Market Doubts Hassett Can Deliver at Fed, Says PGIM’s Peters

Economic

Summary:

PGIM’s Gregory Peters says Kevin Hassett lacks the credibility to push aggressive Fed rate cuts, raising market concerns about Fed independence even as traders price in a more dovish policy path.

Kevin Hassett may not have the ability to deliver the rapid pace of interest rate cuts US President Donald Trump would like, even if he is approved as the next Federal Reserve Chair, said Gregory Peters, co-chief investment officer at PGIM Fixed Income.

Peters made the remarks amid rising talk that Hassett, the White House National Economic Council Director, may ease monetary policy aggressively to please Trump if he is picked to run the Fed. But the PGIM fund manager suggested that — since Fed rate decisions are ultimately decided by committee — Hassett won’t have the power to deliver on his own.

“Does he have the credibility within the committee to drive consensus?” said Peters, who is also a member of the Treasury Borrowing Advisory Committee, in an interview with Bloomberg TV. “We don’t know that answer. I don’t think he has that credibility. I think that’s what the bond market is telling you.”

Peters’ remarks were in response to a Financial Times report that bond investors, including those on the borrowing advisory committee, have voiced concerns to the US Treasury about Hassett’s potential appointment as the Fed chief.

His comments come as bond traders and big macro fund managers game out the impact of Trump’s shake-up of the Fed, where even hints of policy changes can send ripples throughout global markets. The rising chance that Trump will appoint a dovish Fed chair follows his months of unprecedented attacks on the institution, including insults aimed at Powell and an attempt to oust board member Lisa Cook.

Hassett is widely considered a supporter of Trump’s preference for lower rates. Trump said this week the race for the central bank chief job is “down to one” while referring to Hassett as a “potential Fed chair.”

Hassett, while remaining coy about his chances of getting the job, rebuffed criticisms this week, citing a strong Treasury auction as a sign the market hasn’t been scared by the rumors he will take the job. But some traders have piled into bets that the pace of rate cuts is set to pick up, with such positions building after Hassett emerged as the frontrunner.

The rising chance of Hassett getting the job has fueled questions about the independence of the Fed, which Peters said remains a major concern for investors.

“The markets are focused on what happens next,” said Peters. “And what happens next is the new Fed chair, the new composition and quite candidly the meddling of the administration in Fed affairs.“

Still, yields on Treasuries were little changed during Asian trading on Thursday. Those on benchmark 10-year Treasuries held at 4.08% in Asia morning trading Thursday, while yields on policy-sensitive two-year notes edged up one basis point to 3.50%.

Investors are “worried about Fed independence slash credibility and so risk premium, term premium is being built into the curve not only in the US but across all sovereign bond markets,” said Peters. “It depends where you are - the bond market in the back end is still quite fragile.”

Market Doubts Hassett Can Deliver at Fed, Says PGIM’s Peters_1

Source: Bloomberg

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Olivia Brooks

Cryptocurrency

Last week, Bitcoin (BTC) rose nearly fifteen percent to over $93,000. However, this recovery didn't last. BTC experienced heavy selling on Monday, falling to $84,000, marking a rough start to both the week and December, the last month of the year.

However, this selling wave was short-lived. Bitcoin and altcoins quickly recovered after two days of declines.

As BTC surged back above $93,000, these sudden price swings have divided the market. Some analysts say the decline could continue, while others argue that Bitcoin is holding onto a strong support area and a bottom is near.

Has Bitcoin Really Bottomed?

At this point, Bitfinex analysts also took the side that argued that the bottom was near.

Bitfinex argued in its weekly Alpha report that the Bitcoin price is showing signs of bottoming out.

The exchange pointed to several indicators, including excessive deleveraging, capitulation by short-term holders, and seller exhaustion, where selling pressure is rapidly diminishing, suggesting that Bitcoin is very close to the cycle bottom.

"The recent recovery aligns with our previous view that the market is approaching a local bottom in terms of time, although we don't yet know if we've seen a bottom in terms of price."

According to Bitfinex analysts, these factors suggest that the Bitcoin price has entered a stabilization phase, creating the necessary conditions for a sustained recovery in the short term.

While Bitfinex analysts stated that there are many indicators pointing to a bottom in Bitcoin, one analyst said that it is too early to say that Bitcoin has reached the bottom.

It's Too Early to Talk About a Bottom in Bitcoin!

Cryptocurrency analyst Ted Pillows argued in his latest analysis that it is too early to confirm a bottom has formed for Bitcoin because the asset has not yet established clear support.

Pillows noted that his bottom predictions were weakened as BTC failed to hold key support levels like $100,000, $95,000, and $90,000 and easily fell below them.

Stating that BTC is currently stuck at the $93,000-$94,000 level and cannot create a stable support, the analyst said that an upward break of this level again would open the door to $100,000.

On the other hand, a rejection from this level could push Bitcoin back below the $90,000 level.

Source: CryptoSlate

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Adam

Commodity

Although gold has yet to reach October’s all-time highs above $4,360 an ounce, the price is trading close to its fair value, according to one market strategist.

In a recent interview with Kitco News, Nitesh Shah, Head of Commodities & Macroeconomic Research at WisdomTree, said that with so much uncertainty surging through the global economy, it's not surprising that the gold market, despite its volatility, continues to establish higher support levels at each new breakout.

He added that investors waiting for bigger pullbacks will continue to be disappointed, as the precious metal is expected to find solid support from growing economic weakness, which will force the Federal Reserve to cut interest rates next week and through 2026, pushing nominal and real bond yields lower and weakening the U.S. dollar.

Although gold was unable to hold its ground above $4,360 an ounce in October and faced significant profit-taking, the selling pressure has been limited, with support holding above $4,000 an ounce.

After a brief consolidation period, gold continues to hold its ground, building support around $4,200.

“After October’s rally, we have seen a healthy pullback, and I think where we are today is probably where we should be,” he said. “Gold is doing exactly what one would expect it to do in a world with rising government debt and falling interest rates.”

Although many investors have been focused on gold’s upside potential, Shah has spent more time modeling his bear-case scenario.

He noted that there is a risk gold could drop back to $3,800 an ounce, but his modeling suggests that the market remains well supported at that level.

“We can get below $4,000, but it will take a significant effort to get there. One could see it as almost an impossibility,” he said.

In his bearish scenario, Shah said that interest rates would have to rise back to 5%. However, he added that if this were to happen, the U.S. economy would likely fall into a recession, making gold an attractive safe-haven asset.

“You would have to see a scenario where economic activity is so high that interest rates have to go higher and investors don’t see the need for holding gold anymore,” he said. “That just seems impossible right now. Every time gold finds a new support level, we are hit with new uncertainty that sparks another rally.”

In recent days, gold has found new momentum after market expectations shifted dramatically once again. Last month, markets aggressively started pricing out a rate cut in December, but disappointing economic data has now caused the pendulum to swing the other way, with markets now pricing in nearly a 90% chance of a cut.

Shah said that although next week’s monetary policy meeting will be important in setting the tone ahead of the new year, the bigger support for gold remains the uncertainty over who will lead the central bank when Fed Chair Jerome Powell’s term ends in May.

He added that any political pressure affecting the central bank’s independence would be extremely supportive for gold.

Shah also said that any questions surrounding the Federal Reserve’s independence could prompt other central banks to further diversify into gold and away from the U.S. dollar.

Source: kitco

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Justin

Commodity

Saudi Arabia cut the price of its main crude grade to Asia to the lowest level in five years, amid persistent signs of a surplus in global oil markets.

State producer Saudi Aramco will reduce the price of its flagship Arab Light crude grade to a 60 cents premium to the regional benchmark for January, according to a price list seen by Bloomberg. That's the lowest since January 2021. The cut was fractionally bigger than an expected 30 cents a barrel reduction, according to a survey of refiners and traders.

The Organization of the Petroleum Exporting Countries and its allies affirmed over the weekend a previous decision to pause production increases in the first quarter of next year. They will then consider resuming a program to roll back output quotas as the group seeks to reclaim market share. OPEC+ is eyeing weaker seasonal demand during winter months across much of Asia, Europe and North America.

Crude prices are down about 16% this year as booming supply from the Americas in tandem with hikes from the OPEC+ grouping itself exceeded subdued demand growth. The International Energy Agency has predicted a record glut in 2026, while Wall Street banks including Goldman Sachs Group Inc. see futures heading lower. Oil markets have also had to navigate the impacts of global trade disputes, wars and sanctions through this year.

Source: Bloomberg Europe

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Justin

Political

Economic

President Donald Trump pardoned longtime sports and entertainment executive Tim Leiweke after he was criminally charged in July with bid-rigging related to the development of an arena at the University of Texas.

The Justice Department posted a notice of the pardon on its website on Wednesday afternoon. The notice was dated Dec. 2. The move stands out because the pardon comes just months after Leiweke was charged by the Justice Department under Trump's administration.

Leiweke expressed "profound gratitude" to Trump. "The president has given us a new lease on life with which we will be grateful and good stewards," he said in a statement.

The pardon also comes just before Leiweke is scheduled to be deposed by lawyers for the Justice Department and Live Nation Entertainment Inc. on Thursday in the DOJ's separate civil antitrust case against the company and its subsidiary Ticketmaster, according to people familiar with the matter who asked not to be named discussing a confidential matter.

Leiweke earlier unsuccessfully tried to avoid the deposition, citing liability from then pending criminal charges, according to court records.

A trial in the DOJ's antitrust case against Live Nation is set to start in early March in New York.

Spokespeople for the White House, DOJ and Live Nation didn't immediately respond to requests for comment. A spokesperson for Leiweke had no immediate comment on the deposition.

Leiweke's former company, Oak View Group LLC, entered into a non-prosecution agreement with the Justice Department that was announced in July and agreed to pay a fine of $15 million. Leiweke stepped down from his post as Oak View chief executive officer shortly after the charges were filed.

"We are happy for Tim that he can now put this matter behind him," Oak View Group said in a statement. "OVG has remained steadfastly focused on delivering exceptional outcomes for our clients under the leadership of our CEO Chris Granger."

The criminal case against Leiweke related to allegations that Oak View illegally coordinated with its rival Legends on the bidding to develop and operate the Moody Center, a $338 million arena at the University of Texas in Austin. Oak View ultimately won the contract in 2018 and the venue opened in 2022. Legends also signed a non-prosecution agreement with the Justice Department, resolving its case.

Source: Bloomberg Europe

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Adam

Economic

Two of Wall Street’s biggest firms say the AI boom is far from a speculative mania.

Instead, BlackRock and Bank of America say this cycle is being driven by real corporate investment, earnings, and productivity gains — not the kind of irrational exuberance that defined the dot-com bubble of the early 2000s.

"We don't think the bubble framing is that useful at this stage for investors," Jean Boivin, head of the BlackRock Investment Institute, said at a media roundtable on Tuesday.

“We want to avoid just putting everything on a backward-looking kind of metric or assessment," he continued, noting it's "incomplete" to describe the AI boom as a bubble given the build-out continues to unfold at an “unprecedented” scale and pace.

Boivin also pointed to the healthy level of skepticism in markets today.

“There is so much talk about the potential of the bubble … people are conscious of the risk,” he said. “It’s when there’s no discussion of that that we should be more worried.”

BlackRock argues the spending boom in AI is so large that it has become the macro story itself, saying the scale of corporate investment could push US GDP growth consistently above the 2% trend that has dominated for decades.

“The capital spending ambitions tied to the AI buildout are so large that the micro is macro,” the firm wrote in its outlook, estimating corporate spending plans between $5 trillion and $8 trillion globally through 2030, most of it in the US.

“The challenge for investors: reconciling huge capital spending plans with the potential AI revenues,” BlackRock added. “Will their orders of magnitude match?”

The firm also flagged the physical limits of the build-out, from compute to the grid, noting AI data centers could consume 15% to 20% of US electricity by the end of the decade. That makes the build-out both transformative and vulnerable: “This frontloading of spending is necessary to realize eventual gains," BlackRock wrote.

BlackRock said those pressures are part of a structural shift, arguing AI is helping propel stocks to record highs and that it “remains pro-risk and sees the AI theme still the main driver of US equities.”

From bubble to 'air pocket'

Bank of America struck a similar tone, but with a more explicit warning about how the next phase of the boom could play out.

“Is this 2000? Are we in a bubble? No,” Savita Subramanian, head of US equity & quantitative strategy, said during BofA's outlook call on Tuesday. "Will AI continue unfettered in leadership? Also no."

Subramanian views the current environment as more of a pause than the start of a collapse, describing a potential “air pocket” where capital spending outpaces revenue growth. That lag between investment and monetization, especially around power and infrastructure bottlenecks, could spook investors in the near term.

Part of that risk has already shown up on balance sheets. Hyperscaler capital expenditures have risen to 60% of operating cash flow over the past year, up from 30% a decade ago, according to BofA, but still far below the 140% peak in the dot-com era.

The firm also forecasts hyperscaler spending from companies like Microsoft (MSFT), Amazon (AMZN), Google (GOOG, GOOGL), Meta (META), and Oracle (ORCL) reaching $400 billion in 2025 and $510 billion in 2026 as the build-out continues.

But that near-term caution doesn’t mean the comparison to 2000 holds. Subramanian acknowledged that breadth and lofty multiples do “rhyme with 2000,” but pointed to several key differences this time around: Stock allocations are much lower than they were during the dot-com era, earnings growth has supported higher valuations, IPOs are smaller, and speculation in unprofitable companies is less extreme than the late 1990s.

Those differences underpin BofA’s bullish long-term view. The firm sees the S&P 500 (^GSPC) ending 2026 at 7,100, a target that sits on the conservative end of Wall Street’s forecast spectrum, well below firmer calls such as RBC’s 7,750 and Deutsche Bank’s 8,000.

Source: finance.yahoo

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Gerik

Economic

Thailand Approves Significant Increase in Airport Departure Tax

On December 4, Thai Deputy Prime Minister and Transport Minister Phiphat Ratchakitprakarn announced that the Civil Aviation Authority of Thailand (CAAT) had approved a notable hike in the Passenger Service Charge (PSC), commonly referred to as the airport tax, for international travelers departing from six airports managed by Airports of Thailand (AOT).

Starting in early 2026, the PSC for international flights will rise from 730 baht (approximately 23 USD) to 1,120 baht (roughly 35 USD) per person. The new fee will apply to passengers flying out of Suvarnabhumi (BKK), Don Mueang (DMK), Chiang Mai (CNX), Mae Fah Luang–Chiang Rai (CEI), Phuket (HKT), and Hat Yai (HDY) airports.

Revenue Growth Linked to Infrastructure Investment

AOT projects that this fee increase, applied to the average 35 million international passengers who pass through these six airports annually, will generate an additional 10 billion baht (approximately 285 million USD) in revenue per year.

This move is not just a fiscal adjustment but reflects a direct causal relationship between funding needs and long-term infrastructure development goals. The additional funds will be earmarked primarily for service improvement and capacity expansion efforts, particularly the construction of the new South Terminal at Suvarnabhumi Airport.

As Thailand positions itself to accommodate growing travel demand in the post-pandemic era, the fee adjustment serves a dual function: it responds to increased operational and infrastructure demands while ensuring service quality keeps pace with international standards.

Implications for Travelers and the Tourism Economy

While the increased charge may raise concerns among travelers and airlines, the government justifies the hike as necessary for maintaining the competitiveness and efficiency of Thailand’s aviation infrastructure. The additional costs for passengers represent a strategic trade-off—slightly higher travel expenses in exchange for enhanced airport services, reduced congestion, and improved overall passenger experience.

Given that Thailand's tourism sector remains a cornerstone of the national economy, and international air travel plays a central role in its recovery trajectory, the balance between fee hikes and infrastructure quality will be critical. The new PSC structure reflects a broader shift in the funding model for public infrastructure, where user contributions are expected to finance major development projects.

User-Funded Modernization in Thai Aviation

Thailand’s decision to raise the airport tax for international flights is a calculated move to channel consistent revenue into critical infrastructure upgrades. With airport traffic expected to continue its upward trend, particularly in gateway cities like Bangkok and Phuket, the additional income will support long-term improvements in capacity and service quality.

This marks a shift toward a user-pays model in Thai aviation policy—where international travelers, rather than taxpayers or government subsidies, will directly fund the next generation of airport infrastructure. Whether this strategy succeeds in boosting capacity without dampening tourism demand will be revealed as implementation begins in 2026.

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