Image source: Chat GPT

In a way, it’s all going down as it typically would. “Risk off” gains sufficient momentum to spark destabilizing deleveraging. Markets approach the abyss, before well-timed policy responses trigger a powerful market recoil. Huge bearish derivatives positions – for hedging and downside bets – foment instability. On the market’s downside, the sellers of put options and other market “insurance” must dynamically hedge their exposures, with selling begetting market weakness and additional sales. A policy response then forces these sellers to immediately reverse course and become urgent buyers.

Especially in high-risk speculative market environments, the specter of a big short squeeze and unwind of hedges captivates the marketplace, from day traders to the sophisticated levered players. The greater system risk and fragility, the greater the potential for an disorderly upside unwind of shorts and hedges. To that end, when it comes to quick trading profits, no market dynamic can compete with being on the right side of a squeeze. And what begins as a short squeeze tends to take on a life of its own.

Typically, the confluence of policy responses, squeezes, unwinds, and dip buying revitalizes speculative impulses – ensuring another leg higher for an irrepressible bull market. Market dynamics have been pretty much business as usual thus far. But this is too much of a uniquely abnormal environment to extrapolate typical market dynamics.

There’s so much at stake. The administration and global policymakers have settled into crisis management mode. Fragile markets require a steady drumbeat of positive headlines. Tensions must be ratcheted down. Even in the face of what will be heated negotiations, tones need to be more conciliatory.

“Trump says he has 'potential deals' with India, South Korea, Japan.” “Lutnick: ‘I have a deal done, done, done, done’ as China, Japan and India warm to trade talks.” “Trade deal with India soon: Vance.” “Japan Seeks US Trade Deal in June Amid Report of Standoff.” “China ‘evaluating’ US offer to negotiate tariffs; Beijing’s door is ‘open.’” “China says it’s evaluating the possibility of trade talks with the U.S.” “China Hints at Possible Thaw with US in Weighing Trade Talks.”

May 2 – New York Times (David Pierson and Joy Dong): “Despite mounting financial pressure, China says it won’t negotiate until the Trump administration shows ‘sincerity’ by canceling tariffs on its goods. In a potential softening of the bruising trade war between China and the United States, Beijing said on Friday that it was considering holding talks with the Trump administration after repeated attempts by senior U.S. officials to start negotiations. China’s Commerce Ministry said… China was ‘evaluating’ the U.S. offer to talk, but it said Beijing’s position remained consistent: It will only engage in negotiations if Washington cancels its tariffs on Chinese goods first. ‘If the United States does not correct its wrong unilateral tariff measures, it means that the United States has no sincerity at all and will further damage the mutual trust between the two sides,’ the ministry said.”

It's imperative that the U.S. and China begin talks. Both economies face major risks, and clocks are ticking. But I doubt China is softening its position. From the look of China’s Ministry of Affairs Tuesday “Never Kneel Down” video, I’ll assume they’re dug in for tough and protracted negotiations. But these 145% tariffs are essentially an embargo. Stating an openness to commence talks pressures the administration to back down on clearly unworkable tariff levels.

The tariff rate is so egregious that there’s ample room for a mutually beneficial “compromise” that would be well received in the markets – a somewhat lower (non-embargo) tariff starting point that would get the two belligerents to the negotiating table. Still, this would be superficial. Risks to both economies would remain highly elevated in what will certainly be extraordinarily fraught and protracted negotiations.

April 29 – Financial Times (Joe Leahy, Ryan McMorrow, and Kathrin Hille): “China has stepped up an international propaganda campaign against the US trade war, unleashing slick videos portraying itself as standing up against American ‘bullying’ on behalf of the rest of the world, especially the ‘weak’ in developing countries. Posted by the ministry of foreign affairs…, the videos represent a dramatic hardening of Beijing’s diplomatic stance in the trade war and are part of a charm offensive designed to portray China as championing free commerce while Washington ‘slaps its allies in the face’. The propaganda videos contrast dark scenes of Wall Street chaos and angry American protesters with a bright and futuristic China… The latest video, titled ‘Never Kneel Down’, was released on Tuesday and warns countries not to make deals with the US… ‘Bowing to a bully is like drinking poison to quench a thirst,’ the video said. ‘China won’t back down so the voices of the weak will be heard’… ‘Bullying will be stopped… when the rest of the world stands together in solidarity, the US is just a small stranded boat.’”

“Open for talks” notwithstanding, Beijing is likely comfortable with its position and fixated on an arduous process necessary for the achievement of strategic objectives. China, seeing the Trump administration under heightened pressure, is content to delay the start of serious negotiations. Meanwhile, speculative markets are notoriously shortsighted. The Trump administration is seemingly past the belligerent and disrespectful phase, lowering the risk of negative headlines and Chinese counterattacks. In the throes of a formidable squeeze, markets are happy to postpone trade war concerns for another day.

At some point, today’s “typical” market recovery will have to contend with a list of quite atypical risks. Ten-year Treasury yields rose seven bps this week to 4.31%. Yields traded down to 4.00% on April 4th, only to then spike 49 bps the following week. Another upside yield surprise is a reasonable bet. A continuing stock market rally would become a growing bond market worry. Meanwhile, tariff-related price increases and supply chain issues loom large. The environment is certainly conducive to inflation. Q1’s GDP Price Index jumped to 3.7% (from Q4’s 2.3%), while Core PCE rose to 3.5% (from 2.6%) during the quarter.

I also ponder festering liquidity issues. Bloomberg: “Fear of Next Market Jolt Drives Rush to Sell Corporate Bonds.” If I were a borrower, I would certainly use this rally as a window of opportunity to build cash reserves. These types of squeeze markets create the illusion of liquidity abundance. But the start of deleveraging, with associated liquidity destruction, ensures ongoing latent liquidity risks and market fragilities.

April 28 – Politico (Jordain Carney): “If Speaker Mike Johnson has his way, the ‘big, beautiful’ domestic policy bill that President Donald Trump wants passed post-haste would be through the House no later than Memorial Day… To that end, House Republicans will launch a legislative sprint when they return to Washington Monday, with key committees set to finally put GOP pledges on taxes, energy, defense and border security into legislative text. The problem: There are rampant doubts that Johnson’s ambitious timeline is feasible. While Republicans believe they’ve made some progress over the two-week break, including smoothing over some of their trickiest tax problems, they’re still far from an agreement on the key disputes… most notably, the size of spending cuts needed to pay for their plans and how dramatically to reshape Medicaid and other safety-net programs.”

Before long, all the secret closed door meetings will end, finally allowing actual budget legislation to see the light of day. The administration’s proposed budget is thin on detail and thick on unspecified spending cuts. There’s little to indicate the President is backing away from his list of aggressive tax cuts – tips, social security, SALT, overtime… What’s more, substantial tariff revenues are expected to help fill the fiscal hole – risking the fanning of inflation. We should expect a healthy dose of bond market skepticism as budget details emerge.

The market closed Friday pricing a 3.53% Fed funds rate (implying 80bps of rate reduction) for the December 10th FOMC meeting (up from 3.27% on April 8th), 10 bps higher for the week to a near four-week high. For some time now, market rate cut expectations have consistently proved overly optimistic. With big tariffs coming, the Fed is appropriately attentive to inflationary risks. And while the President is unrelenting, the rallying stock market does reduce pressure to cut rates. There will come a time when markets fret that Fed policymakers have been too conditioned to dismiss market instability.

Economic momentum has weakened, though the stock market recovery and reopening of debt markets reduce immediate recession risk. But I’ll push back on the narrative that a robust economy going into trade war uncertainties connotes resilience. The ostensible robustness of our “Bubble economy” can be traced to massive fiscal deficits, a boom in risky lending, extraordinary asset inflation and speculative Bubbles. It would be unwise to extrapolate such unsustainable factors.

Years of reckless fiscal spending appear to be coming home to roost. Ten-year Treasury yields are 75 bps higher since the Fed began (last September) its 100 bps of rate cuts. There is rationale to expect market yields to be less likely than in the past to collapse on first thoughts of market instability, recession, and Fed QE.

To say that market, policy, economic, and geopolitical backdrops are “fluid” is today an understatement. But a more stagflationary environment is a reasonable scenario. And a recession with sticky market yields would pose a serious issue, especially for the faltering Bubble in “private Credit” and leveraged lending.

May 2 – Bloomberg (Sonali Basak): “Private credit fund investors are offloading stakes at significant discounts ahead of more potential pain for the US economy, Oaktree Capital Management Co-Chief Executive Officer Robert O’Leary said. Oaktree sees more chances to buy marked-down assets…, where private asset holders sell stakes in relatively illiquid funds to bring returns to their own investors. That activity has been building in private equity for some time, but credit investors are now putting up bigger trades… Discounts are starting at about 90 cents on the dollar and going as low as the ‘50 cent range,’ he said… Limited partners are taking matters into their own hands given a desire ‘to get out of this before a fall.’ He said the current discounts don’t include a lot of deterioration in credit quality, and as the economic outlook worsens, those discounts will get bigger. ‘To date, we haven’t seen forced selling, there haven’t been really dire liquidity situations that people need to address… I think we’re going to get into more sort of anxious points in time where LPs will want to trade...’ Private credit has grown rapidly in recent years to become a $1.6 trillion industry… High-yield debt markets could see high-single-digit default rates, he said. Other markets are even more vulnerable. ‘If loans are going to see double-digit defaults, I see no reason why ultimately private credit couldn’t end up there,’ he said. ‘It’s poorly underwritten, in the main. I’m not saying everybody is’… Many companies with too much debt are simply limping along… O’Leary said this week that investors have not opened up to idea that we might be facing a recession or are already in one. O’Leary said a downturn could be as serious as the dot-com bubble. ‘That was traumatic, that was pretty V-shaped, so we came out of it pretty quickly… The problem here is you’re starting to put in place barriers that will shape the behavior of our counterparties.’”

The leveraged loan market showed a pulse this week, with prices up and some deals getting completed. After trading below 94.50 at April 9th lows, leveraged loan prices were up 27 cents this week to 95.89 – though still below the 96.51 that began April and 97.70 at January highs.

Stock and Credit market recoveries don’t alter my view that history’s greatest Bubble has been pierced. This is a process that will unfold over months and even years. Robert O’Leary’s important comments from the above Bloomberg article support the thesis of a momentous inflection point in the Credit cycle. I believe the reversal of speculative flows in “private Credit” marks the beginning of the problematic down cycle. Moreover, the manic boom in “private Credit” and high-risk lending more generally was fundamental to late-cycle “blow-off” excess (along with stocks, AI, crypto, etc.) for history’s greatest multi-decade Bubble.

The Dollar Index recovered 0.6% this week to 100.03. From a January high of 110 and a February close at 107.61, the dollar traded down to a 97.92 low on April 21st. The dollar’s pathetic “recovery” suggests a fundamental shift in market perceptions consistent with the burst Bubble thesis.

April 28 – Bloomberg (Ye Xie): “Despite the market recovery of the past week, foreign investors ‘remain on a buyers’ strike on US assets,’ according to Deutsche Bank AG. To gain an almost ‘real-time’ window into how overseas investors have been behaving in recent weeks, Deutsche Bank’s head of FX strategy, George Saravelos, looked at the flows into a variety of funds that take money from overseas and channel it into US stocks and bonds. The data shows a ‘sharp stop’ in the purchases of US assets by overseas buyers over the past two months, with no sign of a turnaround last week…, Saravelos wrote… ‘Our broad takeaway is that the flow evidence so far points to an, at best, very rapid slowing in US capital inflows and, at worst, continued active disinvestment from US assets… Either interpretation poses a challenge to the USD as a twin deficit currency.’”

International “recycling” of decades of massive U.S. trade/current account deficits into our securities markets has been fundamental to the great Bubble. This vital mechanism is today under threat from all sides. The administration’s new tariff regime will surely lead to shrinking trade deficits. Meanwhile, the dollar increasingly suffers from crisis of confidence dynamics. And this extraordinary backdrop puts the Treasury market at significant risk. Massive over-issuance, elevated inflation risk, and now a trade war. Is a Liz Truss market dynamic a ridiculous thought? And it’s not just the Chinese with a horde of Treasuries available as negotiation leverage.

May 1 – Reuters (Ben Berkowitz and Ben Geman): “Japan’s huge U.S. Treasury holdings are among tools available for Tokyo in trade negotiations with the United States, Japanese Finance Minister Katsunobu Kato said… Kato said the primary purpose of Japan’s huge U.S. Treasury holdings is to ensure it has sufficient liquidity to conduct yen intervention when necessary. ‘But we obviously need to put all cards on the table in negotiations. It could be among such cards,’ Kato said… when asked whether Japan, in trade talks with the U.S., could reassure Washington it will not sell its Treasury holdings in the market. ‘Whether we actually use that card, however, is a different question,’ Kato added. Japan holds roughly $1.27 trillion in foreign reserves.”

I’m not sure why nations would just roll over during trade negotiations. The U.S. is in a weakened position, especially with the Chinese keen to play hardball. Our economy is only weeks away from product availability and supply chain issues. In a replay of pandemic dynamics, might consumers begin hoarding items perceived as vulnerable to shortages? Do we see price spikes for some Chinese products? Does consumer and business confidence take another hit?

In the current backdrop, I view market rallies as exacerbating both instability and systemic vulnerabilities. The next phase of deleveraging risks turning highly destabilizing. And the more stocks rally, the greater the shock that will be created come the next leg of the bear market.

This wild market volatility is the proverbial demolition ball chipping away at market structure. Indeed, it’s regressed into one monumental market and economy confidence game. I have a difficult time believing the administration can bolster confidence – not with markets unstable and fragile, with a weakening economy, unfolding trade wars, and a leery population rapidly losing patience. It will be fascinating to see if President Trump has the fortitude to sustain his China trade war brinkmanship. I suspect Beijing is determined to find out.

April 29 – Bloomberg (Hadriana Lowenkron): “President Donald Trump said China deserved the steep tariffs he imposed on their exports and predicted Beijing could find a way to reduce their impact on American consumers. ‘You don’t know whether or not China’s going to eat it. China probably will eat those tariffs,’ Trump said… in an interview with ABC News. ‘China was making $1 trillion dollars a year. They were ripping us off like nobody has ever ripped us off. Almost every country in the world was ripping us off. They’re not doing that anymore.’ Trump said he did not believe hard times were ahead for US consumers, while acknowledging that his 145% tariffs on many Chinese goods amounted to a near-embargo. ‘That’s good,’ Trump said. ‘They deserve it.’”

 

For the Week:

The S&P500 rose 2.9% (down 3.3% y-t-d), and the Dow gained 3.0% (down 2.9%). The Utilities increased 1.7% (up 6.6%). The Banks surged 4.3% (down 4.3%), and the Broker/Dealers jumped 3.4% (up 5.8%). The Transports advanced 4.3% (down 11.4%). The S&P 400 Midcaps surged 3.5% (down 6.1%), and the small cap Russell 2000 jumped 3.2% (down 9.4%). The Nasdaq100 rallied 3.4% (down 4.3%). The Semiconductors recovered 3.4% (down 11.7%). The Biotechs jumped 2.7% (down 1.0%). With bullion dropping $79, the HUI gold index fell 3.2% (up 36.7%).

Three-month Treasury bill rates ended the week at 4.21%. Two-year government yields rose eight bps to 3.82% (down 42bps y-t-d). Five-year T-note yields increased six bps to 3.92% (down 46bps). Ten-year Treasury yields rose seven bps to 4.31% (down 26bps). Long bond yields jumped nine bps to 4.79% (up 1bp). Benchmark Fannie Mae MBS yields gained eight bps to 5.69% (down 16bps).

Italian 10-year yields rose six bps to 3.64% (up 11bps y-t-d). Greek 10-year yields increased six bps to 3.35% (up 14bps). Spain's 10-year yields gained seven bps to 3.19% (up 13bps). German bund yields rose six bps 2.53% (up 17bps). French yields increased six bps to 3.25% (up 5bps). The French to German 10-year bond spread was unchanged at 72 bps. U.K. 10-year gilt yields increased three bps to 4.51% (down 6bps). U.K.'s FTSE equities index gained 2.2% (up 5.2% y-t-d).

Japan's Nikkei 225 Equities Index jumped 3.2% (down 7.7% y-t-d). Japanese 10-year "JGB" yields dropped eight bps to 1.26% (up 16bps y-t-d). France's CAC40 jumped 3.1% (up 5.3%). The German DAX equities index rose 3.8% (up 16.0%). Spain's IBEX 35 equities index increased 0.7% (up 16.0%). Italy's FTSE MIB index rallied 2.6% (up 12.1%). EM equities were mixed. Brazil's Bovespa index increased 0.3% (up 12.3%), while Mexico's Bolsa index fell 1.6% (up 12.7%). South Korea's Kospi gained 0.5% (up 6.7%). India's Sensex equities index rose 1.6% (up 2.5%). China's Shanghai Exchange Index dipped 0.5% (down 2.2%). Turkey's Borsa Istanbul National 100 index dropped 2.8% (down 6.7%).

Federal Reserve Credit declined $13.3 billion last week to $6.667 TN. Fed Credit was down $2.234 TN from the June 22, 2022, peak. Over the past 294 weeks, Fed Credit expanded $2.940 TN, or 79%. Fed Credit inflated $3.856 TN, or 137%, over the past 651 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt dropped $16.4 billion last week to a three-month low $3.279 TN. "Custody holdings" were down $76.2 billion y-o-y, or 2.3%.

Total money market fund assets slipped $4.1 billion to $6.908 TN. Money funds were up $774 billion over 40 weeks (16.4% annualized) and $931 billion y-o-y (15.6%).

Total Commercial Paper added $2.3 billion to a 16-year high $1.403 TN. CP has expanded $83 billion y-t-d and $83 billion, or 6.3%, y-o-y.

Freddie Mac 30-year fixed mortgage rates declined five bps this week to 6.76% (down 46bps y-o-y). Fifteen-year rates slipped two bps to 5.92% (down 55bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates down three bps to 6.91% (down 56bps).


Currency Watch:

April 30 – Reuters (Saeed Azhar and Davide Barbuscia): “Foreign investor appetite for U.S. dollar assets may wane unless the currency depreciates further, said Goldman Sachs’ chief economist… ‘The dollar is still very highly valued… I expect foreign investors to be less willing to keep adding to the U.S. share on their portfolios,’ said Jan Hatzius… Hatzius said that while the U.S. retains key advantages, such as higher productivity trends compared to Europe, the country’s relative performance is beginning to erode, and that will likely show up most clearly in the currency markets. The U.S. runs a current account deficit of more than a trillion dollars, which means the country relies on foreign demand to fund its trade deficit, Hatzius said.”

May 2 – Bloomberg (Nour Al Ali): “The Taiwan dollar’s historic rally is the latest example of how excess optimism about US-China trade war is distorting markets. The Taiwan dollar surged against the greenback today on signs of easing trade tensions. It’s backed by unusually strong volumes in USD/TWD non-deliverable forwards, meaning the rally caught the market off guard and the positioning is far from stretched.”

For the week, the U.S. Dollar Index recovered 0.6% to 100.03 (down 7.8% y-t-d). For the week on the upside, the South Korean won increased 2.8%, the South African rand 1.7%, the Singapore dollar 1.2%, the Australian dollar 0.6%, the Brazilian real 0.5%, the Canadian dollar 0.4%, the Swedish krona 0.4%, the Swiss franc 0.2%, and the Norwegian krone 0.1%. On the downside, the Japanese yen declined 0.9%, the euro 0.6%, the Mexican peso 0.4%, the British pound 0.3%, and the New Zealand dollar 0.3%. The Chinese (onshore) renminbi increased 0.21% versus the dollar (up 0.38 y-t-d).

Commodities Watch:

April 30 – Wall Street Journal (Joseph Hoppe): “Gold demand rose in the first quarter of the year, fueled by a revival of gold exchange-traded fund inflows… Total gold demand for the first three months of 2025 rose 1% on year to 1,206 metric tons, the strongest start to a year since 2016, the World Gold Council said… ETF inflows picked up in the first quarter, totaling 226 tons. A year prior, ETFs saw outflows of 113.0 tons, and inflows of just 18.7 tons in the fourth quarter of 2025. These inflows accelerated across the world, driving a more-than doubling of total investment demand to 552 metric tons. Already in April, Asian ETF inflows have surpassed their first-quarter total.”

April 29 – Financial Times (Leslie Hook and Cheng Leng): “Chinese investors are piling into gold funds at a record rate… Inflows into gold exchange traded funds in China total 70 tonnes — or about $7.4bn — this month, more than double the previous monthly record, according to the World Gold Council, an industry body. ‘Whilst we have seen ETF demand from other regions, China is really in the lead now,’ said John Reade, senior market strategist at the WGC, adding Chinese investment demand for the precious metal had risen ‘dramatically’ this month.”

April 27 – Financial Times (Malcolm Moore): “Imports of crude oil into China surged in March and have continued to accelerate in April, according to analysts, as the country replenishes stocks despite expectations that a weaker global economy will reduce demand. Kpler, a data company that tracks tankers sailing into China, said the country was importing nearly 11mn barrels a day, the highest level in 18 months and up from 8.9mn b/d in January.”

The Bloomberg Commodities Index declined 1.1% (up 2.7% y-t-d). Spot Gold declined 2.4% to $3,240 (up 23.5%). Silver dropped 3.3% to $32.01 (up 10.8%). WTI crude sank $4.73, or 7.5%, to $58.29 (down 19%). Gasoline fell 4.7% (unchanged), while Natural Gas rallied 23.6% to $3.63 (up 1%). Copper sank 4.5% (up 16%). Wheat slipped 0.7% (down 5%), and Corn dropped 3.7% (up 1%). Bitcoin gained $2,000, or 2.1%, to $96,811 (up 3.3%).


Market Instability Watch:

April 27 – Bloomberg (Michael Mackenzie): “The ‘Sell America’ trade that gripped markets this month has left a potentially lasting dent in investors’ willingness to hold the US government’s longest-maturity debt, a mainstay of its deficit-financing toolkit. For bond managers at BlackRock Inc., Brandywine Global Investment Management and Vanguard Group Inc., the problem is that as President Donald Trump approaches his 100th day in office, he has generated a growing list of unknowns, forcing traders to focus on a broad array of issues beyond just the likely path of interest rates. To name a few: What do Trump’s trade war, tax-cut agenda and scattergun policymaking mean for already weakening economic growth, sticky inflation and massive fiscal shortfalls? Will he again threaten to fire Federal Reserve Chair Jerome Powell? Is he actively seeking a weaker dollar?”

April 30 – Yahoo Finance (Jennifer Schonberger): “The Federal Reserve is in a tough spot following new data… reinforcing slower economic growth and higher inflation during the first quarter, a combination that may eventually force the central bank to choose between its dual goals of maximizing employment and maintaining price stability. ‘It was still a stagflation warning shot over the bow of the economy,’ Morgan Stanley Wealth Management chief economic strategist Ellen Zentner said. ‘This type of data won't soothe the markets, and it won't make the Fed's job any easier.’”

May 1 – Bloomberg (Paige Smith): “Charles Schwab Corp. telephoned thousands of its retail-investing customers who were close to margin calls last month as US President Donald Trump’s trade war sent stocks sinking, Chief Executive Officer Rick Wurster said. It’s a ‘pre-margin-call call,’ Wurster said… Schwab reaches out to clients if they’re nearing a margin call… because some clients opt to add funds rather than being automatically pulled out of a position, he said. ‘We absolutely have had to do a lot more of those.’”


Global Credit and Financial Bubble Watch:

April 26 – Bloomberg (Neil Callanan and Kat Hidalgo): “The companies that get private credit loans are looking increasingly wobbly and banks are among those that could eventually be on the hook for losses. Many companies getting direct loans from private lenders are struggling to produce cash, by at least one key measure: At the end of 2024, more than 40% of borrowers had negative free cash flow from their businesses, the International Monetary Fund warned… That’s up from closer to 25% at the end of 2021… Market participants are alarmed that the deterioration in debtors’ credit quality has yet to show up in accounting valuations, while a rise in dividend recapitalizations is ‘further straining borrowers’ debt sustainability,’ the IMF wrote.”

May 1 – Bloomberg (Ethan M Steinberg, Ayai Tomisawa and Takahiko Hyuga): “European and Asian money managers are showing signs of losing some of their appetite for lending to US companies as trade wars heat up, in a potentially worrying sign for corporate America. Investors outside the US turned into net sellers of corporate debt in the first half of April… That’s according to data tracking direct flows compiled by Goldman Sachs Group Inc. strategists including Lotfi Karoui. The selling comes after overseas investors made record purchases of US corporate debt in 2024.”

April 30 – Bloomberg (Rene Ismail): “US leveraged loans are on track to post their first monthly losing streak since 2022, a rare slide for a market that had been benefiting from investor demand for floating-rate debt. The sector has posted a 0.24% loss this month through Tuesday, according to the Bloomberg US Leveraged Loan Index, after declining 0.29% in March. The downturn, though, follows 21 consecutive months of gains during which the average return was 0.84%. Leveraged loans were one of 2024’s best-performing credit sectors, climbing about 9%, with investors flocking to the asset class…”

May 2 – Bloomberg (Aashna Shah and Amanda Albright): “High-yield municipal bonds posted their worst month since September 2023 as the securities struggle to recoup losses from the tariff-fueled selloff earlier this month. The riskiest segment of the market underperformed investment-grade securities for the first time since December, posting a 1.8% loss in April… The tariff-fueled selloff hit high-yield particularly hard and in one week they recorded a 5% loss, the worst week since the pandemic.”

 

Trump Administration Watch:

April 28 – The Hill (Tara Suter): “President Trump shared his thoughts on how his two terms as president have differed, saying in a new interview with The Atlantic that this time around he’s leading ‘the country and the world.’ ‘The first time, I had two things to do — run the country and survive; I had all these crooked guys,’ Trump said... ‘And the second time, I run the country and the world.’”

April 26 – Reuters (Matt Spetalnick, John Geddie and Lili Bayer): “He has launched an unprecedented global tariff war and slashed U.S. foreign aid. He has disparaged NATO allies and embraced Russia’s narrative about its invasion of Ukraine. And he has spoken about annexing Greenland, retaking the Panama Canal and making Canada the 51st state. In the chaotic first 100 days since President Donald Trump returned to office, he has waged an often unpredictable campaign that has upended parts of the rules-based world order that Washington helped build from the ashes of World War II. ‘Trump is much more radical now than he was eight years ago,’ said Elliott Abrams, a conservative who served under Presidents Ronald Reagan and George W. Bush before being appointed U.S. special envoy on Iran and Venezuela in Trump’s first term. ‘I have been surprised.’ Trump’s second-term ‘America First’ agenda has alienated friends and emboldened adversaries while raising questions about how far he is prepared to go.”

April 30 – Wall Street Journal (Alex Leary): “President Trump swept into a sports complex here and declared the first 100 days of his administration a success. ‘You haven’t even seen anything yet,’ said Trump, who stood in front of jumbo screens that read ‘100 Days of Greatness’… The 89-minute rally Tuesday marked a return to the campaign-style events that have helped turn Trump into a political force. He has done little domestic travel, save for weekend jaunts to his private club in Florida. He reveled in the moment, thanking auto workers for their support, heralding the tariffs and touting efforts to slash the size of government and end ‘transgender insanity.’”

April 30 – Bloomberg (Stephanie Lai): “President Donald Trump acknowledged that his sweeping tariff program had risked imperiling him politically, but said he would not rush deals to appease nervous investors during a town hall... ‘Yeah,’ Trump said when asked by NewsNation host Bill O’Reilly if he agreed that his tariff proposals had a perception problem. ‘But I’m a honest guy, and we have to save the country.’ Trump went on to agree there was a significant political risk to his efforts… but said he remained determined to push on. ‘I just think that I’ll be able to convince people how good this is,’ Trump said.”

April 30 – Reuters (David Lawder, Andrea Shalal and Kalea Hall): “U.S. President Donald Trump signed a pair of orders to soften the blow of his auto tariffs… with a mix of credits and relief from other levies on materials, and his trade team touted its first deal with a foreign trading partner… In his latest partial reversal of tariff policies, the Republican president agreed to give carmakers two years to boost the percentage of domestic components in vehicles assembled domestically. It will allow them to offset tariffs for imported auto parts used in U.S.-assembled vehicles equal to 3.75% of the total value of the Manufacturer’s Suggested Retail Price of vehicles they build in the U.S. through April 2026, and 2.5% of U.S. production through April 30, 2027.”

April 30 – Reuters (Daniel Flatley and Chris Anstey): “The Treasury Department said it’s now looking at ‘enhancements’ to its buybacks of older US government debt securities, just weeks after Scott Bessent hinted at the potential to beef up the program in the event of any major market turmoil. ‘Treasury will evaluate a broad range of possible enhancements such as: changes to maximum purchase amounts, buyback operation scheduling and frequency’ and other details, it said… After an unusual tandem selloff of Treasuries with stocks and the dollar that saw yields climb the most since 2001 earlier this month, Treasury Secretary Bessent said… his department had a ‘big toolkit’ to deal with emergencies. He said, ‘We could up the buybacks if we wanted.’”

April 29 – Financial Times (Kate Duguid, Costas Mourselas, Katie Martin and Demetri Sevastopulo): “Donald Trump’s top economic adviser Stephen Miran struggled to reassure leading bond investors in a meeting last week that followed a bout of intense tumult on Wall Street triggered by the president’s tariffs. Miran, chair of the Council of Economic Advisers, met representatives from top hedge funds and other major investors at the White House’s Eisenhower Executive Office building on Friday… Some participants found Friday’s meeting counter-productive, with two people describing Miran’s comments around tariffs and markets as ‘incoherent’ or incomplete, and one of them saying Miran was ‘out of his depth’. ‘[Miran] got questions and that’s when it fell apart,’ said one person familiar... ‘When you’re with an audience that knows a lot, the talking points are taken apart pretty quickly.’”

May 1 – Reuters (Susan Heavey): “The bond market is sending a signal that the Federal Reserve should be cutting interest rates, U.S. Treasury Secretary Scott Bessent said…, noting that yields on 2-year Treasury notes were lower than central bank’s policy rate. ‘We are seeing that two-year rates are now below fed funds rates, so that's a market signal that they think the Fed should be cutting,’ Bessent said…”

May 1 – Associated Press (Lisa Mascaro): “President Donald Trump… signed an executive order aiming to slash public subsidies to PBS and NPR as he alleged ‘bias’ in the broadcasters’ reporting. The order instructs the Corporation for Public Broadcasting and other federal agencies ‘to cease Federal funding for NPR and PBS’ and further requires that that they work to root out indirect sources of public financing for the news organizations. The White House… said the outlets ‘receive millions from taxpayers to spread radical, woke propaganda disguised as ‘news.’”

April 27 – Associated Press (James Brooks): “New Greenlandic Prime Minister Jens-Frederik Nielsen said… U.S. statements about the mineral-rich Arctic island have been disrespectful and that Greenland ‘will never, ever be a piece of property that can be bought by just anyone.’ Nielsen made the remarks… as Nielsen stood side by side with Danish Prime Minister Mette Frederiksen… ‘The talks from the United States have not been respectful,’ Nielsen said… ‘The words used have not been respectful. That’s why we need in this situation, we need to stand together,’ he added.”

April 26 – Bloomberg (María Paula Mijares Torres): “President Donald Trump called for ‘free of charge’ passage of American ships through the Panama and Suez canals, renewing his focus of expanding US influence over critical commercial and naval waterways… ‘Those Canals would not exist without the United States of America,’ Trump said, adding that he’s asked Secretary of State Marco Rubio to ‘immediately take care of’ the situation.”


Constitution/Supreme Court Watch:

May 1 – Politico (Josh Gerstein): “Justice Ketanji Brown Jackson forcefully condemned attacks by President Donald Trump and his allies on judges who have blocked Trump administration policies, warning Thursday that the increasingly hostile rhetoric poses a dire threat to the country’s political fabric. ‘The attacks are not random. They seem designed to intimidate those of us who serve in this critical capacity,’ Jackson told a judges’ conference in Puerto Rico. ‘The threats and harassment are attacks on our democracy, on our system of government. And they ultimately risk undermining our Constitution and the rule of law’… Jackson urged her judicial colleagues to show ‘raw courage’ to dispense justice without fear of the results. ‘I urge you to keep going, keep doing what is right for our country, and I do believe that history will vindicate your service’… Jackson’s unusually pointed comments received a standing ovation from the judges and lawyers in attendance. Her 18-minute fulmination is the strongest public statement by any member of the Supreme Court since the Trump administration began denouncing judges who have blocked Trump’s policies on immigration, firing government workers, and halting federal grants and contracts.”

April 28 – Wall Street Journal (Jess Bravin): “With increasing irritation, federal judges are questioning the Trump administration’s veracity in legal proceedings. The consequences could be serious—both for the administration, which might see its odds of prevailing on close questions diminish before judges who lack confidence in government representations, and for the judiciary, should lip service to court orders become an acceptable norm. The latest potential standoff could come this week, when U.S. District Judge Amy Berman Jackson is scheduled to hold a hearing on whether White House officials are flouting her orders to cease dismantling the Consumer Financial Protection Bureau… ‘There is reason to believe,’ Jackson said in an order last week, that officials ‘are thumbing their nose at both this Court and the Court of Appeals’… President Trump is battling more than 200 lawsuits over his fast-moving campaign to remake the federal government through aggressive assertions of executive power.”

May 2 – Wall Street Journal (Gareth Vipers and Richard Rubin): “President Trump ramped up his fight with Harvard University, threatening to revoke the Ivy League school’s tax exemption after it filed a federal lawsuit against his administration. ‘We are going to be taking away Harvard’s Tax Exempt Status. It’s what they deserve!,’ Trump wrote in a post on Truth Social Friday.”


China Trade War Watch:

April 30 – Financial Times (Ryan McMorrow, Joe Leahy and Demetri Sevastopulo): “Chinese state media has said there would be ‘no harm’ in holding trade talks with the Trump administration, indicating a softening of Beijing’s position as both sides look for a way out of their crushing tariff war. The gesture comes as Trump has indicated he hopes to negotiate over trade and as the fallout has begun to show… Yuyuan Tantian, an account affiliated with state broadcaster CCTV, said… Beijing did not need to talk to the US before Washington took substantive action. ‘But if the US wishes to engage with China, there’s no harm in it for China at this stage,’ it said.”

April 29 – Bloomberg (Josh Xiao): “China’s top diplomat warned countries against caving in to US tariff threats… Chinese Foreign Minister Wang Yi said appeasement will only embolden the ‘bully’ at a BRICS meeting on Monday, rallying the group of emerging-market nations to fight back against US levies… ‘The US, which has long benefited enormously from free trade, is now going so far as to use tariffs as a bargaining chip to demand exorbitant prices from all countries,’ Wang said at the gathering of senior diplomats in Brazil. ‘If one chooses to remain silent, compromise and cower, it will only make the bully want to push his luck more.’”

April 29 – Bloomberg: “President Xi Jinping’s diplomats are fanning out across the world with a clear message for countries cutting deals with Donald Trump: The US is a bully that can’t be trusted. Chinese officials are racing to turn foreign governments against the US inside a 90-day window Trump has granted all nations — except China — to strike trade deals during a tariff reprieve. Once those pacts are in place, Treasury Secretary Scott Bessent has said he wants US allies to ‘approach China as a group’… While US allies from South Korea to the European Union rely on Washington for security and have incentive to appease Trump economically, China is approaching the tariff battle on a more equal footing. Beijing has devoted years since Trump’s last trade war to weaning its economy off many US exports, and has the world’s largest military by number of active soldiers.”

April 28 – Bloomberg (Daniel Flatley): “Treasury Secretary Scott Bessent said ‘all aspects’ of the US government are in contact with China but that it’s up to Beijing to take the first step in de-escalating the tariff fight with the US due to the imbalance of trade between the two nations. ‘We’ll see where this goes,’ Bessent said… ‘As I’ve repeatedly said, I believe it’s up to China to de-escalate because they sell five times more to us than we sell to them, so these 125% tariffs are unsustainable.’”

April 29 – Yahoo Finance (Jennifer Schonberger): “Treasury Secretary Scott Bessent… said the ‘onus’ is on China to bring down its tariffs as he outlined how many jobs the world’s second-largest economy stands to lose in a trade war. If the US keeps tariffs in place at the current level of 145%, China could lose 10 million jobs ‘very quickly,’ Bessent said… ‘So remember that we are the deficit country,’ Bessent said. ‘They sell almost five times more goods to us than we sell to them. So the onus will be on them to take off these tariffs. They're unsustainable for them.’”

April 30 – Associated Press (Paul Wiseman, Anne D’Innocenzio and Christopher Rugaber): “American businesses are cancelling orders from China, postponing expansion plans and hunkering down to see what trade policy surprises President Donald Trump plans to spring on them next. The president’s massive and unpredictable taxes on imports seem likely to mean emptier shelves and higher prices for American shoppers, perhaps within weeks… Gene Seroka, executive director of the Port of Los Angeles, warned last Thursday within two weeks arrivals to the port ‘will drop by 35% as essentially all shipments out of China for major retailers and manufacturers has ceased.’ Seroka added that cargo from Southeast Asia also ‘is much softer than normal with tariffs now in place.’ After Trump announced expansive tariffs in early April, ocean container bookings from China to the United States dropped 60% -- and stayed there, said Ryan Petersen, founder and CEO of Flexport… With orders down, ocean carriers have reduced their capacity by cancelling 25% of their sailings…”

April 28 – Bloomberg (Catherine Wong): “China’s Foreign Minister Wang Yi says if nations choose to remain silent, compromise and retreat, it will only lead to the bullies making further advances. Wang made the remarks during BRICS foreign ministers’ meeting in Brazil. The US has benefited greatly from free trade for a long time, but now it is using tariffs as a bargaining chip to extort other countries. Defending multilateral trade rules has become the most pressing task at present. Wang urges the adjustment of the International Monetary Fund’s quota system and addresses the historical injustice of the lack of representation of the Global South in global institutions.”

April 28 – Associated Press (Didi Tang and Zeke Miller): “One went to the United States. The other went to China. It was a sign of the times. While the Swiss president was in Washington last week to lobby U.S. officials over President Donald Trump’s threatened 31% tariff on Swiss goods, the Swiss foreign minister was in Beijing… As Trump’s trade war locks the world’s two largest economies on a collision course, America’s unnerved allies and partners are cozying up with China to hedge their bets... With Trump saying that countries are ‘kissing my ass’ to negotiate trade deals on his terms…, Beijing is reaching out to countries far and near. It portrays itself as a stabilizing force and a predictable trading partner... ‘America and China are now locked in a fierce contest for global supremacy,’ Singaporean Prime Minister Lawrence Wong said… ‘Both powers claim they do not wish to force countries to choose sides. But in reality, each seeks to draw others closer into their respective orbits.’”

April 28 – Bloomberg (Hallie Gu): “China’s grain supply won’t be affected by a loss of US feed grain and oilseed imports, thanks to abundantly available substitutes on the global market and sufficient reserves at home, a top official from the country’s state planner told reporters… The world’s top buyer of soybeans is set to receive a mammoth amount of the oilseed from South America in the second quarter… Inbound shipments, mainly from Brazil, Argentina, and Uruguay, are poised to climb to more than 30 million tons during the period from April to the end of June, Yin Ruifeng, who is affiliated with China’s agriculture ministry, wrote… That would be a record for the quarter…”

April 30 – Bloomberg: “China Investment Corp., the nation’s $1.3 trillion sovereign wealth fund, is cutting exposure in US private markets to curb risks as an escalating trade war between the world’s two largest economies threatens its investments, according to people with knowledge... The… fund is planning to reduce holdings in US private assets, which may include real estate and infrastructure in addition to private equity… The company has already started seeking buyers for about $1 billion in private equity investments managed by US firms, they added.”

April 28 – Bloomberg: “Xi Jinping has faced growing skepticism and discontent within China due to strict Covid lockdowns, a slowing economy and attacks on entrepreneurs. Now Donald Trump has handed him a gift to rally support at home: an external enemy… Interviews with dozens of people in China across business and government circles… showed a solid consensus is emerging to fight back hard against Trump’s move to rapidly increase tariffs on many Chinese goods to 145% — a level that threatens to effectively wipe out trade between the world’s biggest economies.”

April 28 – Financial Times (Tom Wilson and Camilla Hodgson): “China’s copper stockpiles are on track to dwindle to nothing in just a few months, as the market suffers ‘one of the greatest tightening shocks’ in its history on fears of US tariffs, according to… trading house Mercuria. Huge US demand, as buyers rush to get their hands on copper ahead of the potential imposition of levies by the Trump administration, was sucking imports of the metal into the country from the rest of the world and setting it up in direct competition with China for supplies… Chinese stocks of copper have rapidly declined over the past few weeks, and ‘at the current pace of draws, those Chinese inventories could deplete [to zero] by the middle of June’, Nicholas Snowdon, Mercuria’s head of metals and mining research, told the Financial Times.”


Trade War Watch:

April 29 – Bloomberg (Daniel Flatley): “Treasury Secretary Scott Bessent said the European Union has some ‘internal matters’ to sort out before the bloc can enter into trade negotiations with the US, singling out a tax on digital services levied by some countries. ‘We’re negotiating with a lot of different interests,’ Bessent said… ‘Some of the European countries have put on an unfair digital service tax’ on the US, he said. The US has for years objected to moves by foreign countries that multiple administrations have argued unfairly target American technology giants… Bessent singled out France and Italy… ‘Other countries, Germany and Poland, don’t have that — we want to see that unfair tax on one of America’s great industries removed… It’s going to be a give-and-take. They have some internal matters to decide before they can engage in an external negotiation.’”

April 28 – CNBC (Lori Ann LaRocco): “The clock is ticking on trade deals that the U.S. will need to strike with many nations, most notably China… But in the U.S. farming sector, the damage has already been done and the economic crisis already begun. U.S. agriculture exporters say the global backlash to Trump’s tariffs is punishing them, especially through a decline in Chinese buying of U.S. farm products… Peter Friedmann, executive director of the Agriculture Transportation Coalition, or AgTC, a leading export trade group for farmers, told CNBC the number of canceled purchases… should not be described as approaching a crisis. ‘It is a full-blown crisis already,’ he said.”

April 30 – Financial Times (Kana Inagaki): “General Motors has said it will pull out its ‘Covid playbook’ to offset an up to $5bn hit from President Donald Trump’s sweeping tariffs with cost cuts, as it slashed its annual profit guidance for the year. In a letter to shareholders…, the US carmaker said it now expected to report annual adjusted earnings of between $10bn and $12.5bn before interest and taxes, compared with a previous range of $13.7bn to $15.7bn.”

May 1 – Reuters (Jihoon Lee): “South Korea’s factory activity contracted at the steepest pace in 31 months in April as demand plunged on U.S. President Donald Trump's sweeping tariffs, while firms turned most pessimistic since the pandemic…”


Budget Watch:

May 1 – Bloomberg (Gregory Korte, Erik Wasson, and Anthony Capaccio): “President Donald Trump asked Congress for deep cuts to domestic agencies and a boost to the military in a preliminary outline of his 2026 budget request. The president’s budget calls for $557 billion in non-defense spending next year, which represents a cut of $163 billion from current levels. National security funding would increase to $1.01 trillion, a 13% increase from the previous year. Known as the skinny budget because of its lack of detail, the document is a new president’s first opportunity to outline his vision for the size and scope of the federal government. But Trump’s version was even thinner than usual, omitting baseline economic and interest-rate projections… There was also no set of forecasts for government debt, deficits or tax revenue in the document. Also excluded: any projections related to entitlement programs — headlined by Social Security and Medicaid — which are large drivers of overall federal spending.”

April 25 – New York Times (Alan Rappeport and Tony Romm): “The Trump administration… is preparing to unveil a budget proposal as soon as next week that includes draconian cuts that would entirely eliminate some federal programs and fray the nation’s social safety net. The proposed budget for the 2026 fiscal year would cut billions of dollars from programs that support child care, health research, education, housing assistance, community development and the elderly, according to preliminary documents reviewed by The New York Times.”

April 28 – Bloomberg (Catherine Lucey): “President Donald Trump suggested… his sweeping tariffs would help him reduce income taxes for people making less than $200,000 a year, as public anxiety rises over his economic agenda. Trump has previously argued that tariff revenue could replace income taxes, though economists have questioned those claims. ‘When Tariffs cut in, many people’s Income Taxes will be substantially reduced, maybe even completely eliminated. Focus will be on people making less than $200,000 a year,’ he said… on his Truth Social network.”


New World Order Watch:

April 28 – Reuters (Gwladys Fouche): “The world economy appears to be fragmenting, posing the biggest risk to markets currently as it brings low growth and higher inflation, the CEO of Norway's $1.8 trillion sovereign wealth fund told Reuters… Asked what the biggest risk to financial markets today was, Nicolai Tangen, CEO of the fund’s operator Norges Bank Investment Management (NBIM), said it was decoupling, and referred to one of the fund’s stress-test scenarios that sees a fragmented world economy. ‘That kind of decoupling of the world is a very negative scenario,’ he said… ‘You are in a situation now where you have... a hot war, you have a cold war, you’ve got a trade war, you’ve got a tech war. It’s just a lot of friction here between the superpowers… And it leads to lower economic growth, higher inflationary pressure, and more uncertainty.’ Asked whether we were in that scenario, Tangen said: ‘Looks like it.’”

April 27 – CNBC (Evelyn Cheng): “Chinese manufacturers are pausing production and turning to new markets as the impact of U.S. tariffs sets in, according to companies and analysts… ‘I know several factories that have told half of their employees to go home for a few weeks and stopped most of their production,’ said Cameron Johnson, Shanghai-based senior partner at… Tidalwave Solutions. He said factories making toys, sporting goods and low-cost dollar store-type goods are the most affected right now. ‘While not large-scale yet, it is happening in the key [export] hubs of Yiwu and Dongguan and there is concern that it will grow,’ Johnson said.”

April 29 – Reuters (Samuel Shen and Tom Westbrook): “As Chinese President Xi Jinping toured Southeast Asia this month to forge closer ties against higher U.S. tariffs, the People’s Bank of China was seizing a moment of confusion and disruption in global trade to promote greater usage of the yuan. It won’t de-throne the dollar, but as cross-border yuan payments surged to a record in March...”


U.S./Russia/China/Europe/Iran Watch:

May 1 – Reuters (Costas Pitas and Angus McDowall): “Iran has to ‘walk away’ from uranium enrichment and long-range missile development and it should allow inspectors of military facilities, U.S. Secretary of State Marco Rubio said… as a round of nuclear talks was postponed. Rubio’s comments underscore the major remaining divisions in talks between the countries to resolve the long-running dispute over Iran's nuclear programme, with U.S. President Donald Trump threatening to bomb Iran if there is no agreement.”

May 1 – Axios (Ben Berkowitz and Ben Geman): “President Trump… effectively threatened new and massive sanctions against China over purchases of Iranian oil. It's the opposite of the trade war de-escalation the administration has said is necessary. ‘ALERT: All purchases of Iranian Oil, or Petrochemical products, must stop, NOW! Any Country or person who buys ANY AMOUNT of OIL or PETROCHEMICALS from Iran will be subject to, immediately, Secondary Sanctions,’ Trump posted to Truth Social. ‘They will not be allowed to do business with the United States of America in any way, shape, or form.’”


Canada Friend and Ally Watch:

April 29 – Reuters (Rod Nickel): “Canadian Prime Minister Mark Carney completed a comeback victory for the governing Liberals in Monday’s election, positioning himself for a global role as a champion of multilateralism against U.S. President Donald Trump’s more protectionist policies. The first person to lead two G7 central banks has the experience to earn immediate international credibility, experts say. Carney’s tough words for Trump during the campaign have been closely watched in other parts of the world. ‘Canada is ready to take a leadership role in building a coalition of like-minded countries who share our values… We believe in international cooperation. We believe in the free and open exchange of goods, services and ideas. And if the United States no longer wants to lead, Canada will.’”

April 29 – Associated Press (Rob Gillies): “Canadian Prime Minister Mark Carney ’s Liberals fell short of winning an outright majority in Parliament…, a day after the party scored a stunning comeback victory in a vote widely seen as a rebuke of U.S. President Donald Trump. The vote-counting agency Elections Canada finished processing… an election that could leave the Liberals just three seats shy of a majority… Carney’s rival, populist Conservative leader Pierre Poilievre, was in the lead until Trump took aim at Canada with a trade war and threats to annex the country as the 51st state. Poilievre not only lost his bid for prime minister Monday but was voted out of the Parliament seat that he held for 20 years.”


Ukraine War Watch:

April 28 – Financial Times (Henry Foy, Christopher Miller and Max Seddon): “European and Ukrainian officials fear Donald Trump is on the brink of walking away from peace negotiations with Kyiv and Moscow… Following talks with the US side in recent days, European and Ukrainian officials are convinced Trump is ready to seize any kind of breakthrough this week, which marks his first 100 days in office — even if it falls short of a long-term solution, four officials told the Financial Times. One European official said Trump was ‘setting up a situation where he gives himself excuses to walk away and leave it to Ukraine and us [Europe] to fix’.”

April 28 – Associated Press (Hyung-Jin Kim): “Russian President Vladimir Putin thanked North Korea… for fighting alongside his troops against Ukrainian forces and promised not to forget their sacrifices, hours after North Korea confirmed its deployment for the first time… Putin praised North Korean soldiers who he said ‘shoulder to shoulder with Russian fighters, defended our Motherland as their own.’ ‘The Russian people will never forget the heroism of the DPRK special forces. We will always honor the heroes who gave their lives for Russia, for our common freedom, fighting side by side with their Russian brothers in arms,’ Putin said…”


Bubble and Mania Watch:

April 28 – Bloomberg (Alice Gledhill, Julien Ponthus, and Masaki Kondo): “For years, it was the money-minting trade for the investor set in London and Paris and Tokyo: Buy dollars and plow the proceeds into S&P 500 and Nasdaq stocks. Not only were US equity returns far superior to those generated at home, but they were magnified by the steady rise in the value of the dollar. So when both parts of the trade suddenly blew up after President Donald Trump launched his global trade war, the pain mounted quickly. A 6% decline in the S&P 500 this year ballooned into a 14% wipeout for investors who measure their returns in euros and yen… ‘It’s a double whammy,’ said Benoit Peloille, chief investment officer at Natixis Wealth Management in Paris. ‘You lose on the equity and the currency at the same time.’”

April 29 – Bloomberg (Scott Carpenter): “When three Seattle office buildings a short distance from Amazon.com Inc.’s headquarters defaulted on $135 million worth of commercial mortgage debt last month, it left bond investors who financed the properties facing a long and uncertain slog to claw back money. The buildings… became the latest additions to a pile of soured business property loans that is now as large by some measures as it was during the pandemic. ‘A lot of defaults during Covid are still not fully resolved, and loans that were modified or extended during the 2022 interest rate hikes are coming to roost,’ said Karan Malhotra, head of structured credit trading at Monarch Alternative Capital. ‘They need to be flushed out of the system, so we’re likely to see re-defaulting and more loan sales.’ Higher interest rates, which caused borrowing costs to rise and values to fall, are driving the current problems. The toxic mix is filtering through to a $650 billion market where commercial real estate loans get packaged into bonds of varying size and risk.”

April 30 – Bloomberg (Miranda Davis and Ari Altstedter): “Canadian pension fund Caisse de Dépôt et Placement du Québec is seeking to sell a Chicago office tower in a deal that’s expected to generate bids 59% lower than its last purchase price about eight years ago… Ivanhoé Cambridge… has hired Jones Lang LaSalle Inc. to market the building at 125 S. Wacker Drive… Bids are expected to come in around $60 million…”

April 29 – Wall Street Journal (Yoko Kubota): “Beijing is slamming the brakes on China’s self-driving marketing frenzy. As Tesla and other automakers have touted their assisted-driving systems with terms such as ‘autonomous’ and ‘self-driving,’ one deadly crash last month involving the technology has sparked a broad debate over its capabilities—and how the features are being portrayed to the public. Coming in for particular scrutiny by Beijing’s regulators is the question of whether automakers are portraying the artificial intelligence-powered technologies accurately… It is a high-stakes moment for China’s electric-vehicle industry, which has upended the global automotive world with a wave of affordable, sleekly designed cars.”


AI Bubble Watch:

April 29 – Financial Times (Zijing Wu and Eleanor Olcott): “Huawei has started the delivery of its advanced artificial intelligence chip ‘cluster’ to Chinese clients who are increasing orders after being cut off from Nvidia’s semiconductors because of Washington’s export restrictions. The… tech conglomerate has sold more than 10 sets of CloudMatrix 384, which links a large sum of chips together, according to two people with knowledge... Those who received the first deliveries include data centres that serve Chinese tech companies… Industry analysts have said they are impressed by the speed at which Huawei has built and begun to ship CloudMatrix, a system that connects 384 AI processors to provide the computing power needed to develop AI models and services.”

May 1 – Bloomberg (Carmen Arroyo): “The artificial intelligence boom is driving business to private credit firms, as tech companies seek funding to build data centers filled with computing chips to operate AI models. Carlyle… expects more than $1.8 trillion of capital will be deployed by 2030 to meet that demand, and a chunk of that can be taken up by the private markets, Chief Executive Officer Harvey Schwartz recently wrote… ‘There’s a need for private credit to facilitate the infrastructure build for AI, whether it’s chips or data center developments,’ Mark Van Zandt, managing director… at King Street Capital Management, said… Public-market products like asset-backed bonds or traditional real estate debt, have funded data center projects, but these ‘can’t do it all,’ he added.”

April 29 – Wall Street Journal (Dan Gallagher and Asa Fitch): “The Trump administration’s recent ban on sales of Nvidia’s artificial-intelligence chips for the Chinese market has crimped the company’s growth potential and created an opportunity for competitors such as Huawei Technologies. That might only be the beginning. In less than a month’s time, some of the most significant restrictions on AI computing power to date will come into effect. Those curbs—the ‘AI-diffusion’ rules—place caps on how many AI chips can be sold in a swath of countries… The rules also limit the ability of huge U.S. tech companies such as Microsoft, Amazon.com and Google parent Alphabet to build large AI data centers in those Tier 2 markets. The idea is to limit the ability of countries like China to circumvent U.S. export controls by acquiring AI chips or computing power through other countries.”


Inflation Watch:

April 27 – Fortune (Amanda Gerut): “A new housing report reveals the hurdle to becoming a first-time homebuyer is now even higher in hundreds of U.S. cities. Housing platform app Zillow reports there are now 233 locations in the U.S. where a simple ‘starter home’—a smaller, less-expensive route to owning a larger house—will now run you $1 million or more. The increase represents a dramatic rise from five years ago when there were only 85 cities with million-dollar starter homes… And it’s not just a California problem, wrote Zillow economic analyst Anushna Prakash. New York, New Jersey, Florida, Massachusetts, Washington, and Texas now boast cities in the million-dollar-starter-home club.”


Federal Reserve Watch:

April 29 – Yahoo Finance (Ben Werschkul and Jennifer Schonberger): “President Trump once again went after the Federal Reserve…, saying at a rally in Michigan that ‘I have a Fed person who is not really doing a good job… I want to be very nice and respectful to the Fed.’ ‘You are not supposed to criticize the Fed; you are supposed to let him do his own thing, but I know much more than he does about interest rates, believe me,’ he added.”

April 27 – Wall Street Journal (Editorial Board): “President Trump’s criticism of Chairman Jerome Powell is dominating commentary on the Federal Reserve, but there is a larger debate… To wit, what is the proper role of the Fed, and has it exceeded its writ in ways that compromise its independence? That’s one of the subjects former Federal Reserve governor Kevin Warsh took up in an important speech… to the Group of Thirty… Mr. Warsh’s central argument is that if the Fed’s independence is now in question, the fault lies mainly with the central bank. The Fed has undermined its own credibility in recent years by failing to fulfill its core duty of providing price stability. The central bank has also wandered far from its monetary policy mission into political areas… The most obvious example… is the Fed’s foray into fiscal policy. Whatever the benefits of quantitative easing in the 2008-09 financial panic, the Fed’s boundless bond purchases for many years after the crisis disguised the true cost of capital.”

April 30 – Bloomberg (Maria Eloisa Capurro and Craig Torres): “The Federal Reserve should develop a guiding framework for how it deploys large-scale asset buying, according to an external review of the central bank’s longer-run strategy. The Fed conducts quantitative easing, or the purchase of Treasuries and agency mortgage-backed securities, for two key reasons: to stabilize markets and to stimulate the economy when interest rates are already near zero. But the central bank’s strategy document, which is currently under internal review, makes no mention of the tool. Policymakers should set forth a ‘comprehensive framework’ for the program and ‘clearly delineate’ when it seeks to stimulate the economy and when it’s securing the proper function of markets, said a Group of Thirty report chaired by former New York Fed president William Dudley. As part of that framework, the report argues Fed officials should clarify their objectives and evaluate the costs and benefits of the program. It also said the central bank should lay out its exit strategy from QE as well as detail the desirable composition of its portfolio.”

April 30 – Reuters (Howard Schneider): “A group of former top world central bankers says the Federal Reserve should scrap its nearly five-year-old bias towards jobs and keep a stricter focus on inflation, a recommendation offered as the U.S. central bank conducts its own strategy review. The Fed should ‘always seek to bring inflation back to its 2% inflation target’ and drop the current pledge to use periods of high inflation to offset periods when prices rise too slowly, said the panel, chaired by former New York Fed President William Dudley and including former central bank officials from China, Mexico, Japan, England, and Israel.”

May 1 – Bloomberg (Chris Anstey): “Former Treasury Secretary Lawrence Summers said that bond-market pricing doesn’t amount to a judgment call on what the Federal Reserve ought to do with interest rates… ‘It would have been a grave mistake to have eased already, and would be a very serious error to ease at this upcoming meeting,’ Summers said… A cut on May 7 would undermine confidence in the Fed’s determination to bring down inflation, causing longer-term borrowing costs to climb, he said.”


U.S. Economic Bubble Watch:

April 29 – Yahoo Finance (Alexandra Canal): “Consumer confidence fell for the fifth straight month in April, dropping to its lowest level since the early days of the COVID-19 pandemic as uncertainty surrounding President Trump’s trade policy pushed inflation expectations higher and weighed on the labor outlook. The Conference Board’s Consumer Confidence Index for April came in at a reading of 86, a significant drop from March’s revised 92.9 reading and short of the 88 reading expected by economists. The ‘Present Situation Index,’ which measures consumers’ assessment of current business and labor market conditions, fell to 133.5 in April from 134.5 in March. The ‘Expectations Index,’ which tracks consumers’ short-term outlook for income, business, and labor market conditions, also fell to 54.4 in April from 65.2 last month. This was the lowest level since October 2011. Historically, a reading below 80 in that category signals a recession in the coming year.”

April 28 – Wall Street Journal (Chip Cutter): “The new directive inside C-suites: Trim anywhere you can. The unpredictability of President Trump’s stop-start trade offensive is paralyzing companies on just about every front except one—taking an ax to costs. The chemical company Dow is delaying construction of a new plant. Boston Scientific… is speeding up efforts to cut discretionary spending including travel. The railroad operator Norfolk Southern, meanwhile, is more closely scrutinizing consultant fees. Andre Schulten, chief financial officer of Procter & Gamble, said: ‘We will have to pull every lever we have in our arsenal to mitigate the impact of tariffs within our cost structure.’”

May 1 – Axios (Courtenay Brown): “Manufacturers keep taking it on the chin… Manufacturers reported plummeting production, higher material costs and a drop-off in imports and exports. ‘Demand and output weakened while input strengthened further, conditions that are not considered positive for economic growth,’ ISM's chair Tim Fiore said… The Institute for Supply Management’s purchasing manager’s index for manufacturers fell to 48.7%, down 0.3 percentage point from March… ‘The most important topic is tariffs,’ a respondent in the food manufacturing industry said — among the anecdotes that universally suggested tariffs were hurting business.”

May 2 – CNBC (Jeff Cox): “Nonfarm payrolls increased a seasonally adjusted 177,000 for the month, slightly below the downwardly revised 185,000 in March but above the… estimate for 133,000… The unemployment rate held at 4.2%, as expected… Health care continued to be a leader in job creation, adding 51,000 jobs. Other sectors posting gains included transportation and warehousing (29,000), financial activities (14,000), and social assistance. The federal government reported a loss of 9,000 jobs on the month… On the wage side, average hourly earnings rose just 0.2% for the month, below the 0.3% forecast, while the annual rate of 3.8% also was 0.1 percentage point less than expected and the lowest since July 2024.”

April 30 – CNBC (Jeff Cox): “Companies slowed hiring sharply in April as they braced against potential impacts from President Donald Trump’s tariffs against U.S. trading partners, ADP reported… Private sector payrolls rose by just 62,000 for the month, the smallest gain since July 2024... The total marked a deceleration from the downwardly revised gain of 147,000 in March… Wage gains also took a step backward, rising 4.5% from a year ago for those staying in their jobs, down 0.1 percentage point from March. However, job changers saw an increase to 6.9%, up 0.2 percentage point.”

May 1 – CNBC (Jeff Cox): “Initial unemployment claims posted an unexpected increase last week in a potential trouble sign... First-time filings for unemployment insurance totaled a seasonally adjusted 241,000 for the week ended April 26, up 18,000 from the prior period and higher than the Dow Jones estimate for 225,000… This was the highest total since Feb. 22. Continuing claims… rose to 1.92 million, up 83,000 to the highest level since Nov. 13, 2021. Much of the gain seemed to come from one state — New York… The increase may have been due to spring recess in New York public schools…”

April 29 – Associated Press (Paul Wiseman): “Job openings in the United States fell in March as President Donald Trump’s trade wars clouded the economic outlook. U.S. employers posted 7.2 million vacancies in March, down from 7.5 million in February and 8.1 million in March 2024... It was the fewest number of openings since September and below the 7.5 million that economists had forecast.”

May 1 – Reuters (Lucia Mutikani): “Layoffs announced by U.S. employers dropped in April, but companies remained resistant to boost hiring amid an uncertain economic outlook because of tariffs. Global outplacement firm Challenger, Gray & Christmas said… planned job cuts fell 62% to 105,441 last month. Layoffs were, however, 63% higher compared to last year and April's tally was the highest for the month in five years.”

April 30 – Wall Street Journal (Harriet Torry): “The U.S. economy contracted in the first three months of 2025, as businesses rushed to stock up on imports ahead of the Trump administration’s tariffs and consumer spending slowed… Gross domestic product… fell at a seasonally and inflation adjusted 0.3% annual rate in the first quarter. That was the first contraction since the first quarter of 2022. Consumer spending, the economy’s main engine, rose at a 1.8% pace in the first quarter, the smallest increase since mid-2023. Spending by the federal government fell as the Department of Government Efficiency cut jobs and contracts.”

April 30 – Wall Street Journal (Lucia Mutikani): “U.S. consumer spending increased solidly in March as households boosted purchases of motor vehicles to avoid higher prices and shortages due to tariffs, but that did little to change economists’ views that the economy had shifted into lower gear. Consumer spending… surged 0.7% last month after an upwardly revised 0.5% gain in February… The Personal Consumption Expenditures (PCE) Price Index was unchanged in March after advancing 0.4% in February. In the 12 months through March, PCE prices increased 2.3% after rising 2.7% in February. Stripping out the volatile food and energy components, the PCE price index was also unchanged. That followed a 0.5% gain in the so-called core PCE inflation in February. In the 12 months through March, core inflation increased 2.6% after advancing 3.0% in February.”

April 28 – Wall Street Journal (Telis Demos): “If consumers are expecting higher prices in the future, they might spend more today. But not if they’re also worried about losing their jobs. There are conflicting signals coming from the country’s largest credit-card lenders. Some are showing more spending, others less… Several lenders have reported an uptick in spending in the first quarter versus a year earlier, with some attributing that partly to a ‘pull-forward’ of future purchases. In other words, people are defensively buying stuff today that could become more expensive under President Trump’s tariff policies. But lenders were also reporting a mix of trends within their customer base. Synchrony Financial told analysts that lower-income consumers started ‘tapering’ their spending a year ago…”

May 1 – Wall Street Journal (Theo Francis and Heather Haddon): “Middle-class and lower-income Americans are in belt-tightening mode. Plunging consumer confidence is pummeling the financial results of companies that cater to middle-income households, from McDonald’s to General Motors. McDonald’s reported its worst sales since the pandemic for established U.S. restaurants, after anxious middle- and low-income diners cut their spending. Sales of Harley-Davidson motorcycles dropped by 24% from a year earlier. And Hershey said it expects a 30% drop in profits if tariffs stay as they are. ‘People are just being more judicious,’ McDonald’s Chief Executive Chris Kempczinski told investors…”

April 29 – Bloomberg (Patrick Clark): “Home-price gains in the US eased in February as more properties came up for sale. A national gauge of prices climbed 3.9% from a year earlier, according to data from S&P CoreLogic Case-Shiller. That was less than the 4.1% annual increase in January… The total supply of homes for sale rose in February and hit the highest level in five years in March, according to Redfin Corp… But in March, transactions dropped by the most since 2022. The uncertainty around tariffs and the economy have pushed up borrowing costs and caused buyers to pull back.”

April 30 – Yahoo Finance (Claire Boston): “Home contract signings rose more than expected in March as mortgage rates hovered around their lowest point this year. The Pending Home Sales Index, which tracks contract signings on existing homes, jumped 6.1% from February… It’s the biggest month-over-month increase since late 2023. March’s index reading was 76.5, down 0.6% from a year earlier. A level of 100 is equal to the contract activity in 2001.”

April 30 – CNBC (Diana Olick): “Mortgage rates didn’t move much last week, but homebuyers continued to pull back amid concerns over the broader economy. Applications for a mortgage to purchase a home dropped 4% last week compared with the previous week… Volume was just 3% higher than the same week one year ago, even though interest rates last year were considerably higher.”

May 2 – Bloomberg (Claire Ballentine): “The US Department of Education is restarting collections on defaulted student loans after more than five years, formally ending an era of leniency as US consumers navigate tariff-driven economic uncertainty. Wage garnishment for borrowers who are not making payments will begin ‘later this summer,’ with the government estimating nearly 25% of its $1.6 trillion student loan portfolio could be in default as overdue payments pile up…”

April 28 – Bloomberg (Joe Lovinger): “A widely followed measure of Texas manufacturing activity weakened significantly as executives used words like ‘chaos’ and ‘insanity’ to describe the turmoil spurred by President Donald Trump’s tariffs… A general gauge of business activity plunged to its worst reading since May 2020 based on recent survey responses from 87 Texas manufacturers, the Dallas Fed said... While responses indicated modest current growth in production, company outlooks fell to a post-pandemic low as respondents pointed to frazzled supply lines and difficulty in forecasting.”

April 28 – CNBC (Jesse Pound): “The economic impact of the tariffs imposed by the Trump administration will soon become apparent to everyday Americans and lead to a recession this summer… Torsten Slok, chief economist at Apollo, laid out a timeline in a presentation for clients that showed when the impact of tariffs announced by President Donald Trump could hit the U.S. economy. Based on the transport time required for goods from China, U.S. consumers could start to notice trade-related shortages in their local stores next month, according to the presentation. ‘The consequence will be empty shelves in US stores in a few weeks and Covid-like shortages for consumers and for firms using Chinese products as intermediate goods,’ Slok wrote…”

April 29 – Associated Press (Mae Anderson): “Major orders canceled. Containers of products left stranded overseas. No roadmap for what comes next. The Trump administration raised tariffs on goods from China to 145% in early April. Since then, small business owners who depend on imports from China to survive have become increasingly desperate as they eye dwindling inventory and skyrocketing invoices. President Donald Trump seemed to back down somewhat last week… That helped set off a rally in the stock market. But for small businesses that operate on razor-thin margins, the back and forth is causing massive upheaval. Some say they could be just months from going out of business altogether.”


China Watch:

April 30 – Wall Street Journal (Jason Douglas): “China’s economy showed its first big signs of damage from the trade war, as steep U.S. tariffs pummeled export orders and production at the country’s factories. A gauge of new export orders fell in April to its lowest reading since Covid-19 was ravaging the country in 2022, while overall manufacturing activity in China was the weakest in more than a year…”

April 29 – Financial Times (Thomas Hale): “China’s manufacturing activity contracted by the most since 2023 in April…, in an early sign of the economic impact from US President Donald Trump’s trade war. The country’s official manufacturing purchasing managers’ index came in at 49, the weakest level since December 2023.”

April 30 – Bloomberg: “Shares of Chinese banks slumped following weak earnings, with analysts concerned the global trade war will further undermine their profit. Lenders were the worst performers in the Hang Seng China Enterprises Index after some of them reported a drop in profit and lower margins. Industrial & Commercial Bank of China Ltd. fell as much as 6% in Hong Kong… Shares in China Merchants Bank Co. and Postal Savings Bank of China Co. slid at least 5%. The financial health of Chinese lenders is being closely watched as Beijing gears up for a deepening trade dispute…”

April 30 – Reuters (Joe Cash): “The average price of resale homes across 100 Chinese cities fell by 0.7% month-on-month in April…, as more residential properties came onto the market boosting competition for buyers. ‘Price cuts to drive sales remained the market norm,’ the China Index Academy wrote… As 70% of China’s household wealth is held in real estate signs of stabilisation or even a mild rebound in the property market… could help cushion China’s economy from the impact of a renewed trade war with the United States. Some analysts estimate average home prices have slumped by 20-30% since a peak in August 2021 amid a protracted property crisis… Prices of existing homes fell 7.2% year-on-year on average in April…”


Europe Watch:

April 28 – Bloomberg (Paul Wallace): “Defense spending surged last year by the most since at least the end of the Cold War…, with European countries rushing to bolster their security in the face of threats from Russia. Military expenditure worldwide rose 9.4% from 2023 to just over $2.7 trillion, the Stockholm International Peace Research Institute said… Wars in Ukraine and the Middle East have dramatically worsened the security outlook for Western nations and forced many of them to end a long-standing reluctance to boost spending on their armed forces significantly.”

April 30 – Financial Times (Philip Georgiadis): “Two of Europe’s largest airlines have warned that some Europeans are starting to avoid US travel… Air France-KLM and Lufthansa have this week reported signs of weakening demand on transatlantic routes among European passengers, although they said the impact had been limited. ‘We know there are a lot of customers that are holding back in buying tickets for a little more clarity on… the border, and things like that,’ Air France-KLM chief executive Ben Smith told analysts…”


Japan Watch:

May 1 – Wall Street Journal (Megumi Fujikawa): “The Bank of Japan halved its growth forecast for the Japanese economy as U.S. tariffs begin to bite, highlighting how President Trump’s efforts to rewire U.S. trade are hitting economies around the world. The central bank said it expects Japan’s economy to expand just 0.5% in the fiscal year ending March 2026, a sharply lower forecast than the 1.1% growth predicted in late January… ‘It is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them,’ the central bank said, as it held its benchmark policy rate steady at 0.5%.”


Emerging Market Watch:

April 28 – Bloomberg (Vinícius Andrade and Nicolle Yapur): “Colombian assets dropped after the International Monetary Fund paused access to an $8.1 billion credit line, adding to concerns about the South American country’s widening budget deficit. The lender’s move drew a quick response from Colombia’s President Gustavo Petro, who wrote on X that ‘the vampires are coming, but the vampires disappear before the sun,’ followed by the last name of Kristalina Georgieva, the IMF’s managing director.”

April 30 – Bloomberg (Abhishek Vishnoi and Haslinda Amin): “Veteran emerging-markets investor Mark Mobius is keeping the bulk of his funds’ holdings in cash as he waits out the trade-related uncertainty, which is likely to persist for up to six months. ‘At this stage, cash is king. So 95% of my money in the funds are in cash,’ Mobius said… ‘Right now, we’ve got to keep the cash and be ready to move when the time is right.’”


Social, Political, Environmental, Cybersecurity Instability Watch:

April 29 – Financial Times (Anjana Ahuja): “The cool wind that has been blowing on climate science since President Trump took office is fast becoming an Arctic freeze. Earlier this month, the administration broke with tradition by slipping out information about a key climate metric — carbon dioxide concentration in the atmosphere — without commentary, despite a record jump. There is also a race to save critical climate data sets after the administration indicated it would stop paying for the data to be hosted online, with sites potentially going dark from May. European research institutes have responded to transatlantic distress calls by joining forces to back up the information before it disappears or is deleted. When it comes to climate science, the US is showing signs of becoming a rogue state.”

April 27 – Bloomberg (Jason Gale): “A global race to recruit US scientists is heating up as President Donald Trump’s sweeping cuts to research funding and federal agencies trigger an exodus from the country’s research institutions. Canada, France, Germany, Denmark, Norway, and Australia are among nations offering incentives… to entice scientists facing mounting uncertainty at home. The turmoil has left many American researchers rethinking their futures. In a Nature poll conducted in March, more than 1,200 scientists — 75% of respondents — said they were considering leaving the US. Europe and Canada were among the top relocation choices. ‘Academic freedom is under pressure in the United States, and it is an unpredictable situation for many researchers in what has been the world’s leading research nation for many decades,’ Sigrun Aasland, Norway’s Minister of Research and Higher Education, said…”

April 29 – Bloomberg (Gautam Naik): “Insured losses from natural catastrophes could soar to $145 billion this year — well above the 10-year average — as population growth, urban sprawl and climate change combine to supercharge risks, according to a report by Swiss Re Institute. Severe thunderstorms, floods and wildfires are the main drivers behind this year’s loss estimate, the reinsurer said... The figure is based on a long-term growth trend of 5% to 7% each year and includes about $40 billion in losses from the Los Angeles wildfires. Swiss Re also warned that the risk of ‘peak’ loss years is growing. Such events, which can result in insured losses of about $300 billion in a single year, ‘should not be considered an anomaly,’ it said.”

April 28 – Politico (Aitor Hernandez-Morales): “The massive blackout that left the Iberian Peninsula in the dark on Monday appears to have been sparked by the unexplained disappearance of 15 gigawatts of power from Spain’s electricity grid. ‘This has never happened before,’ said a grave-looking Spanish Prime Minister Pedro Sánchez… ‘And what caused it is something that the experts have not yet established — but they will.’ He added that ‘no hypothesis has been rejected, and every possible cause is being investigated.’ A spokesperson for the Spanish government told POLITICO that ‘at 12:33 p.m. 15 gigawatts of the energy being produced [in Spain] suddenly disappeared and remained missing for five seconds.’ They added that the amount of electricity that had suddenly vanished from the power grid was equivalent to 60% of the total being consumed nationwide at that time.”

April 28 – Financial Times (Michael Peel): “The US should step up efforts to combat its year-long bird H5N1 flu outbreak and control the pandemic risk to people, an international group of virologists has warned. The high historical human mortality rate from H5N1 suggests ‘the terrible consequences of underreacting to current threats’, say human and animal virologists from the Global Virus Network spanning more than 40 countries.”


Geopolitical Watch:

May 1 – Financial Times (Editorial Board): “The surge in tensions between India and Pakistan sparked by a deadly shooting in Indian-administered Kashmir last week has not so far sounded the global alarm it merits. The killing of 25 tourists and a resident in the disputed region was the worst terrorist attack on civilians in India since the 2008 Mumbai attacks that killed 166. New Delhi has linked the violence to Pakistan; Islamabad has denied any connection. The nuclear-armed neighbours are in a dangerous stand-off. India’s prime minister, Narendra Modi, has given his army ‘operational freedom’ to respond. Pakistan’s government claimed… to have credible intelligence of an imminent Indian military strike.”

April 27 – Financial Times (Kathrin Hille): “China’s move to proclaim sovereignty over a disputed reef in the South China Sea has triggered a new stand-off with the Philippines, raising tensions between the two rival claimants on the eve of US-Philippine military drills nearby. The Philippines sent navy, coastguard and maritime police officers to Sandy Cay and two neighbouring sandbanks in the Spratly Islands on Sunday to ‘uphold the country’s sovereignty, sovereign rights and jurisdiction’… The move came a day after China said it had ‘implemented maritime control and exercised sovereign jurisdiction’ over the reef by showing its own flag there — the first such official declaration of sovereignty on or near a land feature in the disputed waters in at least a decade.”

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