and Qualcomm.

In premarket trading, Alphabet plunged 7% after slower growth in its cloud business contributed to lower-than-expected revenue in the fourth quarter. Advanced Micro Devices tumbled 9% after giving a disappointing outlook for its data center business, an area where it’s struggling to catch up with AI computing leader Nvidia Corp. Apple dropped in premarket trading after China’s antitrust watchdog signaled a probe into the company’s policies. The poor tech results and news hit the broader Mag7 group (GOOGL -7%, AMZN -1%, AAPL -2%, MSFT -0.3%, META -0.4%, NVDA +0.4% and TSLA -1%). Here are the other notable premarket movers:

• Broadcom (AVGO) gains 3% after a higher-than-expected capital spending forecast from customer Alphabet, which accounts for 9% of the firm’s sales, according to Bloomberg supply chain data
• Chipotle Mexican Grill (CMG) drops 4% after sales rose less than expected, highlighting the high bar the company set by defying an industrywide traffic slowdown in recent years
• Cirrus Logic (CRUS) rises 8% after the company forecast a 4Q revenue range with a midpoint above what analysts expected
• Electronic Arts (EA) gains 2% after the video-game maker reported third-quarter earnings and provided further context on the underperformance of EA Sports FC
• FMC (FMC) slumps 22% after the agricultural sciences company’s 2025 outlook fell short of expectations
• Harley-Davidson (HOG) slips 2% after 4Q revenue disappointed
• Johnson Controls (JCI) rises 8% after boosting its adjusted earnings per share forecast for the full year
• Lumen Technologies (LUMN) rises 10% after the telecommunications firm reported 4Q profit and revenue that beat estimates
• Match Group (MTCH) falls 8% after the dating service provider forecast revenue for the first quarter below the average analyst estimate and announced a change in CEO
• Mattel (MAT) surges 14% after the toymaker reported better-than-expected 4Q results and FY25 EPS guidance above analyst estimates
• Mercury Systems (MRCY) jumps 19% after the company reported adjusted earnings per share for the second quarter that beat expectations among analysts, who on average expected a loss
• Mondelez (MDLZ) drops 4% after the Oreo cookies-maker issued annual forecasts for organic revenue growth and profit that trailed Wall Street expectations
• Oscar Health Inc. (OSCR) sinks 11% after the insurance firm provided a disappointing 2025 revenue forecast and posted a wider-than-expected loss in the 4Q
• PDD Holdings (PDD) ADRs drop 6% after the US Postal Service said it’s temporarily suspending inbound parcels from China and Hong Kong, sparking concerns that e-commerce shipments from retailers like Shein or PDD’s Temu will be affected
• Among other Chinese e-commerce companies: Alibaba (BABA) -2%, JD.com (JD) -2%
• Uber Technologies (UBER) drops 7% after reporting weaker-than-expected fourth-quarter earnings and operating income, overshadowing steady bookings growth
• Walt Disney Co. (DIS) rises about 1% after reporting fiscal first-quarter results that topped analysts’ estimates, fueled by the blockbuster film Moana 2 and higher income from its streaming services

While the first volleys in the latest US-China trade war made clear that Xi Jinping would take a more cautious approach than during Donald Trump’s first term, tariff risks remain at the forefront.

“It remains tough for anyone to have a particularly high degree of conviction when operating in such an uncertain environment,” said Michael Brown, senior research strategist at Pepperstone Group Ltd. “I still favor adopting a more cautious stance in the short run, as uncertainty remains elevated, and participants chew through this week’s remaining risk events, including earnings from Amazon, and Friday’s US jobs report.”

Meanwhile, disappointing results from Alphabet and AMD also heightened unease about the outlook for megacap tech companies that have driven the S&P 500’s gains. Alphabet posted fourth-quarter revenue that missed analysts’ expectations after growth in its cloud business slowed, raising concern from investors about the billions the company is spending on artificial intelligence. Chip maker AMD gave a disappointing outlook for its data center business, an area where it’s struggling to catch up with AI computing leader Nvidia Corp. Amazon.com is scheduled to report on Thursday.

“Those expectations that analysts have placed, the bar is a lot higher this time,” said Aneeka Gupta, director of macro-economic research at Wisdomtree UK Ltd. “There is a greater probability that they don’t meet that higher bar. If they disappoint, the ramifications are a lot bigger.”

The breakneck speed of news continue: besides Trump's trade war, companies reporting results on Wednesday include Uber, Disney, Ford Motor and Qualcomm. Traders will also look to the US ISM services data later today for more clues on the Federal Reserve’s rate path. Activity in the services sector likely grew more slowly in January amid winter storms across much of the country and wildfires on the West Coast. High-frequency payroll data suggest hiring activity was relatively steady on a seasonally adjusted basis, according to Bloomberg Economics.

The Stoxx Europe 600 fluctuated, down 0.1% at last check, with declines for technology shares offsetting gains in health care after upbeat guidance from the region’s biggest listed company, Novo Nordisk A/S. Among individual movers in Europe, Spanish lender Banco Santander SA surged after reporting record profit and announcing at €10 billion buyback. Drugmaker GSK Plc. jumped after boosting its sales forecast. Renault SA declined after a report that Nissan Motor, in which it has a 36% stake, will withdraw from its deal with Honda Motor Co. Ltd. to integrate their businesses. Here are the biggest movers Wednesday:

• Novo Nordisk shares rise as much as 6.3% after the Danish drugmaker reported better-than-expected sales for the fourth quarter and provided guidance for 2025 which was also ahead of market expectations
• Santander shares advanced as much as 8.7% to the highest since February 2018 after the Spanish lender reported record earnings and offered a strong outlook for this year
• TotalEnergies shares gain as much as 1.9% to highest since Nov. 19 after France-based energy company reported fourth-quarter net income that beat the average analyst estimate and as it maintains the pace of share buybacks
• Vestas fluctuated between gains and losses in early trading as investors weighed the wind-turbine maker’s guidance, seen as conservative, against a welcome €100m stock buyback and reinstated dividends
• Credit Agricole shares advanced as much as 2.2% to the highest since June after the French lender reported net income for the fourth quarter that beat estimates driven by strength in asset management and insurance
• Bechtle shares rise as much as 6.9% to trade at the highest since mid-November, as preliminary results from the German retailer of computers and office supplies showed a beat on profits
• GSK shares rise as much as 6.7%, the most in almost four months, after the pharmaceutical giant’s results and outlook came in above consensus expectations, while its 2031 sales target was also raised
• LVMH drops as much as 1.2% after the shares are downgraded to hold from buy at Stifel. Its analysts say there is little upside for the luxury goods stock following a recent rally and lack of earnings upgrades
• Husqvarna shares drop as much as 7.3% and are headed for their lowest close since 2020 after the Swedish lawn-care and outdoor-equipment manufacturer’s fourth-quarter results
• Pandora shares fall as much as 4.1% after the Danish jewelry maker’s organic revenue growth forecast for 2025 fell short of estimates. The softer outlook could trigger earnings revisions, RBC says

Earlier in the session, Asian equities advanced as tech shares tracked their US peers higher, offsetting Chinese stock declines due to heightened trade tensions after the onshore market reopened post-holiday. The MSCI Asia Pacific Index rose as much as 1% before trimming gains, with tech-heavy markets such as Taiwan and South Korea helping to lead gains in the region. Japanese stocks reversed midday losses, as Toyota Motor gained after raising its annual operating profit outlook. Honda Motor surged and Nissan Motor slumped after the Nikkei reported that the two competitors failed to reach a consensus on a combination. Onshore Chinese equities traded lower after the Lunar New Year holidays, as sentiment was hit by fresh headlines on Sino-US relations, including a report that the US Postal Service is temporarily suspending inbound parcels from China and Hong Kong. A gauge of Chinese shares listed in Hong Kong fell more than 1%.

In FX, the Bloomberg Dollar Spot Index drops 0.3% to its lowest since Jan. 27, extending yesterday's losses after US job openings fell in December by more than forecast to a three-month low. The move reflects unwinds of longs built on tariff risks and meets spillover of yen strength. USD/JPY drops 1.1% to 152.65, its lowest since Dec. 13; one-week risk reversals are little changed at 140bps, puts over calls. Japan nominal wages rose 4.8% in December from a year earlier, the largest jump since 1997; real wages also grew for a second straight month in December, even as economists expected a drop amid accelerating inflation. The yen also rallied after Economic Revitalization Minister Ryosei Akazawa said the nation is in an inflationary situation.

In rates, treasuries hold gains, accumulated during London morning amid a bigger rally in gilts after a sale of UK 30-year bonds was most oversubscribed since July, leaving yields richer by 2bp-4bp across maturities. Also supporting Treasuries, US equity index futures fell after disappointing earnings from Alphabet and AMD. US 10-year yields trade around 4.45%, richer by 6bps on the day with gilts outperforming by 2.5bp in the sector; long-end leads gains in Treasuries, flattening 2s10s spread by ~1.5bp. Gilts lead a rally in European bonds, with UK 10-year yields falling 7 bps to 4.46%. Bunds extended declines after the ECB’s main gauge of future euro-zone pay growth continued to signal a sharp slowdown in 2025.

In commodities, WTI crude drops to $72 a barrel. Bitcoin rises 1.5% toward $98,000.

Treasuries rise, with US 10-year yields falling ~4 bps to 4.47%. Other haven assets are also bid with gold rising $29 to a fresh record high while the Japanese yen tops the G-10 FX leader board, climbing 1.1% against the greenback. The yen is also bid after data showed Japanese nominal wages rising at the fastest pace in nearly three decades. The Bloomberg Dollar Spot Index falls 0.3%.

Wednesday's US economic data calendar includes January ADP employment change (8:15am), December trade balance (8:30am), January final S&P Global US services PMI (9:45am) and January ISM services index (10am). Fed speaker slate includes Barkin (7:30am and 9am), Goolsbee (2:30pm), Bowman (3pm) and Jefferson (7:30pm)

Market Snapshot

• S&P 500 futures down 0.6% to 6,027.25
• STOXX Europe 600 little changed at 535.55
• MXAP up 0.8% to 184.02
• MXAPJ up 0.4% to 576.88
• Nikkei little changed at 38,831.48
• Topix up 0.3% to 2,745.41
• Hang Seng Index down 0.9% to 20,597.09
• Shanghai Composite down 0.6% to 3,229.49
• Sensex down 0.4% to 78,287.81
• Australia S&P/ASX 200 up 0.5% to 8,416.87
• Kospi up 1.1% to 2,509.27
• German 10Y yield little changed at 2.36%
• Euro up 0.3% to $1.0409
• Brent Futures down 0.9% to $75.53/bbl
• Gold spot up 1.0% to $2,870.42
• US Dollar Index down 0.35% to 107.58

Top Overnight News

• Trump’s plans for the US to take over Gaza have been met with anger and dismay across the Arab world, raising fears of reignited conflict in the region. Saudi Arabia and Turkey on Wednesday dismissed a proposal by President Trump for the US to take control of Gaza and for Palestinians to permanently leave the strip, an idea likely to be also rejected by other Middle Eastern nations. FT, WSJ
• US President Trump mulls revoking loans from the $400bln clean energy office: BBG
• US government officials have privately warned that Elon Musk’s blitz appears illegal. It was separately reported that the US Treasury gave Elon Musk's DOGE 'read-only' access to the payment system: WaPo
• US Senate confirmed US President Trump's nominee Pam Bondi as Attorney General.
• Morgan Stanley expects the Fed to deliver only one 25bps cut this year, in June (prior forecast was for two 25bps cuts)
• Fed's Jefferson (voter) said there is no need to hurry further rate cuts and a strong economy makes caution appropriate, while he added that interest rates are likely to fall over the medium term and disinflation is expected to continue, though progress may be slow. Furthermore, he said the Fed faces uncertainty around government policy and that growth and labour market conditions are expected to remain solid.
• China’s Caixin services PMI for Jan came in at 51, down from 52.2 in Dec and below the Street’s 52.4 forecast. WSJ
• Japan's December inflation-adjusted real wages rose 0.6% year-on-year thanks to a wintertime bonus bump, preliminary government data showed on Wednesday, with government officials expressing optimism that wage hike momentum ahead is growing. RTRS
• French PM Francois Bayrou is set to ride out two no-confidence votes today, giving him the stability needed to implement a delayed 2025 budget. BBG
• The ECB’s wage tracker predicts salaries rising by an annual 1.5% in the fourth quarter, a sharp slowdown from the 5.3% peak recorded a year earlier. While the ECB needs salary growth to slow, it doesn’t want too steep a deceleration. BBG
• Bond traders exited wagers in futures and cash Treasuries in the past week, amid tariff uncertainties. Swaps rates are pricing in just 3 bps of easing next month, or a bit more than a 10% chance of a cut. BBG
• Apple -2.6% in premkt. China’s antitrust watchdog is laying the groundwork for a potential probe into Apple Inc.’s policies and the fees it charges app developers, part of a broader push by Beijing that risks becoming another flashpoint in the country’s trade war with the US. BBG
• INTC (Intel) could be targeted with an antitrust probe in China as Beijing considers further ways to retaliate against Trump’s trade war. FT
• President Donald Trump and officials close to him recently expressed interest in pulling U.S. troops out of Syria, leading Pentagon officials to begin drawing up plans for a full withdrawal in 30, 60 or 90 days. NBC

Earnings Summary

• Advanced Micro Devices (AMD) -8.5% pre-market: Beat on Q4, strong AI-driven growth. Missed data centre sales forecasts.
• Alphabet (GOOGL) -7.3% pre-market: Q4 missed, Cloud growth slowed, foresees 2025 capex above-exp. Making the Gemini 2.0 flash AI model available from Wednesday. Continues its strong relationship with NVIDIA (NVDA).
• Amgen (AMGN) -1.4% pre-market: Q4 beats, Phase 3 trials for obesity drug MariTide will start before mid-year.
• Snap (SNAP) +3.7% pre-market: Strong Q4 numbers, execs. hint at price hikes ahead.
• Credit Agricole (ACA FP) +1.1%: Q4 beat. Loan loss provisions above exp.
• Equinor (EQNR NO) -2.4%: Q4 miss. USD 5bln buyback. 2025 Oil & Production to grow +4% Y/Y.
• GSK (GSK LN) +5.2%: Q4 mixed, FY beat. Announced buyback.
• Novo Nordisk (NOVOB DC) +3.5%: Q4 beat, slight Wegovy miss. Diabetes value market share U/C, diabetes care sales +20%.
• Pandora (PNDRA DC) -1.3%: Q4 mixed/in-line, new buyback, China performance remained challenging at end-Q4.
• TotalEnergies (TTE FP) +1.4%: Q4 beat, raises dividend.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed with the region only partially sustaining the positive momentum from the US, as Chinese markets reopened from the Spring Festival and participants digested disappointing China Caixin Services PMI data. ASX 200 edged higher with the gains led by outperformance in the resources, tech and mining sectors, while Australian Services and Composite PMI figures were revised higher from the preliminary release. Nikkei 225 swung between gains and losses with the index pressured intraday as the Japanese currency strengthened after data showed the fastest pace of wage growth in Japan since 1997. Hang Seng and Shanghai Comp declined on the mainland's return from the Spring Festival holiday as participants digested the recent US-China tit-for-tat tariffs, while disappointing Chinese Caixin Services PMI data added to the downbeat mood.

Top Asian News

• Temu and Shien targeted in new EU measures against "dangerous and cheap" e-commerce imports into Europe.
• China's Foreign Ministry, on US President Trump saying he is in no hurry to speak with Xi, says what is needed it dialogue and consultation not unilateral action.
• US President Trump's administration weighs adding Shein and Temu to its forced labour list, according to Semafor.
• BoJ director general of monetary affairs Masaki said the BoJ sees underlying inflation gradually heading toward 2% and price rises post-pandemic have been driven mostly by cost-push factors, such as rising import costs from a weak yen. Masaki stated the BoJ will keep raising interest rates if underlying inflation accelerates towards the 2% target as projected but added the BoJ must support economic activity with accommodative monetary conditions.

European bourses (Stoxx 600 -0.2%) began the session with a clear downward bias, and has traded sideways at subdued levels throughout the morning. Little price action was seen following the release of today's EZ Final PMIs/ECB Wage Tracker. European sectors began the session with a negative bias, and sentiment continues to remain downbeat. Healthcare tops the pile, lifted by post-earning strength in Novo Nordisk (+3.6%) and GSK (+5.2%). Autos and Parts has parked itself right at the bottom of the pile, with losses driven by downside in Renault after it was reported overnight that the Nissan/Honda merger could collapse; recent sources suggest the deal has been scrapped. The French automaker holds a 17% stake in Nissan. Nissan (7201 JT) board decides to scrap merger talks with Honda (7267 JT), according to Reuters sources.

Top European News

• The Times' Shadow BoE MPC voted 5-4 in favour of lowering the base rate by 25bps to 4.50% this week; the dissenters cited stubborn wage growth as justification for holding rates.
• ECB's de Guindos says he is not sure where ECB interest rates will end up; see inflation approaching the ECB target.

FX

• DXY is lower for a third consecutive session as markets continue to price in a more constructive trade environment after Trump's concessions to Mexico and Canada earlier in the week. From a US macro perspective, today sees the release of ADP in the run-up to Friday NFP print, whilst ISM services data is also due; a slew of Fed speakers are also on the agenda. DXY has crossed below its 50DMA at 107.77 with the next downside target coming via the 30th Jan low at 107.50.
• EUR/USD has gained a footing above the 1.04 mark, which is in stark contrast to the 1.0209 trough seen at the start of the week. This has mainly been as a result of the easing trade tensions between the US and Mexico/Canada. Final EZ PMI and the ECB's latest wage tracker data had little sway on EUR. ECB Chief Economist Lane is due to speak.
• GBP is once again on the front foot vs. the USD, whilst steady vs. the EUR. UK-specific drivers are on the light side in the run up to Thursday's BoE rate decision which is widely expected to see a 25bps rate cut via an 8-1 vote split. UK services PMI was revised lower but GBP was unfazed. Cable is up for a third session in a row with Monday's 1.2248 trough very much in the rear-view mirror, with the pair currently at 1.2520.
• Antipodeans are both near the top of the G10 leaderboard as optimism around trade continues to percolate following the easing of tensions between the US, Mexico and Canada earlier in the week. It remains to be seen whether this optimism is unfounded for the antipodes given that China’s retaliatory tariffs on the US come into effect on February 10th.
• PBoC set USD/CNY mid-point at 7.1693 vs exp. 7.2661 (prev. 7.1698).

Fixed Income

• A morning of gains for USTs, upside was initially modest in nature and tempered by hawkish developments out of Japan via the largest wage data and remarks from former official Hayakawa around potentially hiking twice more in 2025. Further upside in the complex continued in the European session, with some impetus potentially stemming from reports that China could investigate Apple. Specifically, USTs lifted to a 109-15 session high over the course of 20-minutes. Ahead, US ADP National Employment, ISM Services, Quarterly Refunding Announcement and a slew of Fed speakers.
• Bunds are firmer. For the bloc specifically, the region’s final PMIs have been subject to slightly more revision than is usually the case with French figures revised down amid political uncertainty; the EZ print saw Composite unrevised while Services saw a mild downward revision. The first formal release of the ECB’s wage data saw a very slight revision higher in the 2025 estimate to 3.256% from the initial 3.2% estimate; a slight pull back was seen in Bunds, but the upside has since continued alongside peers. Bunds at a current 133.64 peak.
• Gilts are following peers throughout the morning and hit a 93.47 peak just after the release of the UK’s own Final PMIs. Figures which were subject to modest negative revisions while the internal commentary points to an increasingly stagflationary environment.

Commodities

• Another soft morning for the crude complex despite the weak Dollar but after the US and Chinese presidents failed to conduct a call yesterday to discuss tariffs. On that front, US President Trump said he would speak to Chinese President Xi at the appropriate time and is in no rush, while he responded 'that's fine' when asked about China’s retaliatory tariffs. On the flip side, US President Trump signed a memorandum regarding maximum pressure on Iran. WTI Mar resides in a USD 72.17-72.97/bbl range and Brent Apr within 75.60-76.34/bbl confines.
• Firm trade seen in precious metals, partly amid the momentum gold has upheld as it prints fresh record highs. Spot gold has reached levels as high as USD 2,870/oz to the upside (vs USD 2,839.74/oz low) with clean air seen until prices reach round and half-round levels.
• Mixed trade in base metals with copper futures rangebound despite the return to the market of its largest buyer as participants also digested disappointing Caixin Services PMI data. 3M LME copper resides in a USD 9,151.00-9,209.00/t range.
• Iranian Oil Minister says unilateral sanctions on major oil producers will place pressure on OPEC, as US President Trump orders "maximum pressure" on Tehran. Adds, unilateral sanctions will destabilise the market.
• Private Inventory Data (bbls): Crude +5.0mln (exp. +2.0mln), Distillate -7.0mln (exp. -1.5mln), Gasoline +5.4mln (exp. +0.5mln), Cushing +0.1mln.

Geopolitics: Middle East

• US President Trump said he had fantastic talks with Israeli PM Netanyahu and many countries will soon be joining the Abraham Accords, while they discussed how to ensure Hamas is eliminated and Trump stated that Gaza should not go through the process of rebuilding and occupation by the same people, and instead, various domains should be built for Gazans to live in. Trump added the US will take over the Gaza Strip and own it with the site will be levelled and economic development to be created. Furthermore, Trump said they are working hard to get all hostages and more hostages will be released, if not, it will make 'us' somewhat more violent.
• Israeli PM Netanyahu said US President Trump is the greatest friend Israel has ever had in the White House and they must eliminate Hamas, recover hostages and ensure that Gaza does not pose a threat to Israel. Netanyahu also stated that Trump sees a different future for Gaza and it is a different idea worth paying attention to and could change history.
• Hamas official Sami Abu Zuhri said President Trump's remarks about the desire to control Gaza are ridiculous and absurd, while he added that any ideas of this kind are capable of igniting the region.
• Saudi Arabia stressed its rejection of attempts to displace Palestinians from their land and said it will not establish relations with Israel without the establishment of a Palestinian state.
• US Middle East envoy Witkoff said President Trump is telling the Middle East that Gaza will probably be uninhabitable for 10-15 years.

Geopolitics: Ukraine

• Ukrainian drone attack sparked a fire at an oil depot in Russia's Krasnodar region.

US Event Calendar

• 07:00: Jan. MBA Mortgage Applications 2.2%, prior -2.0%
• 08:15: Jan. ADP Employment Change, est. 150,000, prior 122,000
• 08:30: Dec. Trade Balance, est. -$96.8b, prior -$78.2b
• 09:45: Jan. S&P Global US Services PMI, est. 52.9, prior 52.8
• 10:00: Jan. ISM Services Index, est. 54.0, prior 54.1, revised 54.0

DB's Jim Reid concludes the overnight wrap

After a tricky few days for markets, the last 24 hours saw things begin to stabilise again, with most asset classes unwinding the tariff-driven moves around the weekend. For instance, the S&P 500 (+0.72%) posted a decent recovery, the VIX index (-1.41pts) fell back a bit, and the US Dollar also weakened after its recent surge. There wasn’t a single factor driving the moves, but investors have grown hopeful that the tariff delays for Mexico and Canada will mean that tariffs are ultimately avoided, whether that’s via further delays or some kind of deal. If that does transpire, then that would avoid a major trade shock that hits growth and raises US inflation, hence the more positive market reaction over the last 24 hours. Nevertheless, there’s little doubt that markets remain pretty nervous about the whole situation, withtariff risk still being priced in to several key assets, and gold prices (+0.98%) hit an all-time high of $2,843/oz.

Some of that optimism followed reports that a call between President Trump and President Xi was being scheduled, leading to speculation about whether something might also be worked out with the 10% China tariffs now in force. However, that was then downplayed, with Trump himself saying “We’ll speak to him at the appropriate time. I’m in no rush”. We’re starting to see some real economy impacts from the new tariffs as well, as the US Postal Service suspended inbound international packages from China.

Reflecting the growing optimism on tariffs, some of the best performers yesterday were the most trade-sensitive assets. For instance, the Canadian Dollar (+0.74%) strengthened further against the US Dollar, continuing to bounce back from its 9-year low on Friday. Another outperformer was the NASDAQ Golden Dragon China Index (+2.65%), which is made up of companies that are publicly traded in the US, but where a majority of their business happens in China, though this did give up some of its gains after being up +4.3% intraday. And over in Europe, the STOXX Automobiles & Parts Index (+2.09%) had its best day in four weeks, as investors grew a bit more confident that tariffs might be avoided.

Aside from the latest trade developments, markets got a further boost from the latest JOLTS report of job openings from the US, which showed the labour market remained on an even keel into December. Admittedly, job openings fell by more than expected, down to a 3-month low of 7.6m (vs. 8m expected). But it still meant the ratio of vacancies per unemployed workers was at 1.10, which is broadly in line with its levels over the previous 6 months. Moreover, the quits rate (2.0%), the hires rate (3.4%) and the layoffs and discharges rate (1.1%) were all unchanged. So from a market point of view, it was in a goldilocks zone where it wasn’t showing inflationary pressures from a tight labour market, but it didn’t show a serious deterioration either.

All-in-all, that helped the S&P 500 (+0.72%) to recover after the last couple of sessions, aided by a strong performance for the Magnificent 7 (+1.70%). Palantir (+23.99%) saw the best performance in the S&P 500, which came as their revenue forecast surpassed estimates. However, the tech mood then soured after the close as Alphabet’s quarterly results missed sales estimates amid slowing growth in its cloud business, with the company also announcing a higher than expected 2025 CAPEX plan. The stock fell by more than -7% in after-hours trading. Next up on the Mag 7 earnings are Amazon, who report after tomorrow’s close. As seen on slide 6 of Jim’s “Deeply seeking comparisons to 2000” chat pack last week (link here), investors are expecting 9-22% per annum growth in earnings for the Mag-7 for the next 5 years, so the expectations bar is high, and any disappointment in earnings are likely to be met with a sharp sell-off.

Meanwhile in rates, US Treasuries also unwound the previous day’s moves, with yields moving lower across the curve. That was supported by comments from Fed Vice Chair Jefferson, who reiterated the view that he saw “a gradual reduction in the level of monetary policy restraint” as “the most likely outcome”, even as he said that “I do not think we need to be in a hurry to change our stance.” So along with the tariff delays, that supported investors’ belief that the Fed would still cut rates this year, and the amount of cuts priced in by the December meeting moved up +2.4bps on the day to 44.5bps. In turn, that helped Treasury yields to move lower, with the 2yr yield (-3.5bps) down to 4.21%, whilst the 10yr yield (-4.4bps) fell to 4.51%.

Over in Europe, markets also put in a decent performance that unwound much of the previous day’s moves. For sovereign bonds, that meant yields rise across most of the continent, as the prospect of fewer tariffs saw investors dial back the likelihood of rapid ECB rate cuts. So that helped yields on 10yr bunds (+1.4bps) to move back up a bit. Moreover, there was a fresh tightening in sovereign bond spreads, with the Franco-German 10yr spread falling to 71.4bps, its tightest since mid-September. European equities also advanced, with gains for the STOXX 600 (+0.22%) and the DAX (+0.36%), and there were particularly strong gains in southern Europe for Italy’s FTSE MIB (+1.38%) and Spain’s IBEX 35 (+1.37%). Otherwise, there wasn’t too much ECB commentary, but France’s Villeroy confirmed existing market expectations that “there will probably be more” rate cuts.

Overnight in Asia, data has shown Japanese wages growing by their fastest pace since 1997 in nominal terms, cementing the view that the Bank of Japan are set to keep hiking rates. That’s led yields to rise across the curve, with the 10yr JGB yield (+1.2bps) up to 1.28%, which is its highest level since 2011, whilst the Japanese Yen has strengthened by +0.61% against the US Dollar overnight. In terms of the data itself, it showed that nominal earnings were up by +4.8% year-on-year (vs. +3.7% expected), and real earnings were up +0.6% year-on-year (vs. -0.1% expected). This morning the Nikkei (+0.07%) is broadly flat. Elsewhere in Asia, the CSI 300 (-0.27%) and the Shanghai Comp (-0.36%) both fell back as they reopened after the holiday, although South Korea’s KOSPI (+1.04%) is on track for a second consecutive advance. Looking forward, US equity futures are pointing lower after Alphabet’s earnings, with those on the S&P 500 down -0.42%.

To the day ahead now, and data releases from the US include the ISM services index for January, the ADP’s report of private payrolls for January, and the trade balance for December. Otherwise, there’s the final services and composite PMIs for January from around the world. From central banks, we’ll hear from Fed Vice Chair Jefferson, along with the Fed’s Barkin, Goolsbee and Bowman, and the ECB’s Lane.

Tyler Durden Wed, 02/05/2025 - 08:17

Military Plane Carries Indian Migrants Back From US In Furthest Deportation Flight Yet

Indian media is reporting an unprecedented first - that US military flights are being used to deport illegal migrants from India.

Regional reports are citing a US official who say this is the furthest such flight involving military transport flights for migrants, also amid reports that illegals are also being flown to the US Army's base at Guantanamo Bay Cuba. Here's what the English-language Times of India says in an unconfirmed report:

In the first such operation of its kind involving India since the return of Donald Trump to the White Hosue, the US dispatched a C17 miliary aircraft carrying an unspecified number of illegal Indian migrants to India. Anonymous US officials were quoted as saying dozens had been deported, and unconfirmed reports put the number of number of deportees at north of 200, but there is no confirmation about the same by either county.

Illustrative: USAF

The report continues, "The people who are returning, all verified Indian nationals, are among the thousands of Indians identified for deportation under the Biden administration."

This after President Trump previewed last month, "For the first time in history, we are locating and loading illegal aliens into military aircraft and flying them back to the places from which they came," according to a press briefing issued by Trump last month.

According to a Tuesday Bloomberg report:

Like several other nations, India is working behind the scenes to appease the Trump administration and avoid the brunt of its trade threats. In the last few weeks, India’s Prime Minister Narendra Modi has delivered a series of concessions to the White House on issues core to Trump’s agenda. Modi is expected to meet Trump in Washington next week.

India’s Ministry of External Affairs did not offer an immediate comment. Bloomberg earlier reported that the South Asian nation is willing to take back 18,000 undocumented Indian migrants from the US.

But we should note that a couple hundred illegal undocumented Indian migrants at this point is but a very small political concession by Modi. Trump and the Indian leader have had very warm relations in the past, and during Trump's first administration.

Currently, all eyes are focused on flights to central America, but it could demonstrate how far the new president is willing to go, in terms of costly cross-continental flights all the way to southern Asia.

Bloomberg has noted that India's own numbers are likely an underestimate. "While the total number of undocumented Indian migrants in the US isn’t certain, a report published last year by the Department of Homeland Security pegged the number at around 220,000 as of 2022," the publication wrote.

First U.S. military flight deports Indian migrants under #DonaldTrump's immigration agenda | Watch pic.twitter.com/OvNZnnPE0a

— The Times Of India (@timesofindia) February 4, 2025

"An aircraft with around 200 people residing illegally in the US will land on Wednesday in Amritsar in India’s northern state of Punjab, according to people familiar with the matter, who asked not to be identified because the details aren’t public," Bloomberg reported further.

Tyler Durden Wed, 02/05/2025 - 07:45

China Finds Leverage Ahead Of Trade Talks: Beijing Mulls Probe Into Apple's App Store Practices

Beijing appears to be reviving several antitrust investigations against US big tech companies. 

Financial Times reported on Tuesday that antitrust investigations into Google and Nvidia were being considered, while a new probe against Intel was pending. Bloomberg now reports that China's antitrust watchdog is mulling over opening a formal probe against Apple. These investigations should be viewed as a strategic move by Beijing to increase leverage ahead of upcoming trade talks between President Xi Jinping and President Donald Trump.

Bloomberg, citing sources familiar with the matter, reported that China's State Administration for Market Regulation (SAMR) is considering a potential probe into the world's most valuable company over the 30% fee it charges app developers. The potential investigation will also review how Apple blocks third-party payment services in the App Store. 

The report continued:

The conversations stem from long-running disputes between Apple and developers such as Tencent Holdings Ltd. and ByteDance Ltd. over iOS store policies — a source of tension between the US company and regulators worldwide.

...

Chinese regulators believe that Apple may be charging local developers unreasonably high fees, the people said. They think the barring of third-party app stores and payment methods also hinders competition and hurts local consumers, the people said. If Apple resists making changes, the government may launch a formal investigation, the people added.

"Last year, the company revamped its store practices in the European Union to meet the requirements of the Digital Markets Act. That's led to third-party app marketplaces and outside payment methods," Bloomberg noted.

The news follows an FT report one day ago on SAMR opening up a competition investigation into Google. The report did not clearly state the scope of the investigation into Nvidia. 

The tech investigations show that Beijing seeks leverage ahead of Xi's trade talks with Trump. On Tuesday morning, US tariffs of 10% went into effect, with China retaliating with tariffs of its own. Separately, Trump struck multiple deals with Canada and Mexico to delay imposing 25% tariffs. 

In markets, Apple shares in New York slid nearly 3%...

If trade talks between the US and China sour, China will likely open an official probe into Apple, which would be yet another headache for Tim Cook. The CEO is already dealing with soft iPhone sales in the world's largest handset market. 

Tyler Durden Wed, 02/05/2025 - 07:20

De Beers CEO Signals US Diamond Recovery, Criticizes China's Fake Stones Grown "In Microwaves"

De Beers Chief Executive Officer Al Cook spoke with Bloomberg Television on Tuesday at the Mining Indaba conference in Cape Town, South Africa, highlighting early signs of a recovery in the US diamond market. The industry has faced significant pressure from cash-strapped consumers, while a surge in lab-grown diamonds from China has sent prices tumbling. 

"So we saw some good signs in demand just before Christmas. In November and December, we saw demand for diamond jewelry in the US up around 8% year on year. So, there are some encouraging signals. Demand in the US has been reduced by lab-grown diamonds," Cook said. 

He explained, "We have to tell the story of natural diamonds far better than we have. Lab-grown diamonds are like taking a poster of the Mona Lisa and putting it up in an art gallery and telling people it's the real thing. It's not - a natural diamond is created over a billion years, while lab-grown diamonds are created in a microwave in China in three weeks." 

Separately, Bloomberg noted:

Anglo American Plc CEO Duncan Wanblad said on Monday that the mining giant won't let its struggling De Beers diamond business be a drag on its restructuring. Wanblad said the company intended to exit De Beers by the end of this year, but given the state of the market that could spill over into 2026.

The diamond industry has been hammered by a twin crisis: cash-strapped consumers amid a luxury downturn and the proliferation of lab-grown diamonds flooding the world by China. 

Cook pointed out in the interview that India has overtaken China to become the second-biggest market. He commented: "But we see growth, the regrowth of Chinese demand being a longer-term story," adding, "The good news is that India has taken over where China was." 

According to Bloomberg data, citing the Diamond Standard Index, diamond prices have plunged to the lowest on record, with data going back to early 2002.

Diamond deflation. 

Tyler Durden Wed, 02/05/2025 - 06:55

Why The US Grows While The EU Slows: Adam Smith's Recipe

Authored by David Hebert via the American Institute for Economic Research (AIER),

What explains the curious lack of economic progress in the EU over the past 16 years?

In 2008, the economies of the European Union and the United States were roughly equal in size in terms of GDP. Fast forward through a global financial crisis and pandemic and the U.S. economy has nearly doubled while Europe’s has barely grown at all. How can we explain this?

One answer is to point out the glaring problem with comparing EU GDP in 2008 to EU GDP in 2023: Brexit. Recall that GDP is defined as the value of all the production that takes place within an economy. In 2016, the EU lost its second largest economy and with it, a significant portion of its overall GDP. Still, with a GDP of between $2.5 and 3 trillion, Britain’s exit from the EU cannot, by itself, explain the nearly $10 trillion gap in GDP.

First, we must remind ourselves that wealth does not happen automatically, bestowed from above as if it were manna from heaven. It has to be created through the conscious and deliberate efforts of workers, business leaders, and entrepreneurs. Notice one group of people missing from this list: policymakers. Despite their claims to the contrary, policymakers cannot create wealth. Indeed, they cannot do so. However, their role in wealth-creation cannot be understated, for they wield the simultaneous power to foster growth and to inhibit it.

Adam Smith gave us the blueprint for growth all the way back in 1776. He writes, “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.”

Comparing the United States and the EU on these dimensions reveals differences.

Peace

To classify the current U.S. climate as “peaceful” seems disingenuous, especially considering recent attacks, murders, and the bellicose election cycle. Indeed, “reducing crime” is a growing concern for all Americans across the entire political spectrum. Interestingly, crime rates have fallen precipitously in the last several decades. Despite the growing concerns, in a very real sense, Americans have never been safer in their homes and their communities.

Internationally, the United States is also much more peacefully engaged than it has been in decades. The U.S. is not currently engaged in any large-scale, direct combat roles in any international conflicts. To the extent that the U.S. is involved (in Ukraine or the Israel-Hamas War), it is through providing political backing, economic aid, military intelligence, and diplomatic support. In other words, the U.S. is engaged in supportive activities, not combative.

Looking at the EU, we see similar results. Crime rates, in general, have mostly fallen throughout the Union, with some cross-country variation. Though, it should be noted that rates of some crimes have been rising in recent years in the EU and some have fallen only slightly and nowhere near the levels to which they have fallen in the U.S.

Advantage: United States

Easy Taxes

“Easy taxes” could be interpreted many ways. The most obvious interpretation would be the overall tax rate. Because the EU is made up of so many different countries, each of which has their own constellation of policies, direct comparisons can be difficult to make. Looking at top marginal income tax rates, the US comes in at roughly 42.3 percent. Countries in the EU range from 55.9 percent (Denmark) to 10 percent in Romania and Bulgaria, with the average being 42.8 percent. On this dimension, taxes seem to be roughly similar in terms of ease.

One could also consider taxes “easy” if the compliance costs are relatively low and do not disproportionately benefit political cronies or large corporations. Here, both countries largely fail. The U.S. Chamber of Commerce reported in 2024 that 73 percent of small businesses spent either “a great deal” or “a fair amount” of time on issues related to tax compliance. The European Parliament itself, in a 2023 report (PDF), admits as much, saying, “smaller enterprises are burdened with relatively larger compliance costs. Such additional burden does not appear to stem from special allowances for small firms, rather from the general design of a tax system.” Smaller businesses typically do not have access to a dedicated, in-house team of tax experts who are able to handle the administrative and compliance burdens of a tax system.

Finally, we could also consider taxes to be “easy” if they are applied in a way that is equitable. In this context, “equitable” means that people or companies in similar financial or economic situations pay the same amount of taxes. In the United States, it is no secret that many companies enjoy special tax abatements and exemptions and that many will choose to incorporate in Delaware for certain tax and business advantages. But the same is true of countries in the EU, especially if we consider that companies can locate their headquarters in a particularly tax-advantaged country and that workers can come from neighboring countries with relative ease. Since tax rates, exemptions, and interpretations of statute vary by country in the EU, it can easily be the case that clever companies can find (unintended or not) loopholes allowing them to save on their tax bill.

Advantage: United States (but only slightly)

A Tolerable Administration of Justice

Whenever even just two people live in close proximity, conflict will occur. This conflict need not necessarily be violent; it could be a simple disagreement between parties requiring outside adjudication. Customers and merchants can disagree on the terms of a warranty, companies can believe that they have complied with various laws and regulations where the public might disagree, or neighbors might disagree on noise levels that are permissible at certain hours of the night.

What is necessary, then, is some means of resolving conflicts in a way that is understood to be fair and impartial to both parties. This conflict resolution mechanism must also be easily accessible so that when disputes happen, a resolution can be reached quickly and at (relatively) low cost. In most countries, this service is performed by courts and other mediation services.

In the United States, The National Center for State Courts provides analyses of public opinions of the court system. In their 2023 report, they find that, broadly speaking, the public trusts the court system, finds it to be generally accessible, but that there is growing concern that the court system has become politicized.

For the EU case, the European Commission publishes an EU Justice Scoreboard report, which analyzes the court system on the bases of “efficiency, quality, and independence.” While they find evidence of general improvements being made within the Union, they also acknowledge that much work remains and that there is tremendous cross-country variation in the quality of the judiciary.

We can also get a sense of the overall administration of justice by looking at The Fraser Institute’s Economic Freedom of the World Index, specifically the legal system score by country over the last twenty years. While both the United States and the EU score highly in absolute terms, of the twenty-seven countries in the EU, only seven (Austria, Denmark, Finland, Germany, Netherlands, Luxemburg, and Sweden) score higher than the U.S. and only just barely. The other twenty countries are all significantly lower than the U.S. scores.

This matters because having reliable, affordable, and quick access to an impartial court system allows for conflicts to be resolved and for both parties to move forward with their lives—and businesses.

Advantage: United States

Conclusion

Overall, the United States has greater peace, both domestically and internationally, easier taxes, and a more tolerable administration of justice than the European Union. The disparate economic growth between the two is understandable in those terms.

What does remain a mystery, though, is the magnitude of the disparity. If we include the UK’s GDP into the EU’s GDP, there would still be a $7 trillion gap. And while some may point out that Brexit caused reduced economic growth for the entire European region, it is hard to imagine anyone seriously arguing that voting against Brexit would have nearly doubled every single EU member’s GDP. Much remains to be examined.

Still, Adam Smith remains correct: peace, easy taxes, and a tolerable administration of justice are vital for economic progress. With these securely in place, the rest, as he says, will follow and indeed it has.

Tyler Durden Wed, 02/05/2025 - 06:30

The Most Important Trade Chart In The World

Markets this year - and newsflow in general - seem to be rolling from one mega theme to another at breakneck speed. As DB's Jim Reid described it, by mid-January, the UK was in the crosshairs of investors as global yields spiked. A week later, Deep Seek created temporary panic in the tech sector. Then yesterday saw another huge market swing, especially in Mexican and Canadian assets, as the “shock” weekend tariffs were delayed by a month.

Sure, trade will remain the short-term focus, but don’t forget about tech. Alphabet reported tonight and tumbled more than 8% after it missed on revenue and cloud, with Amazon now on deck for Thursday. Note that yesterday Nvidia fell below last Monday’s levels when they fell -16.97% in a day, thus wiping out the subsequent bounce. It’s now down -22% from its all-time high in early January and at levels it first hit in June last year, pointing to a loss of momentum. So keep an eye on tech as the trade war heats up.

That said, the trade topic continues to be front and center and US tariffs of 10% on all Chinese goods went into effect this morning, which were met in turn with retaliation from China. They imposed 10-15% tariffs on a combination of energy, agricultural goods, and auto vehicles from the US, a response which was largely viewed by the market as tame even if this is just the first exchange in the latest trade war.

Indeed, while markets may be inclined to read across from negotiating successes the US had with Mexico and Canada, a lot is different in the US-China trade relationship according to Reid, where a much more existential imbalance lies behind US trade angst with China, which the Trump administration now seems keen to correct.

In a report published this morning by Deutsche Bank's Thematic Research team (available to pro subs in the usual place), the authors look at the heart of the imbalance that’s motivating the US-China trade war and explains why this will be a fundamentally different fight. 

While the US accounts for 29% of global consumption, it produces only 15% of the world's goods. Meanwhile, China accounts for 32% of global manufacturing but just 12% of consumption. Simplifying it, this imbalance shows up in a USD1 trillion Chinese trade surplus and a nearly equivalent US deficit.

China's economic development in recent years, instead of moving it towards a consumer-oriented economy, has moved in the direction of a more advanced manufacturing economy. This is now causing consternation in the West, with China making strides in many high-value added capital goods. While the US is still the second-largest goods producer, it has less than half of China's global share, with many US allies also seeing significant drops in their manufacturing share over the past 30 years. This may now have gone too far. Access to cheaper goods is no longer a good “trade” for the US given the loss of economic security over production supply chains and technologies to a competing power.

Trump's exhortations to "MAKE YOUR PRODUCT IN THE USA AND THERE ARE NO TARIFFS" suggests that bringing production back to the US is a key goal of trade policy.

As Reid concludes, the US-China trade war is likely to be fundamentally more enduring than the US’s disputes with its neighbors, something which the market is clearly not ready for...

Much more in the full DB presentation available to pro subscribers.

Tyler Durden Wed, 02/05/2025 - 06:15

Palestinians Would 'Love To Leave' Gaza, US Could 'Take It Over' Trump Proclaims Alongside Netanyahu

Israeli Prime Minister Benjamin Netanyahu was all smiles as he visited the White House and met with President Trump in the Oval Office Tuesday afternoon, especially given Trump said many things in terms of the future of Gaza that the Israeli leader would welcome.

Trump in an exchange with reporters while sitting next to 'Bibi' continued pressing the idea that Palestinians should be relocated out of Gaza. "There's hardly a building standing, and the ones that are are going to collapse. You can't live in Gaza right now. And I think we need another location," Trump said, echoing prior comments.

Trump stoked further controversy by claiming Palestinians would "love to leave" Gaza - comments which have already been condemned by many pundits as tantamount to an ethnic cleansing campaign. Arab leaders too have blasted any plan which would see a mass exodus or removal of Palestinians to neighboring countries.

Via AFP

" Who would want to go back?" Trump posited during the sit-down with Netanyahu. Indeed the place has been leveled, but as the ceasefire has held there's been evidence of a mass return of tens of thousands of Palestinians to their largely destroyed communities in the northern Gaza Strip.

"It would be my hope that we could do something really nice where they would not want to return," Trump reasoned, despite the current Israel-Hamas truce calling for future reconstruction of the Strip.

"It doesn't have to be one area, but you take certain areas and you build really good quality housing, like a beautiful town, like someplace where they can live and not die," Trump said.

"The U.S. will take over the Gaza Strip, and we will do a job with it, too," Mr. Trump said. "We'll own it and be responsible for dismantling all of the dangerous unexploded bombs and other weapons on the site, level the site and get rid of the destroyed buildings —  level it out. Create an economic development that will supply unlimited numbers of jobs and housing for the people of the area. Do a real job. Do something different."

"Just can't go back," he continued. "If you go back, it's gonna end up the same way it has for a hundred years."  --CBS

The two leaders also discussed the status of the ceasefire in Gaza and the question of the eradication of Hamas. "I support getting all the hostages out and meeting all our war goals," Netanyahu said.

"That includes destroying Hamas’s military and governing capabilities and making sure that Gaza never poses a threat to Israel," he added, in broad agreement with Trump - though it's unclear what details the two see eye to eye on in terms of next practical steps. According to more:

Turning to Netanyahu who was sitting beside him, Trump said, "And he wants peace also."

"We’re dealing with a very complex group of people, situation and people, but we have the right man," Trump added.

"We have the right leader of Israel. He’s done a great job, and we’ve been friends for a long time."

When pressed on how many people he thinks should be resettled out of Gaza, Pres. Trump says, “All of them.”

“I think all of them. I think they’ll be resettled in areas where they can live a beautiful life and not be worried about dying every day.” https://t.co/kpbLcWSWh3 pic.twitter.com/iMhURaEA9c

— ABC News Politics (@ABCPolitics) February 4, 2025

As for some kind of refugee mass resettlement plan, the reality is that past historic waves of Palestinian refugees and armed groups flooding nearby Arab countries have literally erupted in wars and street battles, which especially Lebanon can attest to. Jordan has also seen its country destabilized at times - Black September being a prime case in point.

There's also the logistics - with Palestinians now rushing back to their largely destroyed communities in northern Gaza, they are defiantly telling the world they don't plan to leave their homeland. The Gaza ceasefire would likely collapse if Palestinians were suddenly pushed out in large waves into Egypt and Jordan.

Meanwhile a little damage control...

Advisers to US President Trump’s administration told reporters that his “cleaning out” Gaza comment referred to a long-range plan to make the enclave habitable, and that it is “unfair” to Palestinians to tell them they’d return within five years. pic.twitter.com/VxzYjx7qZF

— Al Jazeera English (@AJEnglish) February 4, 2025

Jordan already hosts several million Palestinians, based on past historic large refugee waves, and the result of mass displacement due to various Arab-Israeli wars.

If Jordan goes along with Trump's plan, there would be the likelihood of some kind of armed Palestinian uprising within Jordan itself.

⚡️#BREAKING A reporter asked Trump what would happen if Egypt and Jordan told him no.

"They won’t tell me no. I want to remove all the residents of Gaza," he responded.

"It will happen."

— War Monitor (@WarMonitors) February 4, 2025

Such a plan would be nearly impossible to execute or at least be deeply complicated from the start. And ultimately it can be seen as the textbook definition of ethnic cleansing of a territory.

Tyler Durden Wed, 02/05/2025 - 05:44

'Red Hand' Revolt In Serbia: People Power Or Color Revolution?

by Nebojsa Malic via The Libertarian Institute,

For six weeks now, Serbia has been rattled by what purports to be a student rebellion, leading to the prime minister’s resignation last week and rumors of a snap election. Students from sixty-three colleges of five state and two private universities, as well as four high schools, have emerged as the biggest challenge to the Progressive Party rule—and fueled rumors of yet another "color revolution."

Late last week, thousands of students rallied in the capital, Belgrade, and set out to Novi Sad—the second-largest city in Serbia and the site of a tragedy that has served as the trigger for the entire crisis. The concrete canopy of the Novi Sad railway station, built in 1964 but recently renovated as part of a bullet-train project, collapsed on November 1 and killed fifteen people.

Serbia is the largest of the six successor states of the former Yugoslavia (Kosovo, a breakaway Serbian province that the United States and its allies consider the seventh, doesn’t count). Belgrade has no intent of joining NATO, which bombed Serbia in 1999 to occupy and detach Kosovo, and officially aspires to join the European Union—but has so far refused to go along with the bloc’s sanctions regime against Russia.

All of this has obviously made Serbia a place of considerable interest to Moscow, Beijing, Brussels and Washington alike. President Aleksandar Vucic has managed to parlay his balancing diplomacy into a flow of infrastructure and industrial investments, such as the high-speed train project to the Hungarian border.

Opposition parties backed by the West have long accused the Progressives of skimming funds from these construction projects—as they have done while in power—and quickly seized on the Novi Sad tragedy to demand resignations and arrests. They followed the same playbook as in 2023, when a mass shooting at a Belgrade school was harnessed into “Serbia against violence” protests to demand regime change. Vucic responded at the time by calling a snap election, which the Progressives easily won, however.

At first the Novi Sad protests looked like another street performance that would fizzle out. Everything changed when students of two Belgrade university schools walked out of class on November 21. The following day, a group of theater students blocked the street outside their school, and got into a fight with several motorists who tried to get through. The incident triggered a domino effect at Belgrade colleges, with self-appointed “student soviets” (plenum) eventually demanding the arrest and identification of the attackers—who they claimed were ruling party activists—and the release and full pardon of all students involved in the fracas.

Since then, student groups have blocked strategic streets in Belgrade for at least fifteen minutes every day, around the time of the canopy’s collapse. They have also expanded their demands: for the government to publish all the records related to the railway station’s reconstruction, and to increase the higher education budget by 20%.

The student soviets claim they are trying to compel a lawless government to uphold the law and punish those responsible for the canopy carnage. The way they have gone about it, however, is itself extra-judicial. Only a small percentage of students from every school are part of these “soviets,” and no one knows who their ringleaders are. Their spokespeople claim to be apolitical and want nothing beyond the four demands. Yet when the government tries to appease them by fulfilling their demands, they refuse to take “yes” for an answer.

Meanwhile, Western-backed opposition and NGOs have repeatedly tried to take over the protests and use them to overthrow the government. There have been calls for a “student-nominated expert cabinet” and even a new constitution (though notably not an election).

Watching the students, it is hard not to sympathize with them. They’re young, idealistic, patriotic, hungry for justice—something the Serbs value highly—and are filled with energy. Yet all of these things also make them the perfect tool of forces that have already weaponized human kindness and decency to nefarious ends, both in Serbia and elsewhere.

The protests are unusually well-organized, photogenic, and media-savvy. Every march or blockade is ringed by “staff” in high-visibility vests and sometimes hard hats. They brandish Serbian flags as well as banners declaring “no surrender” on the issue of Kosovo, reinforcing their patriotic bona fides. The logo they have adopted is a red handprint, insinuating that the government has “blood on its hands” because of the canopy collapse.

The “red hand” appears to have been lifted from Mjaft! (Enough), an Albanian “social justice” NGO founded in 2003 and funded by the United States and George Soros for years. It appears to have gone defunct in 2021, but one of its leaders, Erion Veliaj, had become the mayor of Tirana since then. No one has come forth to claim ownership of the “bloody hand” logo by the Serbian student soviets, so far.

People of Serbia are normally wary of street protests, remembering the bitter aftertaste of their October 2000 “democratic revolution” against then-President Slobodan Milosevic. Many of the people involved believed they were taking part in a spontaneous revolt against Milosevic’s purported “betrayal” of Kosovo—only to discover they had been played by the National Endowment for Democracy and its clever blueprint of subversion that would become known as the “color revolution.”

Those protests too were led by “students”—or rather, what started as a student group before getting infiltrated by NED. Known as Otpor (Resistance), they used a black fist as their symbol and also had clever marketing and branding, all funded by the American taxpayer.

Some of the people behind the October 2000 coup later openly boasted about getting “suitcases of cash” via the U.S. embassy and various NED cutouts, and a small number went on to become professional revolution-mongers in places like Georgia, Ukraine, and North Africa.

Knowing all this, the “red hand” protests certainly raise a number of red flags—including literally, in the form of a random Ferrari banner used by anti-Milosevic protesters in the 1990s. Attempts by the NGOs, Western-backed parties and some EU propagandists to co-opt and divert the protests to their own ends also stink to high heaven.

This is the scale of the mass protests in Serbia against President Vucic

Video from Saturday's protest pic.twitter.com/5OcXAFaf26

— Visegrád 24 (@visegrad24) February 3, 2025

Moreover, the student soviets’ high degree of organization and discipline is in stark contrast to the generally disorganized and demoralized state of pro-Russian, “sovereignist” or right-populist forces in Serbia in recent years.

Normally a PR-savvy politician, Vucic has reacted to the protests in a clumsy fashion, eventually settling on a policy of appeasement that only seems to have emboldened the demonstrators. Every time he appears close to calming them down, a violent incident escalates things. On two occasions, cars trying to pass through the blockades injured young women holding the line—fortunately, not seriously. Yet a poem has already appeared on social media fantasizing about a deliberate vehicle attack turning fatal.

The night after Vucic called for calm and said he had met all the students’ demands, a group of protesters went to graffiti the Progressive Party offices in Novi Sad. They were confronted by some of the party members armed with bats, and one girl got her jaw broken. This is what triggered the resignations of Prime Minister (and Progressive Party chair) Milos Vucevic and the mayor of Novi Sad.

There are several ways this could end. The students could declare victory and go back to their colleges, having put the government on notice. Or they could keep going until they get hijacked by the NGO-opposition axis, which has already made plans in the media to seize power and launch purges of the Progressives. There is a non-zero chance of political violence escalating into a shooting war.

Whatever happens, the “red hand rebellion” seems to have scuttled Serbia’s opportunity to “reset” relations with the United States, or serve as the host of the Ukraine peace summit, being a truly neutral venue genuinely sympathetic to both Presidents Donald Trump and Vladimir Putin.

Tyler Durden Wed, 02/05/2025 - 05:00

These Are Europe's Most In-Demand Jobs

Looking to move to Europe and wondering what kind of jobs one could get there? We have some insights to share.

This chart, via Visual Capitalist's Pallavi Rao, shows the most in-demand jobs in the EU, as sourced from a year’s worth of online job advertisements.

Data for this graphic is from Eurostat which looked through hundreds of hiring websites in 2023.

They warn that ads don’t automatically mean new jobs. Multiple advertisements could be counted for the same vacancy. Meanwhile, employers don’t always advertise for their vacancies, and sometimes advertise even when they don’t have vacancies.

Europe Really Needs Some IT Support

Nearly one-in-ten job advertisements in Eurostat’s database were for an Information and communications technology (ICT) specialist. In pure numbers that amounted to roughly 871,000 ads in 2023.

RankProfession# of European Online
Job Adverts 2023Share of All Job
Postings Analyzed 1ICT Specialists871K9% 2Software Devs515K5% 3Engineers412K4% 4Manufacturing Workers385K4% 5Engineering Science
Technicians351K4% 6Shop Salespeople312K3% 7Transport Workers308K3% 8Marketing Managers280K3% 9Clerical Support262K3% 10Finance Associates246K3% 11Sales Professionals219K2% 12Admin Secretaries216K2% 13Client Information
Workers214K2% 14Purchasing Agents211K2% 15Admin Professionals202K2% 16Numerical Clerks197K2% 17Business Services190K2% 18Janitorial Workers177K2% 19Electrical Equipment
Installation175K2% 20Other Sales Workers174K2% 21Finance Professionals152K2% 22Machinery Mechanics151K2% 23Logistical Clerks141K2% 24Truck & Bus Drivers136K1% 25Admin Managers133K1% 26Plant Operators125K1% 27Mining Supervisors*124K1% 28Trade Workers120K1% 29Servers115K1% 30Personal Aides115K1% 31Social Workers109K1% 32Assemblers106K1% 33Food Preparation98K1% 34Cooks97K1% 35Doctors96K1% 36Childcare Aides**94K1% N/AOthers1.8M19%

Note: *Includes Manufacturing and Construction Supervisors. **Includes Teacher Aides. Figures rounded.

What do ICT people do? Nearly anything IT related. It could range from user support and troubleshooting to installing and maintaining network operations and devices.

Also wanted: software developers, with 515,000 ads posted in 2023.

For those without tech skills, fear not, there’s a lot of other parts in the EU economy that need good people.

European businesses need sales and marketing support (across different experience levels: managers, professionals, and agents).

People who like to do numbers can also find a place in there (payroll clerks, logistics support, and accountants).

And for those who like working with their hands—workers in manufacturing, transport, and electrical equipment installation are also needed.

Looking to make some extra income? Creator Neomam Studios partnered with NetCredit to look at The 20 Best-Paying Side Hustles. Marketing comes out on top here.

Tyler Durden Wed, 02/05/2025 - 04:15

Trump's Interest In Ukraine's Rare Earth Minerals Might Backfire On Zelensky

Authored by Andrew Korybko via substack,

Trump’s confirmed interest in Ukraine’s rare earth minerals is being interpreted by some as beneficial for Zelensky amidst uncertainty about his commitment to Ukraine. One of the points from Zelensky’s so-called “Victory Plan” calls for letting his country’s allies extract its critical minerals. New Secretary of State Marco Rubio recently warned about the strategic advantage that China derives from its control over the rare earth mineral supply chain so he might have influenced Trump’s views on this issue.

US Senator Lindsey Graham raised awareness of Ukraine’s critical mineral riches during his trip there last June after he claimed that they’re sitting on $10-12 trillion worth of such wealth. Trump 2.0’s foreign policy focus on more muscularly containing China in all ways predictably predisposed him to appreciate the abovementioned point from Zelensky’s “Victory Plan”. The problem though is that the bulk of Ukraine’s critical mineral wealth is under Russian control and Ukrainian forces continue retreating.

At the same time, Special Envoy for Ukraine and Russia Keith Kellogg’s words about how Ukraine needs to hold its long-delayed elections were seen as Trump’s interest in brokering a ceasefire, after which martial law can be lifted, the elections can be held, and the new government can then begin peace talks. This expectation contrasts with what Trump said a few days later about his interest in Ukraine’s (largely Russian-controlled) rare earth mineral deposits and the attendant possibility for proxy escalation.

Instead of abandoning his efforts to freeze the Ukrainian Conflict by doubling down on military aid in the hopes that Zelensky’s forces will then recapture these deposits from Russia, which could perpetuate the proxy war and thus derail his foreign policy agenda, Trump might instead try to cut a deal with Putin. One of the conditions that Trump could make for coercing Ukraine into withdrawing from at least some of the territory that Russia claims as its own might be for Putin to sell the US some of these minerals.

Putin might agree to this depending on how far Trump is able to coerce Ukraine into withdrawing, plus there’s a pragmatic argument in favor of this arrangement in that it could form a trust-building measure for the US one day allowing the EU to partially resume some Russia gas pipeline imports. The purpose would be to restore a degree of Russia and the EU’s pre-conflict complex economic interdependence, albeit this time under US supervision, as a reward for Russia complying with a ceasefire.

Russia requires capital and technology to fully exploit the rare earth deposits that are now under its control, both of which could be provided by the US, with the first possibly involving the return of some seized Russian assets so long as they’re invested into this endeavor. If successfully implemented, then this proposal could lead to more creative diplomacy of the sort suggested at the end of this analysis here for depriving China of Russia’s enormous resource wealth, which aligns with Trump’s foreign policy goals.

Ukraine wouldn’t be left completely in the lurch, however, since other smaller rare earth mineral deposits still remain under its control. These could be given to the US in exchange for continued military aid, even if the latter is curtailed when compared to its height under the Biden Administration in the run-up to summer 2023’s ultimately doomed counteroffensive. If Trump already reaches an agreement with Putin on the Russian-controlled deposits, then Zelensky would have little choice but to agree to this deal.

Far from the full military support that he expected to receive in pursuit of recapturing those lost deposits, he’d only end up with whatever the cost-conscious Trump Administration determines is the absolute minimum that the US considers that Ukraine requires for keeping the peace. This is the best outcome for those on all sides who truly want peace, but it requires substantial will on both the US and Russia’s parts along with the US coercing Ukraine into agreeing, none of which can be guaranteed.

Tyler Durden Wed, 02/05/2025 - 03:30

Where USAID Cash Is (Was) Going

The website of the United States Agency for International Development went dark over the weekend and employees were put on leave, as Elon Musk said Monday that President Donald Trump wanted to shut down the largest disburser of U.S. foreign aid.

The remarks were made by Musk during a live stream discussing the work of his government task force, the so-called Department of Government Efficiency, that he was announced to be leading by the president. Media reports meanwhile said that USAID could be absorbed into the State Department while many of the projects its supports - from health to infrastructure and disaster-relief programs - would be slashed significantly.

USAID spending equals less than 1 percent of the federal budget, but, as Statista's Katharina Buchholz reports, The United States Agency for International Development, USAID for short, is the biggest dispenser of U.S. foreign aid, according to the federal website Foreignassistance.gov.

It disbursed almost $44 billion in the fiscal year of 2023 (latest available), with $16 billion going to Ukraine.

You will find more infographics at Statista

The number represents more than 60 percent of all U.S. foreign aid listed on the website.

The agency pays out only economic aid, with military aid being handled by the Department of State and the Department of Defense.

After Ukraine, USAID payments were predominantly going to the Middle East and Africa in 2023.

Ethiopia, Jordan, Afghanistan and Somalia all received more than $1 billion from USAID that year. U.S. aid recipients are found all over Latin America, Africa, Asia and Eastern Europe.

Together with the Department of State/Defense spending, which focuses on the Middle East even more due to military aid components, it is the widest-ranging U.S. foreign aid paid out.

Tyler Durden Wed, 02/05/2025 - 02:45

Switzerland Halts Foreign Aid To Eritrea Over Refusal To Accept Rejected Asylum Seekers

Authored by Thomas Brooke via Remix News,

Switzerland has halted its development aid to Eritrea due to the African nation’s refusal to accept the return of its nationals who have been denied asylum in Switzerland.

The decision was confirmed by Michael Steiner, spokesperson for the Federal Department of Foreign Affairs (EDA) in an interview with broadcaster SRF.

A valuation report from the Swiss foreign ministry stated that attempts to link foreign aid to greater political cooperation with the repatriation of Eritrean citizens had failed.

“We are currently not supporting any further projects in Eritrea. No further progress could be made when it comes to migration,” Steiner told the broadcaster.

The Swiss Federal Council initiated a development aid program in 2016 designed to improve vocational training for young people in the country in an attempt to help Eritrea build its infrastructure and improve economic and employment prospects in the country.

The program resumed in 2017 after the Swiss discontinued development activities in Eritrea in 2006 due to the political landscape at the time.

Switzerland had hoped that by providing financial assistance, Eritrea would agree to receive deported asylum seekers. However, the Eritrean government has only accepted voluntary returnees, showing no interest in a broader migration dialogue, according to the federal report.

There are currently 200 Eritrean nationals awaiting deportation from Switzerland, which the African nation is refusing to accept responsibility for.

From the end of May, no further financial aid will be transferred to Eritrea, though minor support initiatives may still be considered in the future. However, no new projects in Eritrea will be funded moving forward.

The Swiss government had previously expressed optimism that the program was starting to show improvements in dialogue with the Eritrean authorities, claiming in an initial evaluation report that “Switzerland has much more information about the situation on the ground than it did in the past, it has access to government departments, it has built a basis of trust, and it has created an opening in view of new developments.”

However, some politicians remained skeptical including Damian Müller, a lawmaker for the Liberal Party and a member of the House of Representatives’ foreign policy committee, who suggested a change in strategy was required.

“The fact that Eritrea continues to reject forced repatriations is proof of this,” he said.

The current vice-president of the same committee, Greens parliamentarian Sibel Arslan, said the policy was wrong to begin with and that development aid programs should continue regardless of cooperation on migration.

“The Greens have always been against the idea of mixing international cooperation with migration policy. This kind of linkage is mistaken.”

While Eritrea claims to be a democracy, many Western observers classify it as an authoritarian state ruled by a single-party system. The situation has led to a significant Eritrean diaspora across Europe, with around 7,000 Eritrean asylum seekers currently residing in Switzerland. The largest ex-pat community is found in neighboring Germany where 80,000 Eritreans live currently, many of whom are unemployed or work in low-wage jobs.

The Eritrean communities in European countries have often sparked civil unrest due to clashes between pro and anti-government protesters, seen most recently in the United Kingdom, Germany, and Sweden.

WATCH: Major civil unrest as Eritrean migrants attack riot police with sticks in Camberwell, south London. pic.twitter.com/277hHNTuDW

— Remix News & Views (@RMXnews) December 30, 2023

With Eritrea refusing to take back rejected asylum seekers, Switzerland is now exploring alternative solutions. The Federal Council is looking for third countries willing to accept Eritrean nationals who are subject to deportation. However, as of now, no such agreements have been reached.

Read more here...

Tyler Durden Wed, 02/05/2025 - 02:00

US Postal Service Suspends Shipments Of Parcels From China, Hong Kong

The US Postal Service has suspending inbound international packages from China and Hong Kong Posts, delaying or blocking shipments from giant online retailers, and Amazon competitors, like Shein and PDD’s Temu. USPS said letters and flat mail from China and Hong Kong would not be affected, according to a statement on its website.

Potential reasons behind the suspension could be to ensure the tariff is enforced and not bypassed by potential loopholes such as exporting multiple packages of smaller value items (see more here).  While it’s not clear what prompted the move, it followed Trump's decision to revoke a “de minimis” rule for China, which previously allowed small packages under $800 to enter the US duty-free. This exemption, often used by Chinese-linked e-commerce companies, was removed as part of a new 10% tariff on goods from China and Hong Kong, which took effect just after midnight Tuesday Washington time.

Washington is cracking down on a loophole that retailers like Temu and Shein have used for years to expand in the US, allowing them to ship high volumes of small packages and gain an edge over competitors like Amazon.com Inc. Critics say the flood of parcels from China is difficult to track and may contain illegal or dangerous goods.

According to US Customs and Border Protection data quoted by Bloomberg, the total volume of de minimis shipments into the US hit 1.4 billion packages in fiscal year 2024, about double the number in 2022. Predictably, discount online retailers like Temu and Shein contributed significantly to the spike in volume.

However, disruptions from the move may be more limited now than it would have been in previous years, as other postal operators have taken over the USPS’s role in handling cross-border lightweight e-commerce packages, including those from China, according to a US Office of Inspector General report in May 2023.

US officials have alleged that parcel mail, direct from China and via third-party countries, is a gateway for illicit drugs, including deadly fentanyl. “What the cartels in China have done is exploit that loophole to smuggle in not just fentanyl but all sorts of drugs,” White House trade adviser Peter Navarro told Politico in an event in Washington Tuesday.

The China tariff order took effect even as two others, for Mexico and Canada, were put on hold. Trump has hinted at a possible call with Chinese leadership this week, though details remain unclear. While the White House has not ruled out a deal to pause the Chinese tariffs, which could also impact the Postal Service’s ban, nothing has been confirmed yet.

Shares of Alibaba fell more than 2% in Hong Kong, while JD.com tumbled more than 5%, while the Hang Seng China index losses also extend, down 1.8% now.

In a Goldman note published late on Tuesday, the bank tried to assess the impact of Trump's removal of the de-minimis exemption on China's e-commerce platforms, where PDD's Temu has the highest US exposure amongst China cross-border players. Here are some of the highlights from the report (full note available to pro subs in the usual place).

For PDD, US contributes to around ~40% of GMV for Temu, while Temu was a 10% loss drag to PDD group profit in FY24E (and with minimal valuation implied by PDD's current market cap). Despite the new regulations, Goldman believes cost advantages of eCommerce platforms vs. US offline retailers will continue given the lower cost structures for online businesses (fewer layers between factories and end consumers), while Chinese platforms will continue to diversify their merchant bases beyond China to local merchants.

• An evolving Temu business model and global diversification prior to these developments in tariff policy development, where Goldman has seen:
  • 1) Temu's geographical diversification with the US contribution to Temu's global MAU from 100% at the time of launch in early-2023, down to its latest at 15% of Temu's global MAU as of Dec 2024 as per the latest eCommerce tracker, with fast expansions in South America and the Middle East;
  • 2) Temu's ongoing US business model evolve from full-entrusted model (direct air freight shipments that enjoy de-minimis exemptions), to a rapidly growing semi-entrusted model that has recently reached 25% of Temu US GMV as of Sept-2024 (where merchants ship products by sea freight under traditional trade ahead of time); and,
  • 3) Temu's business model has expanded beyond air freight direct shipments, with the semi-entrusted models launched in 19 countries as of Jan-2025 that do not depend on de-minimis.
• The limited value that has been ascribed by the market to the Temu business in PDD's current market cap, as investors have been anticipating pending regulatory clarity around U.S. tariffs, multiple countries' de-minimis rules, personal data, etc. before being willing to ascribe any meaningful value to the Temu business, despite the fact that the Temu app reached 350mn MAU in Dec 2024.

Looking ahead, the key to watch will be any further tariffs/tax applied for cross-border eCommerce goods, and development of any risks related to targeted tariffs on China imports/app bans/expansion of the Uyghur Forced Labor Prevention Act (UFLPA) Entity List etc. that could pose a potential impact to Temu's US operations. Meanwhile, Goldman expects ongoing geographical diversification away from the U.S. and business model shifts, including further expanding the launch of its 3P marketplace to local US merchants (local-to-local sourcing) and semi-entrusted model for cross-border eCommerce platforms. Of course, none of that will help Temu if other countries piggyback on similar sanctions as the US.

More in the full Goldman note available to pro subs.

Tyler Durden Tue, 02/04/2025 - 23:49

New York Aldi Cashiers Reject Regular Customer's $2 Bills, Claiming They're Fake

One step closer to a Central Bank Digital currency, and 1984…

As the younger generations grow up, the norms we once thought were commonplace with money - like sound money backed by gold and silver and denominations like half dollars and $2 bills - are now ancient history.

Case in point, Richard Seeger of Wurtsboro, NY, who was shopping at an Aldi when the cashier refused to take his $2 bills, thinking they were fake, according to a new article from the NY Post.

“I was in Aldi’s this morning in Monticello… I wanted to pay with some $2 bills… the young guy refused to accept them and insisted they were counterfeit,” Steger wrote on a Facebook group called “Uncensored Sullivan County New York News and Politics.”

Two young cashiers immediately declared the bills counterfeit without even attempting to verify them. Steger urged one to check, only to be met with arrogant dismissal.

The cashier claimed the phrase "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE" indicated a fake, a clear misunderstanding of its meaning (debatable, we know).

He then handed the bills to a female coworker. The woman asked if the young man had checked the bills with a counterfeit marker.

Steger wrote: “He whispered ‘no, they’re fake.’ So, without even checking them, she rudely and arrogantly told me, ‘We’re not accepting them!’”

“Then she gave me the ‘ef you have a nice day smile to leave… if you know what I mean,” he continued. “Absolutely disgusting and unprofessional treatment to a regular customer!"

Aldi did not respond to The Post’s request for comment.The $2 bill, featuring Thomas Jefferson and Trumbull’s Declaration of Independence, has been in its current design since 1976. Once tied to gambling and fraud, 1.2 billion are in circulation today.

Tyler Durden Tue, 02/04/2025 - 23:25

TV Keeps Losing Ground

Just 59 percent of people surveyed by Statista Consumer Insights in the United States in 2024 had watched linear television in the last twelve months.

In contrast, 86 percent said they had watched digital videos during the same time period.

As Statista's Katharina Buchholz details below, the decline of classic TV continues...

You will find more infographics at Statista

Five years ago, 79 percent of survey participants had still said that they watched broadcast, cable or satellite television.

This was already fewer than digital video watcher, but only slightly at that time. Three years ago, during the coronavirus pandemic, the decline of linear TV watching in the United States accelerated when use dropped to 70 percent, down 6 percentage points from 2020. It dropped again by 5 percentage points in 2022 to 65 percent.

However, in the last six years, video streaming and downloading platforms have also ceased to win a significant amount of new customers.

While the number of platforms a single user or household has access to might still be rising, the industry has apparently reached all potential new customers that have not used streaming or other online video formats before.

Tyler Durden Tue, 02/04/2025 - 22:35

California Passes $50M Bill To Resist Trump Agenda

Authored by Eric Lendrum via American Greatness,

On Monday, Democrats in the California State Legislature passed a $50 million spending bill aimed at resisting President Donald Trump’s agenda, a move that has received widespread mockery and criticism.

As Breitbart reports, two separate bills were passed by the State Senate; after an initial delay by Democrats in the State Assembly, the bills were approved and now head to the desk of Governor Gavin Newsom (D-Calif.) for his signature.

The bills are expected to primarily fund legal challenges to the president’s planned policies.

Half of the funding, $25 million, will go to the office of California Attorney General Rob Bonta (D-Calif.) and the California Department of Justice, in order “to mitigate the impacts of actions taken by the federal government.”

The remaining $25 million will go to organizations and nonprofits that provide legal assistance to illegal aliens and other immigration-focused groups.

Republicans in the legislature attempted to propose an amendment that would forbid the funds from being used to defend illegals who committed additional crimes in the United States, but Democrats rejected those efforts.

These bills come as Southern California is still reeling from wildfires that have ravaged the Los Angeles area, causing up to $275 billion in damages and killing nearly 30 Californians.

Despite the anti-Trump tone of the most recently passed bills, the state government is nevertheless expected to seek hundreds of billions in aid from the Trump Administration.

Tyler Durden Tue, 02/04/2025 - 22:10