Month: October 2025

Most businesses expect tariff price hikes, KPMG says

Nearly half of big businesses raised prices in the last six months due to tariffs, and a large majority expect to do so in coming months, a new KPMG survey out Thursday finds. (…)

44% of businesses have already increased prices due to tariffs, per the September survey of 300 executives at U.S. companies with more than $1 billion in annual revenue.

• Over the next six months, 42% say they will raise prices as much as 5%.
• Another 29% say they plan to raise prices somewhere from 6% to 15%.

Those price increases are helping with, but not eliminating, the margin compression companies face as their input costs rise.

• Some 39% of businesses have already seen their gross margins decline.
• About two-thirds of respondents say they have already seen sales be deferred or decline outright and hardly any say sales are rising.

Like I wrote yesterday, soft data is getting harder:

Eurozone growth ticks up once again but remains muted

The seasonally adjusted HCOB Eurozone Composite PMI® Output Index increased for the fourth month in a row to 51.2 in September, from 51.0 previously, signalling a further gradual acceleration in output growth across the eurozone private sector. Additionally, the headline measure rose to its highest level since May 2024.

Germany was central to the broader pick-up in growth, with its respective Composite PMI Output Index rising to a 16-month high and indicating a moderate expansion. Nonetheless, out of the euro area nations which Composite data are available for, Spain saw the strongest increase in private sector business activity during September. Moderate growth was registered in Ireland and Italy, making France the outlier across the currency bloc as output shrank at a faster pace than in August.

Albeit rising for a ninth straight month and to the strongest extent in almost a year-and-a-half, the expansion in eurozone output was relatively sluggish, once again coming in below the long-run trend rate of the survey (52.4). Limiting the upturn was a muted improvement in new business. While September’s rise in new order inflows represented the strongest gains in sales volumes for eurozone private sector companies since May 2024, growth was marginal.

Weighing on demand was a decrease in new export orders, stretching the current sequence of contraction in new work from abroad to over three-and-a-half years.

With growth of output surpassing that of new business, September survey data signalled a further reduction in backlogs of work across the euro area. The pace of depletion was the quickest in three months. Clearances of pending projects were achieved despite employment levels decreasing at the end of the third quarter. Notably, this marked the first time since February that workforce numbers have fallen. That said, the extent to which jobs were cut was fractional.

Eurozone companies reported an increase in their operating costs during the latest survey period. However, the rate of inflation slowed and remained below the survey’s historical average. There was likewise a cooling of selling price pressures as output charges increased to the weakest extent since May.

Looking ahead, private sector firms in the euro area were optimistic of growth in business activity over the coming 12 months. In fact, optimism improved on the month and reached its second-highest level since July 2024 (only fractionally surpassed by that seen in June). Nevertheless, expectations were relatively muted by historical standards.

The HCOB Eurozone Services PMI Business Activity Index increased from 50.5 in August to 51.3 in September, signalling faster growth during the closing month of the third quarter. The latest data point marked a fourth consecutive survey period in which the index has posted above 50.0 and therefore in expansion territory.

September saw a pick-up in demand for services which was notable, at least compared to the trend over the previous 12 months. That said, new business growth was mild overall and limited to domestic markets, as indicated by a concurrent (and fractionally faster) reduction in new export orders.

Employment in the service sector was only fractionally up from the level seen in August. This marked the weakest month for the eurozone service sector labour market in over four-and-a-half years when the latest expansionary trend in workforce numbers began. The downward trend in backlogs of work was nevertheless sustained, marking 17 successive months of reductions.

As for prices, inflation ticked lower at the end of the third quarter. Input costs and output prices rose at their slowest rates in two and four months, respectively.

Lastly, service providers maintained a positive assessment of year-ahead activity prospects, with expectations even rising by a solid degree to an 11-month high.

Multinationals race ahead as dollar slump divides US stock market Domestically focused companies lag behind as currency suffers worst year since early 2000s

(…) The US currency is on course for its worst performance in a calendar year in more than two decades, dropping nearly 10 per cent against a basket of major currencies so far in 2025 as Donald Trump’s trade and economic policies cause global investors to rethink their exposure to the world’s largest economy. (…)

A weaker greenback boosts a US company’s foreign earnings in dollar terms, while also making American goods cheaper abroad. Domestically focused companies do not tend to benefit, and those firms that rely on buying goods from overseas in foreign currency face higher input costs.

“Small companies that import goods . . . will suffer and large companies with global reach and capacity to access finance will manage the impact,” said Shahab Jalinoos, head of G10 FX strategy at UBS. (…)

“You hear about currency effects more often when the dollar strengthens and companies blame the strong dollar for losses. But management rarely says ‘we got bailed out by currency effects’.” (…)

“There are a subset of companies that will benefit more than others,” said George Pearkes, a macro strategist at Bespoke Investment Group, who cited tech giants among the businesses in line for a boost from the weaker currency, and utilities and banks among domestic-facing firms that would be hurt by it. (…)

GIVE THEM CREDIT

Jim Chanos slams ‘magical machine’ of private credit after First Brands collapse Investor famed for spotting Enron fraud sounds alarm on Wall Street’s booming debt machine

Jim Chanos, one of Wall Street’s best-known short sellers, has sounded the alarm on the private debt boom, telling the Financial Times that First Brands Group’s chaotic bankruptcy could augur a wave of corporate collapses.

Some of the biggest names on Wall Street are facing the prospect of multibillion-dollar losses from the bankruptcy of First Brands, a heavily indebted maker of spark plugs and windscreen wipers based in Ohio.

First Brands has now disclosed almost $12bn in debt and off-balance sheet financing built up in the years before its Sunday bankruptcy filing, which also ensnared less well-known private lenders such as a Utah-based leasing specialist. (…)

The FT has previously reported that the group’s founder and owner, low-profile businessman Patrick James, was previously sued by two lenders that alleged that fraudulent conduct had exacerbated their losses. James strongly denied the allegations of fraud in the two cases, which were both dismissed after settlements were reached. (…)

“With the advent of private credit . . . institutions [are] putting money into this magical machine that gives you equity rates of return for senior debt exposure,” he said, adding that these high yields for seemingly safe investments “should be the first red flag”. (…)

Chanos said: “We rarely get to see how the sausage is made.”

First Brands’ bankruptcy has revealed that James controlled both the auto parts conglomerate and some of its off-balance sheet SPEs through the same chain of limited liability corporations. Chanos described this common ownership as a “huge red flag”. (…)

First Brands’ financial statements were not publicly available. While hundreds of managers of so-called collateralised loan obligations had access to its financial disclosure, they had to consent to non-disclosure agreements to receive the documents.

“The opaqueness is part of the process,” Chanos said. “That’s a feature not a bug.”

Any resemblance from the above to the below is your own imagination.

Everything’s bigger in Texas, data center edition: behold the blockbuster debut of Fermi, Inc. (FRMI on the Nasdaq), with shares enjoying a 55% rip yesterday to leave the nine-month-old firm with a $19 billion market capitalization. 

Fermi, which counts former Texas governor turned Trump 1.0-era energy secretary Rick Perry among its cofounders, plans to construct the world’s largest energy and data facility, which could generate 11 gigawatts of energy – twice that currently serving New York City – by 2038 per CEO Toby Neugebauer.  

Tenant revenues are unlikely to take shape prior to 2027 according to the prospectus, a noteworthy detail considering the firm is structured as a real estate investment trust, which must earmark 90% of taxable income towards shareholder dividends. Neugebauer told the Financial Times that Fermi has snagged a deal with “one of the most valuable and respected technology companies on the planet.”

In any event, Wednesday’s closing price confers a $6 billion paper windfall on Neugebauer, the son of former Texas congressman Randy Neugebauer and who previously helmed the ill-fated, “anti-woke” banking startup GloriFi, which filed for Chapter 7 liquidation in 2023 alongside a torrent of investor litigation. (ADG)

Also from ADG:

• The firm [OpenAi] projects $20 billion in annual recurring revenue by year-end but also pegs cumulative cash burn at $115 billion through 2029, an increase of $80 billion from its first quarter forecast.
• Meta’s capital expenditures are set to vault to $97 billion next year from $37 billion in 2024 if the sell-side consensus proves accurate, with free cash flow poised to drop to $28 billion, half that achieved last year. Notably, those outlays do not include the monster four million square foot Hyperion data center, which Meta will occupy under a 20-year lease. A Pimco-led $26 billion debt financing will underpin the project, which is structured as a joint venture and remains off the social media giant’s books. Out of sight, out of mind? Not quite, according to a Sept. 5 Bloomberg bulletin: “If [Meta]  decides to terminate the lease early or opts to not renew it and the value of the data center falls below a pre-determined threshold, [Meta] will reimburse investors for potential losses.”

Goldman Sachs:

Since the rise of the AI theme in 2022, most capex at large tech firms has been financed out of the substantial cash reserves on their balance sheets. Over the past few quarters, the tide appears to have shifted, with debt capital markets playing an increasingly important role.

This shift is evidence across many corners of credit markets—from the ABS market, where issuance of data center deals has now reached $20 billion since the start of 2024, to both pubic and private corporate credit markets, as well as bilateral vendor financing agreements.

Mapping the equities in the GS TMT AI basket, which tracks equities that are either pursuing artificial intelligence or can help enable the technology, we find these AI-related issuers have accounted for $141 billion in corporate credit issuance in 2025 to-date, eclipsing full-year 2024 gross supply of $127 billion. Tech issuers in this basket have accounted for the lion’s share of this supply at $86 billion, followed by Utilities at $51 billion.

We think this trend will likely extend for two reasons.

First, cash balances among large tech firms have substantially declined to levels that are almost in-line with the median non-financial IG issuer.

Second, the appetite for spending remains strong, with capex growth anticipated to reach a solid 50% on a year-over-year basis, through 2025.

The read-through for credit markets is, on the margin, negative, in our view. While not yet a cause for alarm, given both the high cashflow generation and low leverage among large tech companies, the shifting funding mix of capex beyond cash is worth monitoring.

This is arguably late cycle… and the Fed is loosening…meaning reducing the cost of capital, not only for banks like in the good not-so-old days, but to all capital providers.

But credit markets are already very loose and risk averse as the Bloomberg Financial Conditions Index, which measures the availability of capital across a broad range of markets, illustrates:

Rich Bernstein’s RBA:

Besides easy financial conditions, there are other factors that might question why the Fed feels the need to cut rates: 1) the economy is healthy, 2) inflation expectations are rising, 3) trade agreements have resulted in supply chain shocks, and 4) immigration restrictions are limiting labor supply.

In addition, the Fed doesn’t appear to fully recognize that ongoing deglobalization and financial bubbles are both inherently inflationary.

Regardless of what the Fed should or should not do, they have cut rates and are signaling their intent to cut rates further. We think there could be two potential financial market outcomes.

First, the response to the Fed cutting rates could be a broadening of the equity markets. That would be a very healthy outcome because a broader stock market would imply the Fed has reignited a healthy lending cycle, which in turn would spur stronger profits and economic cycles.

The second response could be the Fed rate cuts simply result in more excess liquidity and more speculation. With existing easy financial conditions, investors might use the added liquidity to further speculate. This could ultimately foster a very bad outcome.

We have repeatedly emphasized over the past 30 years that bubbles are inherently inflationary because they grossly misallocate capital within an economy. In other words, capital flows to things not needed in the economy, while truly necessary investment goes ignored.

During the Technology Bubble, we argued that energy was the sector being starved of capital despite the massive need for investment. The bubble’s misallocation of capital led Energy to be the best performing sector during the 2000s, and the US CPI peaked at 5.6% before the global financial crisis destroyed economic growth and inflation fell.

There is a similar misallocation of capital within the US economy today. Simply put, imagine if all the capital going into cryptocurrencies instead was invested in the US electric grid. We strongly doubt electricity prices would be rising more than 6% per year as they currently are if that had been the case.

So, investors need to carefully watch the Fed and the markets’ responses to their actions:

1. The possibility that inflation isn’t dead and employment isn’t waning. The Fed might have to go on hold or even reverse course and raise rates. This is the worst case scenario for financial markets fueled by liquidity and speculation, but might be good for the relative performance of value, dividends, non-technology quality, and more broadly diversified portfolios.

2. The possibility that employment is much worse than expected and a series of large rate cuts ensue. This isn’t a particularly good scenario either because it implies the economy and earnings are demonstrably weaker than consensus forecasts. Defensive sectors would likely outperform in this environment.

3. The Fed’s rate cuts are very timely, and the economy reaccelerates without much inflation. This would result in a broadening of the market in a very healthy way.

4. The Fed adds unnecessary liquidity to the financial markets and speculation runs rampant. This might be fun for some investors in the short-term, but it could create serious misallocations within the economy and add to significant future inflation.

U.S. Lost 32,000 Jobs in September, Says Payroll Processor ADP report shows a labor force that continues to deteriorate

The U.S. shed 32,000 private-sector jobs in September, payroll-processing giant ADP said on Wednesday.

That is down from a revised loss of 3,000 in August. Economists polled by The Wall Street Journal had expected an increase of 45,000. (…)

The leisure and hospitality sector shed 19,000 jobs last month, the largest decline among major sectors, according to ADP. Education and health services were bright spots, with a collective gain of 33,000 jobs. (…)

Small establishments with fewer than 50 employees shed 40,000 jobs, while those with 500 or more employees added 33,000 jobs.

ADP’s report is based on data from more than 26 million workers whose employers use ADP to manage payrolls. That is a large sample of U.S. private-sector employment, which includes about 136 million workers. ADP’s monthly numbers sometimes diverge widely from BLS figures, which are based on a broader survey of employers.

Still, ADP’s methodology was substantially revised in 2022 in an effort to make it an independent reading of the labor market, as opposed to a forecast of the BLS readings. As a result, economists say that ADP’s numbers have become a more useful measure. In recent months the ADP report registered weakness in the job market before it showed up in revised, official figures.

Ed Yardeni:

The previous month’s job growth was also significantly revised down from an increase of 54,000 to a loss of 3,000 jobs. The three-month average change in ADP payrolls was only 23,000 through September.

As we noted on Tuesday, following the August JOLTS report, companies hired 5.1 million workers during the month; however, this number matched the separations resulting from quits and firings. So there was no net gain in employment. Companies appear to be freezing their payrolls while they assess how AI can help them boost their productivity.

The blue line below is ADP (private), red is BLS (total). Second chart is YoY:

The shutdown could prevent the BLS report due tomorrow. ADP data are not encouraging, nor are Indeed Job Postings, down 2.6% in August from July.

BTW, the 5.1M hires Ed Yardeni refers to above was down big time from earlier this year:

Data: Bureau of Labor Statistics; Chart: Axios Visuals

Meanwhile,

The new Axios Vibes survey by the Harris Poll shows 65% of Americans see themselves as either sometimes or regularly financially squeezed each month, up from 58% in June 2024.

• Surveys with longer track records tell a similar story. The University of Michigan Consumer Sentiment Index was 21.4% lower in September than a year earlier. It is now lower than at any point during the 2008-2009 recession.
• The Conference Board’s Consumer Confidence Index fell in September to 94.2, below the 98.7 recorded in June 2022 when inflation peaked.

Compared to February 2020, during Trump 1.0, both Republicans and Democrats are sharply more negative about the economy now.

• The Consumer Sentiment Index for Republicans in September was 33.5 points below February 2020, while for Democrats it was 39.1 points below.

• In the Axios Vibes poll, 47% of survey respondents said it has gotten harder to afford groceries since this time last year, compared to 19% who said it has gotten easier.

“Consumers continue to express frustration over the persistence of high prices, with 44% spontaneously mentioning that high prices are eroding their personal finances” — the highest in a year, noted Joanne Hsu, director of the Michigan survey.

Soft data is getting harder…

MANUFACTURING PMIs

USA: Production growth slows in September amid ongoing tariff disruptions

The headline index from the report, the seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index™ (PMI^®), recorded 52.0 in September. That was down from 53.0 in the previous month and therefore signaled a weaker rate of expansion of the manufacturing economy.

Weaker growth emanated from a slowdown in new order book gains. Although up for a ninth successive month, new orders rose only modestly and at a pace below the survey average. Exports were a source of demand weakness, falling overall for a third month in a row. Tariffs were reported to have weighed on export sales especially to Canada and Mexico.

A slowdown in demand growth led to weaker output gains in September. Overall output increased at a much weaker pace than August’s recent high. However, rising to a faster degree than new orders, production increased sufficiently for firms to add to their stocks of finished goods for a second month in succession.

Work outstanding declined at the fastest pace for five months, in part due to an expansion of labor capacity. September’s survey showed that employment rose solidly as firms filled vacancies and as part of business expansion plans.

A positive outlook also helped encourage manufacturers to take on additional staff, with several anticipating an increase in sales over the next 12 months. In some instances, tariffs were seen as driving an expansion of domestic focused industrial output. Overall business activity expectations subsequently improved slightly compared to August. That was despite some ongoing uncertainty amongst the panel related to trade and wider federal government policies.

Meanwhile, tariffs continued to push up input prices during September, with vendors reportedly raising their charges. Although input cost inflation weakened since August, it remained elevated in the context of the survey history.

High prices discouraged purchasing activity in September, which overall rose only slightly on the month. Where buying rose, this was linked to a desire to bolster inventories, in part due to tariff and supply-side uncertainty. Difficulties importing goods and stock shortages were again noted as driving average vendor delivery times higher in September.

Regarding manufacturers’ own selling prices, these rose at a noticeably slower pace in September as competitive pressures and slower demand growth weighed on company pricing power. Although still rising at a historically strong pace, output price inflation softened in September to its lowest level since January.

Wells Fargo on the ISM:

Just about every facet of the economic picture for manufacturing was evident in the morning’s release of the ISM index for September. Start with the headline: For the seventh straight consecutive month, the manufacturing index was in contraction territory. That said, the 49.1 reading is the mildest pace of contraction throughout that period. Trade policy may be no less uncertain than it was earlier this year, but to some degree at least, firms have acclimatized to the ever-changing tariff landscape.

The adjustments are evident in the details. Of the various sub-components that feed into the headline, just two are above 50, signaling expansion: supplier deliveries at 52.6 and production at 51.0. In a report earlier this year (…). So longer wait times push the ISM higher. The wait-times today have more to do with supply chain disruption from trade policy.

In the absence of the “boost” from supplier deliveries, the ISM would be deeper in contraction. That is not to say that things are universally grim. The 51.0 reading for production indicates that factories are still producing, just at a somewhat below-average rate. In the 10 years that preceded the pandemic, the production index averaged 56.6, a bit [?] more firmly in expansion than the 51.0 reading today.

The remaining components that feed into the headline are all still in contraction. The employment component climbed 1.5 points, but still remains low at 45.3 and points to potential risk for more manufacturing layoffs).

New orders fell 2.5 points, the biggest move of the main sub-components, and, critically, that moves this proxy for future work into contraction after it had broken out into expansion in August. That leaves inventories at 47.7, a bit lower than it was last month. Many firms stocked up on key inputs prior to tariff implementation. The contractionary readings here for inventories signal that many of them are drawing down those supplies. That could eventually have implications for pricing.

The prices paid component, which does not feed into the headline, came down for the third straight month. That development is a positive one for anyone hoping for a less-restrictive policy stance from the Federal Reserve. Still, the current reading of 61.9 is firmly in expansion territory and thus not exactly the “all clear” when it comes to scope for sustained inflationary pressure in the months ahead.

Canada: Downturn in manufacturing sector continues inSeptember

The S&P Global Canada Manufacturing Purchasing Managers’ Index™ (PMI^®) remained below the critical 50.0 no-change mark in September for an eighth successive month. Posting 47.7, down from 48.3 in August, the PMI pointed to a solid and slightly faster deterioration in operating conditions.

Both output and new orders contracted in September, and at quicker rates than in August. Panellists continued to bemoan the adverse impact on demand of tariffs and wider economic uncertainty. Production and new orders have now fallen for eight months in a row. New export sales were again especially hard hit due to tariffs, with firms again pointing to continued weakness in sales to the United States.

The lack of overall new orders and cuts to production meant firms generally chose to not replace leavers at their plants. Some firms also reported enforced layoffs. The net result was a decline in employment for an eighth successive month, although the rate of contraction was modest and the softest since February. (…)

Tariffs meanwhile remained an ongoing source of cost pressures in September. Input prices again rose sharply, although the rate of inflation eased noticeably since August and was the second-lowest of the year so far. Prices for metals like steel, plus shipping costs in general, were reported to have increased during the month. Firms also pointed to ongoing delivery delays, especially for imported goods which was again linked to tariffs.

Manufacturers struggled to pass on their higher input costs to clients in the form of increased selling prices during the month. This was highlighted by the latest data on output charges, which increased only modestly in September and to the softest degree in nearly a year. Panellists attributed their lack of pricing power to market competition and a soft demand environment.

Unsold Oil From Middle East Hints at Early Signs of Global Glut

(…) The volume of unsold oil set to be loaded in November ranged from 6 million barrels to 12 million barrels, according to estimates from traders familiar with the matter, asking not to be identified as they’re not authorized to speak to the media. Sellers include the United Arab Emirates and Qatar, they added.

As the monthly spot trading cycle ends, shipments are usually discounted to move them, and price-sensitive buyers in China and India are the typical purchasers. However, there’s no indication that these unsold cargoes have been snapped up yet, according to the traders.

Still, for a clearer picture on overall supply and demand balances, the market will need to see the November allocations from suppliers such as Saudi Arabia to their buyers, which purchase crude under long-term contracts. Those allocations to refiners will be due early this month. (…)

Other metrics are pointing to a softening market. The futures curve for Abu Dhabi’s flagship Murban crude, which is in a bullish backwardation structure, has weakened in recent sessions. Price premiums for December-loading cargoes against Middle Eastern oil benchmarks also shrunk earlier this week.

Weaker-than-expected Chinese demand — including a possible slowdown of China’s strategic stockpiling — along with OPEC+’s push to continue returning idled output are weighing on the market, traders said.

A Once Unstoppable Luxury Housing Market Is Starting to Crack Economic uncertainty has taken a toll on wealthy buyers and sellers

The number of luxury-home sales nationwide dropped 0.7% during the three months ended Aug. 31, compared with the same period last year, according to data from real-estate brokerage Redfin, which said luxury sales nationwide dropped to the lowest level for that period since it began tracking the market in 2013.

Price growth also slowed. During the three months ended Aug. 31, the median sale price for luxury properties—defined as the top 5% of the market—increased 3.9% year over year to $1.25 million, according to Redfin. But that is down from a 6.1% year-over-year price jump for the three months ended Aug. 31, 2024.

“The luxury market seems to be weaker than the rest of the housing market right now—which is already pretty weak,” said Chen Zhao, head of economics research at Redfin, citing a 0.6% drop in nonluxury sales during the period, compared with the luxury market’s 0.7% drop. (…)

Following the tariff shock of early April, however, buyers and sellers across the spectrum saw dramatic swings in household wealth that took a toll on spring and summer purchasing.

“This injected a substantial hesitancy to make large financial decisions among many prospective luxury-home buyers and sellers,” said Patrick Carlisle, Compass’s chief market analyst in the San Francisco Bay Area, where August home sales above $5 million dropped 13% from August 2024.

“Buyers are being cautious about their investments,” said Kim Bedwell of Briggs Freeman Sotheby’s International Realty in Dallas, who said there are more $5 million-plus homes on the market in the city’s affluent suburbs than she has seen in a while.

Luxury prices, which became “overinflated” during Covid, are returning to prepandemic norms, said Bedwell. In August, she sold a roughly 13,600-square-foot home in Westlake, a suburb of Dallas-Fort Worth, that was last asking $10.995 million, down from the original asking price of $12.5 million in January. (…)

Nationally, Redfin found the number of luxury listings is on the upswing. During the three months ended Aug. 31, inventory rose 9.5% year over year to the highest level—for that time period—since 2020, Redfin data show. Nonluxury inventory rose 13.4% year over year. (…)

China curbs use of Nokia and Ericsson in telecoms networks Beijing’s national security drive hits European groups even as Huawei maintains its business on the continent

China is curbing the use of European telecom kit suppliers Nokia and Ericsson in its networks as President Xi Jinping pushes to decouple the country’s critical tech infrastructure from the west.  Two people familiar with the matter said Chinese state-backed buyers of IT equipment — which include mobile network operators, utilities and other industries — have begun more closely analysing and policing foreign bids.

That process has required contracts by Sweden’s Ericsson and Finland’s Nokia to be submitted for “black box” national security reviews by the Cyberspace Administration of China where the companies are not told how their gear is assessed. The reviews by the powerful tech watchdog can stretch three months or longer.

Even in cases where the European groups ultimately secure approval, the lengthy and uncertain audits often leave them at a disadvantage to Chinese rivals that face no such scrutiny, the people said. “If China is doing this for national security reasons, the question is why Europe does not reciprocate by applying the same standard,” said one of the people, who asked not to be named. 

Beijing’s effort to curtail European vendors follows a similar drive in Europe, where some governments have warned against working with Chinese telecoms giants Huawei and ZTE. But those calls have had an only limited impact on the Chinese companies’ market share on the continent.

China’s national security reviews come as Xi pushes a self-strengthening drive aiming to replace broad swaths of foreign technology. Last month, with Russia’s Vladimir Putin and North Korea’s Kim Jong Un at his side, Xi declared China “does not fear power or coercion” as it “stands strongly on its own with self-reliance”. (…)

State buyers of telecom equipment now require bidders to include detailed documentation on every component in their systems and the portion of local content, said the people familiar with the process, noting foreign groups were even including the details of Chinese R&D efforts to try to bolster their applications.  (…)

Beijing’s growing sales restrictions have collapsed Ericsson’s and Nokia’s combined market share in China’s mobile telecoms networks to about 4 per cent last year from 12 per cent in 2020, according to analyst Stefan Pongratz at research provider Dell’Oro Group. (…)

The EU Chamber of Commerce in China recently said the localisation requirements in IT and telecom posed an “existential threat” to the continent’s tech groups. Nearly three quarters of respondents to the chamber’s recent member survey said the restrictions had lost them business. 

European policymakers have also voiced security concerns about Chinese telecom vendors, warning of espionage risks and potential backdoor access. But most capitals have been slow to impose bans, deterred by the low cost of Chinese equipment and the desire to avoid provoking Beijing.

Around five years after the European Commission urged member states to bar high-risk suppliers such as Huawei and ZTE, only 10 of the EU’s 27 countries had introduced restrictions as of June 2025, according to regulatory research firm Cullen International. (…) Huawei and ZTE have retained 30 to 35 per cent of the European mobile infrastructure market, down only 5 to 10 percentage points from 2020, data from Dell’Oro Group shows.  

Germany has 59 per cent of installed 5G gear sourced from Chinese groups, according to John Strand of Strand Consult, even though the country plans to phase out some equipment from high risk Chinese vendors by 2029. “All the mobile network equipment in Berlin is Chinese,” said Strand. “Germany has big industries like chemicals and cars that don’t want relations with China to be hurt.”

AI CORNER

10% of the world’s population now uses ChatGPT

A recent publication by OpenAI reported that the number of users ChatGPT sees each week is now around 700 million, which translates to roughly 10% of the world population. With a deployment that vast, GenAI is not only being increasingly adopted in enterprises but is also becoming a part of our everyday lives.

In June 2024, 53% of the messages were non-work-related, which in June 2025 stands at 73%, leaving 27% categorised as work-related messages.

77% of the conversations are reported being used for practical guidance (29%), information seeking (24%), and writing (24%). However, when it comes to only work-related messages, it is largely used for writing (40%), practical guidance (24%) and technical help (10%).

Based on the output that the user wants to receive, the messages sent to ChatGPT can also be classified into three types: doing, asking and expressing. These have different economic implications.

Doing messages – using ChatGPT to perform tasks such as writing, generating code, analysing data, etc. – produce directly usable output and can be seen as automation of tasks.

Asking messages – seeking information to be better informed – help in supporting user decisions but do not directly produce output, serving as an augmentation tool.

Expressing messages, which are neither for information seeking nor performing a task, contribute negligibly to productive output.

Currently, 35% of messages are doing related and 52% are asking, highlighting the dual role of ChatGPT as a co-worker producing output and a co-pilot aiding problem-solving. The most common tasks can be combined into two main functions; a) gathering, documenting, analysing, and interpreting information, and b) thinking, solving problems and providing consultation. This shows that generative AI currently aids people with either the quality or speed of their work, which is a productivity improvement.

Share of work-related messages sent to ChatGPT

Sample from May 2024 to June 2025

Source: NBER, OpenAI

Currently, usage is roughly balanced between men and women but there are differences in how they use it. Women tend to send mostly writing and practical guidance queries, while men tend to use it more for technical help, information seeking, and multimedia.

The share of work-related messages also increases with age, education level, and for highly paid professional occupations. This suggests that GenAI might currently be providing more productivity benefits for users who already have access to better jobs and education, validating earlier concerns about its disproportionate impact.

A recent Standford study in the US further supports this, by showing a decline in employment for early-career employees.

The disparities in usage might suggest unequal benefits. Men tend to use GenAI at work for tasks centred around asking – such as information seeking – reflecting a more augmented, decision-supported role for AI. In contrast, women more often use AI for doing tasks like writing, which are more closely linked to automation and have a higher risk of replacement. Moreover, highly educated employed users stand to gain more, while opportunities for junior employees could be limited.

This makes us think about something Nvidia CEO Jensen Huang’s said recently: “You’re not going to lose your job to AI, you’re going to lose your job to someone who uses AI.” While embracing this technology offers clear productivity gains, those who use it best will have a distinct advantage.

Russell 2000 Is For Losers, But Is Currently Winning

The Russell 2000 small-cap stock price index is outperforming the S&P 600, another small-cap index. The former includes many more companies that are losing money than the latter. This is yet another sign of mounting speculative froth in financial markets in response to the Fed’s 25bps cut in the federal funds rate on September 17.

The S&P 600’s requirement that companies demonstrate positive earnings before being included acts as a screening tool, filtering out many of the most speculative or financially distressed businesses that are often found in the broader Russell 2000.

The percentage of companies in the Russell 2000 Index that lose money has generally been quite high in recent years, often hovering around 40%. The similar percentage for the S&P 600 is closer to 20%. (…)

‘Crazy, Right?’: More PE Funds Than McDonald’s Signals Pressure

“There are 19,000 private equity funds in the US. There are 14,000 McDonald’s in the US. How are there more private equity funds than McDonald’s? That’s actually crazy, right?” KKR & Co. partner Alisa Wood said Wednesday at Bloomberg’s Women, Money and Power event in London. “Capital coming back is really important. The mark-to-market paper gains only take you so far.” (…)

Private equity firms are now raising and deploying billions of dollars into artificial intelligence, particularly data centers, with hopes the emerging asset class will deliver the beleaguered industry the next surge of growth. They’re acquiring AI companies and data-center providers through their equity and real estate businesses, as well as lending against those assets. (…)

“Data centers are a great place to be positioned” because “you’re not picking like which specific application within artificial intelligence is going to be the winner,” she said. “You win when you see the digitization of our world playing out, as we are all demanding more information, more compute, more content as well.”

McCarthy-Baldwin also pointed to another promising sign for the industry — the prospect of retail investors rushing into alternatives markets. Looser regulations are making it easier for Blackstone and its peers to expand beyond their traditional investor base to find new sources of capital that fuel investments. (…)

This embrace has prompted investors like Greenlight Capital founder David Einhorn to warn of the perils of pouring a deluge of cash into AI infrastructure. (…)

Trust in Media at New Low of 28% in U.S.