Shifting Fortunes - France versus Italy

You know Europe is in a mess when Italy is the stand-out performer
https://www.telegraph.co.uk/business/2025/09/14/you-know-europe-in-mess-when-italy-is-stand-out-performer/
French borrowing costs have now risen above those of Giorgia Meloni’s country. 

How the Superrich Reduce their Tax Burdens

Buy, borrow, die: could this American strategy of the super-rich save you tax?
https://www.telegraph.co.uk/business/2025/09/13/buy-borrow-die-super-rich-strategy-save-you-tax/
US families stay rich, generation after generation, by using this three-step strategy. 

France Gets a Downgrade

France’s Debt Rating Cut on Fears of Political Instability
https://www.nytimes.com/2025/09/12/business/france-fitch-debt-rating.html
Fitch Ratings cited the “increased fragmentation and polarization” of politics in the debt-laden country as justification for the downgrade.
 
Fitch downgrades crisis-strained France
https://www.reuters.com/sustainability/boards-policy-regulation/fitch-downgrades-crisis-strained-france-2025-09-12 

IBM and the Quantum Computing Race

Good Old IBM Is Leading the Way in the Race for ‘Quantum Advantage’
https://www.wsj.com/tech/ibm-quantum-computer-b443bf5c
IBM is racing Google, Amazon, Microsoft and a handful of startups to build the world’s first viable quantum computer. 

What Will Happen When the AI Bubble Bursts?

What if the $3trn AI investment boom goes wrong?
https://www.economist.com/leaders/2025/09/11/what-if-the-3trn-ai-investment-boom-goes-wrong
Even if the technology achieves its potential, plenty of people will lose their shirts.
 
What if the AI stock market blows up?
https://www.economist.com/finance-and-economics/2025/09/07/what-if-the-ai-stockmarket-blows-up 

Oracle surge pours fuel on fiery AI bubble debate
https://www.reuters.com/technology/oracle-surge-pours-fuel-fiery-ai-bubble-debate-2025-09-11

The Downside of Dollar Hegemony

The US Tightens the Dollar’s Death Grip on Brazilian Democracy
https://www.project-syndicate.org/commentary/trump-administration-sanctions-on-brazilian-judge-highlight-need-for-dollar-alternatives-by-camila-villard-duran-2025-09 

US Labor Market - Far Less Robust than Previously Thought

It looks like a lot of Wall Street trades between March 2024 and March 2025 were based on a false impression of the underlying strength of the U.S. economy:

U.S. Added 911,000 Fewer Jobs in the Year Ended in March
https://www.wsj.com/economy/jobs/us-job-growth-revision-a9777d98
Revised job numbers show significantly weaker labor picture than earlier reports indicated

Employers Added Nearly a Million Fewer Jobs Than Believed, Data Shows
https://www.nytimes.com/2025/09/09/business/jobs-revisions-economy-fed.html
Preliminary annual revisions could add to political pressure on the agency that produces the data.
 
Job Revisions and the Trump Economy
https://www.wsj.com/opinion/donald-trump-economy-job-revisions-bls-joe-biden-tariffs-8145ed52
Blaming Biden and the Federal Reserve for slow growth won’t work forever.

 
Current Employment Statistics Preliminary Benchmark (National) Summary
https://www.bls.gov/news.release/prebmk.nr0.htm

The Power of Big Business

Trump Administration Halts I.R.S. Crackdown on Major Tax Shelters
https://www.nytimes.com/2025/09/09/business/trump-irs-tax-shelters.html
The Treasury Department is rolling back efforts to shut down aggressive strategies used by America’s biggest multinational companies and wealthiest people. 

Oblivious Markets

Why Are Markets Ignoring the Obvious About America?
https://www.project-syndicate.org/commentary/why-markets-remain-calm-despite-trump-turmoil-by-erin-lockwood-2025-09
Given that Donald Trump’s agenda should concern those who hold capital, many are wondering why there has been so little resistance to his administration from markets and Big Business. Six possible explanations stand out – and none of them bodes well for the long term. 

Why Are Financial Markets Shrugging at Trump’s War on the Fed?
https://www.project-syndicate.org/commentary/disconnect-between-threat-to-fed-and-investors-reaction-by-barry-eichengreen-2025-09

Rise of Retail Investors Buoy India's Stock Markets

India’s Investors, Defying Tariffs, Keep Pouring Money into Stocks
https://www.nytimes.com/2025/09/08/business/india-stocks-investors-trump.html
Middle-class Indians have been plowing their savings into the stock market, making it far less vulnerable to the shocks of a trade war. 

Dollar's Haven Status

Dollar's haven status may have always been a mirage
https://www.reuters.com/markets/currencies/dollars-haven-status-may-have-always-been-mirage-2025-09-08 

China is ditching the dollar, fast
https://www.economist.com/china/2025/09/10/china-is-ditching-the-dollar-fast
Officials believe that the yuan has finally come of age.

Related:

Dollar collapse: The crisis is no longer just theoretical by Vivekanand Jayakumar, The Hill - 04/28/25
https://thehill.com/opinion/5270094-trump-tariffs-dollar-decline/ 

Central Bank Credibility - The Case of the Fed

Time to Imagine a Federal Reserve That Actually Works for the People
https://www.nytimes.com/2025/09/14/opinion/reinvent-fed-central-bank.html

The Assault on the Fed’s Independence Should Concern Everyone
https://www.wsj.com/opinion/the-assault-on-the-feds-independence-should-concern-everyone-6720d146
Almost all U.S. presidents want lower interest rates; Trump’s ideas are removed from economic reality.

Trump’s Risky Game with the Fed
https://www.wsj.com/opinion/trumps-risky-game-with-the-fed-1d727c53
The U.S. built its economic credibility slowly over a long time. Once lost, it won’t be easy to regain. 

Why the Fed should not cut rates now
https://www.ft.com/content/ecd1c563-08c9-4177-ad6f-652f06beb6fc
Amid loose financial conditions and a bubbly market, it’s exactly the wrong time.

UK's Economic Woes - A Harbinger for Rest of G-7

Is the U.K. a Canary in the Coal Mine for a Heavily Indebted World?
https://www.wsj.com/world/uk/is-the-u-k-a-canary-in-the-coal-mine-for-a-heavily-indebted-world-a1d904f0
Borrowing costs are surging for many industrialized countries, causing talk of a possible crisis.

Who will go bust first: Britain or France?
https://www.telegraph.co.uk/business/2025/08/28/who-will-go-bust-first-britain-or-france/
The countries are in a slow-motion race towards a financial crisis. 

Britain’s economic woes are sadly home-grown
https://www.reuters.com/commentary/breakingviews/britains-economic-woes-are-sadly-home-grown-2025-09-05 

The bond vigilantes will keep on circling
https://www.ft.com/content/90f22ca9-6992-4ea0-bd5b-da6f7d279cbe
Investors are losing faith in the ability of western governments to rein in spending.

Why American bondholders are jumpy about inflation
https://www.economist.com/finance-and-economics/2025/09/10/why-american-bondholders-are-jumpy-about-inflation
The Federal Reserve prepares to cut interest rates in tricky circumstances.

Related:
https://vivekjayakumar.blogspot.com/2025/09/the-west-is-heading-towards-fiscal-cliff.html

Are We Underestimating the Risk of a Recession?

Is the US already in a recession? By Tej Parikh
https://www.ft.com/content/e9be3e3f-2efe-42f7-b2d2-8ab3efea27a8 

For vast segments of the American economy it certainly feels that way.

America’s ‘Buy Now, Pay Later’ Economy
https://www.wsj.com/opinion/americas-buy-now-pay-later-economy-3dae0902
Signs of an emerging debt crisis are everywhere—from credit cards and mortgages to government budgets.

AI Impact - Deeper Issues

Just How Bad Would an AI Bubble Be?
https://www.theatlantic.com/economy/archive/2025/09/ai-bubble-us-economy/684128/
 
Will AI Choke Off the Supply of Knowledge?
https://www.wsj.com/tech/ai/will-ai-choke-off-the-supply-of-knowledge-8a71cbcd 

Bond Market Developments

Tariffs? Dutch Pensions? What’s Giving Bond Markets the Jitters?
https://www.wsj.com/finance/investing/tariffs-dutch-pensions-whats-giving-bond-markets-the-jitters-a0f3cf08
It’s hard to pin down the cause of the latest swings, but the list of culprits suggests weaker demand for the longest bonds could last.

The bond doom-mongers have got at least one thing right
https://www.ft.com/content/4edbbd55-a5da-4b7c-9158-0fa397501513
The big global bond market crisis is just around the corner and always will be. In the end, what tends to happen is that governments pony up the higher borrowing costs, investors agree to buy without a gun to their head, and peace is restored, at a cost to future generations. But be in no doubt: the pressure is building.

Companies Kick Off September with Deluge of Bond Sales
https://www.wsj.com/finance/investing/companies-kick-off-september-with-deluge-of-bond-sales-4bae88ea
The prospect of falling rates has boosted the demand investors have for corporate debt, with companies including Merck joining in a wave of borrowing.

Bessent’s Take on the Fed

The central bank put its own independence at risk by straying from its narrow statutory mandate. By Scott Bessent (U.S. Treasury Secretary), Sept 5, 2025.
https://www.wsj.com/opinion/the-feds-gain-of-function-monetary-policy-ac0dc38a
Successive interventions during and after the financial crisis of 2008 created what amounted to a de facto backstop for asset owners. This harmful cycle concentrated national wealth among those who already owned assets. Within the corporate sector, large firms thrived by locking in cheap debt, while smaller firms reliant on floating-rate loans were squeezed as rates rose. Homeowners saw their property values soar, largely insulated by fixed-rate mortgages. Meanwhile, younger and less affluent households, shut out of ownership and hit hardest by inflation, missed out on appreciation.
By failing to deliver on its inflation mandate, the Fed allowed class and generational disparities to widen. Its pursuit of a wealth effect to stimulate growth backfired.
 

I wrote two pieces way back in Feb 2021 that made similar arguments:
Have misguided policies led to recent asset bubbles and boom-bust cycles? BY VIVEKANAND JAYAKUMAR, The Hill - 02/16/21
https://thehill.com/opinion/finance/538921-have-misguided-policies-led-to-recent-asset-bubbles-and-boom-bust-cycles/
The pros and cons of running the economy hot BY VIVEKANAND JAYAKUMAR, The Hill -  02/01/21
https://thehill.com/opinion/finance/536691-the-pros-and-cons-of-running-the-economy-hot

Basic Stock and Bond Market Lessons

4 Questions to Ask Before Buying Bonds
https://www.wsj.com/finance/investing/buying-bonds-what-to-ask-10a3b1db
Ratings, duration, yield to maturity and the yield curve are key metrics for investors to understand.

Interest rate risk — When Interest rates Go up, Prices of Fixed-rate Bonds Fall
https://www.sec.gov/files/ib_interestraterisk.pdf

US bond market may be too sanguine about underlying fiscal, inflation risks
https://www.reuters.com/business/finance/us-bond-market-may-be-too-sanguine-about-underlying-fiscal-inflation-risks-2025-09-05

How to Keep This Hot Stock Market from Melting Your Retirement Dreams
https://www.wsj.com/finance/investing/how-to-keep-this-hot-stock-market-from-melting-your-retirement-dreams-2cf28499
Don’t assume high returns will last, or that you will spend far less. 

Three Alternatives to the Classic 60/40 Portfolio to Consider Now
https://www.wsj.com/finance/investing/stock-bond-portfolio-ratios-b0d43275
Financial pros say strategies like the 25/25/25/25 permanent portfolio or the 30/70 flip might be better options for investors.

A Lousy Labor Market

THE EMPLOYMENT SITUATION — AUGUST 2025
https://www.bls.gov/news.release/pdf/empsit.pdf

US labor market cracks widen as job growth nearly stalls in August
https://www.reuters.com/business/us-labor-market-cracks-widen-job-growth-nearly-stalls-august-2025-09-05

Dismal Jobs Report Fuels Expectations of Faster Rate Cuts
https://www.wsj.com/economy/central-banking/jobs-report-fed-interest-rate-cuts-65a8a169
Weak summer hiring has traders betting on consecutive interest-rate cuts through year-end, but inflation risks remain a wild card.

Mounting Deportations Meet Slow Hiring in a ‘Curious Kind of Balance’

https://www.nytimes.com/2025/09/05/business/economy/jobs-immigration-deportations-hiring.html
An influx of immigrants helped ease worker shortages, and now their expulsion is helping to mask America’s weakening demand for labor.

The Fed Saw These Jobs Numbers Coming
https://www.bloomberg.com/opinion/articles/2025-09-05/bls-jobs-report-the-fed-saw-this-coming
Markets seem to think Friday’s report drastically changes the outlook. But this is essentially what policymakers expected all along.
 
Worker Pessimism Is Part of the US Economy Now
https://www.bloomberg.com/opinion/articles/2025-09-05/worker-pessimism-is-part-of-the-us-economy-now
A bounce in job creation won’t fix housing affordability and inflation pressures.

Wall Street's wealth engine powers through job-market anxiety

https://finance.yahoo.com/news/wall-street-wealth-engine-powers-201913148.html

Wall St retreats from record highs as slowdown fears cloud rate-cut optimism
https://www.reuters.com/business/wall-st-retreats-record-highs-slowdown-fears-cloud-rate-cut-optimism-2025-09-05/

---

My take from May 2025:

Why the Federal Reserve risks falling behind the curve as recession fears rise by Vivekanand Jayakumar, The Hill. May 10, 2025
https://thehill.com/opinion/5292727-data-confusion-market-challenges/

The West is Heading Towards a Fiscal Cliff

Bond markets show the world is flirting with disaster
https://www.telegraph.co.uk/business/2025/09/03/bond-markets-show-the-world-is-flirting-with-disaster/
With G7 public debt at an all-time high, governments must curtail spending to balance books.

The bond doom-mongers have got at least one thing right
https://www.ft.com/content/4edbbd55-a5da-4b7c-9158-0fa397501513
The big global bond market crisis is just around the corner and always will be. In the end, what tends to happen is that governments pony up the higher borrowing costs, investors agree to buy without a gun to their head, and peace is restored, at a cost to future generations. But be in no doubt: the pressure is building.

Why France’s Financial Woes Are Pushing Its Government to the Brink
https://www.nytimes.com/2025/09/07/business/france-government-collapse-economy.html
The French prime minister has proposed drastic spending cuts and tax increases to shore up the country’s accounts, but his plan could backfire.

 
How Europe’s hard right threatens the economy
https://www.economist.com/leaders/2025/09/04/how-europes-hard-right-threatens-the-economy
At best, the continent should expect stagnation, at worst a bond-market rout.

How the West Got Hooked on Economic Support  
https://www.ft.com/content/62b44835-1ce6-461e-9d8b-ba4b728c4e9e
Crisis firefighting has given way to a dependence on government and central banks
 
Related:
https://www.economist.com/finance-and-economics/2025/09/04/the-hard-rights-plans-for-europes-economy