**** denotes well-worth reading in full at source (even if excerpted extensively here)
Economic and Market Fare:
................ In its latest economic forecast released last week, the IMF improved its forecast for global growth slightly, but still predicted a slowdown. “We now project global growth at 3.2 percent this year and 3.1 percent next year, a cumulative downgrade of 0.2 percentage point since our forecast a year earlier.” The IMF economists reckon US real GDP will rise just 2.0% this year, down from 2.8% in 2024, and then increase by just 2.1% next year. ..........
The OECD economists are just as pessimistic. In its September Interim report on the world economy, the OECD expects global economic growth to slow to 3.2% in 2025 and 2.9% in 2026, down from 3.3% in 2024. ...........
The UN’s trade and development agency (UNCTAD) has also released an advanced preview of its Trade and Development Report 2025. It makes for sober reading on the prospects for global growth and trade. UNCTAD economists see “faltering global growth which shows no signs of picking up in the near term. Global output growth continues to lag behind pre-pandemic trends. Momentum remains fragile and clouded by uncertainty. Investor anxiety has boosted financial markets, but not productive investment.” ..............
The OECD economists are just as pessimistic. In its September Interim report on the world economy, the OECD expects global economic growth to slow to 3.2% in 2025 and 2.9% in 2026, down from 3.3% in 2024. ...........
The UN’s trade and development agency (UNCTAD) has also released an advanced preview of its Trade and Development Report 2025. It makes for sober reading on the prospects for global growth and trade. UNCTAD economists see “faltering global growth which shows no signs of picking up in the near term. Global output growth continues to lag behind pre-pandemic trends. Momentum remains fragile and clouded by uncertainty. Investor anxiety has boosted financial markets, but not productive investment.” ..............
During a conference call with investors last week, JPMorgan CEO Jamie Dimon made a memorable response to a question from Wells Fargo analyst Mike Mayo about the collapse of a subprime auto lender called Tricolor that cost the bank $170 million. Tricolor went bankrupt due to allegations of fraud, including double-pledging of collateral, which led lenders to halt financing.
“Mike, you should assume that whenever something like that happens, we scour all process, all procedures, all underwriting, all everything, and we think we’re okay in other stuff,” said Dimon. “But I – my antenna goes up when things like that happen. And I probably shouldn’t say this, but when you see one cockroach, there are probably more.”
Dimon’s instinct about there being more big credit problems lurking beneath the surface of the US economy is correct, but even he may not fully appreciate the scale of the threat.
The End of the Fiat Illusion — From Benjamin Strong to the Bi-Polar Monetary Order
When I launched Macro Anchor this summer, it was out of conviction that we had entered a regime shift, an irreversible transformation in the global economic system. At the time, most analysts were still debating inflation prints and rate cuts. I saw something deeper: the end of the era of moderation and the beginning of a world driven by fiscal dominance, financial repression, and geopolitical fragmentation. My first viral post, Trump’s Benjamin Strong Is Coming, So Is the Final Phase of the Bubble, reached more than 500 likes on LinkedIn and marked the birth of this project. In it, I argued that if Trump returned, he would appoint his own Benjamin Strong, a figure ready to flood the system with liquidity, suppress interest rates, and create one last euphoric asset boom before the inevitable reset.
We now have him: Stephen Miran. A supply-sider with a trader’s temperament and faith that growth and confidence can out-run arithmetic, Miran is the modern echo of Benjamin Strong. He is precisely the kind of policymaker I described months ago, someone who will push easy money until belief itself becomes policy. His appointment as a Fed Governor confirms what I predicted from the start: that the next phase of this cycle will not be managed by technocrats but by pragmatists who view debt monetization as national strategy. The final phase of the bubble is no longer a metaphor; it is being engineered in real time.
Over the past three months Macro Anchor has traced the anatomy of this shift. We began with fiscal dominance, where fiscal policy dictates all others: interest rates, exchange rates, trade policy, and even industrial strategy. Debt has grown so large that the Fed, ECB, and BOJ can no longer lead, but follow the bond market. Central banks now adjust to the needs of the Treasury, not the other way around. Monetary, trade, and industrial policies have become instruments of fiscal survival. Interest rates are no longer tools of macro management but reflections of fiscal constraints.
From there comes financial repression, the quiet confiscation of savings through inflation kept above yields. It is not policy failure but policy design. The purpose is simple: melt the debt in real terms. Yet as William White (ex Chief of the BIS) wrote in his 2023 essay The End of Certainty, financial repression is not neutral, it is a transfer of wealth from the bottom to the top. It rewards borrowers and asset owners, punishes savers and wage earners, and widens the social divide that monetary policy once pretended to soften. The same mechanism that stabilises sovereign balance sheets erodes the middle class. Repression preserves solvency at the expense of cohesion.
Once repression becomes structural, markets adapt. Investors stop fighting the system and begin profiting from it. That is the debasement trade .............
We are not heading toward the disappearance of the dollar but toward a bi-polar monetary order. One pole remains centred on the United States, a dollar system still backed by energy, military power, and high technology. The other is emerging across Asia, a bloc anchored by energy alliances, rare-earth dominance, and mass chip-making capacity. The first relies on confidence and security guarantees; the second on production and material collateral. Both will coexist, compete, and balance each other, defining the next monetary equilibrium. .............
Economist puzzled by fall of US 10y yields and a thesis on why stocks and bonds could rally into year-end.
China Fare:
Roach: China Doubles Down
What does the Fourth Plenum have to say about the upcoming 15th Five Year Plan?
............... Indeed, there have been hints that the government would use the upcoming 15th Five-Year Plan to implement a long-awaited strategic rebalancing toward consumer-led Chinese economic growth. The message from the just-completed Fourth Plenum of the CPC Central Committee says otherwise.
This meeting typically provides a strong signal of what to expect when the new plan is formally released at the upcoming Two Sessions meetings, which will next be held in March 2026. The full communiqué (released earlier today) leaves little doubt of the key priorities: first, deepening China’s industrial network; second, pushing further on indigenous innovation; and third, household consumption.
This is disappointing in the following sense: China’s technological prowess is so well assured at this point, it makes little sense to dwell on the obvious. The planning exercise should be put to better use in tackling the nation’s most dauting challenge — a long-awaited structural rebalancing. ...............
P.E. Fare:
Nate Koppikar, the portfolio manager and cofounder of Orso Partners, had a novel idea. Private equity is in love with AI, investing more than $200 billion in the lofty tech sector since 2020, he surmised. Why not ask AI what it thinks of private equity?
Not much, as it turns out.
A series of yes or no questions Koppikar posed to Gemini 2.5 Pro resulted in the following: Institutional investors are over-allocated to private equity, the returns are not improving over time, GP-stake sales are not positive for limited partners, and PE funds using continuations are hiding bad assets. GP-led secondaries, according to Gemini, are the “most LP-abusive development in the private equity/credit industry.”
Moreover, private equity is not a good investment when considering new allocations in 2025, according to Gemini. And the AI model concluded all of this at a time when private equity is eager to sign up retail investors, which Koppikar thinks is a symptom of the industry’s structural decline. ................
Bubble Fare:
.................. The problem with speculative bull runs is that they always end, and most of the time that ending is destructive. It is inherently logical that, as an investor, you want to move to protect your capital. The problem is that a bearish posture can lead to more severe underperformance because the market is in full speculative mode. Such is why, as an investor, it is logical to engage in bearish thinking, but must maintain a bullish bias amid a bull run. That means you must engage selectively, ride momentum where it leads, and keep disciplined exits.
As noted, that is a difficult skill to master, but that is your edge: you see the warning signs, yet you don’t surrender to them too early. .................
Quotes of the Week:
Thompson: "So yes… it’s a risk. But not just to the downside. People tend to frame risk as something that only hurts us. But in a Bull Market, risk often lives on the upside. When we spend all our energy preparing for what could go wrong, we miss what could go right. And if we don’t take risk in a Bull Market then when the hell should we? It always sounds smart to talk about risk. It signals discipline, prudence, and wisdom. But ignoring the potential for leaders to keep leading is just as flawed as ignoring downside exposure. When the biggest names are breaking out, that’s not something to fear."
Thompson: "So yes… it’s a risk. But not just to the downside. People tend to frame risk as something that only hurts us. But in a Bull Market, risk often lives on the upside. When we spend all our energy preparing for what could go wrong, we miss what could go right. And if we don’t take risk in a Bull Market then when the hell should we? It always sounds smart to talk about risk. It signals discipline, prudence, and wisdom. But ignoring the potential for leaders to keep leading is just as flawed as ignoring downside exposure. When the biggest names are breaking out, that’s not something to fear."
Charts:
1:
(not just) for the ESG crowd:
U.S. B.S.:
............................ It’s two plutocrat-owned warmongering imperialist parties whipping their respective bases into the mass delusion that they are participating in a heroic act of revolutionary defiance by voting Democrat or Republican. They get everyone fighting a fake revolution so that nobody thinks about fighting a real one.
It didn’t used to be this way, for the record. The US has been a murderous and tyrannical oligarchic bloodbath for its entire existence as a nation, but up until fairly recently its politics looked more or less like the politics of other western nations. ..........
That’s changing because public discontent with the status quo is soaring to all-time highs as Americans get poorer and everything gets shittier. The establishment order is no longer accepted and people are starting to push for real change, so their outrage needs to be harnessed and corralled into politically safe directions. .............
Now you’ve got the two main strands of American political thought falling all over themselves to be the first in line to support the establishment, all while being told that they are fighting the power. They remain mollified because they think they are doing something, and the powerful get to keep everything they’ve stolen.
It’s truly a brilliant scam. Evil, destructive and tyrannical, to be sure, but you’ve got to admire the skill with which this psyop has been pulled off.
Geopolitical Fare:
.............. Imagine thinking this is a good argument. Imagine thinking it’s perfectly reasonable to blow up a car full of children if they cross a made-up invisible line.
Think about how dehumanized Palestinians would have to be in your mind to believe this is a sane and reasonable position to have. To feel that deadly force via heavy war machinery is a perfectly fine way of administering crowd control.
Imagine if that was happening in your country. If police just blew up your vehicle if you accidentally turned onto a one-way street or made an unauthorized U-turn. If they could send a drone to go pick you off if you were walking down a street they didn’t think you should be on.
By attaching a military goal to each act of killing, Israelis of all stripes could partake in the slaughter without questioning the morality of their actions.
................................ Now cast your mind back to pre-war Asia. Japan is kicking ass, especially against the Chinese. They’ve conquered Taiwan, Korea and South Manchuria. All of this requires lots of oil, and they buy that oil from America, primarily, which was the Saudi Arabia of the day. FDR (who hated the Japanese and was a Sinophile) cut off oil exports to Japan.
Japan had only so much in the way of oil reserves. It decided to use them to go to war, grabbing as much territory as possible, while they still existed. Some of their conquests: Burma, the Dutch East Indies, and Borneo, had oil.
The situation today isn’t identical. There’s no non-China rare earth production to seize. Everyone else is pretty much happy to sell to America, they just don’t have enough to matter.
But what does matter is that if China’s rare earth ban continues, America loses the ability to make large volumes of advanced weapons. Every time I look into estimates of how long it will take to get rare earths production up and running the West, the optimistic numbers are at about ten years, with a median around twenty. China itself took about twenty years, in the 80s and 90s. ...........
So the rare earths ban means that if the US wants war against China, it has to be soon. Within a year, I’d say. ..............................
Other Fare:
Welsh: The Personal Politics of Hopelessness
........... Bret Weinstein issues a stark warning: we are living through a coordinated sabotage of our truth-seeking institutions.
***** Johnstone: Capitalism Is Shoving AI Down Our Throats Because It Can't Give Us What We Actually Want
At some point capitalism lost the ability to give us new things that we need and started giving us new things we don’t need, and now it’s giving us new things we never needed and don’t even really want.
Nobody needs all this generative AI crap. We were doing fine with online search functions and the ability to write and make art for ourselves. Only the most shallow and vapid of individuals find any appeal in the idea of talking to a chatbot like a companion, consuming “art” generated by a computer program, or letting the technology of some plutocratic megacorporation do their thinking, researching and expressing for them.
The economy is now balancing on a giant bubble of a fledgeling industry that is already underperforming expectations and hitting points of diminishing returns on multiple fronts, all while being really bad for the environment. And it doesn’t improve anyone’s life in any meaningful way.
Nobody asked for this.
And it’s not like people aren’t asking for things; capitalism just doesn’t have the ability to give them the things they are asking for. World peace. Affordable housing. Good health. Fast and efficient public transportation systems. Solutions to the various environmental catastrophes that status quo human behavior is driving us toward. The ability to have our needs met without spending all our time at work. Care for the needful. General human thriving. These are not demands that a system driven by the pursuit of profit for its own sake can supply. ..............
........... Bret Weinstein issues a stark warning: we are living through a coordinated sabotage of our truth-seeking institutions.
This is not a minor critique; it is a fundamental attack on the very mechanisms of a functional society. ......................
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