What Inflation Alarmists Missed in Their Warnings

Economic

Summary:

Inflation warnings missed structural forces. High debt, deficits, and aging demographics limit demand and growth, keeping inflation and yields subdued despite temporary price spikes and monetary concerns.

Over the last couple of years, inflation alarmists such as Paul Tudor Jones, James Grant, and Jeff Gundlach have all said that inflation is returning with force. In different ways, they each stated that they would not own Treasury bonds due to the expectation that inflation would rise as the dollar declined due to the ongoing deficits.

They have all argued, in some form or another, that ballooning deficits, tariffs, and the “dollar debasement” would drive inflation much higher, with yields of 6% or more on the 10-year Treasury as inevitable.

As Jeff Gundlach noted in June of this year, a “reckoning is coming” for U.S. debt, and yields on long-term bonds could continue to rise as the economy weakens. Paul Tudor Jones said in October 2024 that “all roads lead to inflation.” Lastly, in June 2024, James Grant stated that “persistent inflation” is the new norm.

However, while these are brilliant, well-regarded gentlemen, the forecasts have not panned out, at least so far, as they believed, because they ignored the structural weight of the “3-Ds” (Debt, Deficits, and Demographics) on economic growth, which drives inflation.

Of course, it hasn’t been just these three gentlemen discussing higher inflation and higher interest rates. Inflation alarmists have filled media headlines over the last few years, making a myriad of claims, but they have misunderstood what drives inflation in a consumer-driven economy. Furthermore, they misjudged the nature of money creation in a debt-saturated system.

Veil Of Money

Let’s start by understanding the basics of money supply. The media often states that the Government is “printing money,” which will lead to inflation. The reasoning is sound on the surface; if a government prints more dollars, each of those dollars has less value, in theory. However, that view misses two crucial points. First, as discussed in “Money Printing,” the government does not “print money.”

“Modern economies operate under an endogenous money system, meaning banks create money in response to economic activity. As the Bank of England explained in its 2014 paper “Money creation in the modern economy,” it is not central banks that directly dictate broad money growth, but rather commercial banks extending credit when they see viable opportunities. Put simply: loans create deposits.“

Re-read that last bolded sentence, which is the most critical point. The U.S. does not “print” money. All money is lent into existence, as we continued explaining in that post.

“This means that the growth of the money supply closely follows the economy’s growth. When businesses expand, hire, and invest, banks extend more credit, and the money supply grows. Conversely, when the economy slows and loan demand weakens, money supply growth contracts, regardless of how much the Federal Reserve expands its balance sheet. We saw this after 2008: despite unprecedented quantitative easing, money growth and inflation remained subdued because banks hoarded reserves instead of lending.

It’s easy to point to M2 charts and scream “debasement. “ However, the money supply must grow as the economy grows. If it doesn’t, deflationary risks emerge. Therefore, the key is whether money creation exceeds economic growth in a sustained way. Since 1959, the money supply has grown in alignment with economic growth.”

A better way to assess this is by comparing M2 to GDP. Historically, the two have tracked closely. Even during the COVID-19 shock, M2 as a percentage of GDP remained below 100%, indicating that money supply growth was broadly aligned with economic output. Today, that ratio is falling, not rising.

What Inflation Alarmists Missed in Their Warnings_2

The reality is that the growth rates of M2 highly correlate with the state of the economy.

What Inflation Alarmists Missed in Their Warnings_3

This brings us to the “Veil of Money” theory, which posits that money serves as a neutral medium of exchange, affecting only the nominal price level, but not the underlying fundamental economic factors, such as output, employment, and the allocation of resources. In this view, money overlays the real economy like a veil, and to understand economic activity, one must “pierce the monetary veil.”

During the pandemic, the money supply spiked. But that’s not the whole story. Bank reserves ballooned, yet lending barely moved. Consumer demand rose temporarily due to direct payments, rather than a structural shift in consumption. Once those payments stopped and the economy reopened, that demand faded, supply increased, and inflation started to recede. In other words, the increase in the money supply did not alter the real economy; in fact, it may have worsened it.

What Inflation Alarmists Missed in Their Warnings_4

As such, the problem for the inflation alarmists is that inflation occurs only when demand exceeds supply. In a service-based, aging economy that’s already over-leveraged, such a demand surge rarely occurs sustainably.

While the inflation surge of 2021 and 2022 was real, it wasn’t systemic. It was the result of excessive government interventions in concert with global supply shocks. That combination created a short-term explosion in prices. But it was never sustainable.

The 3 D’s: Debt, Deficits, Demographics

To understand why inflation alarmists have been incorrect, at least so far, you have to understand the “3Ds”: Debt, Deficits, and Demographics.

Let’s return to the basics of “inflation,” which is simply the function of “supply and demand.” Nothing more. Nothing less. As we noted previously:

“Inflation is the rise in prices due to supply and demand imbalances. Rising wages and consumer demand for products and services that grow faster than the available supply create higher prices (aka inflation). The following economic illustration is taught in every ‘Econ 101’ class. Unsurprisingly, inflation is the consequence if supply is restricted and demand increases via monetary interventions.”

What Inflation Alarmists Missed in Their Warnings_5

With this concept in mind, let’s start with the debt. Currently, total U.S. debt, comprising government, corporate, and household debt, stands at record levels. As shown below, when that debt, as a percentage of GDP, grows, it slows economic activity as increased interest payments consume income, thereby limiting consumption and investment.

What Inflation Alarmists Missed in Their Warnings_6

What the inflation alarmists miss is that every dollar borrowed must be repaid with future income. As more income is allocated to servicing debt, less is available for spending, which reduces demand in the economy and, as shown, leads to lower inflation. That’s why high debt is deflationary, not inflationary. Such is also why expectations of yields hitting 6% or more remain unfounded, as an economy that is dependent on debt to function can’t support higher rates.

The second “D”, deficits, are also problematic to the inflation alarmists’ view. Annual deficits are now routine. The government borrows to fund everything from defense to entitlements to foreign aid, with the Congressional Budget Office projecting trillion-dollar deficits for the next decade.

As the deficit grows, more money is diverted from productive investments into debt service, which again negatively impacts economic activity. As shown, when the deficit is reduced, it is because economic activity has increased, resulting in higher revenue for the government and potentially leading to inflationary pressures.

What Inflation Alarmists Missed in Their Warnings_7

The long-term consequence of persistent deficits is low growth as more debt is needed to generate less output. That dynamic has played out in Japan, Europe, and now the U.S. However, ironically, while everyone hopes for lower inflation, which is economically repressive, we should be discussing how to increase inflation through stronger economic growth.

Lastly, the most overlooked driver of disinflation is the decline of demographics in the U.S. The population is aging, and the U.S. workforce growth rate is falling. Immigration has slowed. Birth rates are down. Fewer workers and more retirees result in lower production and consumption. Older people spend less. They don’t buy homes, take out loans, and live on fixed incomes, which translates to lower economic velocity.

What Inflation Alarmists Missed in Their Warnings_8

At the same time, entitlements such as Social Security and Medicare are proliferating, absorbing an increasing share of the federal budget. That adds to debt, increasing deficits, which feeds into economic retardation.

Put all three together, high debt, chronic deficits, and an aging population, and you get structural stagnation, keeping inflation low, capping long-term rates, and reducing economic prosperity.

What the Market Is Telling You

The bond market isn’t stupid. When inflation spiked, yields rose, briefly. But as soon as growth slowed and fiscal drag returned, yields fell. Long-term expectations remain subdued, with the 10-year breakeven inflation rate still near 2.3 percent. The Fed’s own projections indicate that inflation will return to target over time.

As shown, the spike in the Fed’s preferred measure of inflation, the trimmed mean PCE inflation rate, has returned to the bond market’s view of inflation. While the Fed took a lot of heat for saying inflation would be “transient,” ultimately, they were correct.

What Inflation Alarmists Missed in Their Warnings_9

If inflation were going to stay hot, you’d see it in long-dated yields and in the breakeven rates. However, for now, at least, you don’t. That’s because markets understand what Wall Street celebrities don’t: structural forces matter more than temporary shocks.

If you’re expecting another surge in inflation, you’re betting against demographics, debt dynamics, and deficit math. That’s probably going to be a bad bet.

Here’s what you should prepare for instead:

Inflation will remain volatile but is expected to trend lower.

Long-term yields will stay capped by debt service constraints.

Growth will slow as the stimulus fade continues.

The Fed will pivot again — not toward more hikes, but to rate cuts and balance sheet expansion.

Does this mean we won’t ever see another rise in inflationary pressures? No. In fact, we should be hopeful for such due to economic growth that leads to broader economic prosperity.

However, the calls for runaway inflation and 6 percent interest rates are primarily a misunderstanding of the world in which we live. We are not in a 1970s cycle, but rather in a debt cycle where every dollar of growth incurs more debt, and every attempt to tighten policy leads to deflationary pressures.

That’s not a theory. It’s what the data shows. And until something changes in the structure of our economy, it’s what you should expect.

Source: investing

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Justin

Russia-Ukraine Conflict

Europe has folded rather quickly on EU leaders' controversial plan to confiscate Russian assets held in Belgium's depository Euroclear to use as a reparations loan for Ukraine.

On Friday it became clear in the two day Brussels summit the EU was unable to agree on the plan, but instead has opted to raise €90 billion ($105 billion) in joint borrowing, with Hungary, the Czech Republic and Slovakia choosing not to take part.

via Associated Press

Not only had objecting member states like Hungary sent EU leaders scrambling to circumvent a normal vote, but Belgium has remained unwavering in insisting on unlimited guarantees tied to assets held on its territory.

Fearing immediate Russian retaliation, Belgium wanted assurance that the rest of the EU would step in and absorb whatever retaliatory measures, including lawsuits, would result from the asset seizure.

Belgian Prime Minister Bart De Wever recently summed up the dilemma best: "We do not wish to be at war with Russia. We must negotiate based on reality, not fantasy. In reality, you don't steal money from a foreign central bank. Stealing from a central bank is like robbing an embassy."

So it appears EU leadership has backed down, perhaps having learned their lesson from Biden weaponizing the dollar early in the Ukraine war. As a reminder, here's what President Vladimir Putin had to say by way of warning back in spring of 2024:

"The dollar is the cornerstone of the United States' power... it is the main weapon used by the U.S. to preserve its power across the world," the Russian leader said. "As soon as the political leadership decided to use the dollar as a tool of political struggle, a blow was dealt to this American power."

As for the failed effort to permanently seize the some 210 billion euros ($247bn) in Russian assets held in Europe, EU officials had played down the possibility of an alternative plan right up to the eve of the summit.

And just like that, France's Macron calls for renewed push for diplomacy with Moscow...

German Chancellor Friedrich Merz spearheaded the efforts, but now the setback marks a blow for he and European Commission President Ursula von der Leyen, who had pitched the reparations loan hard while not presenting another alternative.

Still, Danish Prime Minister Mette Frederiksen proclaimed that the immediate objective had been met. "The bottom line is that our support for Ukraine is secured," Frederiksen told reporters. But Russia won't be the one being forced to pay for wartime destruction.

As it stands now, EU member states will borrow from financial markets and cover the interest costs themselves. The loan is intended to be interest-free for now, with no clear future plan on just how it will be recouped. European Council President Antonio Costa said that "technical aspects of the reparations loan" must still be "worked out."

In the end this marks another behind the scenes victory for Russia after ramping up the pressure on Belgium. RT underscores in its story headlined EU's plan to steal Russian assets for Ukraine fails that "Without the EU war chest, Zelensky faces a short-term economic crisis. Ukraine needs some €72 billion to repay a G7 loan and stay afloat fiscally."

Source: Zero Hedge

Risk Warnings and Disclaimers

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Justin

Forex

Economic

Key points:

· Chinese firms seek to move to Singapore amid Sino-U.S. tensions

· Singapore offers strategic advantages

· Relocation benefits smaller firms, big firms face challenges

A growing number of Chinese companies are looking to domicile in Singapore, betting a move to the trade-focused city-state would reduce risks their operations get disrupted by Sino-U.S. geopolitical tensions.

The trend, billed as "Singapore washing" by some analysts, started gaining traction near the end of U.S. President Donald Trump's first presidency and has since accelerated, spreading to various sectors from critical minerals to tech and biotechnology, analysts and experts said.

"Demand has always been rising...and the key thing right now is that it's probably going to accelerate at a more rapid pace," said KG Tan, CEO of InCorp Group, which helps companies relocate or expand in nine Asia-Pacific locations.

There is no official data on how many Chinese companies are domiciled in Singapore, but Tan said interest from Chinese firms is "very strong" with about 15-20% more inquiries now year-on-year.

Singapore-domiciled companies include optical products maker Terahop, backed by China-based Zhongji Innolight, which set up shop in the city in 2018.

More recent additions include data centre operator DayOne, spun off from GDS Holdings; Manus AI, an artificial intelligence agent from China's Butterfly Effect; and ChemLex, an AI-powered chemical synthesis company.

Neither Manus AI's nor Terahop's websites make reference to their Chinese backers. ChemLex CEO Sean Lin said he considers his Shanghai-founded startup a Singapore company.

DayOne CEO Jamie Khoo said in July that it always intended to split from its Chinese parent, as both companies operate under different regulatory regimes. Manus AI and Terahop did not respond to requests for comment.

SINGAPORE PROVIDES A STRATEGIC SWEET SPOT

Singapore offers an attractive base for firms looking to navigate U.S. tariffs and maintain access to key American technologies whose sales are restricted in China. Washington imposes tariffs of just 10% on goods from Singapore.

"The Singapore brand is trusted worldwide. Singapore is valued for its international flavour, neutrality, and is culturally easy for Chinese firms and their expats to adapt to," said Maybank China economist Erica Tay.

"With a whopping 28 free trade agreements, it is also a good base from which to grow markets outside China."

But that advantage has also left Singapore on a tightrope, as the U.S. steps up its scrutiny over Chinese firms and as some of those foreign entities have been involved in criminal activities.

Singapore-based data centre firm Megaspeed, which split from a Chinese gaming firm in 2023, faces a U.S. probe for allegedly diverting Nvidiachips used for AI.

The Asian country also had its biggest money laundering case involving foreigners of Chinese origin in 2023, and is investigating a conglomerate, owned by a Cambodian citizen of Chinese origins and accused of running vast scam centre operations.

The U.S. Department of Commerce and China's Ministry of Commerce did not respond to requests for comment. Reuters has asked the Singapore government for comment.

TOO BIG TO HIDE

While a relocation in theory offers businesses more flexibility in managing tariffs, export controls and other protective trade policies, such moves do not guarantee firms freedom from political or regulatory heat.

Fast fashion firm Shein and short video platform TikTok, among the early movers to Singapore, notably failed to shield their operations from Western scrutiny.

Shein ran into political opposition in the U.S. and the UK over its efforts to go public there and also had to seek Beijing's nod for its listing plans, despite having moved its headquarters from Nanjing to Singapore.

It is now seeking China's blessing for a stock market debut in Hong Kong, and reportedly considering relocation back to China.

TikTok, owned by China's ByteDance, saw its Singaporean CEO Chew Shou Zi repeatedly grilled over his links to the Chinese government at a Congressional hearing in Washington in 2024.

ByteDance, which is required to sell its U.S. operation to a consortium of American and global investors to meet national security requirements, signed off on the sale deal, TikTok said on Thursday.

A failed effort by Yuxiao Fund, a Singapore-registered Chinese investor, to boost its stake in Australian rare earths miner Northern Mineralsin 2024 due to its China link also highlights the limits of being based in Singapore.

Experts argue the strategy mostly works for smaller firms but provides less wriggle room for big businesses.

"It's the low-profile entities like family offices and trading companies which tend to have an easier time avoiding attention," said Chong Ja Ian, political scientist at the National University of Singapore.

Some have already taken note of the growing scrutiny.

Dou Changlin, the chief operating officer of Shandong Boan Biotechnology, which provides clinical services for global drugmakers, said its Singapore subsidiary is used to fund the company's U.S. operations.

While the structure has helped it meet funding needs from Singapore, not from China which has stepped up scrutiny of capital flows, Dou cautions U.S. authorities could eventually draw a connection with its Chinese parent company.

"We are very small in the U.S., I don't think we're on the radar of the U.S. government yet," he said.

Source: TradingView

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Adam

Forex

Economic

This week’s central bank meetings have not been explosive for FX markets, but have provided some support to sterling and weighed on the yen. We note in the overnight release of US Treasury TIC data for October that the BRICS nations’ holdings of US Treasuries continue to edge lower. For today, the focus will be on how far USD/JPY has to rise

USD: Short-Term Resilience

The dollar is proving surprisingly resilient despite the release of a very soft US November CPI reading yesterday. It may be that the numbers seem too good to be true, which prevented a bigger reaction in FX and interest rate markets. In fact, 2-year US Treasury yields ended yesterday’s session unchanged on the day. However, the data leaves the idea of Fed cuts in 2026 intact, with the market now anticipating one 25bp cut by April and another by September. For today’s US session, there’s little meaningful data apart from housing starts and home sales, plus the final read of consumer confidence and inflation expectations for December. We doubt these will move markets.

Overnight, the US Treasury TIC data for October was released. This is a volatile series and the net purchases of US long-term securities – at $17.5bn – were the lowest since the net $24bn outflow in April. These figures do bounce around a lot, so it is far too early to conclude there are any strong signs of a rotation away from US asset markets. However, one enduring trend is the continuing fall of Treasury holdings amongst the BRICS nations. In October, these were China (-$11.8bn), India (-$12bn) and Brazil (-$5bn).

Across the foreign official sector, foreign official holdings of Treasury Bonds and Notes were off $22bn, though partially offset by a $14bn increase in T-bill holdings. We think the decline in India’s holdings probably relates to FX intervention to support the rupee, but suspect there are also geopolitical factors at play too. However, this year has shown that the private sector is more than willing to buy Treasuries and our call for a weaker dollar in 2026 is based on foreign investors increasing their hedge ratios on US assets rather than selling them outright.

Yen weakness today is making DXY look bid. Here, USD/JPY may stay bid after the Bank of Japan Governor said the BoJ needed to see the impact of the rate hike before moving again. That could mean another six to 12 months! Short-term resistance for DXY is at 98.75/80.

EUR: EU Leaders Deliver

Late last night, EU leaders managed to secure a EUR90bn loan for Ukraine. The money would be funded from the joint EU budget (excluding Hungary, Slovakia and the Czech Republic) and would not involve frozen Russian assets. That is probably the best outcome for the euro in that it does not raise challenges over property rights nor require some imaginative use of emergency legislation. Presumably, it should also add another EUR90bn to the EU’s pool of safe faxed income assets – and should find willing buyers.

EUR/USD is drifting towards the lower end of recent ranges. Yesterday’s ECB meeting was not a market mover after all, and the new set of forecasts probably leaves room now for market rates to be priced both higher and lower from here. Look out for the eurozone December consumer confidence data later in the day. Let’s see if EUR/USD support holds at 1.1680/1700 and option activity drags it back to 1.1750 by 1600CET today.

GBP: Bears Need Patience

Sterling drew some support from a Bank of England press release which was not as dovish as we had expected. Many of the decision-makers cited the fact that expectations for wage growth remained stubbornly high and were concerned about structurally high inflation.

We suspect that these wage expectations will come down in the New Year in line with lower headline inflation. In all, we continue to expect 25bp rate cuts in February and April, compared to market pricing of just one cut. And that should mean EUR/GBP continues to find support ahead of 0.87.

Source: investing

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

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Blue River

Forex

Technical Analysis

EUR/USD Technical Analysis

The Euro has started to drift a little bit lower again during the Friday session as it looks like we are in fact going to see more continuation of this consolidation. That was my base case a few days ago; if you had been watching then, I don't think we would have broken out. I think we don't have anywhere to be.

So, 1.18 I think continues to be a ceiling that extends about 50, maybe 75 pips. And then the floor is probably 1.15, maybe 1.14. With this being the case, I do think that we start to drift lower, and in fact, that's already starting to happen. So, I am bearish, short-term. In the intermediate term, I'm probably neutral. Longer term, I think I'm still bearish, but that obviously can change in a few months.

GBP/USD Technical Analysis

The British pound looks very much the same in the sense that it can't break over the recent ceiling at 1.34, so with that being said, I think you have a scenario where we could start to fade a bit. I mentioned yesterday that if we could break down below the Wednesday lows, I think this thing starts to unravel. We go down to the 1.32 level and then 1.30. I still believe that's the case. However, if we can break above 1.35, then obviously something changed, and it's very likely we're going higher.

EUR/GBP Technical Analysis

With the price action that we've seen in both the Euro and the pound against the US dollar, they are doing almost nothing against each other. We are sitting at a support level in the form of 0.8750, which continues to be important. It had previously been significant resistance, and now we're trying to figure out whether or not the breakout and the pullback lead to a rally towards 0.89, or if we break down.

If we break down below 0.87, then I think the market will probably unravel a bit, maybe goes looking for the 200-day EMA. But as things stand right now, this is a neutral with a slightly bullish connotation to it. But really, this is more short-term trading back and forth than anything else.

Source: FX Empire

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Adam

Stocks

North American Construction Group Strengthens Its Presence In Western Australia With The Acquisition Of Iron Mine Contracting, A Diversified Mining Services Contractor; to Buy Iron Mine Contracting for About C$115M

Reitmans Canada 3Q Net Income CAD 0.9M; 3Q Gross Profit CAD 109.6M; 3Q Revenue CAD 194.9M; 3Q Adj EBITDA CAD 5.6M; 3Q EPS CAD 0.02; Reports 3Q Revenue of CAD 194.9 Million

Sony to Take Control of 'Peanuts' Franchise

TransAlta Provides Notice to Mothball Sheerness Unit 1; Sheerness Unit 1 to Be Temporarily Mothballed April 1; Sheerness Unit 1 to Be Mothballed for Up to Two Years

Expected Major Events for Friday

00:01/UK: Dec UK Consumer Confidence Survey

00:01/UK: Nov UK monthly automotive manufacturing figures

00:01/UK: Nov Zoopla House Price Index

07:00/GER: Dec GfK consumer climate survey

07:00/GER: Nov PPI

07:00/UK: Nov Public sector finances

07:00/UK: Nov UK monthly retail sales figures

07:45/FRA: Nov PPI

08:59/JPN: Japan Monetary Policy Meeting decision

08:59/JPN: Dec Monthly Economic Report

09:00/ITA: Dec Consumer Confidence Survey

09:00/ITA: Dec Business Confidence Survey

09:30/UK: Nov Monthly Insolvency statistics

09:30/UK: 3Q Bank of England statistics on UK banks' external claims

10:00/ITA: Oct Balance of Payments

10:00/ITA: Oct Industrial turnover

11:00/UK: Dec CBI Distributive Trades Survey

13:30/CAN: Nov New Housing Price Index

13:30/CAN: Oct Retail trade

15:00/US: Oct Employment Trends Index

15:00/US: Nov Employment Trends Index

15:00/US: Nov Existing Home Sales

15:00/US: Dec University of Michigan Survey of Consumers - final

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Friday

Bio-Path Holdings Inc (BPTH) is expected to report for 3Q.

Carnival Corp (CCL) is expected to report $0.24 for 4Q.

Conagra Brands Inc (CAG) is expected to report $0.43 for 2Q.

Lamb Weston Holdings Inc (LW) is expected to report $0.60 for 2Q.

Paychex Inc (PAYX) is expected to report $1.12 for 2Q.

TX Rail Products Inc (TXRP) is expected to report for 4Q.

Winnebago Industries Inc (WGO) is expected to report $0.00 for 1Q.

ANALYST RATINGS ACTIONS

ABM Industries Cut to Neutral From Buy by UBS

Allstate Cut to Market Perform From Outperform by William Blair

Americold Realty Trust Cut to Neutral From Outperform by Baird

Camden Property Trust Raised to Neutral From Underweight by JP Morgan

Cinemark Cut to Equal-Weight From Overweight by Morgan Stanley

Core Scientific Raised to Market Outperform From Market Perform by Citizens

Edwards Lifesciences Raised to Overweight From Neutral by JP Morgan

Energy Transfer Cut to Equal-Weight From Overweight by Morgan Stanley

Enphase Energy Raised to Neutral From Sell by Goldman Sachs

Enterprise Pdts Partners Cut to Underweight From Equal-Weight by Morgan Stanley

Evergy Cut to Neutral From Outperform by Mizuho

Federal Realty Raised to Overweight From Neutral by JP Morgan

GE Vernova Raised to Buy From Hold by Jefferies

Glacier Bancorp Raised to Overweight From Neutral by Piper Sandler

Helmerich & Payne Raised to Overweight From Neutral by Piper Sandler

Heritage Commerce Cut to Neutral From Buy by DA Davidson

Kemper Corp Cut to Underperform From Market Perform by William Blair

Kennedy-Wilson Holdings Cut to Underweight From Neutral by JP Morgan

Lennar Cut to Underperform From In-Line by Evercore ISI Group

Lennar Cut to Underperform From Neutral by B of A Securities

Lennar Cut to Underperform From Sector Perform by RBC Capital

Lineage Cut to Neutral From Outperform by Baird

Merck Raised to Outperform From Market Perform by BMO Capital

Micron Technology Raised to Buy From Neutral by B of A Securities

Nabors Raised to Overweight From Underweight by Piper Sandler

NMI Holdings Raised to Outperform From Market Perform by Keefe, Bruyette & Woods

PayPal Holdings Cut to Underweight From Equal-Weight by Morgan Stanley

PennyMac Mtg Invt Tr Raised to Outperform From Market Perform by Keefe, Bruyette & Woods

Penumbra Raised to Overweight From Neutral by JP Morgan

Public Storage Cut to Neutral From Overweight by JP Morgan

Ranger Energy Services Raised to Overweight From Neutral by Piper Sandler

Realty Income Cut to Underweight From Neutral by JP Morgan

Regency Centers Cut to Neutral From Overweight by JP Morgan

Rivian Automotive Raised to Outperform From Neutral by Baird

Sealed Air Cut to Neutral From Outperform by Baird

Shake Shack Raised to Neutral From Underweight by JP Morgan

Sherwin-Williams Raised to Buy From Neutral by Citigroup

Simulations Plus Cut to Neutral From Buy by BTIG

SmartStop Self REIT Cut to Underweight From Neutral by JP Morgan

Sphere Entertainment Raised to Overweight From Equal-Weight by Morgan Stanley

Two Harbors Cut to Hold From Buy by Maxim Group

UDR Inc Cut to Underweight From Neutral by JP Morgan

Verrica Pharmaceuticals Raised to Buy From Hold by Brookline Capital

Warner Music Group Raised to Overweight From Equal-Weight by Morgan Stanley

Welltower Cut to Neutral From Overweight by JP Morgan

This article is a text version of a Wall Street Journal newsletter published earlier today.

Source: morningstar

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Glendon

Political

Commodity

U.S. crude oil prices were stable on Friday after President Donald Trump told NBC News that he will not rule out war with OPEC member Venezuela.

"I don't rule it out, no," Trump told the news outlet in a phone interview. He declined to say whether overthrowing President Nicolas Maduro is his goal.

"He knows exactly what I want," Trump told NBC. "He knows better than anybody."

The oil market right now is not indicating a major risk of a supply disruption. U.S. crude oil rose 29 cents, or 0.5%, to $56.44 per barrel, while global benchmark Brent was up 31 cents, or 0.5% to $60.31.

The U.S. benchmark fell to four year lows earlier this week as traders priced in the possibility of a peace agreement in Ukraine that would bring more Russian crude into a well supplied market.

Trump has been ramping up pressure on Maduro. He ordered a blockade of sanctions oil tankers off the South American nation's coast after seizing a vessel a last week.

The U.S. has staged a major military buildup in the Caribbean and launched deadly strikes on boats that it claims are trafficking drugs to the U.S. The legality of those strikes is disputed and has been the subject of scrutiny by Congress.

Venezuela is a founding member of OPEC and has the largest proven oil reserves in the world. It is exporting about 749,000 barrels per day this year with at least half that oil going to China, according to data from Kpler. Venezuela exports about 132,000 bpd to the U.S., according to Kpler.