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Amid rising fears that the Fed’s next move may be a rate hike instead of a cut, it appears that bond buyers – and especially foreign bond buyers – did not get the memo, and instead today’s just concluded sale of $69 billion in 2Y paper was one of the strongest on record.

Starting at the top, the auction stopped at 4.169% at its 1pm close out time; this was down from 4.211% last month and also stopped 1.1bps through the 4.18% When Issued, following last month’s modest tail. This was the third biggest stop through in the past two years as shown in the chart below.

The Bid to Cover was less exciting: at 2.56% it was down 10bps from last month’s 2.66% and was the lowest since October, which is why it was well below the six-auction average of 2.66%.

But what the auction lacked in BTC, it more than made up for thanks to foreign demand, because with 85.5% of the auction awarded to Indirects, i.e., foreign buyers, this was the highest Indirect award on record.

And with Directs awarded 7.6%, Dealers were left holding just 6.9% of the auction, the lowest on record!

Overall, this was a stellar auction, and on news of the break the 10Y yield, already near session lows, dropped to a fresh low for the day, just below 4.40% and likely set to drop even more.

European leaders have been urging that the United States must backstop any Ukraine peace deal to prevent the country from ever being attacked by Russia again. Of course, this means a military backstop; however, all signs point to Trump wanting to reduce the American troop presence in Europe, in favor of the Europeans doing more to provide for their own security.

Some European officials have already attacked this policy as the US signing off on Ukraine’s “surrender” to Moscow. For example, days ago Finnish MEP member Mika Aaltola of the European People’s Party claimed that the Trump administration “has given us three weeks to agree on terms for Ukraine’s surrender.” Aaltola added: “If we don’t, the United States will withdraw from Europe.“

These words also came around the time of an NBC News report which cited US officials who said Defense Secretary Pete Hegseth privately informed Ukrainian officials that Washington may significantly reduce its troop presence in Europe. 

This as President Zelensky has been urging against this, recently asserting that over 100,000 European troops could be needed in Ukraine to prevent another future war. He’s described that this would be necessary in the scenario that Ukraine doesn’t get a path to NATO membership.

Weekend reports indicate that Europe is readying a proposed plan to send at least 30,000 of its troops to Ukraine in a peacekeeping capacity in the wake of any truce deal. The report says this would be “with the US providing technical, logistics, and weapons support” – but crucially no American boots on the ground, as Trump has repeatedly promised. Meanwhile:

TRUMP: US BACKING OF SOME KIND FOR EUROPEAN TROOPS IN UKRAINE

The NY Times reports Monday of a European scramble to fill the US void as Trump signals draw back from Europe: 

European leaders are racing to try to figure out how to fill a potential void — in Ukraine and in continental security as a whole — as President Trump’s White House talks of dialing back American support and troop numbers in Europe.

…At the same time, European foreign ministers will be meeting in Brussels, where they are expected to debate how much to send to Kyiv in their next support package.

That plan could end up totaling more than 20 billion euros, according to two people familiar with the discussions who spoke on the condition of anonymity to discuss internal deliberations.

Currently France and the UK under Starmer are leading the way in advancing such plans to send European troops to Ukraine.

NBC has more details on what this might look like practically in the following:

But Western officials say what’s being discussed is a “reassurance force,” not an army of peacekeepers posted along the 600-mile (1,000-kilometer) front line in Ukraine’s east.

The proposal supported by the United Kingdom and France would see fewer than 30,000 European troops on the ground in Ukraine — away from the front line at key infrastructure sites such as nuclear power plants — backed by Western air and sea power.

Under the plan, the front line would largely be monitored remotely, with drones and other technology. Air power based outside Ukraine — perhaps in Poland or Romania — would be in reserve to deter breaches and reopen Ukrainian airspace to commercial flights.

The report adds, “That could include American air power.” But European planners are dreaming if they think Moscow would actually go for this.

Some have suggested this is all about sabotaging efforts at quick negotiated peace…

🇺🇸🇬🇧🇺🇦 British PM Starmer will present Trump with a plan to send 30,000 European peacekeepers to Ukraine.

Poltava, Kryvyi Rih and Dnipropetrovsk are planned to be the main bases for the European troops.

That is just a sabotage of the agreement, since Putin will not accept this. pic.twitter.com/3tpAJZ6Npi

— Lord Bebo (@MyLordBebo) February 20, 2025

From the start of the Kremlin contemplating negotiations, President Putin has made clear that Russia will not tolerate Western armies on the ground in Ukraine. Moscow has rejected as a non-starter any plans which put NATO forces along its border. This is especially given Russia is in the driver’s seat regarding the war in Donbass, and will be able to dictate terms… at least much more so than the West.

Via SchiffGold.com,

In his latest podcast from Wednesday night, Peter addresses the renewed buzz surrounding Elon Musk’s Department of Government Efficiency (DOGE). Peter argues that no matter how many cuts are made, the government’s nature ensures that fraud and abuse will persist. Without market forces exerting pressure on bureaucrats, the state has to reason to spend and allocate resources wisely.

To kick off the show, Peter details the bold moves made by the DOGE team operating out of the White House, arguing that their progress—while impressive—is still insufficient for the fiscal challenges ahead:

The representatives of Doge actually have authority granted to them by the president to go through various agencies and departments and try to eliminate what they can without congressional approval, spending that is determined to be wasteful, fraudulent, abusive– and they’re actually making quite a bit of progress. Now, while I think that they are going to be able to make some cuts far more than anything that we saw with the Grace Commission, I don’t think it’s going to be nearly enough to get us out of jail as far as paying for the tax cuts.

Peter then turns his attention to the very nature of government, arguing that waste, fraud, and abuse are inevitable when bureaucrats have no real incentive to be efficient:

They are going to find waste, fraud, and abuse. I mean, anybody who believes that that’s not there is completely naive and doesn’t understand government. … That’s why you want to minimize the amount of government you have, because anything the government decides to do is going to be subject to waste, fraud, and abuse. That’s why it’s a very inefficient process. That’s why you want to completely limit what the government does, because so much is going to be wasted, so much is going to be stolen, there’s going to be so much graft and kickbacks. That is the nature of government. There’s nothing you can do about it.

Peter also discusses mounting evidence of recessionary pressures, including households struggling with debt. He warns that record-high delinquencies in credit card payments are a harbinger of economic distress:

I just read again that delinquencies now are at a 13 or 14-year high. The last time they were this high, we were in a great recession. So normally, in order to get to a point where people can’t make their credit card payments, you’re in a recession. Now, I think we are in a recession, and that’s why people can’t make their payments. But if we’re not in a recession now, just imagine how much worse it’s going to be.

Connecting Fed policy to the fraud DOGE has uncovered, he points out that the current low-interest regime is essentially a giveaway that fuels wasteful borrowing and inflation:

If they’re going to say, ‘Hey, borrow money at 4% and pay it back when inflation is 5%,’ I’m getting free money. There’s no real cost to borrowing. So more people are going to borrow if the government’s going to pay you to borrow. What they need to do is ratchet up interest rates to make borrowing expensive. So fewer people will do it. But they don’t have the guts to actually choke off all that debt-fueled consumption because they know that it will produce a recession and they don’t want that. 

Finally, Peter argues that DOGE should be commended for exposing the character of most politicians and bureaucrats. Even if DOGE won’t sufficiently cut waste, it’ll open many Americans’ eyes to the truth of government:

What’s great about it is a lot of people don’t know this. A lot of people don’t realize how bad the government is. They’re finding out. They’re finally getting their eyes open to the corruption, the criminality that is involved in government. I’ve always said the worst people, the most corrupt people go to government. They’re attracted to government. Even if they’re not corrupt when they go, they get corrupted while they’re there. That’s the only reason they can stay there because if you’re not corrupt, you’re not going to stay in Washington. 

What else can we thank DOGE for? Auditing the gold stored at Fort Knox.

Admittedly second-tier data, but this morning has seen two disappointing signals for US growth as The Chicago Fed’s National Activity Index dropped to 0.03 (thanks to a plunge in Personal Consumption & Housing…

Source: Bloomberg

…and The Dallas Fed Manufacturing survey clumped into contraction (from its highest level since Oct 2021), dramatically worse than expected, as tariff fears loom large for many. The general business activity index tumbled 22 points to -8.3 (biggest miss since Jan 2024 and biggest MoM drop since COVID lockdowns), and the company outlook index fell 24 points to -5.2. 

Source: Bloomberg

Texas factory activity fell in February after rising notably in January, according to business executives responding to the Texas Manufacturing Outlook Survey. 

The production index, a key measure of state manufacturing conditions, fell 21 points to -9.1. Other measures of manufacturing activity also declined this month. 

The new orders index fell 11 points to -3.5, and the capacity utilization index slid 14 points to -8.7. 

The shipments index remained positive but edged down to 5.6. Perceptions of broader business conditions worsened in February.

In fact across the entire spectrum, every indicator is a disastrous stagflationary signal:

Input cost pressures intensified in February, while wage pressures retreated slightly. The raw materials prices index pushed up 18 points to 35.0, a multiyear high.

The outlook uncertainty index shot up to 29.2 from a near-zero reading last month, reaching a seven-month high.

Fear-mongering over the impact of Trump’s tariff plans appear to be the main driver of the sudden slump in sentiment:

• Tariff threats and uncertainty are extremely disruptive.

• With some of the new Buy America changes and tariffs incoming, we are looking at closing the business.

• The back-and-forth tariff talk has been very stressful, but it has not been disruptive so far.

• It is very hard to plan. Interest rates? Tariffs? Wow.

• Currently it is very slow…

• I’m very worried about the possible tariffs affecting some of our material costs, which we will have no choice but to pass along to our customers. This is a terrible policy decision and hopefully will not be very long lived.

• The new tariffs will have a big impact on the demand for our products.

• The Trump tariff situation is creating uncertainty about our future material costs later this year.

And then there’s those who live off the government teat:

President Trump’s freeze on government contracts has had a dramatic impact on us. USAID [United States Agency for International Development] is our major customer.

But, it’s not all doom and gloom:

• Last month was our best month in over a year. We are seeing much more business activity and expect this trend to continue. We are finally seeing a bright future for our business.

• The proposed 25 percent tariffs on steel imports will directly and favorably improve the bottom line as a domestic steel manufacturer. However, uncertainty is sky high.

• The phone is ringing. There’s some trepidation  about inflation and tariff impact, but we have confidence that orders are about  to come. More importantly, our industry feels better in general about where our country is going as a whole.

And then there is this comment, that sums up many businesses’ hopes:

• Keep lowering interest rates, please.

 

Authored by Matthew Piepenburg via VonGreyerz.gold,

Topics like bond yields, dollar debates, or yield curves can be admittedly, well, boring.

And things like politics can be, well… emotional at best or divisive at worst.

Shared Concern Among So Much Division?

In the current Zeitgeist, it’s hard to get through the fog of market complexity or the self-censorship of political polarization to arrive at anything even resembling a shared concern.

But we should all be concerned if we are collectively sinking on a global debt ship with not enough lifeboats to save our fiat current’s absolute purchasing power.

And when it comes to the water over-filling the air-tight compartments of the U.S. debt Titanic, we need to look soberly at what the Trump America is facing.

Toward this end, let’s be blunt.

Can’t We All Agree that America is Broke?

Public debt – $37T, unfunded liabilities at $190T. A debt/GDP ratio above 120%, etc.

The USA is in an unprecedented debt trap/spiral, the math, details, history and consequences of which we have been tracking for years.

And history (ignored) tells us an even darker yet simpler truth: debt destroys nations.

Every time and without exception.

Boring Bond Yields

Given that the USA in particular (and the world in general) is witnessing the greatest debt crisis of human history, should we not be equally concerned rather than politically divided when it comes to such boring things like bond yields (which reflect the very cost of debt)?

As for those boring bond yields, let’s just keep it broad and simple.

Yields on the 10-year U.S. Treasury represent the cost of money/debt for nearly everyone on the globe, in general and Uncle Sam in particular.

This means that when those yields start to climb too high, just about everything and everyone (including the country you reside in) starts to fall deeper into “uh-oh.”

And those yields rise when demand (i.e., purchasing) of those bonds starts to fall.

Read that last line again. Let it sink in.

When trust, love and/or demand and price for UST’s falls, pain for just about everything but the USD (and now gold) spikes.

Boring? Yes.

But relevant?

Absolutely.

From Boring Bonds to Just About Everything

So, what does such boring bond/UST talk have to do with your currency, your wealth or your lives?

And what does such boring bond talk have to do with market risk, gold prices, BTC’s direction or the fate of Trump’s America or even world trade and peace?

A lot.

Trump Change

Trump is a disruptor. A political outsider to a DC setting for which the term “swamp” is probably too kind.

He’s making bold statements and directives on everything from tariffs and immigration to JFK’s assassination (no great mystery there…) and DOGE spending cuts.

Love or hate him – he’s certainly busy making change…

And although he may know far more about real estate capitalism than he does about government debt or US history, his Treasury Secretary, Scott Bessent, knows a heck of a lot about the latter – which means he’s dealing with a lot of contradictions coming out of today’s White House.

No Change Without Consequence or Contradiction

Trump’s administration is making headlines, for example, about a stronger USD, ending inflation, optimizing tariff revenues, saving big oil and getting those boring UST yields down.

But there’s just one catch – no one, not even Trump or Santa Clause, can do all that without radically re-shaping the prior notion of American exceptionalism.

And ironically, no one knows this better than Trump’s own Treasury Secretary.

Why?

It’s simple – and even a bit “boring” – but the forces at play will directly impact YOU, so it’s worth a few reality checks and simple fact-reminders here.

It All Starts (and Ends) with the Dollar

If Trump, for example, pushes for a stronger dollar and aggressive tariffs (love or hate em), such a policy would not only create a drag on the global economy (which owes over $14T in USD-denominated debt), it would also be knife wound to Uncle Sam, oil production and the very yields the Trump White House wants to reduce.

That is, a rising dollar forces foreigners (and nations) to sell/dump USTs to get more liquidity to pay debts.

And if USTs continue to sell off, then prices fall, and yields rise; and when yields rise, even Uncle Sam reaches a point where he can’t afford his own bar tab.

See the paradox? The trap? The boring yet incredibly important relationship between bonds, currencies and economic life itself?

The USD: Weaker By Necessity

This relationship between a strong dollar and UST yields is clear and direct, and although the headlines and consensus still see a strong dollar ahead, I’ve long argued the oppositefor the simple reason that America itself can’t afford a strong dollar.

And deep down, Scott Bessent (a private gold buyer) knows this, too.

He’s openly admitted to the “counterparty” risk of a strong USD, but he won’t publicly confess that one of those counterparties at risk is the U.S. itself.

So, what is to be done?

How can Trump afford short-term tariff costs, cut spending/waste in DC (via DOGE), pay for the needed re-shoring of American jobs, or even win the war on inflation without risking debt issuance to the moon and hence bond yields even higher (which recently rose from 4.3% to 4.65% in just three trading days)?

Well, as even his own Treasury Secretary knows under his breath, the answer is simple: he can’t.

Unless…

Unless …an already openly declining, and hence openly desperate, debt-soaked nation does what all desperate individuals or nations do: resort to desperate measures.

Only Desperate Options Left

Bessent knows that for anything Trump wants to enact to grow the American economy; he must first get Uncle Sam’s debt to GDP levels to a place where growth is even mathematically feasible.

At current debt/GDP levels, for example, such growth is mathematically impossible.

So, what can the US do under Trump?

1) Inflate Away Our Debt?

We could end up inflating away our debt.

For that to happen, we’d need years of inflation and negative real rates at well over 15% to even come close to “inflating away” such debt.

This would not only be fatally painful for U.S. citizens but also political suicide for Trump.

2) Play the Yellen Card?

Bessent could try his predecessor’s playbook of just issuing more UST’s (IOUs) from the short end of the yield curve or emptying the reverse repo market and TGA accounts to buy more time/liquidity and create more debt.

But with the world dumping USTs and bracing itself for more tariff and trade wars, there just isn’t enough love, trust or buyers for those American IOUs anymore…

More importantly, such wimpy measures can no longer save a nation whose bar tab (interest expense on outstanding debt, entitlements and defence) is 140% of its tax receipts.

That, folks, is neon-flashing evidence of desperation, which means we are now at an inflection point where the only measures left are entirely emergency measures – and they come with a cost. A serious cost.

3) Create BTC Bubble?

The U.S. could also help pay down some debt by speculating in a politicized BTC bubble, and then use the speculation proceeds (not actual BTC “currency”) to pay down debt in an emerging-market-desperation play akin to El Salvadore?

This is desperation at its highest, yet masquerading as “tech” nirvana to the rescue…

I’ve written and spoken about this option at greater length here and here.

4) Revaluing Gold?

Finally, and perhaps most importantly, the topic of gold revaluation is also ripping through the precious metal pundit circles at a galvanic pace, and for good reason.

Based upon “reported” U.S. gold holdings, if gold were politically re-priced to just $4000 per ounce, that would create an additional $1.2T of instant liquidity (i.e. inflationary M2), which the Treasury Department could then direct deposit into an ever-drying TGA.

(This direct deposit is made legal under Section 2.10 of the Financial Accounting Manual for Federal Reserve Banks.)

Such a gold revaluation policy would take a lot of pressure off Bessent’s Treasury Department and buy the U.S. more time and money for the aforementioned Trump policies to “Make America Great Again.”

But could a potential series of gold revaluations to inject new money into the TGA piggy bank truly make America, well… great?

Or would it just save the U.S. economy from crumbling to the ground?

Kissinger’s Ghost

In the 1970s, Kissinger was very concerned when Europe, which collectively owned more gold than the U.S., wanted to revalue their gold to similarly cover their own debt disasters at home.

This would mean the U.S. would have to do the same, thereby playing its last Trump card (pun intended) of desperation (reverting to its gold vaults) in 1974.

And why was Kissinger so terrified of having to resort to the ultimate “red button” act of desperation in the form of revaluing its last real form of sound money/wealth?

Because Kissinger knew then what many of us know.

That is, if the USA shows its hand and starts revaluing gold to higher and higher levels to pay down higher and higher levels of debt (to keep politicians in power and the masses free of pitchforks), this would mean the end of American supremacy, hegemony and/or the Pax Americana.

Why?

Because he who has the most gold wins, and despite what the World Gold Council reports, it’s an open secret that America does not have the most gold (in a world of central banks stacking gold at record levels and COMEX revolving doors).

The Dilemma: Greatness or Survival?

Trump, Bessent, and the USA itself thus face a debt trap and, hence, a sovereign dilemma of historical import.

Yes, certainly, the U.S. can and may revalue its gold holdings to dig itself partially out of debt and hence spur more growth.

But once/if the U.S. revalues, the rest of the world will naturally follow, and that will make the US just one more economically average nation among many, but certainly not the strongest anymore.

Kissinger knew this.

Do Bessent and Trump?

Either Way, Gold Wins

Regardless of whether such a formal gold revaluation occurs from the top down in DC, the gold price will continue to rise (re-value itself) naturally from the bottom up for the simple reason that debt-soaked nations = debased currencies.

Gold, which only rises because fiat money inevitably suffocates under debt, sits at a different kind of historical moment.

It gets the last laugh because sovereign debt, led by sovereign mismanagement, has killed its sovereign currency in a death by a thousand cuts.

So, yes, gold gets the last laugh – but the circumstances couldn’t be sadder.

By all accounts the hold-up in the US and Ukraine potentially agreeing to a final mineral deal has been President Zelensky’s refusal to sign – seeing in it selling off Ukraine’s economic sovereignty; however, sources on both sides strongly suggest a deal is very close.

“I will not sign what ten generations of Ukrainians will have to pay back,” said President Volodymyr Zelenskyy at a press conference Sunday. President Trump is seeking access to some $500 billion in the country’s minerals, including rare earths, to repay Washington for its wartime aid.

Kiev as well as many of its European partners have complained that the deal offers no clear security guarantees or even the promise of future aid in return. Instead it appears set up to repay the US billions in past aid, and Ukrainian officials and the media have described it as punitive. 

The Ukrainian leader described this weekend:

“Let’s first clarify the $500 billion figure. I know that we had $100 billion [in US aid provided to Ukraine], and that’s a fact. But I’m not going to acknowledge $500 billion, regardless of what anyone says, with all due respect to our partners,” Zelensky told reporters at the “Ukraine Year 2025” forum.

Still, there appears have been some weekend progress, and the Zelensky government knows it’s in no position to fiercely push back, also given that the Trump administration is essentially calling for a near-future change in leadership at this point, having blasted Zelensky as a ‘dictator’.

“Ukrainian and U.S. teams are in the final stages of negotiations regarding the minerals agreement. The negotiations have been very constructive, with nearly all key details finalized. We are committed to completing this swiftly to proceed with its signature,” Ukrainian Deputy Prime Minister and Minister of Justice Olga Stefanishyna stated on X Monday.

“We hope both US and UA leaders might sign and endorse it in Washington the soonest to showcase our commitment for decades to come,” Stefanishyna added.

A fresh description from US officials involved say the deal will commit to a “free, sovereign and secure” Ukraine and achieving a “lasting peace” as part of it. This will include the US agreeing to “durable partnership” between Washington and Kiev, the texts shows as reported by Bloomberg.

The latest draft also stipulates that those who “acted adversely” to Ukraine in the war should not “benefit from its reconstruction” – Bloomberg has also noted.

Earlier this month, when talk of a mineral deal plan was first being floated by the White House, Zelensky expressed openness, though he was also likely attempting to be diplomatic and conciliatory, not thinking such an agreement would be pushed this hard by Trump, or realistically get off the ground.

Special Envoy Steve Witkoff on a rare earth minerals agreement with Ukraine: “I expect to see a deal signed this week.” pic.twitter.com/61e1Q8qfvT

— Rapid Response 47 (@RapidResponse47) February 23, 2025

“If we are talking about a deal, then let’s do a deal, we are only for it,” Zelensky had told Reuters at the time. The Ukrainian leader insisted the deal wouldn’t involve “giving away” Ukraine’s resources but framed it as a partnership.

But now with the details being hammered out and put into place, he clearly understands it to be very heavily skewed in Washington’s favor, and not benefiting future generations of Ukrainians.

Update (1120ET): Sunday night’s panic within the FBI has quickly morphed into “utter despair” among liberals, “who had already grown fearful of a highly politicized FBI,” according to (formerly USAID-funded) Politico, which is rich considering that the FBI under Biden spent four years as a “highly politicized” weapon to go after conservatives.

Politico reports the Patel/Bongino appointments have been met with ‘utter despair by liberals, who had already grown fearful of a highly politicized FBI.’ Can anyone argue with a straight face that the FBI has *not* been highly politicized for years? https://t.co/0eYO0y1Ekt

— Byron York (@ByronYork) February 24, 2025

Rolling Stone (of pedo coverup fame), framed Bongino’s appointment with the “bad cops” tag, which is followed by an unhinged screed.

The once-great activist rag writes: “The FBI will officially be headed by two men with no experience in the bureau, and a lot of blind loyalty towards President Donald Trump.”

During the first weeks of Trump’s second administration, Bongino has hyped up the president’s power grab and revenge tour against his political opponents. Earlier this month, the radio host urged Trump to ignore a court order blocking the administration’s attempt to place a widespread freeze on federal funding. -Rolling Stone

And boy does Bongino know his stuff when it comes to the rot within the US Deep State:

INTERESTING TIMESTAMP!

FEW KNOW MORE ABOUT THE FISA ABUSE AND THE STEEL DOSSIER THAN DAN BONGINO!

THINGS JUST GOT EXTREMELY HOT FOR THE BAD ACTORS WITHIN OUR GOVERNMENT (CURRENT/FORMER)

THE PANIC WILL BE FRONT AND CENTER!

NOT ONLY DO WE HAVE JOE ROGANS’ AUDIENCE LOCKED… pic.twitter.com/NynnRKds7y

— SirOliverPollock(KAIZER)😎 🧐 🤫 (@SirCensorLot) February 24, 2025

You know who should be panicking right now? Adam Schiff…

Oh boy. Went back to watch Dan Bongino’s last broadcast and Adam Schiff is in hot water now. pic.twitter.com/FkAWD6R61y

— Big Fish (@BigFish3000) February 24, 2025

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Last Day! Support ZeroHedge with the purchase of a ZeroHedge Multitool ,on sale until midnight tonight… Comes with belt sheath that sports ZH logo.

Satisfaction guaranteed or your money back.

*  *  *

On Sunday evening, President Donald Trump announced that former Secret Service agent and conservative talk show host Dan Bongino will become the new deputy director of the FBI – the agency that helped Obama and Hillary Clinton set Donald Trump us with the Russia Collusion hoax – which included leaks to the press, fabricating evidence, and die-hard deep state servants who vowed to destroy our president.

And now – Bongino and newly minted FBI Director Kash Patel are in charge…

 

Thank you Mr. President, Attorney General Bondi, and Director Patel. pic.twitter.com/bJqIDbWLEE

— Dan Bongino (@dbongino) February 24, 2025

…which is not sitting well with current and former agency officials – or deep state journalists like NBC‘s Ken Dilanian, who reports that the FBI Agents Association struck out against Bongino’s selection. 

Without naming Bongino directly, the Association lashed out over the fact that the Deputy Director has typically been an active Special Agent.

“The FBI Deputy Director should continue to be an on-board, active Special Agent—as has been the case for 117 years for many compelling reasons, including operational expertise and experience, as well as the trust of our Special Agent population,” reads a memo obtained by WNBC‘s Jonathan Dienst.

As the WSJ notes,

The announcement sent shock waves through the FBI, whose new director Kash Patel had offered Republican senators private assurances that he would name a special agent with bureau experience to be his deputy, rather than a political outsider. Patel was sworn in at the White House on Friday.

Leaders of the FBI Agents Association, who met with Patel in January, said the new director had agreed that the deputy should be a current special agent…

Ken Dilanian echoed this sentiment, complaining on X that Bongino “has never spent a day working at the FBI, but he has spent many hours spouting baseless falsehoods about the bureau.”

A few minutes before Trump made his announcement, my colleague @jonathan4ny obtained a memo from the FBI agents association which said in part:

“The FBI Deputy Director should continue to be an on-board, active Special Agent—as has been the case for 117 years for many compelling… https://t.co/vnc80obNYs

— Ken Dilanian (@KenDilanianNBC) February 24, 2025

In other words, the right people are freaking out right now.

Ken is still furious that Kash looks different than every other FBI Director.

The “traditionally” argument is a call for the elites to stay in charge. https://t.co/f7QlLDHyHq

— Richard Grenell (@RichardGrenell) February 24, 2025

Bongino is part of the Russiagate corner—he knows this stuff from our side of the fence. No classified briefings, no peeking under redactions—just the hard grind of piecing it all together. Now he’s a co-keeper of the holy grail and we’re about to see it all. It’s all coming out.

— Hans Mahncke (@HansMahncke) February 24, 2025

Oh man they are so f’d https://t.co/QXKqQL7QZQ pic.twitter.com/L01po49seI

— David Steinberg (@realDSteinberg) February 24, 2025

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As DB’s Jim Reid writes in his expansive Daily Reid note this morning, five years ago today, global markets first began to panic after a weekend that saw 11 Italian towns emerge from it in Covid lockdown. Five years later we had a mini panic on Friday as attention focused on a report earlier in the week about a new coronavirus discovery in bats, from the infamous Wuhan lab, with similar properties to Covid-19. And speaking of five years, will the German election be seen as a pivotal moment when we look back on it in 2030? For financial markets the make-up of the Bundestag was probably as important as the overall results and the one line summary is that the centre-right and centre-left should have sufficient seats to form a grand coalition but overall the centrist parties are short of a two-thirds majority. This latter means that any future reforms of the debt break will be challenging and may require compromise and horse trading.

In terms of the details, the provisional results confirm a victory for the centre-right CDU/CSU (28.6%), followed by the far-right AfD (20.8%), centre-left SPD (16.4%) and Greens (11.6%). Of the smaller partis, the leftist Linke (8.8%) comfortably exceeded the 5% threshold, but the far-left BSW (4.97%) and liberal FDP (4.3%) fell short. BSW’s narrow failure to enter the Bundestag, which may take a few days to be definitively confirmed, has the important consequence of leaving the CDU/CSU and SPD combined with a projected 52% of the seats. 

That leaves the grand coalition as the most likely outcome, being the only option to avoid the need for three-party coalition given that mainstream parties have ruled out partnering with the AfD. DB’s Germany economists see the prospect of a two-party coalition led by a strong CDU/CSU as a positive for Germany’s corporate sector, promising less policy gridlock and uncertainty than under the outgoing government. Earlier in the night, CDU leader Merz said he wanted to form a coalition within the next two months.

While the outcome may reduce the risks of particularly fractious coalition talks, it still confirms an ongoing anti-establishment trend that has been visible both in Germany and Europe as a whole. The result marks the lowest ever vote share for the two major parties, even as the turnout (82.5%) was the highest since at least 1990. And it leaves the centrist parties short of a 2/3rds constitutional majority, with the CDU/CSU, SPD and Greens jointly at just under 66% of seats. That means any debt brake reform, including for defense spending, would require support from one of the fringe parties. This may not be impossible, but it would require significant political compromises.

In terms of other events this week, Nvidia’s earnings on Wednesday could be the biggest mover of markets. Interestingly of the 62 analysts who cover the stock on Bloomberg, 56 have a buy rating with only one sell. DB are currently one of only 5 with a hold rating. Outside of that, inflation takes centre stage with US core PCE, German, French and Italian flash CPI, as well as Tokyo CPI all out on Friday with Spain’s equivalent coming out on Thursday. In terms of the rest of the main global releases, the German Ifo survey today will be less relevant given the election but later we have the Dallas and Chicago Fed manufacturing surveys. Tomorrow sees the US Conference Board consumer confidence release which will be interesting after Friday’s weak UoM equivalent. Wednesday sees US new home sales and Australian inflation. Thursday sees US durable goods and the ECB account of their January meeting and Friday sees US personal income and spending data and the ECB consumer expectations survey. There are also lots of central bank speakers through the week, including at the G20 central bankers and finance minister meeting in Cape Town on Wednesday and Thursday. You can see the main ones detailed in the day-by-day calendar at the end as usual, along with key earnings releases and all the other data.

Digging into the main US data this week now. According to DB economists, Friday’s personal income (+0.3% forecast vs +0.4% previously) and consumption (+0.2% vs. +0.7%) will likely be softer due to the LA wildfires and poor weather with the all-important core PCE deflator (+0.27% vs. +0.16%) higher but not as extreme as CPI due to softer subcomponents in the subsequent PPI. This would lower the YoY core PCE two tenths to 2.6%. 

In the US consumer confidence tomorrow, the jobs-plentiful / jobs hard-to-get series is important as a good proxy for the unemployment rate. For claims on Thursday our economists are looking to the DC area in particular given press reports of substantial federal government layoffs. Around 20% of the ~2.3mn federal government employees live in Washington DC, Maryland and Virginia. The German bank estimates that there have been roughly 14k potential federal layoffs since the Trump Administration took office with another 12k pending the resolution of court cases. Clearly this is just within the first month.

Courtesy of DB, here is a day by day summary of the key events:

Monday February 24

• Data: US January Chicago Fed national activity index, February Dallas Fed manufacturing activity, Japan January PPI services, Germany February Ifo survey
• Central banks: BoE’s Lombardelli, Ramsden and Dhingra speak
• Earnings: Diamondback Energy, Trip.com, Domino’s Pizza, Cleveland-Cliffs
• Auctions: US 2-yr Notes ($69bn)

Tuesday February 25

• Data: US February Conference Board consumer confidence index, Richmond Fed manufacturing index, business conditions, Dallas Fed services activity, Philadelphia Fed non-manufacturing activity, December FHFA house price index, Q4 house price purchase index, Germany Q4 GDP detail, EU27 January new car registrations
• Central banks: Fed’s Logan, Barr and Barkin speak, ECB’s Schnabel and Nagel speak, BoE’s Pill speaks
• Earnings: Home Depot, Intuit, Workday, Coupang, ASM
• Auctions: US 5-yr Notes ($70bn)

Wednesday February 26

• Data: US January new home sales, Germany March GfK consumer confidence, France February consumer confidence, Australia January CPI
• Central banks: Fed’s Barkin and Bostic speak, BoE’s Dhingra speaks
• Earnings: Nvidia, Salesforce, Deutsche Telekom, TJX, AB InBev, Synopsys, CRH, Snowflake, Stellantis, E.ON, Novonesis, TKO, Paramount Global
• Auctions: US 2-yr FRN (reopening, $28bn), 7-yr Notes ($44bn)

Thursday February 27

• Data: US January durable goods orders, pending home sales, February Kansas City Fed manufacturing activity, initial jobless claims, Japan February Tokyo CPI, January retail sales, industrial production, France February PPI, Italy February consumer confidence index, manufacturing confidence, economic sentiment, December industrial sales, Eurozone January M3, February economic confidence, Canada Q4 current account balance, Switzerland Q4 GDP
• Central banks: ECB’s account of the January meeting, Fed’s Schmid, Barr, Bowman, Hammack, Harker and Barkin speak
• Earnings: Iberdrola, AXA, Dell, LSEG, Autodesk, Rolls-Royce, Vistra, Monster Beverage, Eni, Haleon, Engie, Warner Bros Discovery, Telefonica, Endeavor

Friday February 28

• Data: US January PCE, personal income and spending, advance goods trade balance, retail inventories, wholesale inventories, February MNI Chicago PMI, Kansas City Fed services activity, UK February Lloyds Business Barometer, Nationwide house price, Japan January housing starts, Germany February CPI, unemployment claims rate, January retail sales, import price index, France February CPI, January consumer spending, Q4 total payrolls, Italy February CPI, Canada Q4 GDP, Sweden Q4 GDP
• Central banks: ECB consumer expectations survey, BoE’s Ramsden speaks
• Earnings: Allianz, Holcim, BASF, Amadeus IT, Erste

Finally, Goldman notes that the key event this week is this week is core PCE inflation on Friday. There are several speaking engagements by Fed officials this week.

Monday, February 24

• There are no major economic data releases scheduled.

Tuesday, February 25

• 04:20 AM Dallas Fed President Logan (FOMC non-voter) speaks:  Dallas Fed President Lorie Logan will speak at the “2025 BEAR Conference: The Future of the Central Bank Balance Sheet” in London. Speech text and a moderated Q&A are expected. On February 6, Logan said, “I think the possible policy strategies for the FOMC in 2025 boil down to two key alternatives. In some scenarios, it will soon be appropriate to resume reducing the federal funds target range. In other scenarios, we’ll need to hold rates at least at the current level for quite some time.” She also said, “What if inflation comes in close to 2 percent in coming months? While that would be good news, it wouldn’t necessarily allow the FOMC to cut rates soon, in my view.”
• 09:00 AM FHFA house price index, December (last +0.3%)
• 09:00 AM S&P Case-Shiller 20-city home price index, December (GS +0.4%, consensus +0.4%, last +0.4%)
• 10:00 AM Conference Board consumer confidence, February (GS 102.0, consensus 102.7, last 104.1)
• 11:45 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will give a speech on financial stability at an event hosted by Yale School of Management. Speech text and Q&A are expected.
• 01:00 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will give a speech called “Inflation Then and Now” at an event hosted by the Rotary Club of Richmond. Speech text and Q&A are expected. On February 5, Barkin was asked if he still expected the FOMC to cut the fed funds rate this year and responded with “That’s certainly the lean, but we’ll have to see what happens.” Barkin also said, “I still think policy is moderately restrictive.”

Wednesday, February 26

• 08:30 AM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will repeat his speech called “Inflation Then and Now.”
• 10:00 AM New home sales, January (GS flat, consensus -3.3%, last +3.6%)
• 12:00 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will speak on the economic outlook and housing at the Urban Land Institute’s annual Housing Opportunity Conference in Atlanta. Q&A is expected. On February 3, Bostic said, “My general outlook is that we’re going to get to target and get back to neutral. And I think neutral is lower than where we are now, somewhere in the 3-3.5% range. But how long should it take for us to get there depends on how the economy evolves.”

Thursday, February 27

• 08:30 AM GDP, Q4 second release (GS +2.1%, consensus +2.3%, last +2.3%); Personal consumption, Q4 second release (GS +4.1%, consensus +4.1%, last +4.2%): We estimate that Q4 GDP growth was revised down by 0.2pp to +2.1% (quarter-over-quarter annualized), reflecting a downward revision to consumer spending (-0.1pp to +4.1%) due to softer public transportation and personal home care details in the Quarterly Services Survey (QSS), a downward revision to business fixed investment (-0.8pp to -3.3%), but an upward revision to exports.
• 08:30 AM Durable goods orders, January preliminary (GS +4.0%, consensus +2.0%, last -2.2%); Durable goods orders ex-transportation, January preliminary (GS +0.3%, consensus +0.2%, last +0.3%); Core capital goods orders, January preliminary (GS +0.4%, consensus +0.3%, last +0.4%); Core capital goods shipments, January preliminary (GS +0.4%, consensus +0.3%, last +0.5%): We estimate that durable goods orders increased 4.0% in the preliminary January report (month-over-month, seasonally adjusted), reflecting a rebound in commercial aircraft orders. We forecast 0.4% increases for core capital goods orders and shipments, reflecting further increases in the orders and shipments components of manufacturing surveys in January.
• 08:30 AM Initial jobless claims, week ended February 22 (GS 225k, consensus 221k, last 219k): Continuing jobless claims, week ended February 15 (consensus 1,872k, last 1,869k)
• 09:15 AM Kansas City Fed President Schmid (FOMC voter) speaks: Kansas City Fed President Jeff Schmid will give remarks at the USDA Outlook Forum.
• 10:00 AM Pending home sales, January (GS -5.0%, consensus -0.8%, last -5.5%)
• 10:00 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will speak on novel activity supervision at an event in Washington. Speech text and Q&A are expected.
• 11:45 AM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will speak on community banking at an event in Kansas. Speech text and Q&A are expected. On February 18, Bowman said, “I continue to see greater risks to price stability, especially while the labor market remains strong,” and later added, “I would like to gain greater confidence that progress in lowering inflation will continue as we consider making further adjustments to the target range.”
• 01:15 PM Cleveland Fed President Hammack (FOMC non-voter) speaks: Cleveland Fed President Beth Hammack will give the keynote address on financial stability at the Research Conference on Bank Regulation in New York. Speech text and Q&A are expected. On February 11, Hammack said, “Given current economic conditions, it will likely be appropriate to hold the funds rate steady for some time… We are well positioned to respond to changes in the outlook to achieve our maximum employment and price stability objectives.”
• 03:15 PM Philadelphia Fed President Harker (FOMC non-voter) speaks:  Philadelphia Fed President Patrick Harker will give a speech on the economic outlook at an event in Newark, Delaware. Speech text and Q&A are expected. On February 11, Harker said, “Inflation has remained elevated and somewhat sticky over the past several months, both in the overall and core figures. But that notwithstanding, I do believe that our current positioning will bring inflation back to target, in the next two years if conditions broadly evolve as I expect.”

Friday, February 28

• 08:30 AM Personal income, January (GS +0.4%, consensus +0.4%, last +0.4%); Personal spending, January (GS flat, consensus +0.2%, last +0.7%); Core PCE price index, January (GS +0.25%, consensus +0.3%, last +0.2%); Core PCE price index (YoY), January (GS +2.54%, consensus +2.6%, last +2.8%); PCE price index, January (GS +0.30%, consensus +0.3%, last +0.3%); PCE price index (YoY), January (GS +2.43%, consensus +2.5%, last +2.6%): We estimate that personal income increased by 0.4% in January, while personal spending remained unchanged. We estimate that the core PCE price index rose by 0.25% in January, corresponding to a year-over-year rate of 2.54%. Additionally, we expect that the headline PCE price index increased by 0.3% from the prior month, corresponding to a year-over-year rate of 2.43%. Our forecast is consistent with a 0.16% increase in our trimmed core PCE measure.
• 08:30 AM Advance goods trade balance, January (GS -$118.0bn, consensus -$115.0bn, last -$122.0bn)
• 08:30 AM Wholesale inventories, January preliminary (consensus +0.1%, last -0.5%)
• 09:45 AM Chicago PMI, February (consensus 40.3, last 39.5)
• 10:15 PM Chicago Fed President Goolsbee (FOMC voter) speaks: Chicago Fed President Austan Goolsbee will speak at the 2025 Stanford Institute for Economic Policy Research (SIEPR) Economic Summit. Q&A is expected. On February 20, Goolsbee said, “My view is, before we got to the uncertainties from policy and from geopolitics and from some others, the overall [picture of inflation] looked pretty good to me.”

Source: DB, Goldman, BofA

Given a green light by a federal judge to plunge ahead with a sweeping federal layoff campaign, the Trump administration on Sunday announced it was cutting 2,000 positions at the U.S. Agency for International Development and putting nearly every other USAID employee on paid administrative leave. There’s no indication of how long those leaves will last — or the ultimate fate of people in that category.  

The leaves took effect at 11:59 EST on Sunday night. The relatively few who will remaining at work — at least for now — are “core leadership” and those involved in “mission-critical” or “specially designated” programs, according to a document reviewed by the New York Times. USAID employees were told that, if they fell into those exceptions, they’d find out by 5pm Sunday. Earlier reporting suggested that 600 people would be deemed essential.

Counting employees, contractors and local staff overseas, USAID had more than 13,000 employees as of September. In late January, thousands of contractors were let go. To eliminate the 2,000 employees now, the administration is using a mechanism called a “reduction in force.” 

USAID workers have begun leaving their building in DC after being fired.

pic.twitter.com/mlisY6QLHt

— Ian Jaeger (@IanJaeger29) February 23, 2025

USAID said it “intends” to furnish employees posted abroad with “a voluntary Agency-funded return travel program and other benefits.” Asserting a commitment to their safe return, the agency said those employees will retain access to USAID systems until they make it home. 

The first axe to fall over the weekend hit hundreds of contractors who received form letters notifying them that their services were no longer needed. According to AP, the generic notices didn’t include the names of the recipients, raising fears that they’d face a struggle applying for unemployment benefits. 

Here are just handful of examples of USAID projects that have sensible people cheering on the agency’s destruction:

• $1.5 million to push diversity, equity and inclusion (DEI) in Serbian workplaces
• $70,000 for a DEI musical in Ireland 
• $25,000 for a transgender opera in Colombia
• $32,000 for a transgender comic book in Peru
• $2 million for gender transitions and LGBT activism in Guatemala
• $2.5 million for electric vehicles in Vietnam
• $6 million to foster tourism in Egypt 

On Saturday, the New York Post published an expose revealing that just 2% of the billions of dollars designated for relief projects in Haiti since a 2010 earthquake went to Haitian organizations or businesses, while 56% landed at entities in and around Washington DC. While some of that money eventually found its way to Haiti, it’s fair to say it was substantially eroded by the middlemen roosting around the capital. “Little wonder USAID is so threatened by the sudden scrutiny,” wrote Paul Vallas.  

Upon taking office in January, Trump declared a 90-day freeze on almost all foreign aid. Earlier this month, federal Judge Amir Ali issued a temporary restraining order blocking the freeze, saying it would likely cause irreparable harm to aid organizations. Last week, Ali said the administration was flouting the restraining order, and directed it to at least temporarily re-open the spigots.  

There are some foreign fans of Trump’s ongoing demolition of USAID and freezing of foreign aid programs, including Hungarian Prime Minister Viktor Orban:

USAID was the heart of a robust financial and power machine. A monster created to crush, crumble and erode the freedom and independence of nations so that the liberal-globalist empire could thrive. President @realDonaldTrump drove a stake through the heart of the empire. Now it’s… pic.twitter.com/VnYLUAGM5Z

— Orbán Viktor (@PM_ViktorOrban) February 23, 2025

By Michael Every of Rabobank

Three Years And Five-To-Ten Years On

Three years ago today, Russia invaded Ukraine. As we now stagger towards a possible negotiated end to the conflict –or at least a pause to rearm– the world around us is vastly changed even if some politicians and many in markets still don’t fully grasp just how much.

Inflation was supposed to be over after the initial Ukraine energy shock, or so we keep being told by central banks. However, Friday’s US Michigan consumer survey’s 5- to 10-year inflation expectations rose to 3.5%, the highest in 30 years. For younger/“I don’t do geopolitics” readers, that was the early post-Cold War era of US hyperpower globalization now ending; and it shows Main Street gets something Wall Street is struggling to accept.

Meanwhile, another flurry of Friday White House economic statecraft executive orders threatened to further upend the global trading and financial system and take us back not to the 1990s, nor the 1980s, but perhaps the 1880s.

‘America First Investment Policy’ argues: “Economic security is national security,” and “Investment at all costs is not always in the national interest.” The US FDI screening agency will now block Chinese investments in US tech, food supplies, farmland, minerals, natural resources, ports, and shipping terminals. The US will “fast-track” friendly tech FDI, provided it can prove it has distanced itself from China. It will also use all necessary legal instruments to deter investment into China’s military-industrial sector, which given the latter’s civil-military fusion policy covers a lot – and this is just as Wall Street started to get bullish on Chinese tech stocks.

The US Trade Representative proposed charging Chinese ocean carriers, and those who use Chinese-built ships, for entering US ports. $1,000 per net tonne, up to $1m max ($1.5m for Chinese built and operated ships) is the fee, on a sliding scale even if fleet reshuffling meant they did not come to the US. That could force fleet bifurcation, as with the global ‘shadow fleet’ carrying Russian oil. So will quotas for US cargo exports to be carried on American ships. At first, 1% of all US container, dry bulk, and tanker exports on US-flagged and operated vessels; after two years, 3%; after three years, 5%, with 3% on US-built vessels; and after year seven years, 15%, with 5% US-built. This means a lot of ships must be reflagged; a lot of crews trained (“Learn to sail”); and a lot of shipyards and shipbuilding required. The economic impact is enormous: industry experts suggest it would push up freight rates 15-20%. This all echoes US mercantilist merchant marine history I flagged as something we could logically see reoccur in 2021’s ‘In Deep Ship’.

(On which, Australia and New Zealand were both just shocked by a Chinese warship popping up in the Tasman Sea test-firing its guns and disrupting flights into Sydney airport: and those in the Antipodes who thought geopolitics only happens far from their shores, and they don’t really need defence spending.)

That Trump ‘Grand Macro Strategy’ looks like “US + allies vs. China” than “US alone” but would force hard choices on those trying to play both sides. Indeed, the official list of US “foreign adversaries” in the executive order now includes Hong Kong. What does that say about the outlook for markets there?!

The same is evident in the US asking Mexico to raise its external tariffs on China (and enforce them) as a quid pro quo for the US not imposing tariffs on it. Canada next? If so, is it join a North American bloc (with reshuffled key industries) and a common external tariff against China and third parties who could transship Chinese goods, or do without the US market? This was argued as the likely economic statecraft angle when tariffs on Mexico and Canada were first announced, and while less disruptive than a global all vs. all, it would still be a huge blow.

As that Great Game is played, we also see:

• Ukraine’s President Zelenskyy has offered to step down if it brings peace and allows Ukraine NATO entry, though it remains to be seen if those are compatible goals, or if NATO still means anything.
• Polish President Duda, set to spend 6% of GDP on defense, flew to the US for a meeting with President Trump and was snubbed: he was kept waiting 90 minutes, then only got a 10-minute slot not the promised hour, with zero US commitments. If this is what Poland gets, what about everyone else in Europe? It’s UK PM Starmer’s turn to go to the US this week, and he seems to think that a promise to boost defence spending from 2.3% to 2.5% of GDP going forwards is going to win him US praise.
• The German election results mean a likely CDU-SDP coalition government after the far-left BSW party, like the liberal FDP, seemingly just fell under the 5% threshold to enter the Bundestag. It’s far from clear if this will be a government capable of acting rapidly and radically enough to address the vast challenges it faces. If not, some commentators are warning that the AfD is waiting in the wings.

Next Chancellor Merz, despite being congratulated by President Trump, has already stated: 

1. NATO “may soon be dead”; 
2. Europe needs “strategic autonomy”; and 
3. Germany needs “independence from the US”

Does that include removing the 50,000 US troops stationed in Germany? It apparently means Berlin requesting France and the UK extend their nuclear umbrellas to it. Yet Germany is going to have to give to get, and giving is expensive.

We are talking about a *vast* German, and European spending bill ahead – or Draghi’s “slow agony” greatly speeded up. We had already estimated that pursuing ‘strategic autonomy’ would cost up 4-5% of EU GDP annually, which the Draghi report assumed would come from the private sector, and we didn’t. That was before President Trump shook everything up. Indeed, it would take 3% of GDP extra on defence alone for Europe to get serious, and that doesn’t include any of the costs of dealing with supply chains, energy, commodity stockpiles, subsidies, industrial policy, tech investment, and social cohesion. It was also before Friday’s latest White House executive orders made a “with us or against us” global trade, technology, capital flows, and maritime supply chain bifurcation even more likely.   

The market is so far reacting to the German election with a stronger Euro. When one thinks about the clashing grand macro strategies here, and who can press their claims hardest, that reaction does not appear logical: then again, markets are still full of people who think we are still in the now-defunct world of macrostrategy.

Underlining that we aren’t, Hungary has announced a lifetime income tax exemption for mothers who have two or three children, as part of its ‘Year of the Breakthrough’ to address demographic decline.

So, in three years we have moved to a US consumer 5- to 10-year inflation expectation of 3.5% and worries over the future of Ukraine; and the EU; and NATO; and liberal democracy; and the re-emergence of not just 1990’s but 1980’s and 1880’s economic statecraft and mercantilism, and neo-imperialism and ‘spheres of influence’. Where do you think all the above will be in another three years, or in five to ten? So, where do you think markets should be trading?