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Saturday, November 8, 2025

2025-11-08

**** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

Weekly Wrap, Nov 7, 2025
  • LEIs still support risk assets over the next 6m. Policy and liquidity tailwinds are intact while our growth LEIs for US, Eurozone, and China are elevated. Our “no recession” Fed easing cycle roadmap is starting to play out (stronger USD, higher equities, rising yields).

  • Tactical: notable divergences in US equity markets and optimistic earnings estimates. Reason for caution with nimble portfolios.

  • Despite US data blackout, available data suggests consumption and manufacturing are resilient. Watch labor and housing for further weakness.


Here are three reasons I’m adding exposure now:

1. The Trend Is Your Friend
Short-term, things have been messy. But zoom out.
The long-term trend always takes precedence over the short-term noise. 
.....
2. Breadth at Washout Levels & Improving
......
3. The Poker Hand
Markets are a probabilistic game, not a certainty business.
I don’t have high conviction….yet.
We still need follow-through from this weeks hammer candle, but I love the hand that’s been dealt.
The risk/reward is clearly defined: using today’s low as the stop gives a small loss if wrong, and meaningful upside if right. 
That’s how you win in trading, taking asymmetric bets when the setup is favorable and your downside is controlled. ............
Promising, But Not Promised
Markets reward discipline over perfection.
You’ll never catch the exact bottom, and that’s not the goal.
The goal is to position yourself when the odds swing back in your favor, even if it still feels uncomfortable.



......... In this note, we’re going to explore the question of whether investors who allocate their wealth primarily by extrapolating past returns into the future can be money pumped. Both survey-based and anecdotal evidence suggest that extrapolative – aka “return-chasing” – behavior is widespread among investors, especially in assets and strategies where the absence of future cash-flows leaves little choice but to base decisions on historical performance. ......................


BNP Gold: Stuttering after the surge, but more room for upside in 2026 (via theBondBeat)

KEY MESSAGES
  • Raising our 2026 price projections: We raise our forecast for the average 2026 gold price by 13% to USD4,420/oz –and expect to see a high above USD5,000/oz before the end of that year. Our view reflects sustained macro risks, and despite a recent stutter, we think solid support around USD3,850-3,950/oz sets the stage for further upside.
  • Key drivers remain in place: USD debasement expectations remain a key driver, but we also see strong speculative demand for gold as a hedge against risks ranging from US and European debt sustainability to Fed independence/credibility and a potential US AI-driven equity bubble. Concerns also linger that tariff-related trade disruption could prompt a global slowdown


China Fare:


The rise of generative AI has triggered a global race to build semiconductor plants and data centers to feed the vast energy demands of large language models. But as investment surges and valuations soar, a growing body of evidence suggests that financial speculation is outpacing productivity gains

................. Much like previous speculative cycles, this one is marked by the emergence of creative financing mechanisms. Four centuries ago, the Dutch Tulip Mania gave rise to futures contracts on flower bulbs. The 2008 global financial crisis was fueled by exotic derivatives such as synthetic collateralized debt obligations and credit default swaps. Today, a similar dynamic is playing out in the circular financing loop that links chipmakers (Nvidia, AMD), cloud providers (Microsoft, CoreWeave, Oracle), and LLM developers like OpenAI.

While the contours of an AI bubble are hard to miss, its actual impact will depend on whether it spills over from financial markets into the broader economy. How – and whether – that shift will occur remains unclear. Virtually every day brings announcements of new multibillion-dollar AI infrastructure projects. At the same time, a growing body of reports indicates that AI’s business applications are delivering disappointing returns, indicating that the hype may be running well ahead of reality.

The Ghosts of Bubbles Past
Financial bubbles can be understood in terms of their focus and locus. The first concerns what investors are betting on: Do the assets that attract speculation have the potential to boost economic productivity when deployed at scale? Second, is this activity concentrated primarily in equity or credit markets? It is debt-financed speculation that leads to economic disaster when a bubble inevitably bursts. As Moritz Schularick and Alan M. Taylor have shown, leverage-fueled bubbles have repeatedly triggered financial crises over the past century and a half.

The credit bubble of 2004-07, which focused on real estate and culminated in the global financial crisis of 2008-09, is a case in point. It offered no promise of increased productivity, and when it burst, the economic consequences were horrendous, prompting unprecedented public underwriting of private losses, principally by the US Federal Reserve.

By contrast, the focus of the tech bubble of the late 1990s was on building the internet’s physical and logical infrastructure on a global scale, accompanied by the first wave of experiments in commercial applications. Speculation during this period was mainly concentrated in public equity markets, with some spillover into the market for tradable junk bonds, and overall leverage remained limited. When the bubble burst, the resulting economic damage was relatively modest and was easily contained through conventional monetary policy.

The history of modern capitalism has been defined by a succession of such “productive bubbles.” From railroads to electrification to the internet, waves of financial speculation have repeatedly mobilized vast quantities of capital to fund potentially transformational technologies whose returns could not be known in advance.

In each of these cases, the companies that built the foundational infrastructure went bust. Speculative funding had enabled them to build years before trial-and-error experimentation yielded economically productive applications. Yet no one tore up the railroad tracks, dismantled the electricity grids, or dug up the underground fiber-optic cables. The infrastructure remained, ready to support the creation of the imagined “new economy,” albeit only after a painful delay and largely with new players at the helm. The experimentation needed to discover the “killer applications” enabled by these “General Purpose Technologies” takes time. Those seeking instant gratification from LLMs are likely to be disappointed. ...........................

The outcome of this ongoing horse race is impossible to call. Will LLMs eventually generate positive cash flow and cover the energy costs of operating them at scale? Or will the still-nascent AI industry fragment into a patchwork of specialized, niche providers while the largest companies compete with established social-media platforms, including those owned by their corporate investors? As and when markets recognize that the industry is splintering rather than consolidating, the AI bubble will be over.

Ironically, an earlier reckoning might benefit the broader ecosystem, though it would be painful for those who bought in at the peak. Such a deflation could prevent many of today’s ambitious data-center projects from becoming stranded assets, akin to the unused railroad tracks and dark fibers left behind by past bubbles. In financial terms, it would also preempt a wave of high-risk borrowing that might end in yet another leveraged bubble and crash.

Most likely, a truly productive bubble will emerge only years after today’s speculative frenzy has cooled. As the Gartner Hype Cycle makes clear, a “trough of disillusionment” precedes the “plateau of productivity.” Timing may not be everything in life, but for investment returns it pretty well is.


Get ready for chaos

.................. The generative AI industry has long reminded me of Wiley E. Coyote suspended in mid-air, over the edge of the cliff, about to fall, but not until the moment he looks down:

People are starting to look down.



Quotes of the Week:



Charts:
1: 

2:




(not just) for the ESG crowd:

U.S. B.S.:


........... But he won because he was laser focused on the affordability crisis: food, housing, transit and child care. For many years now I have said that voters in most Western countries want real change, and they will vote for anyone who seems to not be like a status quo politician and for any promise to overturn the status quo. Like a wolf in a leg trap, they’re so desperate to escape from a future of eternally lowering expectations

......................... What Mamdani represents is America’s last hope. If the movement he exemplifies loses, America’s future is to slowly un-develop, becoming more akin to Brazil or India than to developed nations. Vast numbers of homeless, desperate workers, extended new slums and people absolutely desperate for food, healthcare and housing. In this he is similar to Corbyn: the last chance for America to turn it around before the shit hits the fan. If this movement fails, America fails. It may be able to get back up again, sure, but it will be far harder to do in twenty years than in three or seven years.



The 21st Manama Dialogue in Bahrain, an annual global security and geopolitical conference

................................. I could write more but there isn’t much point in doing so. I could cite “A Clean Break” and subsequent events to further denigrate Ms. Gabbard’s words. Perhaps she thinks she can alter US policy by herself. Promoting “an understanding that there cannot be prosperity without peace” is something that’s sorely needed to be pounded into the heads of US Neoliberal/Neocon elites, although they look at their personal prosperity over the past decades of forever wars and ask why should we change course. ...................



............................... Trump used to at least posture as an anti-interventionist who didn’t get along with the warmongers of the DC swamp. Now he’s best butt buddies with the most bloodthirsty swamp creatures alive.

They love him, and why wouldn’t they? He bombed Iran. He bombed Yemen. He poured genocide weapons into Israel to incinerate Gaza and to bomb Lebanon, and has been aggressively stomping out free speech that is critical of Israel’s war crimes. He’s been bombing Somalia at an unprecedented rate. He’s giving every sign that he’s getting ready to do something truly horrible in Venezuela. He’s even threatening to invade Nigeria now. .....................



Experts predict several possible scenarios, from the "Iraqi" and "Chechen" to the "Armenian" and "Ukrainian" ones. Armen Galstyan is a former employee of the Russian Center for Science and Culture (the "Russian House") in Caracas. He spent a significant part of his life as a Russian diplomat in Venezuela. We found his opinion on the consequences of the American invasion of Venezuela quite interesting.

Bluff or clowning?

– How will the American invasion of this country end, Armen Borisovich?

First of all, it hasn't started yet. And it's not a given that it ever will. Remember how Trump spurred an entire aircraft carrier group toward the shores of North Korea? And how did it all end? With the North Korean president mocking him. He called all his threatening remarks "the ramblings of a sleeping dog." And in the end, Trump backed down. He remembers it very well. I think, in a certain sense, it was a face-off, as they like to say at the Foreign Ministry. And it's completely unclear whether he'll want to lose face a second time.

On the one hand, if Trump "goes away," it would be a clear loss of his reputation. On the other hand... Trump is a wild man. A poetic showman. And often his show takes on the contours of outright bluff and clowning. And he, sensing this, sometimes spills the blood of his political opponents to prove to everyone that he's a tough, serious guy. A true political cowboy. That's how he assassinated Iran's national hero, General Qassim Soleimani, and bombed the underground workshops where the country's nuclear program was being developed.

It was quite serious.

"A battle of brains and characters"

– Could the invasion of Venezuela become just as serious?

- We'll see. The chances are fifty-fifty for now. ....................................................................

What's the general mood in the country? How prepared are people for war?

Everyone in Venezuela, great and small, hates Americans. Except for the national traitors, whose number is unknown. Although treason here can get you killed, the very act of betrayal is quite common among Venezuelans. So everyone has scores to settle, and bloody vendettas are constantly raging. But while sporadically settling their debts of honor, all Venezuelans unanimously hate Americans. This hatred is existential, metaphysical in nature. ............................



Geopolitical Fare:


Let’s run thru the important points:

Domestically in the US the only issue that really matters is affordability. Food, housing and medicine. This will dominate the next few years, maybe even the next decade. Mamdani will win, he will be blocked from doing much of he wants by courts and the the State and federal government, and his future will depend on him making those who stop him the villains. The mid-terms and the next election will be fought in bread and butter issues.

China is going to win the AI race, as predicted. 

This is, again, because Chinese models are at least 90% cheaper to run, and mostly open source. Only a complete and utter moron would run their business using proprietary models where OpenAI or Anthropic can jack up the price any time they want or depreciate the model you actually needed. Even US startups agree, 70 to 80% of them are using Chinese open models.

American AI either bursts or causes a great depression. Or perhaps bursts and causes a depression. There isn’t any other possibility. They’re spending trillions so American business can mass replace their workers. If it works, it causes a demand depression, a great depression like the Great Depression of the 30s. Who the hell do they think will buy their products? People can barely afford food and rent, let alone fancy AI crap. When they’re homeless they aren’t going to be customers. Meanwhile the rest of the world won’t be buying US AI crap either, they’ll be buying Chinese open source AI crap.

The War of attrition is nearly won by Russia. Ukraine just doesn’t have enough men and drones, it’s that simple. Next year, absent a peace deal, the big arrow moves everyone was wondering about will happen and Ukraine will be forced into unconditional surrender.

Europe is done. They’re losing their industrial base and their tech base. The people are unhappy and turning to populist opposition, either left or right. The Eurocrats are using lawfare to make outsider parties illegal if they look likely to win. This will take some time to play out. There will be changes in government away from neoliberalism, and if they can’t be achieved peacefully there will be a lot of violence. The EUs only play here is to try and gin up a war against Russia, but if they succeed, they’ll lose the war.

China and the US are now co-equal powers but that won’t last. China is on the rise, America is gutting its own science, arts and intellectual base while immiserating its own people and keeping smart foreigners out. (Or throwing them out.) All the big spend isn’t on re-industrializing, it’s on an AI moonshot which probably won’t succeed and will burst, or which if it does succeed will cause a Great Depression.

I will remind you that rich people have limited real power. They can buy a lot of influence, but if government turns on them they are done, because they do not have private armies capable of standing up to the State’s military and paramilitary forces. If the political zeitgeist turns against them, the government can make any changes it wants. Ask various Chinese billionaires how things worked out for them when the CPC decided they were too big for their britches.

One way they lose their influence is simply by having a real, undeniable depression. They’re doing everything they can to create one. If the Fed can’t bail them out, they’re done.  The Fed’s ability to print dollars is going away, they have at most one large bailout left in them. After that, they can’t, because if the dollar isn’t the unit of trade for the world, over-printing will be catastrophic. Dozens of countries have found this out, again and again. Money can’t buy what your country can’t actually do, and the US can do less and less—the rich people sold America’s ability to do things to China to get three generations of fake wealth.

We are moving towards the end-game. It will take ten to fifteen years to play out. The West will be immiserated, neo-liberalism will end, US power and Empire will collapse. There will be wars and revolutions around the globe, because the force holding the world in its post-war, post-Soviet collapse state, including such things as borders, is going away. China is not likely to engage in massive military operations thousands of miles from its border and has shown itself uninterested in what happens in other countries domestically, unless they’re countries very close to it geographically...................


U.S. planners need to accept that Kiev is losing its war and Pyongyang won’t relinquish its nukes.



................................................... All parties seem to agree that negotiations must start from a recognition that Russia will not relinquish control over the Ukrainian territory it now controls. But, as Russia has said since 2014, its objective is not territory, but the threat to the rights of the population of Donbass (and Crimea), which have repeatedly expressed its desire for self determination through referenda and, ultimately, rebellion. These are the root causes that Ukraine and the West still need to address.



............. But this particular incident shines a special sort of light into exactly what’s going on behind Israeli eyes over there in that sadistic society.

............. Israel cannot be sustained without nonstop violence. The violence cannot be sustained without hatred. The hatred cannot be sustained without systematic indoctrination.

That indoctrination teaches Jewish Israelis from birth that the victims of their genocidal state are all inhuman monsters who would rape and murder them all if Israel ceased its apartheid abuses, militarism, and incessant violence. It teaches them that killing off their empathy and compassion is essential for their survival, because only the Jews who are willing to do whatever it takes to survive are going to make it.

Just in case their childhood indoctrination isn’t enough to sway them, Israelis are also made to serve in the military where they spend two years killing off any remaining sense of human decency within themselves as they inflict acts of unfathomable cruelty upon Palestinians as part of their duty to the state.

They are trained to believe they must have cold hearts and hard hands, because that is what’s necessary to do what must be done. .............

This is Israel. This is Zionism. This is what it looks like when Zionists get everything they want. You’re looking at it. This is it.

Israel can’t keep going like this. Humanity can’t keep going like this. We need better systems. Better ideologies. Better motivators driving our behavior.

All our systems which drive cruelty and abusiveness around the world need to go the way of the dinosaur. Zionism. Capitalism. Imperialism. All our competition-based systems which pit us against other people, other ethnicities, other countries, and our own biosphere.

We need to move into collaboration-based systems which advance justice, equality, and well-being for all of earth’s creatures. Because what we’ve been doing clearly isn’t working.



RIP Couldn't Come Soon Enough Fare:


Dick Cheney, arguably the single government official most responsible for the expansion of US warmongering and militarism in the 21st century, has died.

The worst worst war sluts of the US empire have issued statements expressing their condolences, including Democrats like Joe Biden, Kamala Harris, Bill Clinton, and Nancy Pelosi. Because if there’s one thing that can bring Democrats and Republicans together, it’s war crimes and the slaughter of millions of middle easterners. 

Dick Cheney died far too old and far too free. The fact that such monsters get to pass away in their eighties surrounded by loved ones instead of alone in a cage is an indictment of our entire civilization.

In a truly sane society, Richard Bruce Cheney would have lived out his life in relative obscurity, working as a gardener or something. In a fairly sane society, people would have realized what a monster Cheney was before he could do any major harm in Washington, and he would have been driven out of any town he tried to enter. In a slightly sane society, he would have been punished for the rape of Iraq and lived out the rest of his life in a cell in The Hague. 

But we do not live in a truly sane society, or in a fairly sane society, or even in a slightly sane society. We live in the sort of society that lets a man unleash a chain of events which kills millions and displaces tens of millions causing more human suffering than the mind can possibly comprehend, and then live out the rest of his life in comfort and privilege, with zero consequences of any kind.

Dick Cheney is dead now, but his legacy lives on. The damage he did is still unfolding. The hegemonic, hypermilitaristic ideology he promoted has become the baseline norm. New swamp monsters have stepped in to fill his shoes and advance the same murderous and tyrannical agendas he advanced, confident that they too will suffer no consequences and live long and comfortable lives in reward for their loyal service to the US empire. .............



Other Fare:


As the old punchline goes, "If you wanted to get there, I wouldn't start from here." It's a gag that's particularly applicable to monopolies: once a company has secured a monopoly, it doesn't just have the power to block new companies from competing with it, it also has the power to capture governments and thwart attempts to regulate it or break it up.

40 years ago, a group of right-wing economists decided that this was a feature, not a bug, and convinced the world's governments to stop enforcing competition law, anti-monopoly law, and antitrust law, deliberately encouraging a global takeover by monopolies, duopolies and cartels. ......................................

Anticircumvention law is the reason Canada's only response to Trump's illegal tariffs is more tariffs, which make everything in Canada more expensive. Get rid of anticircumvention law and Canada could get into the business of shifting billions of dollars from American tech monopolists to Canadian startups and the Canadian people .........................


How the CIA created the modern Left and why the Right still think its a Marxist plot

Introduction to The Anatomy of Empire
We are living through a global conflict of connected crises—in Ukraine, Gaza, Iran and the South China Sea, and within the fraying social contracts of Western nations themselves. These are not isolated eruptions, but the symptomatic convulsions of an Empire grappling with its own internal contradictions. Yet one of the most potent and paralyzing of these crises is fought not on a physical battlefield, but in the realm of culture and identity. It is a war over history, truth, and the soul of the West itself ........................

This series, The Anatomy of Empire, is an attempt to return the historical context that has been erased from our collective memory. An effort to wake us from our societal amnesia to understand how we arrived at this dangerous point in history. So far, we have seen how the military-industrial complex fused capital with violence. How the mechanics of imperialist extraction evolved into the financial, digital, legal realm of neocolonialism 2.0. How the Empire cultivates and then consumes allies once they have outlived their utility. And how the Empire incorporated the infrastructure of fascism into the architecture of the Cold War and beyond.

Now, we turn to a more subtle, yet equally formidable, engine of control. In the ashes of World War II, as socialist and communist parties surged with a vision of material, class-based transformation, the architects of the American Century made a fateful decision. .....................



............... You don’t need to know anything at all about politics or parapolitics to see that (B) is the most likely explanation for why things keep getting worse for everyone besides the rich and powerful. Your own basic reasoning and understanding of human behavior will tell you that there’s no way democracy is working as advertised if things keep getting worse and worse for ordinary voters while billionaires and empire managers keep getting everything they want.

Things are shitty because we are ruled by people who want things to be shitty. Once you awaken to this undeniable reality, you will inevitably find yourself growing more and more radicalized.

Our rulers want nonstop war and genocide. Our rulers want obscene levels of inequality. Our rulers want the public to be poor and struggling. Our rulers want people to be getting dumber, sicker, and more miserable. Our rulers want the unrestricted industry that’s killing earth’s biosphere. Our rulers want us to have vapid, unedifying mainstream culture. This dystopia looks more or less exactly how they want it to look. ...................

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