Federal Reserve officials face a challenge resolving differences over how to set interest rates with little new economic data to guide tricky judgment calls.

Fed Vice Chair Philip Jefferson offered a case study in the central bank’s predicament on Monday, acknowledging the risk of stubborn inflation and weaker employment conditions—dueling threats that call for opposing prescriptions.

“The evolving balance of risks underscores the need to proceed slowly” with rate cuts, Jefferson said during a talk at the Kansas City Fed.

Beyond that observation, Jefferson’s comments did little to build the case either for a long time-out on rate cuts or for a rate cut at next month’s meeting—a decision that is shaping up to be unusually contentious.

(WSJ - Continue Reading)

Instead of waging a bloody battle that could ignite a clash between nuclear-armed states, China may be betting it can conquer Taiwan without firing a shot — by choking off the island’s fuel and electricity until its government capitulates.

China’s campaign wouldn’t start with missiles but with paperwork and patrol boats — "routine" inspections, new customs rules and cyber intrusions designed to quietly strangle Taiwan’s imports while giving Beijing plausible deniability, according to a new report by the Foundation for Defense of Democracies (FDD).

The report warns that a successful Chinese squeeze on Taiwan’s fuel would ripple far beyond Asia. With the island producing most of the world’s advanced semiconductors, any prolonged power outage could halt global electronics and defense manufacturing — hitting U.S. supply chains and markets almost immediately.

(MSN - Continue Reading)

There is new evidence of global pain stemming from President Trump's trade policy, which single-handedly scrambled the world economy.

Why it matters: From China to Switzerland, the economic readjustment to double-digit tariffs has been bumpy. Even with trade deals, the levies imposed on their goods are still well above pre-Trump norms. Unlike the U.S., most countries do not have an AI investment boom picking up the slack.

Driving the news: Japan's economy shrank by almost 2% on an annualized basis in the third quarter, the first time activity contracted in more than a year. Switzerland's GDP in the same period fell by 0.5%, the first quarterly drop since 2023.

(Axios - Continue Reading)

Boaz Weinstein's Saba Capital Management has sold credit derivatives in recent months to lenders seeking protection on big tech names like Oracle and Microsoft due to concerns over a debt-financed AI investment frenzy, a source told Reuters.​ Banks have sought to shield their exposure to potential losses by buying credit default swaps (CDS) from the U.S. ‌hedge fund manager, known for his winning bet against the JPMorgan Chase trader dubbed the "London Whale", the person said.

While the credit insurance rises in value in tandem with the perceived risk of ‌a company's default, current prices indicate those risks are still low compared to other sectors. Saba sold banks CDSs on Oracle, Microsoft, Meta, Amazon and Google parent Alphabet, said the source, who had direct knowledge of the deals.

(YF - Continue Reading)