Zerohedge

Via Middle East Eye

Former senior Barack Obama administration officials criticised former US president Joe Biden’s Gaza policies on a foreign policy podcast on Thursday, sparking reactions on social media. Ben Rhodes and Tommy Vietor, both former senior Obama administration officials, co-host the foreign policy podcast, Pod Save the World. 

According to a video from the podcast shared by the Drop Site News, Rhodes, who served as deputy national security advisor, says: “Israel doesn’t want to end the war … if they were willing to end the war, they would get the hostages out. The idea that they need to continue to fight the war against Hamas in Gaza – I’m sorry, there’s no security need to do it. You’re just talking about an already traumatized people, including a lot of injured people, who are being bombed in tents with no food and medicine.”

Vietor, former national security council spokesperson, then says: “What a total fucking disgrace the Biden administration’s policy on Gaza was… Loyalty to Netanyahu blinded him to the carnage, the total immorality of the policy, and US complicity in that policy.” 

The excerpts from the podcast have created interest on social media this week, with many people saying that these former US administration officials speak only when it is “too late”.

Many on social media reacted to the excerpts from the podcast with anger, saying that thousands of people have been talking about the atrocities done by Israel and “the real reasons why Israel does not want to end the war”.

Social media users also pointed out the hypocrisy of these former US administration officials who have always “sided with the Zionists” but are now speaking up. 

In early January, Israeli Prime Minister Benjamin Netanyahu promised to continue Israel’s war on Gaza, in part as a bid to stop far-right Finance Minister Bezalel Smotrich from exiting his coalition. Netanyahu also faces the wrath of the electorate and pending corruption cases against him once the war in Gaza is over.

Former Obama Advisors On Biden’s Policy on Gaza

Ben Rhodes and Tommy Vietor, both former senior Obama administration officials co-host the foreign policy podcast Pod Save the World.

Rhodes, who served as Deputy National Security Advisor, states:

“Israel doesn’t want to end… pic.twitter.com/ucjaVpuvfp

— Drop Site (@DropSiteNews) May 1, 2025

Israel also allegedly unilaterally violated the Gaza ceasefire in February after refusing to proceed to the second phase, which would have secured the release of all remaining captives. Netanyahu has repeatedly rejected offers from Hamas for their release. 

Many have argued that if the Netanyahu government had genuinely prioritized bringing the hostages home, a deal could have been reached long ago. But that would mean ending the war, without which Netanyahu’s coalition would collapse. 

The ceasefire in Gaza has effectively collapsed as it transitions from one phase focused on the release of Israeli captives, which is politically palatable in Israel, to the messier question of who will govern the Gaza Strip.

An investigative report aired by Israel’s Channel 13 has alleged that the Biden administration knowingly permitted Israel’s military campaign in Gaza to persist well beyond any defined strategic objective. According to the report, senior US officials privately acknowledged the offensive had devolved into “killing and destroying for the sake of killing and destroying”.

The investigation also claims the US was complicit in political interference, diplomatic obfuscation, and the derailment of peace efforts. Drop Site News shared the translations of the findings on social media. 

Think Trump’s tariffs are only for products, think again. On Sunday evening, President Donald Trump announced that he plans to impose a 100% tariff on films produced overseas, extending his restrictive trade policies on US imports to the entertainment sector for the first time.

In a post on Truth Social, the American leader said he was directing the Commerce Department and his trade representative to “immediately begin the process of instituting” the levy on foreign movies. “WE WANT MOVIES MADE IN AMERICA, AGAIN!” Trump continued.

Films made by American studios are often shot in the United Kingdom and Canada, including this year’s highest-grossing film, “A Minecraft Movie.” Some of summer’s biggest productions including “Mission: Impossible – The Final Reckoning” and “Jurassic World Rebirth” were also made primarily or entirely outside the U.S.

As Bloomberg notes, it was not clear how such a tariff would work, nor how foreign movies would be valued for tariff collection purposes. Many films from Hollywood studios involve global production, including shooting locations in foreign countries and post-production work that can be done anywhere in the world.

Today Trump announced a 100% tariff on movies produced outside of the United States. But movies aren’t physical goods that come across the border in a way that a tariff can be applied. This would be some new kind of federal excise tax on Americans who watch movies filmed abroad.

— Peter Schiff (@PeterSchiff) May 5, 2025

As WSJ notes, Hollywood studio executives – were given no prior warning about the tariff plan and no information about how it might work – scrambled Sunday night to determine what the announcement would mean for their business.

If other countries imposed reciprocal tariffs, it could devastate Hollywood studios, since most big-budget event films earn the majority of their revenue overseas, and especially China.

“We’re on it,” U.S. Commerce Secretary Howard Lutnick posted on X on Sunday.

We’re on it. https://t.co/r5zCLxZrem

— Howard Lutnick (@howardlutnick) May 4, 2025

It is unclear how such a tariff would work because movies aren’t physical goods that move through ports like most items subject to tariffs. The Trump administration would need to determine how to value a movie in order to apply the tariffs, as well as what the threshold would be to classify it as an import.

The action may be a retaliation for China’s decision last month to “moderately reduce” the number of Hollywood films allowed in the country, which in turn was retaliation for Trump’s aggressive tariffs. The China Film Administration said in April that the restrictions would “inevitably further reduce the domestic audience’s favorability toward American films”, an outcome which Trump – who has a very unfavorable view of Hollywood himself – seems to appreciate at the time.

While the US film industry is the most influential in the world, foreign films have seen a rise in popularity in recent years, drawing award-winning acclaim. The South-Korean thriller Parasite, for instance, won four Academy Awards, including the coveted Best Picture category in 2020. The film and TV industry supported some 2.3 million jobs in the US in 2023, according to the Motion Picture Association trade group. The association didn’t respond to a request for comment on Trump’s tariffs made outside of regular working hours.

London in particular has become a thriving hub for Hollywood productions, because of its tax incentives, extensive infrastructure including large soundstages, and English-speaking crews. Disney’s Marvel Studios is shooting a pair of upcoming Avengers sequels there.

Film and TV work in the US has contracted in recent years for a number of reasons. Media companies have cut back on spending in an attempt to boost their profits as they shifted from traditional TV to streaming services. Those streaming services are expanding globally and looking to produce more films for foreign markets.

Spending on film and TV production in the US fell 28% between 2021 and 2024, according to data from the research firm ProdPro, although a large part of that has to do with the backlash among normal Americans against Hollywood’s fake wokeness. Meanwhile, pther countries, such as Canada, Australia, and the UK, are seeing an increase in film and TV production, due in part to attractive tax incentives and lower production costs.

Movie and TV filming in the greater Los Angeles area declined 22% in the first quarter, reflecting California’s continued loss of business to other areas.

In January, Trump appointed actors Mel Gibson, Jon Voight and Sylvester Stallone to be special ambassadors to Hollywood with the goal of boosting US jobs. Voight is expected to introduce some ideas shortly, including incentives for businesses.

“These three very talented people will be my eyes and ears, and I will get done what they suggest,” he said.

It wasn’t immediately clear which companies would be hurt the most from Trump’s decision, however names such as Netflix will likely be closely scrutinized as a growing number of movies made by the world’s largest streaming service are now produced offshore to lower costs.

Many said $NFLX is “tariff proof”. 100% Not, friendly fire. Btw is not recession proof either.

— Marko Kolanovic (@markoinny) May 4, 2025

Netflix has been the best performing megatech names (a founding member of the now defunct FAANG acronym), although a sharp spike in production costs could results in a sizable drop in the stock.

President Donald Trump’s hard-hitting tariffs on China appear to be taking a toll, disrupting Chinese factories and sparking worker protests over unpaid wages.

As we noted late last month based on reporting by the Financial Times, factories across all of China have begun shutting down and furloughing workers “as the trade war unleashed by US President Donald Trump dries up orders for products ranging from jeans to home appliances.”

With most Chinese goods now facing US duties of at least 145%, or simply lacking the raw materials needed to process goods and sent them onward to the US, Chinese factory owners told the FT that American customers have cancelled or suspended orders, forcing them to cut production.

With about 15% of all Chinese exports last year going to the US…

… and with China increasingly transshipping billions of goods to the US using such (formerly) untariffed venues such as Vietnam… 

…. it is not all surprising that as China’s largest trading partner halts most imports, pain would be pervasive. And it is: in interviews with the Financial Times and via dozens of social media posts, workers shared pictures of quiet production lines or factory suspension notices, highlighting how the tariffs are starting to bite.

Now, according to Radio Free Asia, protests are erupting across China – from Hunan’s Dao County to Sichuan’s Suining City and Inner Mongolia’s Tongliao. Hundreds of enraged workers are storming the streets, blasting unpaid wages and wrongful firings as factories collapse under the crushing force of President Trump’s relentless U.S. tariffs, the news outlet said.

One video shared to X showed angry workers shouting “Strike! Strike!” while protesting outside the Shangda Electronics’ factory in Suining city on Sunday.

【中国多地传出讨薪、罢工维权运动】
中国经济下行，加上美国对中国产品祭出高额关税，内外夹击下，社交平台X及Youtube帐号“昨天” @YesterdayBigcat 近日上传多起中国各地拖欠薪资，员工讨薪和罢工争取权益的案件。#中国经济 #下行 #欠薪 #罢工 #农民工 pic.twitter.com/FQqclPMNsX

— 自由亚洲电台 (@RFA_Chinese) April 29, 2025

Radio Free Asia also reported:

Last week, on April 24, hundreds of workers of Guangxin Sports Goods in Dao county went on strike after the company’s factory was shut down without paying employees their compensation or their social security benefits.Workers at the company’s factory, which produces sports protective gear and related accessories, said Guangxin Sports unfairly dismissed more than 100 female employees, aged over 50 years, in September 2024 on the grounds of “reaching retirement age,” without paying them their wages or guiding them on retirement procedures.

When Radio Free Asia contacted Guangxin for a comment, a male employee at the company immediately hung up the phone on hearing the word “reporter.” The Dao County Labor and Social Security Bureau told RFA that “Guangxin still has dozens of employees operating.”Elsewhere in Inner Mongolia, many construction workers gathered on the rooftops of Jincan Royal Garden Community in Tongliao city on April 25 where they threatened to jump off the building if they were not paid the back wages they were due, another video posted on the same X account showed.

Of note, Goldman Sachs warned last month that Trump’s tariffs put roughly 16 million jobs in China at risk, saying that the increases will “significantly weigh on the Chinese economy.” In April, China’s manufacturing activity plunged more than expected to a 16-month low, entering into contractionary territory, with the official purchasing managers’ index sinking to 49.0. “The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools,” said Zichun Huang, China economist at Capital Economics, wrote.

After Trump shocked the world by imposing a 145% tariff on Chinese imports, Beijing countered with 125% duties on U.S. goods. Trump claims negotiations with Chinese officials are underway, but China’s Foreign Ministry has rejected these assertions, dismissing them as “unfounded.” The White House has defended the tariffs as a necessary measure to protect U.S. workers and address China’s trade practices, though economists warn of rising consumer prices and potential economic disruptions. Bloomberg News reported this week that China has quietly lifted $40 billion in retaliatory tariffs on 131 U.S. import items, including pharmaceuticals and industrial chemicals.

In a Sunday interview with Fox News, Trump said that he will not lower tariffs on China to entice Beijing to negotiate.

“They said today they want to talk. Look, China, and I don’t like this. I’m not happy about this. China’s getting killed right now,” Trump told host NBC’s “Meet The Press” host Kristen Welker. “They’re getting absolutely destroyed. Their factories are closing. Their unemployment is going through the roof. I’m not looking to do that to China now. At the same time, I’m not looking to have China make hundreds of billions of dollars and build more ships and more Army tanks and more airplanes.”

“You’re not dropping the tariffs against China to get them to the negotiating table?” Welker asked.

“No,” the president replied. 

President Trump on Sunday said that he’s ordering the reopening of Alcatraz Federal Penitentiary – the historic prison located in the middle of the San Francisco Bay that closed over six decades ago.

“For too long, America has been plagued by vicious, violent, and repeat Criminal Offenders, the dregs of society, who will never contribute anything other than Misery and Suffering. When we were a more serious Nation, in times past, we did not hesitate to lock up the most dangerous criminals, and keep them far away from anyone they could harm,” Trump said on Truth Social.

“That’s the way it’s supposed to be. No longer will we tolerate these Serial Offenders who spread filth, bloodshed, and mayhem on our streets. That is why, today, I am directing the Bureau of Prisons, together with the Department of Justice, FBI, and Homeland Security, to reopen a substantially enlarged and rebuilt ALCATRAZ, to house America’s most ruthless and violent Offenders,” he continued.

Located 1.25 miles offshore from San Francisco, Alcatraz Island was purchased in 1846 for $5,000 – after which President Fillmore ordered it turned into a military reservation in 1850. In 1859 it was used to house soldiers convicted of crimes, transitioning into the official military prison for the US Army’s Department of the Pacific.

In 1933 the US Department of Justice assumed control of the complex and designated Alcatraz a federal prison the next year – where it housed notorious criminals for the next 29 years, including Al Capone, Doc Barker, and Machine Gun Kelly. It was shuttered in 1963 over high operational costs and building corrosion caused by half a century of being located on an island exposed to saltwater and salt-laden air.

“Both the institution and the men confined within its walls reflect our society during this era,” reads the National Park Service’s webpage about the prison, also known as The Rock.

According to Trump, the reopening of Alcatraz is going to “serve as a symbol of Law, Order and JUSTICE.”

People who criticize activist judges (who often refuse to recuse themselves amid wide-ranging conflicts of interest while ruling against Donald Trump’s agenda) are ‘attacking democracy,’ according to US Supreme Court Justice Ketanji Brown Jackson.

On May 1, Jackson – who was apparently referring to recent comments by Donald Trump, though not specifically naming him – told an audience at the First Circuit Judicial Conference in Rio Grande, Puerto Rico, “The attacks are not random. They seem designed to intimidate those of us who serve in this critical capacity.”

“The threats and harassment are attacks on our democracy, on our system of government. And they ultimately risk undermining our Constitution and the rule of law,” the Biden appointee continued, referring to “the elephant in the room.”

As the Epoch Times notes further, several federal judges have said the Trump administration has not complied with various court orders on federal spending, the firing of government employees, and foreign aid. The administration denies that it disobeyed the orders and has criticized judges who have halted its policy actions, in some cases calling for the judges to be impeached.

Jackson’s comments followed a public statement by Chief Justice John Roberts on March 18 after Trump called for the impeachment of U.S. District Judge James Boasberg, who was confirmed in 2011 after being nominated by President Barack Obama.

Boasberg issued orders forbidding the deportation of alleged Venezuelan gang members under the Alien Enemies Act and then said the Trump administration disobeyed those orders. The Trump administration denies it flouted the orders and said some deportation flights had already left U.S. airspace before the initial written order was issued.

“For more than two centuries, it has been established that impeachment is not an appropriate response to disagreement concerning a judicial decision,” Roberts said in a statement provided to The Epoch Times. “The normal appellate review process exists for that purpose.”

Later that month, Rep. Andy Biggs (R-Ariz.) introduced a resolution in the House to impeach Boasberg.

“We cannot stand by while activist judges who incorrectly believe they have more authority than the duly-elected President of the United States, impose their own political agenda on the American people,” Biggs said in a statement on March 31.

Meanwhile, the Supreme Court is scheduled on May 15 to hear oral arguments on lower court orders blocking Trump’s policy of limiting birthright citizenship for certain individuals.

Trump’s Executive Order 14160, signed on Jan. 20, states that “the Fourteenth Amendment has never been interpreted to extend citizenship universally to everyone born within the United States.”

In the court filings, the Department of Justice did not ask the Supreme Court to rule on the constitutionality of the executive order itself, although it acknowledged that the birthright citizenship question raises “important constitutional questions with major ramifications for securing the border.”

Instead, the department made what it called a “modest” request to contain the coverage of court injunctions within the parties in the lawsuits.

“While the parties litigate weighty questions, the Court should ‘restrict the scope’ of multiple preliminary injunctions that ‘purport to cover every person … in the country,’ limiting those injunctions to parties actually within the courts’ power,” it wrote.

Nationwide injunctions, also known as non-party or universal injunctions, set policy for the entire country. Such injunctions issued by judges have become controversial in recent years as they have become increasingly common.

On April 9, the House passed a bill on a 219–213 vote in an attempt to curb the barrage of district court rulings that have blocked or delayed Trump’s executive actions on multiple fronts.

Wielding national injunctions in that way “undermines the system of government,” the bill’s sponsor, Rep. Darrell Issa (R-Calif.), said on the House floor on April 8.

Sam Dorman contributed to this report.

Many Chinese exports bound for the U.S. have been rerouted to Canada to skirt tariffs as the trade war continues to escalate between the U.S. and many of its international partners, Truenorth wire reports.

This means that, just like Europe which is facing a deflationary tsunami as Chinese dumping is unleashed on its now largest trading partner, Canadian consumers will soon have an abundance of discount goods as warehouse storage reaches its capacity.

As much as 50% of consignments from China were diverted to Canada in mid-April as many industries look to stockpile their inventory north of the border instead of in the US. 

Third-party sellers for companies such as Amazon and Walmart have also begun to hoard goods in Canada so that their items may be held in a country where they won’t face any immediate payment of duties.

The long term strategy of these companies is to hope that they will outlast the Trump administration’s tariffs, some of which are currently as high as 145%, while warehousing their products just north of the world’s largest source of demand for products and services: the US consumer.

The US has long been the world’s largest consumer market, taking in roughly 15% of global imports last year. This was largely due to its previously low tariffs, which averaged around 3.3%, the lowest among all developed nations.  That, however, is now over.

One year ago, realizing that China would quietly decimate its own domestic producers, Canada slapped hefty tariffs on imports of Chinese electric vehicles, steel and aluminum, positioning itself with allies including the U.S. to protect domestic manufacturing. Then-finance minister Chrystia Freeland unveiled a range of measures she said are aimed at leveling the playing field for Canada’s EV industry and steel and aluminum producers to protect them from unfair competition from Chinese companies.

More recently, in late March, China retaliated by imposing 100% tariffs on Canadian agircultural products, including rapeseed oil, oil cakes, and peas. Canada is among the world’s top producers of canola — a rapeseed crop that is used to make cooking oil, animal feed and biodiesel fuel — and China has historically been one of its largest customers.

“New tariffs from China on Canadian canola oil and meal will have a devastating impact on canola farmers and the broader value chain at a time of increased trade and geopolitical uncertainty,” said Chris Davison, President of the Canola Council of Canada. “We urge the federal government to immediately engage with China, with a view to resolving this issue,” he said.

While the jury is still out on how Canada’s EV industry is doing, it is certain that unless Ottawa imposes similar tariffs on all other imports from China, its local manufacturing base will be decimate in the coming weeks as China unleashes a historic dumping wave in the Canadian market, sparking all-out deflation.

Separately, China is now importing record amounts of Canadian crude oil after cutting its purchases of U.S. oil by nearly 90%. The Vancouver port saw an unprecedented 7.3 million barrels shipped to China in March and that number is only likely to grow.

While China still primarily imports oil from the Middle East and Russia, Canadian oil provides a source of relatively cheap crude that is high in sulfur, which can be refined using some of China’s most-advanced equipment.

By Peter Tchir of Academy Securities

U.S. stocks finished the week up around 3% (which was in line with markets globally). 10-year Treasury yields finished 7 bps higher, while the 2-year Treasury gyrated from 3.75% to 3.6% and all the way back to 3.83% to finish the week. Much of the move is because we had some clarity on topics discussed in last weekend’s Deep Breaths, and Dealpalooza prior to that.

Before we update where we stand, we just wanted to highlight this month’s Around the World, where Academy’s Geopolitical Intelligence Group focuses on Israel/Hamas, U.S. and Iran, Ukraine and Russia, tensions with China, and fighting in the Congo. The last one brings back memories of Academy’s version of We Didn’t Start the Fire from October 2023, which actually fits in the “vibes” section quite well.

Policies

There are three policies that matter the most right now:

• Tariffs. Market is pricing in ongoing reductions and delays in implementation. Hoping/waiting for deals. They may come, but it is possible that the theme of “tariffs as a source of revenue” retakes the lead in the constantly evolving game of what tariffs are meant to do. DOGE hasn’t delivered the savings expected, and with budget negotiations coming up, we might see a shift in focus from the administration (which had been clearly backtracking on the tariffs and global trade war since April 2nd). We may start to see the impact on shipping, freight, and most importantly, store shelves, in the coming weeks as well as some hints about who is expected to pay the tab for the tariffs. Those potential effects do not seem fully priced in here (and might be avoided with deals).
   
• Federal Reserve Interest Rate Policy. After Friday’s jobs report (Instant Reaction) it would be shocking if the Fed cut rates (market is pricing in 3%). I think the report was likely flawed primarily due to the enormous impact of the birth/death model on the report (and the ongoing issue of low survey response rates). Could the Fed be a little more dovish, pushing the June meeting from a 35% chance to something higher? That would make some sense, as June is probably my base case. But in the end, expect the Fed to stand still and focus on jobs, selective inflation data (GDP Core PCE, ISM Prices Paid), and policy uncertainty backing their decision. Expect some angry responses from the administration which can easily select some inflation measures that show a different story and can insist that the policies are all working to lower inflation.
   
• The 2026 Budget. This will become increasingly important in the coming days and weeks, as it will become actual legislation as opposed to executive orders. On the surface it is “heavy on austerity.” Unlike in Trump 1.0 (and pretty much in every other administration which all claimed to be somewhat cautious on the deficit but then spent on everything), there is austerity here. That should help interest rates if it looks like the budget can progress without the austerity measures being dramatically reduced (always a possibility in D.C.). It will add some fears about the health of the economy which has become dependent (even overly dependent) on government spending. While Tax Cuts are included, only additional or new tax cuts will really be stimulative. The extension of existing cuts put in place during Trump 1.0 won’t be a boost to the economy since virtually no one is adjusting their spending on the assumption that those won’t be extended. If they don’t get them extended, it will be a big hit, but extending them will not be a big stimulus – so they need to get some new measures incorporated. Early in the process, but negotiations will start to move markets in the coming weeks.

Dealz

So far, no official outlines of any deal have been announced.

• India still seems to be a front runner for first deal. We will be looking to see how aggressive the terms of any deal are in order to get a sense of likely future deals as well as their impact. Larger trading partners are the key here and markets will likely ignore deals with smaller or low per capita GDP nations.
   
• Potential talks with China helped turn weak futures on Thursday night into strength that only grew after the payroll data hit the tape. A deal with China is key and the market seems optimistic about progress. I am increasingly concerned that the optimism is becoming too great, versus what is likely. I could be wrong, but the headlines coming out of D.C. seem to be going above and beyond the call of duty to make everything seem positive on that front. That might be the case, but it doesn’t ring completely true to me.
   
• Ukraine Deal. The deal was finally signed. One thing missing from the U.S. perspective is that the money/profits will be used towards paying for future aid and are not being used to pay for aid already given. That had been a feature of the deal that did not get incorporated. It seems highly likely that any country negotiating with the U.S. will notice that important shift and negotiate harder than they would have otherwise. With no troops on the ground and presumably a lag between getting this deal signed and any serious presence in the region trying to extract these resources, there is plenty of “opportunity” for Russia to continue to attack. Yes, once American companies and workers are there, it will be a deterrent, but that could take some time (especially since I have yet to find a commodity person overly excited about the deal – it could be that I haven’t looked hard enough, or it could be that this is similar to what is in Greenland and the commercial viability is limited). It will be interesting to see how the deal plays out over time, but for now, it is difficult to get too excited about it from either side’s perspectives.

Expect more deal headlines, and hopefully, the outline of an actual deal. I do think that we need to be cautious about “China deal progress” headlines. While I’m not sure what to make of it, the fact that Japan seemed to threaten Treasury holding reductions was also interesting (not in a good way).

Vibes

The U.S. has now apparently impacted elections in Canada and Australia. Not sure what that means, but it is curious to think about as we all try to figure out what the world will look like in the coming years. I do think it is another warning about the American Brand (which will affect sales of American products overseas, and not in a good way).

Israel ramping up in Gaza and the Houthis launching successful attacks after being pounded by the U.S. for the past few weeks is also concerning. A nuclear deal with Iran would be great, but much like the situation between Russia/Ukraine, the risk of more violence in the region seems to be increasing even as talks are ongoing.

China is interfering with the Philippines’ territorial claims. It seems crazy that things could escalate over reefs and shoals, but crazier things have happened.

While I look at a lot of data, I think I can safely say, in my 30+ years in the business, I have never looked at the Taiwan dollar – well, now I have.

An extreme move. It has had other large moves (though nothing quite as aggressive), but the fact that it is happening in the midst of a growing trade war, and heightened tensions, makes me nervous.

India and Pakistan, which wasn’t high on our risk radar last week, is becoming increasingly so.

The People’s Armed Forces Maritime Militia (PAFMM) is something I fear we will all learn a lot more about this year. It completely fits into the Gray Zone of warfare that Academy has been harping on (cyber, cable cutting, etc.). This fleet could be used to disrupt trade in and around the South China Sea. It could be used as a way to increase the chances of an “accident” occurring that risks escalation.

Lots of weird things going on that, at least for me, create this unpleasant vibe (almost like when the sky turns a weird color and the wind dies down right before the storms rages in intensity).

Bottom Line

Rates and risk assets will continue to be headline driven. Policies and deals will take their turns driving markets.

On the bright side, the pivot from less aggression on tariffs, the indications of some cooling with China, and getting the budget going are all positives (I’d like to see more aggressive measures taken to help the chip industry, biotech, and the processing/refining of commodities).

But with the Fed unlikely to help, a lot has already been priced in.

We’ve argued since the start of Trump 1.0, that Trump is willing to pivot and shift his direction. But that also tends to mean that whenever things are really good, be cautious (like in January), and whenever things are really bad, they can change (like in April).

I wish we had more clarity on the direction of policy and deals and weren’t surrounded by all of these “vibes,” but we are. I’m less optimistic than at the start of last week (markets moved and more is being priced in), but have to remain nimble as the headlines could come out in any direction (I’m leaning towards the negative, but am by no means convinced) and we have to respect what seems like a complete lack of liquidity out there.

With everyone trading the same headlines, the moves are abnormally large, and I just don’t see that changing yet.
Guess that is a long way of saying that I am “neutral” with a slight negative bias on risk and bonds.

I do think that everyone, and every corporation, will have to remain slightly cautious in their decisions which will put pressure on the economy, especially if we start seeing real signs of disruption from the tariffs that have already been implemented.

Sen. Joni Ernst (R-IA), chairwoman of the Senate DOGE Caucus, slammed the U.S. government this week for shelling out taxpayer dollars to employees who are busy doing union work instead of serving the American people.

In fiscal year 2019, the Office of Personnel Management reported that federal employees spent 2.6 million hours on union activities, costing taxpayers $135 million. The Biden administration temporarily halted OPM’s data reporting, but the Trump administration resumed it after a request from Ernst.

“Through the course of the past 10 years and studying government efficiency and fraud, waste, and abuse, we have uncovered the issue of taxpayer-funded union time. It’s where we see federal employees—and they can legally do this right now—work during their regular workday, and do that as taxpayer-funded dollars going to their paycheck, but they’re not actually working on their duties as a federal employee,” Enrst said during a panel discussion on government bureaucracy at the The Hill & Valley Forum this week. “What they’re doing is working for their union, maybe to increase their wages or increase their benefits, on the taxpayers’ dime.”

Ernst also sounded off on “egregious” examples of federal employee misconduct. “Federal employees who were caught, you know, one taking a bubble bath when he was on a Zoom call with other employees—he got ratted out, of course. Those that are on the golf course, we get those all the time,” senator said. Even more shocking cases included a HUD employee who was in prison for driving drunk during work hours, unbeknownst to her supervisor, and a remote worker who ran a full-time business while his mother answered his work emails.

“Somehow her supervisor did not know she was in jail,” she explained about the HUD employee, adding, “And one of the most egregious was one federal employee that was working remotely that had started his own business, full-time business, and during the work hours, his mother was responding to his emails.”

Last month, Ernst introduced the Taxpayer-Funded Union Time Transparency Act to revealed just how much federal employee unions are subsidized by tax dollars after the Biden administration paused the public release of the figures. Rep. Scott Franklin (R-FL) introduced companion legislation in the House of Representatives.

“Taxpayers shouldn’t pay for empty federal office buildings or for federal employees to unionize on the clock. It’s just common sense — Americans deserve a full, detailed account of how bureaucrats use both their official time and office space for union-related work,” said Rep. Franklin. “This is exactly the kind of waste and abuse my friend, Senator Joni Ernst, and I are fighting to root out alongside the Trump Administration. The President was right to order federal employees back to the office —but if taxpayers are footing the bill, workers must be accountable for how they spend their official time.“

As Ernst and her DOGE caucus colleagues continue in exposing waste and abuse across the federal government, the success of Elon Musk’s cost-cutting initiative hinges on whether Congress will approve President Donald Trump’s budget, which aims to make these reductions permanent.

In March, President Donald Trump threw his support behind a rescission package to implement major spending cuts spearheaded by DOGE. “It would be great. I think we’re going to do that,” Trump told reporters.

According to a memo from the Office of Management and Budget (OMB) obtained by the New York Post, the administration is pushing two proposals to slash $9.3 billion. “The first includes a rescission of $8.3 billion in wasteful foreign aid spending (out of $22 billion) that does not expire in Fiscal Year (FY) 2025. The second is a separate rescission of all Federal funding for the Corporation for Public Broadcasting (CPB) — which funds the politically biased public radio and public television system,” the Post said.

Authored by T.J. Muscaro via The Epoch Times (emphasis ours),

The United States on Thursday announced the creation of a second military zone along its southern border with Mexico, further expanding the military’s presence in the area.

Dubbed the “Texas National Defense Area,” and announced late on May 1, it is a 63-mile stretch that runs east from the Texas-New Mexico state line in El Paso.

The zone’s creation follows the creation in April of a first military zone along a 60-foot-wide corridor called the Roosevelt Reservation. The corridor runs along the border lands of New Mexico, Arizona, and California.

Nearly 110,000 acres of federal land along the border were transferred from the Department of the Interior to the Army on April 15, granting military control in the zone for three years.

According to court documents filed on April 28, the United States has initiated criminal prosecutions for 28 illegal immigrants for allegedly crossing into the new military zone, charging them with “violations of security regulations,” and entering a “restricted and controlled” New Mexico national defense area on top of illegal entry.

“Any illegal attempting to enter that zone is entering a military base—a federal, protected area,” Secretary of Defense Pete Hegseth said in a video message on April 25 during a visit to the area. “You will be detained. You will be interdicted by U.S. troops and Border Patrol working together.”

“If you have attempted to evade, that’s evading law enforcement, just like you would any other military base,” he added. “You add up the charges of what you can be charged with misdemeanors and felonies, you can be looking at up to 10 years in prison when prosecuted.”

The U.S. Attorney’s Office said that 82 illegal immigrants have been charged with crossing into the New Mexico military zone. The federal government announced in March that the number of illegal immigrant crossings had dropped to the lowest level ever recorded.

New Mexico Gov. Michelle Lujan Grisham has opposed the operation, calling it a “deportation buffer zone” in her state, and “a waste of resources and military personnel, especially when migrant crossings are at the lowest in decades.”

Meanwhile, Texas Gov. Greg Abbott, who continued to send his state’s National Guard to secure the border during the Biden administration, has welcomed the federal assistance. Posting pictures of razor wire barriers on May 1, he said in a Facebook post, “Texas continues to work with the Trump Administration to stop illegal immigration.”

Around 11,900 troops are stationed on the border. According to the Department of Defense, U.S. Customs and Border Protection retains jurisdiction over illegal border crossings. Troops detain and hand over illegal immigrants to the U.S. Border Patrol.

Aldgra Fredly and Reuters contributed to this report.

California has significantly revised its population estimates upward, crediting a larger-than-expected influx of international immigrants for reversing recent trends of population decline, according to Just the News.

Governor Gavin Newsom framed the shift as a testament to California’s enduring appeal: “People from across the nation and the globe are coming to the Golden State to pursue the California Dream, where rights are protected and people are respected.”

According to the state Department of Finance (DOF), the population grew by 108,000 in 2024, bringing the total to approximately 39.5 million residents. The key driver was an upward revision of immigration figures, with 277,468 more immigrants arriving between 2021 and 2024 than previously estimated. This shift turned 2023’s reported population decline into net growth and further boosted 2024’s numbers.

Meanwhile, domestic outmigration continues but is slowing. The DOF reported that California lost 197,016 residents to other states in 2024, down from 249,308 in 2023. Natural increase—births minus deaths—also contributed, rising modestly from 105,550 to 114,805 over the same period.

The Just the News report says that out of California’s 482 cities, 241 saw population gains, 240 experienced declines, and one—Morro Bay—held steady. Among the state’s ten most populous counties, only Contra Costa in the East Bay reported a net loss, shedding just 24 residents.

Despite the population rebound, questions remain about the state’s fiscal outlook. Earlier Census data revealed that those leaving California generally earn more than those arriving, with outmigration from mid-2021 to mid-2022 causing a net loss of $24 billion in personal income. This demographic shift raises concerns that increased population won’t necessarily translate into higher tax revenues.

Compounding the issue, California’s Legislative Analyst’s Office warned in November 2024 that the state has “no capacity” for new spending and is on track for annual deficits rising to $30 billion by 2026, as expenditures outpace stagnant revenue growth.