Baltic
Dry Index. 2069 +23
Brent Crude 61.04
Spot Gold 4278 US 2 Year Yield 3.46 +0.05
US Federal Debt. 37.917 trillion
US GDP 31.519 trillion.
The propensity to swindle grows parallel with the propensity to speculate during a boom the implosion of an asset price bubble always leads to the discovery of frauds and swindles.
Charles P. Kindleberger
Another week in the bubbly stock casinos, but what new cockroach will come crawling out this week? What new TACO will emerge in Washington?
For now, it’s still bubble on in the stock casinos, but to dinosaur Graeme it’s long past time to exit the stock casinos and join Warren Buffett on the sidelines.
In the UK economy, bunker time ahead of November’s massive socialist tax increases.
In Euroland, look away now.
China stocks rise, brushing off weak GDP data
Published Sun, Oct 19 2025 7:39 PM EDT
Asia-Pacific markets opened higher Monday
as investors parsed the latest slew of economic data out of China.
China’s GDP rose 4.8% in the
July-to-September period compared to a year ago, in line with expectations of
analysts polled by Reuters.
The Asian giant also kept its benchmark
lending rates unchanged, in line with expectations, with the one-year loan
prime rate at 3%.
Hong Kong’s Hang Seng Index was up over
2%, while the mainland’s CSI 300 rose 0.74%.
Japan’s Nikkei 225 rose almost 3% to
hit above 49,000 for the first time, while the Topix added 2%, after the
country’s Liberal Democratic Party and the Japan Restoration Party effectively
reached an agreement to form a coalition government, NHK
reported citing sources.
South Korea’s Kospi added 0.36% after
hitting a record high for the third straight day last Friday, while the
small-cap Kosdaq climbed 1.13%.
Australia’s S&P/ASX 200 started the
day 0.1% lower.
Last Friday in the U.S., the three major
averages closed higher.
The Dow Jones Industrial Average rose
Friday as traders digested the U.S.′ softening tone on its trade talks with
China and tried to move past credit concerns that sparked a big sell-off in
regional banks Thursday stateside.
The Dow finished 238.37 points,
or 0.52%, higher at 46,190.61. The S&P 500 settled up 0.53%
at 6,664.01, while the Nasdaq
Composite added 0.52% to finish at 22,679.98.
Asia-Pacific
markets: Nikkei 225, Hang Seng Index, China GDP
Stock futures rise ahead of big earnings week:
Live updates
Updated Sun, Oct 19 2025 6:26 PM EDT
Stock futures moved higher Sunday night as
investors turn their attention towards a slew of big-name earnings reports and
inflation data expected in the coming days.
Futures tied to the Dow Jones
Industrial Average jumped 84 points, or about 0.2%. S&P futures gained 0.2%,
while Nasdaq 100 futures rose
0.3%.
Helping sentiment to start the week was
a report from The Wall Street Journal that said
President Donald Trump in
recent weeks has exempted dozens of products from his reciprocal tariffs and
also offered to exempt hundreds more, reflecting an increasingly shared
sentiment among administration officials that the U.S. should lower duties from
some goods that are not domestically produced.
Stocks are coming off a volatile trading
week, ultimately closing higher despite flaring tensions between the U.S. and
China, a sell-off sparked by regional bank losses and declines in a few
high-flying artificial intelligence stocks. A strong start to the third-quarter
earnings season appears to be lifting sentiment, alongside investors’
anticipation of another quarter percentage point rate cut at the Federal
Reserve’s late October meeting.
The three major U.S. indexes edged higher
on Friday after Trump appeared optimistic
on a potential trade deal with China ahead of his meeting with Chinese
President Xi Jinping later
this month in South Korea.
Treasury Secretary Scott Bessent also said
Friday that he thinks “things have de-escalated” with China and that he will
likely be meeting with counterpart Chinese Vice
Premier He Lifeng in the coming week. These comments suggested to
traders that Trump’s threat of an additional 100% tariff on Chinese imports
beginning Nov. 1 may not happen.
The Cboe S&P 500 Volatility Index had
jumped to a high above 28 at one point on Friday before easing below 21 as
stocks moved higher.
“In spite of [Friday’s] modest rebound in
U.S. equities, risk-assets are reflecting heightened geopolitical uncertainty —
particularly regarding U.S./China relations,” Katie Nixon, chief investment
officer at Northern Trust, said in a note to clients. Nixon added that “the
dispute presents significant economic risks to both sides, so the stakes are
high to reach some sort of a palatable compromise.”
Investors last week also attempted to move
past concerns of credit risks that had caused a broader rout on Thursday. The
market panicked after Zions and Western Alliance disclosed
issues tied to bad loans, leading shares of several financial heavyweights
and regional banks to swing lower before they rebounded on Friday.
Separately, investors continue to monitor
the U.S. government shutdown, which is entering its fourth week as top
Democrats and Republicans remain locked in a dispute over federal health-care
subsidies.
This week, several large companies are
expected to report quarterly results. Netflix, Coca-Cola, Tesla and Intel are among the names on
deck. The September consumer price index is also set for release on Friday and
is expected to show inflation remains hot. Traders will be paying special
attention to the report, given the ongoing data blackout caused by the shutdown.
“Investors seem non-plussed so far, but
many economists are raising concerns that a prolonged shutdown may impact
quarterly GDP growth,” Nixon said. “Most acknowledge, however, that this would
represent a temporary slowdown that would likely be followed by a catch-up
period.”
Stock
market today: Live updates
Global week ahead: ‘Cockroaches’ crawling toward
Europe?
Published Sun, Oct 19 2025 1:21 AM EDT
Europe’s banks take center stage this week
as earnings season gets underway, but with heavy losses across the sector on
Friday, credit concerns appear to be making their way across the Atlantic at a
particularly tricky time for the region’s lenders.
Last week, the biggest names in American
finance battled it out to make the most alarming quote of the week. The
contenders: JPMorgan CEO Jamie Dimon, Citi Group CEO Jane Fraser and Apollo
boss Marc Rowan.
Dimon started the week with a stark warning about the
private credit market, saying “when you see one cockroach, there’s probably
more.”
Fraser was up next, warning of “pockets of
valuation frothiness.” While Rowan was more explicit, suggesting that “there’s
been a willingness to cut corners,” in a recent appearance
with the Financial Times.
With the sirens sounding stateside, what
does this mean for Europe, and how will the continents’ bankers narrate their
concerns as earnings season kicks off in earnest next week?
European earnings season kicks off
Unicredit, Barclays, Lloyds Banking Group and Natwest will lead the financial names
reporting in Europe and the U.K.
Head of Financials for Credit at Federated
Hermes, Filippo Alloatti, told CNBC that he expects CEOs to “shift from macro
to micro risk” as a focus in their earnings calls this week, amid concerns
around the private credit markets. Meanwhile, Johann Scholtz from Morningstar
told CNBC that while he does not see a material deterioration of credit quality
appearing in third-quarter results, “it will be interesting how candid
management teams will be when discussing the future evolution of credit
quality.”
Scholtz highlighted concerns about
corporate and small-to-medium sized company loan books, saying “the market is
underestimating the impact that (trade) tariffs could have on certain pockets
of European banks’ lending books.”
On Friday, bank stocks across Europe sold
off sharply as
credit concerns drove big declines for the likes of Deutsche Bank, Société Générale, UBS and its peers across the sector.
Margin of error
CNBC’s Silvia Amaro will speak to
Unicredit CEO Andrea Orcel as the bank publishes its latest set of earnings,
with S&P Global predicting a subdued third quarter amid narrowing net
interest margins and higher funding costs.
The Italian lender is continuing it’s
M&A ambitions, increasing its stake in Greece’s Alpha Bank to 26%, with
Orcel saying “we are grateful to the Greek government, the central bank and
other Greek institutions for welcoming us and encouraging our investment.” The
reception to Unicredit’s expansion plans in Germany remains cooler.
More
Global week ahead:
'Cockroaches' crawling toward Europe?
The U.S. Is Tiptoeing Away From Many of Trump’s
Signature Tariffs
The administration is considering lifting
duties on some products not produced in the U.S.
Oct. 17, 2025 10:00 pm ET
The Trump administration is quietly
watering down some of the tariffs that underpin the president’s signature
economic policy.
President Trump in recent
weeks has exempted dozens of products from his so-called reciprocal tariffs and
offered to carve out hundreds more goods from farm products to airplane parts
when countries strike trade deals with the U.S.
The offer to exempt more products from
tariffs reflects a growing sentiment among administration officials that the
U.S. should lower levies on goods that it doesn’t domestically
produce,
say people familiar with administration planning. That notion “has been
emerging over time” within the administration, said Everett Eissenstat,
deputy director of the National Economic Council in Trump’s first term. “There
is definitely that recognition.”
The move comes ahead of a Supreme Court
hearing in early November on the reciprocal tariffs—a case that could force the
administration to pay back many of the levies if it loses in court. The White
House, Commerce Department and U.S. Trade Representative’s office didn’t
respond to requests for comment.
The shift on the reciprocal tariffs
reflects the Trump team’s desire
to hedge its bets should
the court strike down its broad levies, according to people familiar with the
administration’s thinking. At the same time, Trump’s team is expanding its use
of tariffs based on more established legal authority: Section
232 of
the Trade Expansion Act of 1962. Trump has already deployed that law to
underpin tariffs on metals and automobiles, and this month announced a new
tranche of duties aimed at heavy
trucks, pharmaceuticals and furniture.
On Friday, Trump unveiled his latest
action under Section 232, imposing 25% tariffs on trucks
and truck parts,
as well as 10% tariffs on buses, effective Nov. 1. As part of that action,
Trump also expanded a tariff
relief program for automakers, allowing them to apply for credits to
partially offset the cost of tariffs on car and truck parts until 2030, instead
of 2027.
Last month, Trump issued new exemptions
for products from gold to LED lights and certain minerals, chemicals and metal
products via a list called “Annex II” that includes many products that are or
will be covered by the Section 232 levies.
He also previewed hundreds of potential
exemptions to come in the future: The order includes a list of products that
could receive zero tariffs under trade agreements with foreign nations that are
being negotiated by Trump’s team. That list, dubbed “Annex III,” is aimed at
“products that cannot be grown, mined, or naturally produced in the United
States,” the order states, such as “certain agricultural products; aircraft and
aircraft parts; and non-patented articles for use in pharmaceutical applications.”
The September order also allows new
authority to the Department of Commerce and the U.S. Trade Representative’s
office to grant tariff exemptions themselves, without Trump himself issuing
executive orders mandating the new carve-outs.
More
The U.S. Is
Tiptoeing Away From Many of Trump’s Signature Tariffs - WSJ
In other news, getting out first beats
getting carried out last.
World’s banking system risks a $4.5tn shock from
the shadows
18 October 2025
The
frenzied stock market sell-off that gripped the US and UK this week
was fuelled by fear as much as fact. Investors saw what could easily be the tip
of an iceberg, and nobody knows quite what lies beneath.
Two car parts suppliers with
multibillion-dollar debts in the private credit market have
gone bust amid allegations of fraud, and two regional US banks have uncovered
a clutch of irredeemably bad loans.
But with Jamie Dimon, the JP Morgan boss,
earlier warning that more
“cockroaches” might scuttle out of the $3tn (£2.2tn) black box that
is the private credit market, many investors weren’t prepared to wait and see
if these were one-off problems.
“No one really knows if this is the full
story,” says James Reilly, of Capital Economics. “So it just makes sense to
take some of your chips off the table. We’re seeing a broad flight to safety as
investors work out what is going on.”
Among the companies hit by the FTSE
sell-off were the asset managers ICG and Schroders, which are seen as more
exposed to the private credit market. But it also hit the big banks, most of
which are now neck-deep in the private market themselves.
The International Monetary Fund (IMF)
warned this week that banks now have about $4.5tn of exposure to the “shadow
banking” sector, a sum exceeding the size of the entire British economy.
‘People are spooked’
Throw in a bout of geopolitical turmoil –
which, with Donald Trump in the White House, is never far off – and the IMF
says up to a fifth of banks could be in some kind of strife.
Kristalina Georgieva, the IMF’s managing
director, said this week that the potential for a crisis to emerge from the
world of non-bank financial institutions “keeps me awake every so often at
night”.
Banks have been on a tight leash since the
2008-09 financial crisis, which has opened up space for the less constrained
non-banking institutions. Wherever edgier borrowers have struggled to get
conventional loans, and whenever investors have wanted higher, if riskier,
returns, the private credit players have flooded in.
And as the playing field has become bigger
and more crowded, some of those players have taken bigger risks.
“A desire to win in a competitive market
sometimes leads to shortcuts,” Marc Rowan, Apollo Global Management’s boss,
told a Financial Times summit this week. “In some of these more levered
credits, there’s been a willingness to cut corners.”
Georgieva’s worry is that the lack of
regulatory restraint has allowed the non-bank lenders not only to take bets
that could be too risky, but also without ever letting in any outside light
shine onto their activities.
“People are spooked,” says John Hardy, a
strategist at Saxo Bank. “As Jim Chanos, the famed short seller, said, ‘In the
private credit and private equity space, opacity is a feature, not a
bug.’”
“We just don’t know what’s going on there.
We just have to infer it from news stories, and from these seizures that are
happening, because pretty chunky-sized operations are going belly-up. So people
are like, ‘OK, wait – how big is this? How big is this problem?’”
Private credit funds are often illiquid,
which means it is hard for investors to buy or sell their holdings. If fears
develop about the funds’ viability, investors will try to sell, or redeem,
their holdings.
The illiquidity might leave them able to
sell only at a large loss. To prevent this, the private credit fund manager
might try to block or delay redemptions.
This creates an incentive for investors to
get out at the first sign of danger. And that reflex rush to the exit can
create a more general sense of panic.
The IMF noted that the increasing
participation of everyday, or retail, investors in the private-credit market
could increase this risk of “herd behaviour”.
More
World’s banking
system risks a $4.5tn shock from the shadows
Global Inflation/Stagflation/Recession
Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
Auto
Loan Delinquencies Jump 50% as Car Prices Reach New Heights
October
17, 2025 at 12:00 PM UTC
Car
loans have gone from the safest consumer credit products to among the riskiest
over the last 15 years as delinquencies rose more than 50%, driven by soaring
car prices and rising interest rates, a new study shows.
Consumers
across all income categories are struggling to make monthly car payments,
according to VantageScore, a credit-scoring
company.
Auto
loans were once a safe haven, with drivers prioritizing payments on their
transportation above other debts, but delinquencies on car loans have jumped
since 2010. The opposite is true for credit cards, personal loans and other
forms of consumer credit.
VantageScore
found that, in relative terms, monthly car payments are increasing faster than
mortgage payments.
“We’re
seeing the cost of cars and the cost related to car ownership increase
enormously,” Rikard Bandebo, VantageScore’s chief
economist, said in an interview. “In the past five years, it has increased even
faster.”
Since
2019, new car prices have risen more than 25% and now top
$50,000 on
average, according to researcher Cox
Automotive.
The average monthly payment on a new car was $767 in the third quarter, and one
in five borrowers pay more than $1,000 a month, according to automotive
researcher Edmunds.com. Interest rates
on new car loans now top 9%, exacerbating an automotive affordability
crisis.
“That’s
a double whammy,” Bandebo said. “You’ve been hit by the increased cost of the
car and then the financing cost of the car.”
No
income group is immune. Prime and near prime borrowers, who typically have good
credit scores, are actually missing car payments at a faster rate than subprime
consumers since lenders tightened financing criteria for the lowest rung
borrowers three years ago, the study found.
“The
higher income you have, you tend to at least feel that you can own a more
expensive car,” Bandebo said.
The
average auto loan balance has grown 57% since 2010, outpacing all other credit
products, VantageScore found.
To
get a more affordable monthly payment, car buyers are stretching the length of
loans to seven
years or
more. That is leaving an increasing number of consumers “upside-down” on their loans,
meaning they owe more than the car is worth.
The
trend of missing car payments is unlikely to reverse with American consumers
continuing to buy more expensive trucks and
sport-utility vehicles. Automakers are also offering fewer affordable
models.
“Consumers
now are in a more precarious position than they’ve been since the last
recession,” Bandebo said. “We’ve seen this growing trend over the last several
years of more and more consumers struggling to make ends meet, and it’s looking
like that trend is going to continue into next year.”
Auto Loan
Delinquencies Jump 50% as Car Prices Reach New Heights - Bloomberg
Covid-19
Corner
This
section will continue only occasionally when something of interest occurs.
Technology
Update.
With events happening fast in the
development of solar power and graphene, among other things, I’ve added this
section. Updates as they get reported.
Lithium battery ignites on Air China flight in mid air, horrifying
passengers as flames burst out in cabin
October 19, 2025
A packed Air China flight bound for
Seoul was forced to make an emergency landing in Shanghai on Saturday after a
lithium battery inside a passenger’s carry-on luggage erupted in flames,
filling the cabin with smoke.
The blaze broke out aboard Flight CA139,
which had departed Hangzhou Xiaoshan International Airport at 9:47 a.m. local
time with 160 passengers and crew headed to South Korea’s Incheon International
Airport, according to statements from the airline and Chinese state media.
Air China said in a post on Weibo that
“a lithium battery in a passenger’s carry-on luggage stored in the overhead
compartment spontaneously ignited.”
The crew immediately responded and no
one was injured, the statement added.
The plane diverted to Shanghai Pudong
International Airport “to ensure flight safety,” Air China said.
Video circulating on Chinese social
media and published by NBC News showed bright flames and thick smoke pouring
from an overhead compartment as startled passengers shouted for help.
Two flight attendants sprinted down the
aisle carrying fire extinguishers while others shouted for travelers to remain
seated.
A passenger quoted by local media said they heard a loud
explosion moments before flames shot from the
storage bin.
Photos shared online showed scorched
lining above several rows of seats.
The aircraft landed safely in Shanghai
around 11 a.m., flight-tracking site Flightradar24 showed. A replacement jet
later transported passengers to Seoul, the airline confirmed.
No injuries were reported, and the
aircraft sustained no structural damage, Air China said.
Passengers described several minutes of
confusion as the fire crackled from the bin. One traveler shouted “hurry up!”
in Korean as smoke thickened.
Local outlets reported that the ignited
item was believed to be a power bank battery, though officials have not
confirmed the brand or manufacturer.
The Air China scare is the latest in a
string of lithium-battery incidents aboard Asian carriers this year.
In May, a China Southern Airlines flight
from Hangzhou to Shenzhen returned to the airport 15 minutes after takeoff when smoke poured from a
passenger’s camera battery and power bank.
In January, South Korean officials said a spare power bank likely caused a fire on an Air Busan flight carrying
169 passengers and seven crew; seven people suffered minor injuries.
The Federal Aviation Administration
warns that lithium-ion batteries can undergo “thermal runaway,” a self-heating reaction that can trigger
explosions if a cell is damaged, overheated, overcharged or exposed to water.
Common household devices including
smartphones, laptops, tablets and portable chargers all use such batteries.
Because of the danger, airlines
worldwide restrict lithium batteries in checked baggage.
The TSA bans uninstalled lithium batteries from the hold entirely, requiring passengers to keep them in carry-on
luggage under 100 watt-hours per cell.
China tightened its own rules this
summer. As of June 28, power banks without certified safety markings are prohibited on domestic flights, and
recalled models cannot be brought aboard.
Hong Kong’s Civil Aviation Department
also barred storing power banks in overhead bins, mandating they be kept under seats or in seat
pockets.
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt Clocks
(usdebtclock.org)
What matters to us is the revelation of the swindle, fraud, or
defalcation. This makes known to the world that things have not been as they
should have been, that it is time to stop and see how they truly are. The
making known of malfeasance, whether by the arrest or surrender of the
miscreant, or by one of those other forms of confession, flight or suicide, is
important as a signal that the euphoria has been overdone. The stage of
overtrading may well come to an end. The curtain rises on revulsion, and perhaps
discredit.
Charles P. Kindleberger
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