Trump Administration Turning to Private Firms in Cyber Offensive

Political

Summary:

The administration is expected to provide more information after the release of the strategy, as well as an executive order that could outline private firms’ roles and provide them with more legal protections.

President Donald Trump’s administration is preparing to turn to private businesses to help mount offensive cyberattacks against foreign adversaries, according to people familiar with the matter, potentially expanding a shadowy electronic conflict typically conducted by secretive intelligence agencies.

The White House plans to make public its intention to enlist private companies in more aggressive efforts to go after criminal and state-sponsored hackers in a new national cyber strategy, a draft of which has been viewed by industry officials and experts. The strategy is expected to be released by the Office of the National Cyber Director in the coming weeks.

The draft, described to Bloomberg News by multiple people, says the federal government should unleash private businesses as it moves to impose consequences on foreign adversaries who breach critical infrastructure and telecommunications networks, or who cripple businesses with ransomware attacks. The draft didn’t provide many details on how the administration would use the companies.

A spokesperson for the Office of the National Cyber Director would not comment on the draft because it is not finalized but said the administration is committed to cybsecurity for Americans and US infrastructure, networks and information.

The push to include industry would open lucrative new business opportunities to firms that have traditionally contracted with the government on defensive strategies rather than offensive measures. But it comes with risks.

There is currently no legal basis for private firms to conduct their own offensive cyber operations. Additionally, any operations to take down adversary infrastructure could put private firms in the crosshairs of foreign government entities, whose intelligence services often use affiliates to carry out their cyberattacks.

But the drive to enlist private companies reflects a growing view within the intelligence community and the administration that the US needs more capacity to fight hostile hacking groups that often work with abundant foreign state support. Adding those firms would both expand the government’s cyber warfare resources and free up intelligence agencies and the military to focus on work only they can handle.

Discussions on contracting out offensive cyber operations were already underway in Joe Biden’s White House, though his administration didn’t settle on a policy, said people familiar with those deliberations.

The cyber strategy draft, some five pages long, also calls for streamlining data security and cyber regulations, the modernization of federal systems, securing critical infrastructure and promoting adoption of post-quantum cryptography and secure quantum computing. The White House has invited industry officials to give feedback on the draft, which could still change, the people said.

Trump administration officials have for months made clear they intend to take more aggressive action against criminal and state-sponsored hackers. Alexei Bulazel, the National Security Council’s senior director for cyber, declared at a security conference in September that the administration is “unapologetic, unafraid to do offensive cyber.”

And tucked inside Trump’s multi-trillion-dollar tax and spending law is a little-noticed provision designating a $1 billion boost for offensive cyber operations, which have typically been conducted by the military’s Cyber Command or intelligence agencies. The law does not prescribe how the money be spent, but its inclusion in Trump’s cornerstone bill is a signal of offensive cyber’s importance to the administration.

Many cybersecurity firms known for defensive operations could easily apply their expertise and their technology to launch attacks, but offensive work would be financially and legally risky, potentially turning off customers and investors alike, said Michael Janke, co-founder of Datatribe, a tech foundry for cyber startups. Legislation, however, could hinder companies that want to remain discreet regarding the use of their tools.

“That gray area provides a lot for both government and commercial to flow within,” he said. “Once you shrink that to legislation, you may not have that gray area.”

Source: Bloomberg

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Political

Stocks

White House AI czar David Sacks defended President Donald Trump’s push to rein in state-level regulation of artificial intelligence over objections from Democrats, saying the move seeks to ease a growing compliance burden for companies.

Under the directive signed by Trump on Thursday, Sacks said, the administration is moving toward developing with Congress a common standard for oversight of the emerging technology. Right now, AI model development can take place across multiple states, each with its own regulatory standards.

“You have fifty different states running in fifty different directions. That type of compliance regime will be hard for small companies and startups, especially innovators,” Sacks said in an interview Friday on Bloomberg Tech. “What we need is a single federal or national framework for AI regulation.”

Championed by Sacks, the order culminates months of lobbying by AI companies led by OpenAI and Alphabet Inc.’s Google as well as venture capital giant Andreessen Horowitz, who have warned that state laws popping up across the country risk overwhelming a nascent industry and potentially harming US competitiveness with China in artificial intelligence. The measure marks the latest in a series of moves by Trump to boost the AI industry, including steps to make it easier to build infrastructure and increase energy supply for power-hungry data centers.

Trump directed the US attorney general to create a task force to challenge state rules that run afoul of his goal of promoting AI adoption. It also permits the Commerce Department to review whether federal broadband funding should be revoked from localities’ with AI measures that the administration deems onerous. Future discretionary grants may also be withheld by other agencies, unless states back away from enacting laws that the Trump team sees as impeding innovation.

The order is widely expected to face legal challenges, especially from states with provisions already in place. California State Senator Scott Wiener, who crafted landmark legislation in the Golden State that Governor Gavin Newsom signed in September, said that setting safety rules has been “a core pillar of state law for decades.”

“It’s absurd for Trump to think he can weaponize the DOJ and Commerce to undermine those state rights,” Wiener said in a statement. “If the Trump Administration tries to enforce this ridiculous order, we will see them in court.”

Sacks said the provision calling for the Justice Department to sue states over AI rules was designed to go after the most burdensome regulations. He expressed uncertainty about whether the administration would seek to challenge California or New York, but he did single out a law in Colorado seeking to prohibit algorithmic discrimination as “probably the most excessive.”

Trump pivoted to the executive order after White House officials and Republican lawmakers failed to include similar legislation preempting state AI laws in a must-pass defense bill earlier this month. Hours after the White House signing ceremony, Democratic US Senator Brian Schatz said he planned legislation that would seek a full repeal of the order.

“Embracing the amazing possibilities of AI can’t come at the cost of leaving Americans vulnerable to its profound risks, which is exactly what this executive order does,” Schatz said in a statement. “Congress has a responsibility to get this technology right – and quickly – but states must be allowed to act in the public interest in the meantime.”

US lawmakers have struggled for years to pass comprehensive AI legislation, and there’s currently no federal standard governing the technology, leaving local authorities to fill that void. The order calls for Sacks and other administration officials to work with Congress on legislation for a “minimally burdensome national standard.”

As AI becomes a central part of daily life, taking on roles such as assessing job applications, identifying criminal suspects, handling medical claims and creating content nearly impossible to distinguish from genuine photos or video, state lawmakers have expressed eagerness to impose some rules of the road. Trump’s order will complicate those efforts, putting any state passing legislation into potential conflict with the White House.

Tech companies have largely opposed state-level regulatory efforts, particularly in California and New York, that would hold companies accountable for harms caused by AI products like chatbots. Trump and his allies have touted the AI boom as a plus to the US economy, even as it poses political challenges, including voter concerns that data centers are spiking energy bills and fears that the technology will spur job losses.

Sacks, a venture capitalist who joined the administration in January, pushed back against those concerns on employment, saying that so far the AI race in the US has generated more jobs than it has cost.

“We are seeing an overall AI boom that’s benefiting the economy,” he said. “Certainly there can be job displacement in the future but we have not seen any of that so far. It’s been quite the opposite.”

Source: Bloomberg

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Manuel

Commodity

Oil prices fluctuated, hovering above the lowest levels in about two months as weakness in US equities markets added to bearish sentiment about oversupply.

West Texas Intermediate traded above $57 a barrel, while Brent traded above $61 a barrel in thin trading. Diesel futures, which were down about 0.7%, lagged the oil complex on Friday, while a selloff in US stocks dragged global gauges from the brink of record highs.

Concerns about oversupply have helped to push crude toward the lower end of a band it has traded in since mid-October, with Brent futures slowly trending toward $60 a barrel. Prices have not dipped below the key psychological level since May. Oil Swings Near Lowest Since October With Surplus in Focus_1

Oil Swings Near Lowest Since October With Surplus in Focus_1

The International Energy Agency on Thursday reiterated its prediction for an unprecedented surplus — although slightly below its forecast last month — and said global inventories have swollen to a four-year high.

Geopolitical tensions may add some support to oil prices. President Donald Trump announced new sanctions on three of Venezuelan counterpart Nicolas Maduro’s nephews as well as six oil tankers, after the US seized a supertanker off the coast of the Latin American nation on Wednesday.

The ship seizure was just the beginning of a new phase in the Trump administration’s ramped-up pressure campaign against the Venezuelan president, according to people familiar with the operation. The act of economic statecraft is designed to deny Maduro a lifeline of oil revenue and force him to relinquish power, the people said.

And a murky outlook for a peace deal to end Russia’s war in Ukraine — which could lower prices by eliminating sanctions on Russian crude — is also helping to support oil.

“Ukraine also seems to keep targeting Russian oil assets even as negotiations for peace are in the works which seems to be keeping a psychological floor in crude,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities Inc.

Source: Bloomberg

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Political

Thailand's Prime Minister Anutin Charnvirakul looks on ahead of making offerings to monks, on the day he speaks to members of the media to announce the dissolution of parliament at the Government House in Bangkok, Thailand, December 12, 2025. REUTERS/Chalinee Thirasupa

BANGKOK, Dec 12 (Reuters) - Thai Prime Minister Anutin Charnvirakul confirmed on Friday that there was no ceasefire yet with Cambodia and said he had spoken by telephone with U.S. President Donald Trump and told him Bangkok was not the aggressor in the conflict with its neighbour.

Anutin said Trump told him he wanted the two countries to return to a ceasefire first agreed in July. He added that the U.S. president had not indicated that trade tariffs would be used as part of his efforts to end the fighting.

Anutin's remarks came as heavy border clashes between the two countries continued for a fifth day.

"He (Trump) wanted a ceasefire. I told him to ask our friends - don't just say a ceasefire but to tell the world that Cambodia will cease fire, withdraw its troops, remove all mines it has planted, and show them that they must stop everything first," Anutin told reporters.

"Right now, there is no ceasefire yet, the fighting is still ongoing," he said.

Thailand and Cambodia have been exchanging rockets and artillery at multiple locations along their disputed 817-km (508-mile) frontier in some of the most intense clashes since a five-day battle in July, which Trump stopped with calls to both leaders to halt their worst conflict in recent history.

Trump is keen to intervene again to salvage the truce he brokered. He met Anutin and Cambodian Prime Minister Hun Manet in Malaysia in October, where they signed an expanded ceasefire agreement.

Trump, who has repeatedly said he deserves the Nobel Peace Prize, lauded himself on Thursday as a global peacemaker and had on Thursday expressed confidence he would get the truce "back on track".

This week's clashes have killed at least 20 people, with more than 260 wounded, according to tallies by both countries, which have blamed each other for reigniting the conflict.

It was not immediately clear if Trump had spoken also to Cambodian Prime Minister Hun Manet.

Cambodian government spokesperson Pen Bona earlier on Friday said he was not aware a call had been scheduled between Hun Manet and Trump, adding "but normally, our PM is always ready to talk".

Hun Manet in August nominated Trump for the Nobel Peace Prize.

Source: Reuters

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Forex

Deutsche Bank AG, Goldman Sachs Group Inc. and other Wall Street banks are forecasting that the US dollar will resume its slide next year as the Federal Reserve keeps nudging down interest rates.

The currency has stabilized over the past six months after tumbling by the most since the early 1970s during the first half of the year when President Donald Trump’s trade war unleashed havoc in global markets.

But strategists expect the greenback to weaken again in 2026 as the US central bank continues to ease monetary policy just as others hold steady or move closer toward raising rates. That rift would give investors an incentive to sell US debt and shift the cash to countries where payouts are higher.

As a result, forecasters at more than half a dozen major investment banks are largely predicting that the dollar will slip against major counterparts like the yen, euro and pound. According to the consensus estimates compiled by Bloomberg, a widely tracked index of the dollar will weaken some 3% by the end of 2026.

“There is ample room for markets to price in a deeper cutting cycle,” said David Adams, head of G-10 foreign-exchange strategy at Morgan Stanley, which expects the dollar to drop 5% in the first half of the year. “That leaves plenty of capacity for further dollar weakness.”

Deutsche Bank, Goldman See Fed Cuts Rekindling Dollar’s Slide_1

The dollar’s decline is expected to be more muted and not as broad as it was this year, when it lost ground against all of the major currencies, leaving the the Bloomberg Dollar Spot Index down nearly 8% in its deepest annual drop since 2017. And the outlook hinges on anticipation that the US job market will continue to weaken — which remains uncertain, given the surprising resilience of the post-pandemic economy.

Currency forecasting is also particularly vexing. When the dollar was surging late last year as investors piled into the so-called Trump trade, betting his policies would spur growth, strategists expected the the rally would reverse by mid-2025, only to get caught off guard by the scale of the drop during the first half of the year.

But strategists see the broad contours heading into the new year as a recipe for a weaker dollar. Traders are pricing in two more quarter-point Fed rate cuts next year, and it’s possible that whoever Trump picks to replace Chair Jerome Powell may give in to White House pressure to lower rates even more. Meanwhile, the European Central Bank is expected to hold rates steady while the Bank of Japan nudges them upward.

“We see risks stacked more against the dollar than in favor of the dollar,” Luis Oganes, London-based head of global macro research at JPMorgan, said at a news conference on Tuesday.

A weaker dollar would have ripple effects in the broader economy by pushing up the cost of imports, increasing the value of corporate profits from overseas, and boosting exports — which would likely be welcomed by a Trump administration that’s complained about the US trade deficit. It could also extend rallies in emerging markets as investors shift cash there to seize on higher interest rates.

That movement propelled emerging-market carry trades — which entail borrowing in low-rate countries and investing where yields are higher — to the biggest returns since 2009. JPMorgan and Bank of America Corp. both see potential for additional gains, flagging the Brazilian real and a handful Asian currencies — like the South Korean won and Chinese yuan — respectively.

At Goldman Sachs, analysts led by Kamakshya Trivedi this month also noted that the market is starting to price a more optimistic economic outlook into other G-10 currencies — like Canada’s and Australia’s — following stronger-than-expected data. They noted the dollar’s “tendency to depreciate when the rest of the world is doing well.”

Deutsche Bank, Goldman See Fed Cuts Rekindling Dollar’s Slide_2

The contrarians who expect the dollar to gain against some other major currencies point primarily to the robust US economy. That growth, powered by the artificial-intelligence boom, will lure investment flows into the country that drive up the value of the dollar, analysts at Citigroup Inc. and Standard Chartered said.

“We see strong potential for a dollar cycle recovery in 2026,” the Citigroup team led by Daniel Tobon wrote in their annual outlook.

The prospect of stronger-than-expected growth was underscored Wednesday, when Fed policymakers marked up their projections for 2026. Yet they still cut interest rates by a quarter point and continued to pencil in one more such move next year. Powell also allayed any concern that the Fed could pivot to raising rates, saying the debate now is whether to continue cutting — or wait — as it’s tugged between a weakening job market and still above-target inflation.

His comments were met with relief in the markets, where some traders had worried that the Fed would deliver a more hawkish message. As Treasury yields dropped, the Bloomberg dollar index slid 0.7% on Wednesday and Thursday, its biggest two-day drop since mid-September, when traders were positioning for the Fed to resume its rate-cutting cycle.

In an annual outlook note to clients late last month, Deutsche Bank’s George Saravelos, the global head of foreign exchange research in London, and Tim Baker, his New York colleague, said the dollar has benefited from a “remarkably resilient” economy and the run-up in US stock prices. Yet they said the dollar is overvalued and predicted it will fall against its major counterparts next year as growth — and equity returns — pick up elsewhere.

“If these forecasts materialize, they will confirm that this decade’s unusually long dollar bull cycle is over,” they wrote.

Source: Bloomberg

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Economic

Bitcoin hoarding giant Strategy (MSTR.O) may be at risk of being removed from the Nasdaq 100 index (.NDX) at its annual reshuffle on Friday, amid questions over its business model that have weighed on its share price, some analysts flagged this week.

After a sizzling rally that pushed its market capitalization to a peak of $128 billion earlier this year, Strategy - which started out as software company MicroStrategy but pivoted to bitcoin investing in 2020 - was included last December under the index's technology sub-category.

That decision was questioned by some market-watchers who argued that the pioneering business model, which has spawned dozens of copycats, more closely resembles an investment fund.

Strategy reported a net profit of $2.78 billion for the three months ended September 30, compared with a loss of $340.2 million a year earlier, mostly driven by an accounting change that allowed it to book gains on its bitcoin holdings. The Virginia-based company's revenue from the legacy software business, meanwhile, stood at just $128.7 million.

"If MSTR is deemed to be a holding company or a cryptocurrency company rather than its legacy business as a software company, then it is susceptible to removal," said Steve Sosnick, chief market analyst at Interactive Brokers.

The exchange operator, whose Nasdaq 100 index tracks the largest non-financial companies by market capitalization, declined to comment ahead of the announcement on Friday.

The Information reported , opens new tab in September that Nasdaq has been tightening requirements for digital asset treasury companies it lists. It has not generally commented on the inclusion of those firms in its indices.

Strategy did not respond to a request for comment.

Analysts flag risks for Strategy at Nasdaq 100 index reshuffle_1

A line chart showing Strategy and bitcoin's performance over the last two years

Index reshuffles are closely watched, since they dictate which companies benefit from billions of passive investor flows. Saylor, though, has generally dismissed worries over potential index exclusion, and some other analysts said they did not expect Nasdaq to delete Strategy on Friday.

DIGITAL ASSET TREASURY QUESTIONS

Concerns have grown over the sustainability of crypto treasury companies, whose shares have proved extremely sensitive to bitcoin's gyrations. Strategy shares are down 65% from their 2024 peak and 36% year-to-date, compared with a 3.6% drop in bitcoin this year.

Strategy's market value has fallen to $52.7 billion as of Thursday, while its bitcoin holdings are worth more than $61 billion, according to Reuters calculations.

While that isn't enough to exclude Strategy on market capitalization grounds, Mike O'Rourke, chief market strategist at JonesTrading, argued in a note this week that Strategy had been included on a technicality and that Friday was a "perfect opportunity for Nasdaq to correct last year's mistake."

If Nasdaq removes Strategy, the company could experience passive fund outflows of about $1.6 billion, according to estimates by Kaasha Saini, head of index strategy at Jefferies.

Global index provider MSCI (MSCI.N) has raised concerns about the presence of digital asset treasury companies in its benchmarks. MSCI is due to decide in January on whether to exclude Strategy and similar companies.

Saylor told Reuters this month that Strategy was engaging with MSCI, but that if it was excluded it wouldn't matter.

Some analysts believe that Strategy is safe because its market value is still relatively high. H.C. Wainwright analyst Mike Colonnese doubted Strategy would be removed, since it is "larger than about 30 other companies in the Nasdaq 100."

Beyond Strategy, Jefferies estimates drugmaker Biogen (BIIB.O) , IT solutions provider CDW (CDW.O) and four other stocks could depart from the Nasdaq 100. The six companies currently have the lowest market cap among the 100 members, according to data compiled by LSEG.

Jefferies expects that retail giant Walmart , which has a market capitalization of $932.7 billion, is not eligible to be included this time, because its effective first day of trading (December 8) on the Nasdaq was after the exchange's November 28 reference date for the rebalancing.

Nasdaq's announcement is expected after the market close on Friday, with changes effective December 22.

Source: reuters

To stay updated on all economic events of today, please check out our Economic calendar

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Central Bank

Federal Reserve officials — including two who will become voters in 2026 — offered strongly opposing views Friday on what to do with interest rates, continuing a debate that will grip the US central bank into the new year.

Three policymakers focused in their comments on inflation risks, though one of them suggested he was advocating only a temporary pause to rate cuts to confirm inflation is subsiding. A fourth emphasized risks to the labor market as the bigger concern.

The remarks were the first since Wednesday, when the Fed cut its benchmark rate by a quarter percentage point for a third consecutive meeting in response to rising unemployment. Dissenting votes against the decision indicated the string of cuts has become increasingly contentious amid lingering inflation, and projections showed the median official only expects one reduction in 2026.

Two officials — Chicago Fed President Austan Goolsbee and his Kansas City counterpart, Jeff Schmid — issued statements Friday outlining the rationale for their dissents against Wednesday's rate cut. It was Goolsbee's first dissenting vote since joining the Fed in 2023, while Schmid's followed a dissent against the previous rate reduction in October.

The Chicago Fed chief said in his statement he "felt the more prudent course would have been to wait for more information" before cutting rates again after a government shutdown delayed several key economic reports in October and November, given some "concerning" data on inflation prior to the shutdown.

Speaking later in the morning on CNBC, Goolsbee added that he projected more rate cuts in 2026 than most of his colleagues: "I'm one of the most optimistic folks about how rates can go down in the coming year," he said.

Schmid was less equivocal.

"Inflation remains too high, the economy shows continued momentum and the labor market — though cooling — remains largely in balance," he said in his statement. "I view the current stance of monetary policy as being only modestly, if at all, restrictive."

The Chicago and Kansas City Fed presidents will rotate off the Fed's voting panel in 2026. Two of their incoming replacements also spoke Friday — one emphasizing concerns about inflation and the other warning of risks to the labor market.

Cleveland Fed President Beth Hammack, at an event in Cincinnati, said the central bank should keep rates high enough to continue putting downward pressure on inflation.

"Right now, we've got policy that's right around neutral," she said. "I would prefer to be on a slightly more restrictive stance."

In projections published Wednesday alongside the rate decision, six of 19 policymakers indicated they would have left the benchmark rate where it was before this week's cut to close out 2025.

Since only 12 of the 19 vote on the rate-setting Federal Open Market Committee each year, and only two of the 12 with votes dissented in favor of higher rates, some analysts dubbed the plethora of elevated rate projections "silent dissents."

Philadelphia Fed President Anna Paulson, who with Hammack will rotate into the FOMC's voting ranks next year, was the only one of the four officials speaking Friday who emphasized ongoing risks to the labor market despite the central bank's recent efforts to adjust rates toward a more neutral setting.

"On net, I am still a little more concerned about labor market weakness than about upside risks to inflation," Paulson said Friday at an event hosted by the Delaware State Chamber of Commerce. "That's partly because I see a decent chance that inflation will come down as we go through next year."