Tag: economy

Inflation Is Rising on Top of Inflation

The September Consumer Price Index has come in at 3.7%, up from 3.4% in August, with prices rising another 0.6% in a single month. The Bureau of Labor Statistics reported the largest monthly increase in five months, driven primarily by energy. Gasoline jumped 9.1% in September alone, accounting for more than half of the monthly increase, while the overall energy index rose 5.2%. The politicians and economists continue talking about inflation as though these monthly reports represent the entire cost-of-living problem. They seem incapable of understanding that Americans are paying these increases ON TOP of the massive inflation that has already accumulated since 2020.

The breakdown of September inflation illustrates just how unevenly these increases are hitting consumers. Energy prices are now 20.4% higher than a year ago, gasoline has surged 34.2%, and fuel oil has exploded 74.2%. Airline fares have risen 22.4%, while education is up 3.8% and shelter another 3.2%. These are not insignificant expenses that households can simply eliminate. People must drive to work, heat their homes, pay their mortgages or rent, and purchase the necessities of life. The government can exclude food and energy to produce its preferred core inflation figure of 2.6%, but nobody gets to exclude those expenses from their household budget.

The cost of living was already elevated before this latest surge. The inflation accumulated during the pandemic never disappeared. Prices did not return to 2020 levels simply because the annual inflation rate temporarily declined. When a household is already paying roughly 30% more for many everyday expenses than it did before the pandemic, another 3.7% increase means the purchasing power of its income deteriorates further. This is why the public becomes increasingly angry when politicians announce that inflation is improving. They are discussing the RATE of increase while the public is struggling with the actual PRICE of everything.

Energy is now feeding another wave of inflation throughout the economy. The disruption caused by the conflict involving Iran has pushed fuel costs higher, and that expense does not remain confined to the gasoline pump. Diesel moves the trucks that deliver food, supplies the agricultural industry, and supports construction and manufacturing. When transportation becomes more expensive, those costs eventually work their way into everything from groceries to building materials. The Fed cannot manufacture oil, reopen shipping routes, or resolve geopolitical conflicts by raising interest rates another 25 basis points.

Meanwhile, the labor market is showing signs of weakness. September payroll growth was only 29,000, and unemployment stood at 4.2%. The economy is producing insufficient employment growth to give workers confidence that they can simply demand higher wages to offset these rising costs. This is the squeeze that conventional economic theory continually fails to address. Consumers face higher prices while employment conditions weaken, and raising interest rates to combat inflation can make financing even more expensive for businesses already struggling with energy and operating costs.

Washington is also the largest borrower in the economy, yet nobody seriously expects Congress to stop spending. The federal government continues accumulating debt, paying more to service that debt, and competing with the private sector for capital. The Federal Reserve can influence short-term rates, but it cannot control government deficits, international capital flows, energy supplies, or the willingness of businesses and consumers to spend. The academics continue pretending that inflation is something they can fine-tune through monetary policy while ignoring the fiscal and geopolitical forces driving the economy.

The September report is particularly troubling because inflation is accelerating at a time when the Fed has already reversed its previous easing policy. The bond market is watching these numbers because investors must consider whether the yield on government debt adequately compensates them for inflation. Washington wants lower borrowing costs, but global capital has no obligation to finance the government at artificially low rates simply because politicians have accumulated debts they cannot afford to service.

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Report confirms: Democrats in ‘total control’ of 5 states with the biggest debts

A new report confirms that Democrats are in “total control” in five U.S. states with the biggest debts, while North Dakota ended up on the other end of the scale, with Republicans in control there, and the state’s $21 billion more than it needed to pay bills.

According to an analysis by the Washington Stand, the Truth in Accounting organization gave the GOP-run North Dakota an “A” grade for having a surplus of $72,300 … per taxpayer.

“While oil, gas, and coal tax revenues declined due to lower energy prices, the decrease was offset by strong investment earnings and federal grant revenue,” the TIA report said.

The report, the 17th annual version of the “Financial State of the States,” assesses the 50 state governments in terms of assets and liabilities.

In North Dakota, Republicans hold the offices of governor, attorney general and secretary of state, and have majorities in both the state House and Senate.

The other end of the scale was occupied by New Jersey, with just $56.8 billion to fund $219.1 billion in outstanding debt, the report said.

“Every New Jersey resident would have to pay $45,800 in taxes to eliminate the deficit. The biggest share of the outstanding debt is in unfunded pension and retiree health care benefits. The former debt is more than $79 billion, while the latter exceeds $91 billion,” the Washington Stand documented.

There are Democrats in all the state’s biggest executive branch jobs, and Democrats in majorities in both legislative chambers.

The Stand confirmed, “Connecticut is the second least healthy state government, according to the TIA report, with every resident having to pay an additional $41,400 in taxes to restore the Nutmeg State’s financial health. Third is Illinois, with a deficit per resident of $36,900, followed by Massachusetts, where $24,100 would have to be paid by each resident, and California at $16,000.”

Democrats are in control of all branches of those governments.

The healthy part of the state population is seconded by Alaska, with a surplus valued at $64,200 per resident. Alaska Republicans occupy the three highest executive branch positions, and the GOP controls the state Senate, but Democrats hold the lower chamber, the report said.

Wyoming is No. 3, with a surplus valued at $30,300, followed by Utah at $14,900 and Tennessee at $11,400. Republicans hold all of the top executive branch positions, as well as control of both chambers of these states’ legislatures.

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BlackRock’s Record Asset Holdings Are Half The Size Of US Economy

BlackRock ended the third quarter with $15.49 trillion in assets under management, a record, after $205 billion of net client inflows, according to its earnings release filed with the SEC on Oct. 14.

GAAP earnings came to $10.57 a share, and as-adjusted earnings to $15.93. Revenue rose 19 percent to $7.75 billion, and the company said it has raised $68 billion in private markets over the last twelve months. Its AI Infrastructure Partnership made its first deployment during the quarter.

Chairman and CEO Larry Fink said clients “entrusted us with $205 billion of net inflows this quarter, and $869 billion over the last year.” He added: “We’re entering our seasonally strongest fourth quarter with accelerating momentum.”

As the Epoch Times notes further, the company drew almost $135 billion in net new flows into its flagship iShares exchange-traded funds, also known as ETFs.

It also repurchased $550 million of its shares during the quarter, delivering stronger value to current shareholders.

“Market fundamentals are strong and well supported, with higher margins and earnings momentum catalyzed by new technology,” CEO Larry Fink said in a statement.

Looking ahead to the final three months of 2026, Fink noted that BlackRock has plenty of momentum and a broad pipeline of opportunities across multiple business segments, including private markets and retirement funds.

BlackRock popped as much as 5 percent following the earnings data but erased its gains as the midweek session progressed.

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Record Tanker Rates Leave Heavy Crude Stranded In The Americas

The Middle East crisis has driven tanker rates to all-time highs and created a shortage of vessels. This oil logistics problem is now causing a ripple effect, tipping the heavy crude market in North and South America into oversupply – while Asia and Europe grapple with a shortage of heavy grades.

Canada is producing over 5 million barrels of crude daily, most of it heavy crude. Some 4 million barrels daily of that goes south to U.S. refineries. Venezuelan production has also moved higher after the U.S. disposed of the country’s government and took control of the oil industry. According to Reuters, a lot of this heavy crude is stuck at home because of the record freight costs that have dampened appetite, pressuring prices in Canada, Colombia, and Ecuador. Venezuelan crude goes mostly to the U.S. Gulf Coast, so it is not as vulnerable to freight rate developments.

Prices for Canadian, Colombia, and Ecuadorian heavy crude have all shed some $10 per barrel in recent weeks, the report said, citing Argus data. All the flagship grades are now trading at the lowest in six weeks, with Western Canadian Select reaching $74 per barrel last week, before rebounding to $79.50 at the time of writing.

Ecuador’s flagship heavy crude grade, Oriente, has also recovered, after dropping to $76 per barrel last week, now trading at over 84 per barrel. Colombia’s Vasconia was the most expensive of the three last week, trading at $84 per barrel, and it has also probably gone up this week, as all oil gains on the flurry of tanker attacks in the Strait of Hormuz.

These prices cited above seem quite enticing on a market where Russian Urals fetches close to $120 per barrel, and Iran Light sells for $104 per barrel, despite the U.S. Navy blockade. However, these prices exclude freight costs and insurance, and these have reached up to $40 per barrel of crude, at a time when heavy crude is in especially strong demand because of the global diesel crunch. Heavy crude yields more diesel than lighter grades, which is quite a hot topic right now.

“You need a ship and the price of ships are going up, and the availability ships are going down,” TP ICAP analyst Scott Shelton told Reuters. Global tanker rates have soared this year due to Middle Eastern producers taking to ship-to-ship transfers outside the Strait of Hormuz. For this, they use shuttle tankers, including smaller carriers, to sneak the oil through Hormuz and then load it on supertankers in the Gulf of Oman. As a result, supertanker rates from the Gulf to Asia hit $1.4 million daily earlier this month.

Shipping costs on the route from the U.S. Gulf Coast to Europe, meanwhile, have surged to $46 million in total, equal to $24.50 per barrel of crude. That compares to $6.5 million, or some $4 per barrel, before the war. The price is even higher on the route from the Americas to Asia, at over $80 million or $40 per barrel. It is little wonder why refiners in Europe and Asia are balking at the price and staying away from purchases.

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The Steady Erosion Of The Middle Class In America Resembles A Very Twisted Game Of Musical Chairs

Have you lost your spot in the middle class yet? Most Americans do not aspire to become rich and they certainly do not want to be poor.  Most of the U.S. population just wants to live a comfortable middle class lifestyle just like their parents did. Unfortunately, there is a huge problem. Since the beginning of this decade, virtually everything has been getting a lot more expensive. So even if your income has been going up, if it hasn’t been going up as fast as the cost of living has you are still falling behind. Chasing “the American Dream” has essentially become like playing a really twisted game of musical chairs. Every single month most Americans are just barely scraping by, and every single month more chairs are being removed from the game. If you still have your seat, you should be very thankful, but I wouldn’t get too comfortable because another major economic downturn is rapidly approaching.

If you are going to live a middle class lifestyle, you have got to have a home.

But homes are now more unaffordable than they have ever been before.

According to  the U.S. Census Bureau, the average sales price for a new home in the U.S. was $502,700 as of the second quarter of 2026.

And the national average for a 30 year fixed-rate mortgage is now way over 7 percent.

Who can afford that?

The top 10 percent of all income earners can still afford that, but that is about it.

If you purchased a home prior to the beginning of this current decade, you are in good shape.

But if you are a young adult that is just starting out, you are out of luck.

That is one of the reasons why more than 25 million U.S. adults under the age of 35 are still living with their parents…

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Europe Is Regulating Its Auto Industry Into Retreat

Brussels apparently believes it can dictate what an industry produces without accepting responsibility when the economics cease to work. Renault is now warning that European production could fall by approximately 300,000 vehicles unless there is greater flexibility around the 2030 emissions requirements. Volkswagen describes the mass market business as under “enormous pressure.” BMW’s global deliveries fell 6.4% in the third quarter, with China down by a quarter. Competition is fierce, customers have choices, and these companies cannot finance a transformation indefinitely by producing vehicles at inadequate margins.

Look at how the target changed. The agreement reached in 2018 called for a 37.5% reduction in new-car CO₂ emissions by 2030 relative to the 2021 target. The subsequently adopted requirement became 55%, an increase of 17.5 percentage points. These are fleet average standards for new cars, but meeting them still depends on what customers actually purchase. A regulation can compel a manufacturer to change its product mix. It cannot compel a family to have the money, charging access, or confidence needed to buy the car.

Volkswagen, Stellantis, and Renault account for more than 60% of European car production. Their mass market operations rely on high volumes and thin margins. That means even a relatively small deterioration in costs or sales can produce a substantial financial problem. The consequences then move through suppliers, machinery makers, transport firms, and communities built around manufacturing. Nobody should imagine that removing 300,000 vehicles from production would affect only Renault’s accounts.

Europe’s own Council describes the wider automotive industry as supporting 12.7 million jobs and contributing more than 7% of EU GDP. Yet its explanation of the emissions rules promises stronger competitiveness and more jobs in new technologies. Fine. Show the workers where those jobs are, what they pay, and when they become available.

Now the Commission proposes easing the 2030 van target from 50% to 40% and the 2035 tailpipe-reduction requirement from 100% to 90%, subject to compensating measures. The passenger car target for 2030 remains 55%. These are proposals, but they expose the problem with planning an industrial transformation around political deadlines. Companies commit capital, develop products, and reorganize factories while officials argue over which requirements should survive. Who pays when the assumptions change? The business, its employees, and eventually the taxpayer asked to support another rescue.

This obsession with the 2030 target is sheer stupidity when Europe is already struggling with expensive energy, mounting debt, war, and competition from manufacturers who can produce cars for less. Where do they imagine the money for this transformation will come from? They are demanding enormous investment while making it harder for the companies expected to provide it to earn a profit. Keep squeezing those margins and production moves, suppliers close, and the industrial skills accumulated over generations disappear with the jobs. Brussels can congratulate itself for reducing emissions within Europe while Europeans buy vehicles manufactured elsewhere. What has that accomplished for the worker whose factory is gone? A deadline means nothing if reaching it helps destroy the industry that supports your economy. Yet they cling to 2030 as though preserving a political promise matters more than preserving the livelihoods of the people paying for it.

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AfD’s Weidel Tells Berlin The Truth: A German Company Goes Bankrupt Every 19 Minutes While Merz Sends Billions To Kyiv

German businesses are going bust in alarming numbers, claims AfD co-leader Alice Weidel. Chancellor Friedrich Merz is devoting his strength and taxpayers’ money to Kyiv, she charged. The numbers for the first part of her statement are dramatic.

“A wave of bankruptcies is sweeping across our country,” Weidel said. “Every 19 minutes, a company in Germany goes bankrupt. In the third quarter of this year alone, the wave of insolvencies affected 41,000 jobs. Many of them will disappear permanently.”

The 19-minute figure traces to official data from the Federal Statistical Office. There were 2,373 corporate insolvencies in July, 8% up on the previous year and thus the highest July figure since 2013. As small-business expert Marc Evers of the German Chamber of Commerce and Industry told n-tv: “Every 19 minutes a company in Germany goes insolvent.” In the seven months to end-July a total of 15,185 corporate insolvencies were registered, 6.9% up on the same period of the previous year. Insolvencies were most frequent in the transport and storage sector, followed by the hospitality industry and construction.

The figure of 41,000 jobs also corresponds with the third-quarter insolvency tracker from the Halle Institute for Economic Research (IWH). According to this, there were approximately 4,880 cases of insolvency of partnerships and capital companies in the third quarter, down 2.3% from the record high of the second quarter. However, this still corresponds with the second highest number of quarterly cases of insolvency since 2005 and approximately 41,000 jobs were affected, about 10% fewer than in the second quarter. Weidel’s assertion that many of these jobs will disappear permanently is her own assessment and not a statistic.

Smaller businesses have not yet experienced the upswing the government is predicting for this year. Instead, according to n-tv, they are slipping into insolvency more and more often. Evers said the small upswing “threatens to be short-lived, because it is based mainly on high, debt-financed government spending.”

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AI sector wipeout risks global financial contagion, IMF report warns — 14 deals drove $1.4 trillion in circular orders on $650B in loans

Watchers and reporters in the AI space have long pointed out how its circular economy could implode, potentially taking associated investments with it. The IMF has examined those fears in its latest Global Financial Stability Report, and its conclusions are stark. In the IMF’s view, the global economy is becoming increasingly dependent on capital flows to the AI world, and a crash could result in harm to global GDP, investment, and consumption by 2028.

The report makes a distinction between “core” AI firms and others in the space. Presumably, core firms include companies like TSMC, Nvidia, and AMD, memory makers like SK hynix and Micron, and storage vendors like Western Digital. Those firms are seeing historical windfalls, and most of their production is currently spoken for years in advance. In other words, in this gold rush, these are the companies making bank selling the shovels.

In theory, if non-core players fail, only their investors would suffer harm, but according to the report, there’s still risk to worry about. Hedge funds have increased leveraged positions and margin borrowing, further exposing themselves to the blast radius of a potential bubble pop. Adding to that, the IMF states that the share of single stocks in leveraged ETFs increased to 28%, likely fueled by demand for AI and tech stocks. By our reckoning, a sharp drop in those equities could trigger a massive sell-off by the ETF issuers and lenders, triggering a feedback loop.

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Oil Rises After MidEast Attacks Spread And Escalate, Stoking Supply Fears

Oil prices rose at this evening’s futures open after renewed escalation of attacks by Iran and its proxies in the Middle East.

WTI is pushing back up towards Friday’s highs.

This move comes as President Trump claims that Russia and Ukraine have agreed to an ‘energy ceasefire’ which may just stabilize diesel prices around the world, but does nothing for exponentially rising tanker rates and the tightness in the physical oil markets.

Treasury markets are closed Monday, silencing the one cross-asset signal that typically anchors risk sentiment – meaning there will be no (cash) bond market verdict on what this weekend of renewed and re-escalated violence wrought.

“In quieter conditions, geopolitical headlines can often have an outsized impact,” Nick Twidale, chief market analyst at AT Global Markets in Sydney, wrote in a note to clients. But with the US inflation reading, several central bank speakers and the start of another US earnings season this week, “there will be plenty for markets to digest,” he wrote.

Dramatic Videos Show Several Tankers On Fire In Strait Of Hormuz This Weekend

Yet another tanker has been struck in the Strait of Hormuz on Sunday, which brings the total number to at least two or possibly as many as three suffering damage in the last 24 hours, chiefly from sea mines.

A slew of videos showing tankers striking mines have emerged on social media over the weekend, at a moment attacks on international vessels by Iranian forces are surging to wartime highs…

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The Black Sea Is Becoming Uninsurable

The Black Sea is rapidly becoming too dangerous for international commerce. Commercial vessels have been attacked near Romania, Bulgaria, Ukraine, and Russia within days of one another. Ships carrying agricultural products and petroleum are being dragged into a war. Politicians seem to forget that global trade depends on moving goods safely between nations. Once commercial shipping becomes a target, the economic consequences extend far beyond Russia and Ukraine. Insurance premiums rise, freight rates increase, and eventually those additional costs are passed directly to consumers who have absolutely nothing to do with this war.

On October 5, a commercial vessel caught fire and sank off Romania, killing two people. The following day, two additional merchant vessels were struck by drones inside Bulgaria’s exclusive economic zone, with one reportedly sinking. Another vessel carrying agricultural oil was attacked near Odesa, while an oil tanker was struck off Russia’s Black Sea coast. Responsibility for some of these incidents remains disputed, but the economic consequences do not depend on which side launched the drones. Shipping companies must now calculate the possibility of losing an entire vessel and its cargo. Insurers must price that risk, and nobody in this business operates on charity.

People do not understand how quickly the cost of war moves through the global economy. A ship owner facing increased war-risk insurance premiums will demand higher compensation to enter dangerous waters. Charter rates rise, cargo owners seek alternative routes, and ports become increasingly expensive to operate. If insurance becomes unavailable at a commercially reasonable price, vessels simply stop sailing certain routes. Every additional expense becomes part of the final price, whether that means wheat, cooking oil, gasoline, or the thousands of other products.

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