Wall Street Credit Worries Intensify After Dimon's 'Cockroach' Warning

Stocks

Summary:

The regional bank said it made the decision after it “became aware of legal actions initiated by several banks and other lenders” affiliated with two of its borrowers and an internal review of its own portfolio.

Wall Street’s credit worries are intensifying after a warning from JPMorgan Chase (JPM) CEO Jamie Dimon about cockroaches in the US economy, as investors on Thursday punished the stocks of regional banks and an investment bank exposed to the bankruptcy of an auto parts maker.

The regional banks that plummeted Thursday were Phoenix-based Western Alliance Bancorporation (WAL) and Salt Lake City’s Zions Bancorporation (ZION). Zions’ stock fell 13% and Western Alliance’s stock fell nearly 10%.

Their pullbacks came after Zions on Wednesday said it took a $50 million charge off — a measure of unpaid debt written off as a loss — for two business loans extended through its California Bank & Trust division.

The drop in Western Alliance came after it said Thursday that it filed a lawsuit “alleging fraud by the borrower” over a revolving credit facility to an entity called Cantor Group V, LLC.

The disclosures are the latest in a series of developments that have worried Wall Street as investors look for signs that credit among commercial customers is weakening.

The concerns started with two recent and sizable bankruptcies in September — subprime auto lender TriColor and larger auto parts supplier First Brands.

The aftermath revealed a web of exposures among large Wall Street players, including Jefferies Financial Group (JEF). A fund controlled by Jefferies’ asset management unit has $715 million in receivables owed by First Brands customers, according to court filings published earlier this month.

Executives have been trying to assure investors that the impact on the firm will be manageable.

The company has published a letter to shareholders from Jefferies CEO Richard Handler and president Brian Friedman noting that Jefferies' exposure was “readily absorbable,” and that the impact to their stock and credit perception was “meaningfully overdone.”

The firm’s investment exposure is effectively “$43 million in accounts receivable” and “$2 million of interest on First Brands’ bank loans,” the executives said.

Yet investors still sent the company’s stock down more than 10% Thursday.

Another event that may have spooked some investors came during JPMorgan’s earnings day, as the CEO of the largest US bank had both a mea culpa and a stark warning when discussing the losses his bank experienced from the downfall of Tricolor Holdings, saying it was "not our finest moment."

The bank said Tuesday that it took a $170 million charge-off related to its wholesale lending to TriColor.

“My antenna goes up when things like that happen,” Dimon told analysts Tuesday morning. "I shouldn't say this, but when you see one cockroach, there's probably more. Everyone should be forewarned on this one," he added.

A number of analysts asked big banks this week about the risk of their exposure to non-bank financial institutions. That lending category so far this year has been the US banking industry’s fastest area for loan growth, according to Federal Reserve data.

"Following the prominent bankruptcies of Tricolor and First Brands, bank investors are rightfully on high alert for any change in asset quality trends," KBW analysts wrote in a note.

Source: Yahoo Finance

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Manuel

Economic

Political

Senate Majority Leader John Thune is ready to bring to a vote legislation imposing sanctions on countries that trade with Russia, a move to put economic pressure on Vladimir Putin even after President Donald Trump announced plans to soon meet the Russian leader.

“I don’t want to commit to a hard deadline, but it will be soon,” Thune said Thursday, adding that he would schedule a vote in the “next 30 days.”

The remarks came just hours after Trump said he made “great progress” with Putin to end war in Ukraine.

The bill would give Trump the authority to impose tariffs of up to 500% on imports from countries that buy Russian energy products and are not actively supporting Ukraine. This specifically targets major consumers of Russian energy, such as China and India. Thune said the bill will undergo some revisions before a vote.

The latest version of the legislation gives Trump the power to set and adjust the levies as he pleases, a person familiar with the bill said. Trump could also choose to allow for exemptions.

It’s not yet clear if the White House will support a vote on the bill, which has languished in the Senate for months despite having the support of at least 85 senators. The White House did not respond to a request for comment about the prospects for the legislation.

Trump spoke with Putin over the phone earlier Thursday, following which the US president said the two leaders would hold a meeting in Budapest at a yet-to-be-determined date. The US and Russia will also hold high-level staff talks next week before the leaders summit.

Trump boasted during last year’s campaign he could end Russia’s invasion on his first day back in the White House. Despite multiple conversations with Putin — including a summit in Alaska in August — that goal has proved elusive.

“I’ve always felt we need strong sanctions against Russia,” Senate Democratic leader Chuck Schumer said Thursday.

Trump has been reluctant to green light a vote but he has become increasingly frustrated with Putin over the war in Ukraine and confirmed this week he’s sending more defensive weapons to President Volodymyr Zelenskiy’s government, sweeping aside an earlier pause by the Pentagon.

Trump is slated to meet Zelenskiy at the White House on Friday.

The House’s own version of the bill was introduced earlier this year and mirrors the Senate’s version. In September, Republican Representative Mike Turner urged Speaker Mike Johnson to schedule a vote.

But a House vote could still be a way off. Johnson has kept House lawmakers home during the US government shutdown and has said he won’t bring them back until the Senate resolves the funding stalemate.

Source: Bloomberg

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

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Manuel

Cryptocurrency

China–U.S. Trade War

The trade war that once rattled global markets has returned, and Bitcoin is part of the battlefield this time.

On Oct. 15, President Donald Trump declared that the United States was now in a trade war with China, saying:

“We’re in a [trade war] now. We have 100% tariffs. If we didn’t have tariffs, we would have no defense. They’ve used tariffs on us.”

This confirmation cements a week of tension after he threatened to slap 100% tariffs on Chinese imports.

Notably, that threat had signaled the start of a monetary standoff with ripple effects reaching deep into global markets.

As a result, traditional equities tumbled, while digital assets erased roughly $20 billion in open interest within 24 hours.

Data from CoinGlass shows that Bitcoin and Ethereum led the decline, extending what had already been one of the rare “red Octobers” for the top cryptocurrencies.

How does this impact Bitcoin?

Tariffs work like a stealth tax, making imports more expensive, raising input costs, stoking inflation, and pressuring central banks to keep interest rates higher for longer. That combination often drains liquidity from risk assets like Bitcoin.

In 2018, similar tariff announcements triggered waves of volatility that pushed Bitcoin below $6,000. The pattern is repeating in 2025.

Institutional investors are gradually shifting toward defensive positions in gold, Treasury bills, and short-duration bonds.

On the other hand, Bitcoin, which still trades like a high-beta macro asset, becomes collateral damage in that flight to safety.

Yet, the situation now carries an added layer of complexity.

Unlike the 2018 cycle, Bitcoin is no longer a retail-driven instrument but a regulated asset class with deep ETF exposure and transparent derivatives markets.

Still, CoinShares‘ head of research James Butterfill had warned in February that the immediate impact of tariffs would be “undeniably negative” for Bitcoin.

Butterfill explained that tariffs slow growth, raise inflation expectations, and spark risk aversion. In this market situation, Bitcoin reacts to liquidity trends, resulting in short-term volatility.

Already, traders increasingly believe that the chances of a continued Bitcoin uptrend are slim this month.

On Polymarket, the odds of Bitcoin hitting $130,000 by month’s end fell below the probability of it retreating to $95,000, reflecting how macro policy is dictating digital-asset sentiment.

However, Butterfill also pointed out that the top crypto recovers faster than equities in a stagflation scenario.

He said: “In the long term, Bitcoin’s role as a hedge could be strengthened, especially if tariff policies lead to economic instability.”

Structural shift

Meanwhile, analysts at Bitunix told CryptoSlate that Trump’s confirmation has escalated the two nations’ economic confrontation and reshaped global risk appetite.

The effect, they said, is twofold: a short-term liquidity shock and a medium-term structural pivot in how capital views decentralized assets.

In the immediate term, heightened uncertainty drives institutions to de-risk. Funds rebalance toward cash equivalents and gold, sparking broad sell-offs in high-liquidity markets like crypto.

According to them, leveraged traders facing margin calls would accelerate the cascade. Notably, that is precisely what triggered last week’s $20 billion liquidation wave.

But beyond the initial turbulence lies a different calculus. If the trade war remains limited to tariffs and export controls, weaker global growth could depress crypto demand.

However, Bitcoin could reemerge as a geopolitical hedge if the confrontation extends into financial settlement systems. In this situation, the US might introduce restrictions on cross-border dollar access or payment rails, forcing investors to seek alternatives.

In that scenario, digital assets transition from “risk assets” to “alternative reserves.” As the Bitunix team explained:

“The erosion of confidence in the US dollar system could reinforce Bitcoin’s narrative as a ‘de-dollarization’ and ‘alternative value reserve’ asset, creating structural support.”

Source: Cryptoslate

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Manuel

Commodity

Political

Oil fell to a fresh five-month low after US President Donald Trump said he’ll meet with Russian counterpart Vladimir Putin to discuss ending the war in Ukraine, raising expectations that Russian crude may soon flow freely.

West Texas Intermediate fell as much as 1.6% Thursday to $57.34 a barrel, the lowest intraday price since May. Trump announced on social media that the US and Russia will hold high-level talks focused on ending the war next week, followed by a leaders’ summit in Budapest.

The prospect of a Russia-Ukraine truce comes amid mounting pressure on Moscow’s oil infrastructure. Russian exports of refined fuels have slumped to the lowest since the onset of the war, underscoring continued strain on the country’s refineries targeted by drone attacks. Oil Falls as Potential Trump-Putin Meeting Reduces Supply Fears_1

Oil Falls as Potential Trump-Putin Meeting Reduces Supply Fears_1

At the same time, Western nations are turning the screws on Russia’s energy sector in a bid to curb the flow of petrodollars to the Kremlin and limit Putin’s ability to finance the war. The UK recently slapped sanctions on Russia’s biggest oil producers, two Chinese energy firms and Indian refiner Nayara Energy Ltd. because of their handling of Russian fuel.

The development took some air out of the earlier rally after India’s oil refiners said they expect to reduce — not stop — the purchase of Russian crude, a move that could squeeze global supply, following remarks by Trump that the South Asian nation would halt all buying. India, along with neighbor China, has made the most of discounted Russian supplies accessible under a Group of Seven price cap mechanism that was designed to keep oil flowing while limiting Moscow’s access to funds.

Crude has fallen this month as increased trade tensions between the US and China raised concerns about demand in the two biggest crude consumers, and as major trading houses said a long-anticipated oversupply is already starting to emerge.

A US government report, meanwhile, painted a mixed picture of the domestic oil market. While refinery runs were down in nearly all regions, pulling the nationwide figure to the lowest seasonal level since 2021, crude stockpiles at the hub in Cushing, Oklahoma, fell to the lowest since July and product inventories declined.

Source: Bloomberg

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Kevin Du

Economic

Demand for options in the US Treasuries market is building up by traders seeking protection against a sharp drop in 10-year bond yields further below 4%, a move that could unleash a broader rally across the bond market.

Open interest, or the amount of active positions held by traders, has recently ballooned in 10-year Treasury options hedging a yield move to as low as 3.85% from around 4% currently. A sustained move under that level would trigger more hedging by traders who are caught wrongfooted, setting off more Treasuries buying.

Yields on the 10-year notes dipped below 4% Thursday, trading around 3.98% as signs of credit stress in smaller US lenders spurred demand for safer assets.

The 4% level in 10-year Treasury yields — a benchmark for the cost of everything from corporate bonds to mortgages — has provided solid resistance for the bond market for much of the year. Yields only briefly dipped below the key handle after President Donald Trump announced sweeping tariffs in April, but have traded a few times below that level this week.

Over recent weeks, the options demand has seen open interest surge across corresponding 113.00 to 114.50 strikes. A bigger break for the 10-year yield under 4% would see these options extend deeper into-the-money.

That could prompt dealers who are short on these call options to start to hedging losses through buying the underlying futures putting more pressure on cash yields. This type of activity, known as delta hedging, can fuel significant trading activity in the Treasury futures market as dealers seek to maintain their options exposure in a neutral position.

On Wednesday, Treasury options trading included a large sized trade in the December 10-year options, which, based on open interest, appeared to involve profit taking on some of these outstanding 10-year calls. However, there are still multiple positions in the market as indicated by the outsized open interest, that could generate a flurry of activity.

Last week, a bond market rally saw 10-year yields sharply drop from near 4.15% after President Donald Trump threatened a massive increase of tariffs on Chinese products. The moves come as traders are also piling into wagers that the Federal Reserve could cut rates by a half-percentage point in one of the two remaining meetings of the year.

Source: Bloomberg Europe

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

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Adam

Cryptocurrency

Commodity

Bitcoin (BTC) may be quietly flashing a familiar bottom cue, one that often appears when gold (XAU) outshines risk assets.

BTC/XAU RSI Hits Oversold Territory

The BTC/XAU ratio’s daily relative strength index (RSI) has now fallen deep into oversold territory below 30, signaling that Bitcoin is once again underperforming gold to an extreme degree.

This setup has historically coincided with capitulation phases in crypto markets, followed by strong rebounds in BTC/USD once risk appetite returns.

Is Gold Signaling Bitcoin’s Next Bottom?_1

BTC/XAU vs. BTC/USD daily chart comparison.

In past cycles, such RSI resets have marked exhaustion points rather than the start of fresh downtrends. Each time the ratio hit these lows, Bitcoin’s dollar price began recovering within days or weeks, as capital rotated back from gold into crypto.

That’s exactly what happened in August 2024 and March 2025, when BTC/USD bounced 30–90% after similar oversold readings on the BTC/XAU chart.

Divergences: The Stronger Bottom Signal

While the current signal is purely oversold, the most powerful historical reversals came when oversold conditions coincided with bullish RSI divergences, when BTC/XAU made lower lows but RSI made higher ones.

These divergences revealed fading downside momentum even as prices slipped, often marking macro turning points. The August 2024 and March 2025 setups both fit this pattern and each triggered a far more sustained Bitcoin rally afterward.

Is Gold Signaling Bitcoin’s Next Bottom?_2

BTC/XAU vs. BTC/USD daily chart comparison.

If the same structure forms again in the coming weeks—oversold RSI followed by a higher low in RSI versus a lower low in price—it could strengthen the case for a multimonth BTC/USD recovery phase.

How High Can BTC Price Go On Gold-Led Rebound?

For confirmation, BTC/XAU must reclaim its 20- and 50-day EMAs as support, signaling a shift in relative momentum.

On the BTC/USD chart, a breakout above $116,000 would align perfectly with that rotation signal, while failure to hold $109,000 support could delay recovery.

Is Gold Signaling Bitcoin’s Next Bottom?_3

BTC/USD daily price chart.

Looking broadly, BTC is trending inside what appears to be a broadening wedge pattern.

A clear bounce above the consolidation area, aligning with the 20- and 50-day EMAs, may extend the Bitcoin price rally toward the wedge’s upper trendline near $125,000.

A further breakout could mean BTC hitting $150,000, a popular 2025 target. Conversely, failure to hold above the EMA resistance could mean retesting the mid-$109,000 levels for a breakdown toward $100,000.

Source: fxempire

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Adam

Economic

Understanding the semiconductor value chain

The semiconductor industry operates through a globally distributed value chain spanning design, production and assembly. Each stage requires specialised expertise and significant capital investment, creating distinct opportunities for investors.

Understanding where value is created helps identify promising investment opportunities. Asian firms have established dominant positions in manufacturing stages that US companies cannot easily replicate.

The following sections break down each stage and highlight the key players shaping the industry's future.

Figure 1: Infographic showing key players within the semiconductor value chain

Stage 1: design

Semiconductor design represents the most research-intensive phase where chips are conceptualised using specialised software. Companies employ Electronic Design Automation (EDA) tools and intellectual property (IP) cores to create chip architectures.

This stage demands significant engineering expertise and innovation. While US firms like Nvidia lead in cutting-edge chip design, Taiwan's MediaTek has carved out a substantial position in mobile and automotive chips.

Design companies typically operate with high margins due to their intellectual property advantages. However, they depend entirely on manufacturing partners to produce physical chips.

Stage 2: wafer production

Silicon wafer production creates the base material for all semiconductor chips. Manufacturers produce pure silicon cylinders, slice them into thin wafers and polish them to perfect smoothness.

These blank wafers serve as the canvas upon which circuits are printed during fabrication. The process requires extraordinary precision and purity standards.

Japan's Shin-Etsu and SUMCO together supply more than half the world's silicon wafers. Their dominance in this foundational material gives them significant influence over global chip production capacity.

Wafer suppliers benefit from steady demand across all semiconductor segments, making them relatively defensive plays within the sector.

Stage 3: front-end manufacturing

Front-end manufacturing represents the most capital-intensive stage where actual chips are fabricated on silicon wafers. This process involves repeated cycles of deposition, lithography, etching and polishing.

Producing advanced chips requires over 1000 steps spanning four to six months. Modern fabrication facilities cost billions of dollars to construct and equip.

Fabrication and foundry services

Taiwan's TSMC commands approximately 70% of global foundry revenue, manufacturing chips for Apple, AMD, Nvidia and many more. The company pioneered high-volume production of 3nm chips, cementing its technological leadership in the world's most advanced chips.

South Korea's Samsung Electronics operates the second-largest foundry business, whilst China's SMIC ranks fourth globally.

Memory chip dominance

South Korea is home to memory chip giants Samsung and SK Hynix, which dominate the global DRAM and NAND flash memory markets. Together, they control more than 70% of DRAM market share.

Memory chips are found in virtually every computer, smartphone and data centre worldwide. However, demand can be cyclical, closely tied to consumer electronics upgrade cycles and data centre expansion.

Materials and equipment suppliers

Japanese firms hold commanding positions in photoresists and photomasks essential for printing circuit patterns onto chips. Hoya and Shin-etsu are key players in these specialised materials markets.

Manufacturing equipment represents another crucial dependency. Tokyo Electron supplies deposition tools and etching equipment, whilst Advantest provides testing systems that no modern foundry can operate without.

Raw materials form the foundation of semiconductor production. China controls 69% of global silicon production and 98% of gallium production according to US Geological Survey data. These raw materials represent powerful bargaining chips in trade negotiations.

Stage 4: assembly, test and packaging

After fabrication, wafers are cut into individual chips, tested for defects and packaged into protective frames for circuit board mounting. This back-end manufacturing stage is more labour-intensive than fabrication.

Taiwan's ASE dominates outsourced assembly, test and packaging (ATP) services globally. China's JCET and Tongfu Microelectronics have rapidly expanded their market share in recent years.

The shift towards artificial intelligence (AI) computing has increased demand for complex packaging solutions, benefiting established players with technical expertise.

TSMC earnings spotlight

TSMC released third-quarter revenue data earlier this month showing 30% year-on-year (YoY) growth, exceeding market expectations. Today's full earnings report is expected to reveal record net income of NT$408.4 billion (26% YoY growth).

Investors will scrutinise revenue contribution from advanced nodes (7nm and below) to gauge demand for AI chips. The management's strategy to handle volatile US trade policies will also be a focal point. TSMC has already committed to build facilities worth $165 billion in Arizona.

Performance comparison across the value chain

Valuation metrics and performance vary significantly across different semiconductor segments, reflecting their distinct roles within the value chain and investor sentiment. Investors should look beyond US and European companies to capture the full potential of the semiconductor industry.