**** denotes well-worth reading in full at source (even if excerpted extensively here)
Economic and Market Fare:
The U.S. government is shut down. But the budget fight is only the surface. Beneath it lies a systemic fracture: an unravelling of institutions, norms, the economy, and America’s credibility abroad.
Shutdowns have become routine political theatre. What used to be an extraordinary crisis is now standard operating procedure. That is not because of accounting disputes; it is because the country itself is split into two incompatible visions of government. One side sees government as the problem; the other sees it as the solution. This is no longer a policy disagreement, but an existential rift. ..........
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The parallel to the late 1920s is unmistakable.
- Speculative euphoria amid cracks. Between 1921 and 1929, the Dow Jones rose sixfold. But underneath, agriculture was depressed, industrial overcapacity was building, and debt burdens were mounting. The market soared while the economy weakened. Today, equities rise while surveys, freight indices, housing, and capex all show strain.
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- Confidence is the tipping point. In October 1929, once confidence cracked, the Dow lost half its value within weeks and nearly 90% over the following years. Today’s calm looks eerily familiar, resilience that holds, until it doesn’t.
Because the jobs market has been so weak, it's become the most important economic metric. Less than 1% job growth in the last year and a rise in the UR make job market conditions simply unacceptable
The next crisis will be blamed on debtors, but it was engineered by speculators and their allies in government
This year, Canada’s household debt climbed to $3.07 trillion, topping the G7 for the 15th consecutive year. With debt—including mortgages, auto loans, and credit cards—growing faster than incomes, this trend shows no sign of slowing. As individuals and small businesses fall behind on loan payments there is evidence that this enormous burden has already straining Canadians’ finances. As a society, we are in danger of insolvency. A sharp drop in employment—potentially triggered by tariffs, rising mortgage costs, a slowdown in lending, or sudden price shocks—could easily push overleveraged families into bankruptcy, with destabilizing consequences for the entire economy.
This historically unprecedented debt burden is carried by people struggling to keep up with decades of rising living costs, stagnant wages, and shrinking social services. Yet if and when the crash comes, ideologues in Parliament and the media will rush to blame already beleaguered debtors. Canadians merely trying to get by will be labeled profligate and irresponsible, accused of taking out loans they could never have afforded. The finger wagging has already begun over at the Globe and Mail.
But the reality is that this debt (75 percent of which is mortgage debt) was inflicted upon us. It is odious debt pressed onto our balance sheets by real estate investment trusts, banks, and landlords—powerful financial interests that have spent decades flooding the market with artificial demand and forcing housing costs to dizzying new heights. ............
This historically unprecedented debt burden is carried by people struggling to keep up with decades of rising living costs, stagnant wages, and shrinking social services. Yet if and when the crash comes, ideologues in Parliament and the media will rush to blame already beleaguered debtors. Canadians merely trying to get by will be labeled profligate and irresponsible, accused of taking out loans they could never have afforded. The finger wagging has already begun over at the Globe and Mail.
But the reality is that this debt (75 percent of which is mortgage debt) was inflicted upon us. It is odious debt pressed onto our balance sheets by real estate investment trusts, banks, and landlords—powerful financial interests that have spent decades flooding the market with artificial demand and forcing housing costs to dizzying new heights. ............
.......... Mark ‘13-years-at-Goldman-Sachs’ Carney cannot be relied upon to hold financial institutions accountable for their predatory lending practices, as Iceland did when their banks misbehaved. Instead, he is likely to take the same stance the Democratic Party took after the Great Financial Crisis (which is the same stance the European Commission adopted during the European sovereign debt crisis): he will assert that our collective prosperity depends on paying the bankers who engineered the crisis in the first place, a position described by economist Michael Hudson as “a veritable Stockholm Syndrome” in which debtors are asked to “identify with their financial captors.” ...............
I thought crypto would be the catalyst for the next collapse, but private credit, subprime auto and commercial real estate give it a run for its money.
...................................... As usual, the easy money of the past 5 years only hid the risks; it didn’t erase them. By 2025, the AAA labels, perpetual funds, and clever underwriting had given way to a harsher reality: empty lobbies, mounting defaults, and repos in the driveway.
The legal tussle over the president’s trade policy is a result of the way he wields power
Here we go again. American markets have already faced endless shocks this year: the April 2 “liberation day” tariffs; US President Donald Trump’s attacks on the Federal Reserve; and this week’s government shutdown.
Now another drama looms: on November 5, the Supreme Court will consider whether Trump’s tariffs, introduced under the 1977 International Emergency Economic Powers Act (IEEPA), are legal — or not.
If they are deemed to be illegal, there is a chance the White House may have to repay billions of dollars of tariff revenue to businesses, creating trade and fiscal chaos. It could also undermine Trump’s approach to geoeconomics, the use of economic policy for statecraft, since he currently assumes he can act without asking Congress.
But if the April 2 tariffs are judged lawful, some legal scholars think that Trump’s powers will then dramatically expand, enabling him to impose taxes or capital controls in a unilateral, almost monarchical, manner without asking Congress.
So November 5 could be momentous. And this creates an unintended irony. That date is also “bonfire night” in Britain, when kids burn effigies of Guy Fawkes, the 17th-century Catholic seditionary who tried to blow up the Houses of Parliament. You could not make it up.
How did this legal mess happen? The answer lies in how Trump exercises power. ...........
Many popular valuation metrics suggest that the stock market is expensive, implying that investors should expect weak returns over the years to come.
Unfortunately, all valuation metrics are far from perfect, and their signals can lead you astray. ...........
Two weeks ago we discussed the a Breadth Thrust Regime provides for the stock market with a powerful tailwind. Last week we reminded readers that Quiet Strength is characteristic of Bull Markets.
After updating our models and indicators this weekend and seeing some deterioration on our Bull Market Behavior Checklist, this week’s focus is on the potential for weakness as we move into the final quarter of the year. Government shutdown gambits and a renewed easing cycle from the Fed while inflation remains high and is rising add to the swirl of macro-related concerns. Our focus is on the message from the market, not the story being told by headline writers.
This week, two of the components on our Bull Market Behavior Checklist moved into the “No” camp. The percentage of ACWI markets above their 50-day average dropped below 70% and the long-term trend in the Value Line Geometric Index has turned lower again. This is alone is not a death knell for the rally. The deterioration seen thus far is more like lane deviation signal and a slight course correction could get the rally back on track. Downside risks increase when our Bull Behavior Composite drops below 3 (it is currently at 4).
Global strength and leadership has been a hallmark of the stock market in 2025. Seeing the percentage of ACWI markets above their 50-day average drop below 70% is not a sign of bull market behavior. Downside risks intensify when it drops below 40%.
In a healthy bull market, nearly all of the sectors in the S&P 500 are above their 200-day average (and in sold out bear markets almost no sectors are above their 200-day average). Right now, 9 of the 11 sectors are still above their 200-day averages. If this drops any further, expectations for a muddled market environment would not be misplaced.
Two other domestic breadth indicators worth monitoring are the spread between new highs and new lows and our sector-level trend indicator.
New highs have now outpaced new lows for 20 weeks in a row. That matches the longest such streak since 2018 and is a sign of strength. New lows exceeding new highs would not be consistent with the persistence of a bull market.
Our sector-trend indicator is wobbling as sector-level momentum has cooled but the overall indicator is still in positive territory.
Kobe put up endless jump shots.
Jerry Rice spent hours on the JUGS machine.
Boring, repetitive work….that’s what built greatness.
It wasn’t about chasing the newest drill, it was about sticking to what stood the test of time.
My philosophy with investing is similar.
Build robust processes to understand the message of the market AND listen.
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The reality is simple.
The frameworks I’ve built haven’t shifted if anything, they’re getting stronger.
Price is confirming, not warning
Bubble Fare:
................. I’ve said before that I wasn’t sure AI was a bubble. But with CoreWeave’s failed IPO magically tripling in months, with Nvidia underwriting its own customers, and now with this talk of chip leasing, I’ve changed my mind. This is what bubbles look like — distorted incentives, circular economics, and financial engineering that papers over weaknesses.
And when the company carrying the entire market on its back decides its next great idea is lease accounting, that might not just be a red flag. It could be a warning flare.
“If something cannot go on forever, it will stop” - Charles P Kindleberger, “Manias, Panics, and Crashes: A History of Financial Crises”, 1978
Every six months it happens like clockwork.
The first time the AI sector was rocked over fears of low/zero ROI, and gargantuan cash burn with nothing to show for it, was June 2024, when Goldman asked point blank if Gen AI was nothing more than "too much spend, too little benefit." i.e., a giant capital drain that will never lead to positive long-term returns for investors.
As Goldman's concern gained prominence, the tech/AI/ hyperscaler, etc sector saw its first major selloff in years, but since the market was already so flooded with liquidity, dip buyers quickly emerged and the brief tremor was quickly forgotten even as Goldman's question was never answered; instead it was assumed that sophisticated, super smart corporate CFOs could not possibly be so dumb as to allocate trillions in capex for what is ultimately a $20/month chatbot used primarily by college-age kids to cheat on their essay writing skills. Fear not, they said, a huge and much more expensive use case will eventually emerge, they said.
Unfortunately, 6 months later - when another $100 billion in capex had already been burned "perfecting" the world's most expensive chatbots/essay cheating platforms, no such use case had emerged. What did emerge however, was a major scare out of China which developed its notorious DeepSeek LLM, which was not only opensourced and massively cheaper than similar US offerings, but required far cheaper equipment than the latest NVDA superdupercard to run efficiently. Around this time we also got a handful of reports that companies like MSFT, GOOGL and META were quietly pulling back on their Capex spending (they were), and it all combined to result in the next big AI selloff, one which started in late January and continued until April, when everything collapse on Trump's Liberation Day meltdown... and which also promptly sparked the biggest rally in stock market history after Trump realized he likes his stocks higher than his tariff revenues. .............
........ Which brought us to September when, with the AI bubble fully raging and singlehandedly pushing stocks to their highest valuation since the dot com bubble... ... Oracle crashed the AI bubble party on Sept 10 with all the grace of a bull in a China shop, when it unveiled one of the biggest circle jerk vendor financing deals of all time (more below), announcing a massive $300 billion, five-year cloud computing deal with OpenAI.
Ever since Greenspan took over the Fed and the 87 crash when they figured out their playbook, the US has only had unavoidable stock market crashes. The Fed is always there to juice markets higher and to jump in at the least sign of a normal (pre-Greenspan) market correction.
But sometimes the irrational stupidity overwhelms even the Fed, because they are both stupid and ideologically unwilling to ever force a correction. This happened twice: the dot-com boom and crash and the Mortgage backed security boom and crash (if we bundle shitty mortgages based on lies together, they become not shitty, because we’re pretending they aren’t all basically the same thing!)
Now we’re going to get the AI Boom crash. I’m well over 90% on this. The AI booms is in the “wildly stupid over-claiming” stage. It’s not that token based AI isn’t a real tech, or that it doesn’t have some uses, but the claims of it completely changing everything (replacing a third of the workforce, acting without human help to run things, being able to cure cancer and make huge theoretical breakthroughs) are obvious over-reaches. So far every academic study that comes in shows that AI isn’t even good at the one thing everyone anecdotally agreed it was good at: writing code. Right now it seems to mainly be a good way to cheat at university, to have a fake relationship, or to bypass Google’s shitty search (which is what I use it for.) ...........
Artificially low interest rates have stimulated investment into AI that has hit scaling limits, says research firm
.............. Let’s start with the boldest claim first — it’s that AI is not just in a bubble, but one 17 times the size of the dot-com bubble, and even four times bigger than the 2008 global real-estate bubble.
And to get that number, you have to go back to 19th-century Swedish economist Knut Wicksell. Wicksell’s insight was that capital was efficiently allocated when the cost of debt to the average corporate borrower was 2 percentage points above nominal GDP. Only now is that positive, after a decade of Fed quantitative easing pushed corporate bond spreads low.
Garran then calculates the Wicksellian deficit, which to be clear includes not only artificial-intelligence spending but also housing and office real estate, NFTs and venture capital. That’s how you get this chart on misallocation — a lot of variables, but think of it as the misallocated portion of gross domestic product fueled by artificially low interest rates. .........
Quotes of the Week:
A prudent speculator never argues with the tape. Markets are never wrong, opinions often are.
A prudent speculator never argues with the tape. Markets are never wrong, opinions often are.
Charts:
1:
Savita BofA: Raising S&P 500 12m target to 7200
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) September 29, 2025
-Our outlook harkens back to the 80s/90s
-Boom-time earnings, mid > mega, tariff deals vs. curveballs, de-reg
-Why broadening now? Next stop for AI, pent-up capex, guidance pop pic.twitter.com/HSkdZdiKQb
(not just) for the ESG crowd:
Four key parts of the Earth’s climate system are destabilising, according to a new study with contributions from the Potsdam Institute for Climate Impact Research (PIK). Researchers analysed the interconnections of four major tipping elements: the Greenland ice sheet, the Atlantic meridional overturning circulation (AMOC), the Amazon rainforest and the South American monsoon system. All four show signs of diminished resilience, raising the risk of abrupt and potentially irreversible changes. ...........
The World responded to Trump at the Climate Summit this past week. A lot of new emission “targets” and “goals” were announced. The "Money" people are saying they don't think it makes a difference.
The 36-month running average for Earth albedo (reflectivity) hit another record low as of the latest data release for July, 2025 by CERES. Notice how the albedo declines sharply around 2013 when China starts phasing out high sulfur coal. Then around 2017 it stabilizes for a couple of years, only to start gradually declining as high sulfur marine diesel is being phased out by 2020. Then, about 2023, the albedo plunges again as those cooling sulfate aerosols have been “washed out” of the atmosphere. Since 2014 this drop in the albedo has had the same effect as adding 138ppm of CO2 to the atmosphere. Effectively pushing us to 560ppmCO2e.
.............. As a “counterpoint” to Trump’s speech, Colombian President Gustavo Petro also spoke at the UN that day. Although few noticed, his language was extraordinarily direct. In stressing the need for climate action, Petro said of Trump:
“The most powerful man in the world does not believe in science. That is irrationality. As Germany, the country of great philosophers, of Kant, Feuerbach, and others, became prey to irrationalism in 1933. Today it’s this (US) country that is becoming irrational.”
“The old societies of Europe are collapsing, and the United States is applauding its new Hitler.” ............
The planet's warming climate is having effects in Antarctica that increasingly resemble those observed in the Arctic, meaning global sea levels could rise faster than previously predicted, Danish researchers warned on Friday. .........
............... What the report never mentions is that U.S. agriculture will inevitably lose major crops and productive regions to areas farther north, like Canada, and that shift will mean a massive economic and national security loss. Our entire food system—from transport to storage to processing—is built around today’s geography and climate. Rebuilding it to match bulk shifts in crops and regions would be staggeringly expensive, if not impossible. And by framing critics as alarmists predicting collapse, the report dodges the real issue: climate change won’t erase U.S. farming overnight, but it will make it more volatile, less nutritious, more costly, and increasingly displaced to other countries.
Ashley Dawson thinks about the future through Nicholas Beuret’s “Or Something Worse: Why We Need to Disrupt the Climate Transition” and Thea Riofrancos’s “Extraction: The Frontiers of Green Capitalism.”
ENERGY-RELATED CARBON EMISSIONS hit an all-time high in 2024, contributing to record atmospheric concentrations of CO2. As a result, last year was the warmest year on record, the first that was more than 1.5°C above preindustrial levels. But how is this possible given the record levels of global investment in and deployment of renewables, which reached an all-time high with 536 gigawatts of renewable capacity added in 2023?
The answer is that fossil fuels are not being replaced by renewables, as the term energy transition suggests. Instead, they are being added to the total energy supply. What we are witnessing, in other words, is energy addition rather than transition. Or, to put it another way, we are living through a green transition; it’s just that it’s not the one that climate activists, scientists, or, indeed, anyone concerned about life on this planet actually wants. This green transition is likely to blow us through 2.0°C of global warming by the end of the 2030s, with all the environmental and social disruption that this implies.
To win a decline in global emissions, we must shut down the ongoing fossil-fuel production that is driving energy addition. ..............
[actually, sadly, we can't, because of the Faustian bargain we've made, as pointed out by James Hansen among others that we need the aerosols up there to prevent immediate rapid heating]
Sci Fare:
U.S. B.S.:
***** Yarvin: You can't handle the truth
For the past two decades, I’ve been watching the world wake up to the obvious. As Orwell said, nothing is so difficult as noticing the nose in front of your face. A few people, me among them, were seeing that the whole story of reality that we lived in was as false and narcissistic—at least!—as the Soviet Union’s narrative of itself.
Yet none of us could accept the darkest aspect of that truth. We all had the idea that we could stand up and speak the truth and, if it was true enough, it would flash around the world like lightning. Nothing could prevail against the truth. The Father of Lies could not stand against the Lord of Hosts. That this fantasy itself was part of the lie—that truth has no army, that no angels will ride to our rescue—was too much. Perhaps if I had known it, I never would have said anything.
This truth is only available to the most advanced atheists and the most advanced Christians. ................
............. Of course Bremmer is absolutely right, but some corrections are in order. One: there is no risk of a Republican one-party state, because there is no actual Republican party. It is a label, not a party. To the extent that the Republicans are organized, it is only for election theater. There is not even a remote, nascent equivalent of the venerable and gigantic progressive institutions which have been running our country for a century.
.............. It is not about “dismantling political opposition.” Politics is this establishment’s outer line of defense. It is not their source of power or money. Winning elections does not create liberal power. It protects liberal power. If they lose elections, it is fine, so long as their money and power is protected. While their power is feeling slightly annoyed, it is generally safe. Their money is completely safe—no one is even starting to talk about defunding the endowments, foundations, etc. In any case, even if these funds were taken, their billionaires would just refill them. Personal expropriation or even proscription/attainder is needed.
........... My brothers in Christ: you cannot even imagine what winning looks like. This is literal. You literally can’t picture it. You can picture winning on this, winning on that, winning on the other thing. But winning overall? You can’t picture it, because you can’t handle the truth. Try anyway—then put yourself in that headspace, and look back at the things the Trump administration is trying to do today. Unfortunately, I rather expect you’ll laugh.
Democrats failed the world, and the worst people you can imagine took advantage.
History has needed many things from America in recent years:
- Adapt to a multipolar world.
- Transition out of a US-centered hegemonic order.
- Accommodate—rather than antagonize—China.
- Pull back from Europe.
- Repudiate trade policies that are insensitive to the distribution of gains.
- Hold the elites running the national security state accountable for overseeing systems of death and oppression.
These are things that might have happened as part of a “progressive”—which at this point just means sane—foreign policy. Global stability has been crying out for changes like these, and they would have naturally resulted from building a social democracy in America. Using the power of the state to provide real security for the working majority is also a way of correcting for historical imbalances of power.
But the Democratic Party wanted none of this.
Rather than discipline and shrink the national security state, Democrats brought the national security state into their party. ............
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We are approaching the middle stages of a prolonged crisis of revolutionary proportions and we’re dealing with it in precisely the wrong ways.
Trump is taking up occasional rhetoric and policy changes that have long needed to happen, breaking America out of its old blood-covered, wealth-hoarding dogmas. But he’s doing so in ways that are profoundly stupid and venal and make worse the very problems he pretends to respond to.
Geopolitical Fare:
Escobar: There's A New World In The Making
History will register that the first week of September 2025 propelled the advent of the Eurasia Century to a whole new level.
That was the expectation ahead of three crucial intertwined dates: the SCO annual summit in Tianjin; the Victory Day parade in Beijing; and the Eastern Economic Forum in Vladivostok.
Yet expectations were even surpassed considering the breath and scope of what just happened.
...................... So, as Putin stressed in his presentation at the plenary session, the heart of the matter is the Trans-Arctic Transport Corridor: arguably the key 21st century connectivity corridor.
............... Lavrov once again delivered the succinct version – commenting on the triple handshake of Putin, Xi and Modi: “A demonstration that three great powers, representing three great civilizations, recognize the commonality of their interests in several areas.”
Historical Fare:
Who would we be without Greek reason, Hebrew spirit and Roman ashes?
....................................................... To know “who we are” it pays to know where we came from. To predict where we might yet go, likewise. History’s finer details deliver no final answers, but the arc of the narrative illustrates essential events, choices and arbitrary traumas via which the particular character of our civilization emerged. Rome’s ashes and the attendant birth of the West were the ultimate act of creative destruction. It may be that the present age, of smartphones and artificial intelligence, will spell the death of much that we still hold to be dear and true, but if any of the world’s civilizations can prove a match for the rising tides that threaten to engulf us, my money is on the West, ever protean, ever innovating and ever adaptable.
R.I.P. Fare:
Other Fare:
The unelected leadership of the evidently corrupt European Union (EU) is now paying mainstream media to promote the agendas of its EU "elites." The EU appears to have spent as much as 1 billion euros during the past decade alone in the process, according to a recent report, "Brussels's media machine: European media funding and the shaping of public discourse," by Thomas Fazi .......
Americans Are Using PTO to Sleep, Not for Vacation—Report
Pics of the Week:
Pics of the Week:
from the BondBeat:
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