Morning Roundup

By Mark Masterson on October 16, 2025

Good morning,

Below are the news items moving markets today:

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Executive Summary

Happy Thursday!

Quick look around markets today…

First, the government shutdown update. 

Senate GOP leadership open to ACA vote to end shutdown (but numerous hurdles remain):

• MSNBC reported Senate Majority Leader Thune privately told Democratic leaders that he’s willing to make a deal on a vote for extending ACA subsidies in exchange for reopening the government.
• Thune also said he supported extending subsidies if they included reforms.
• However, Thune cautioned that he can’t guarantee a bill would pass that extends subsidies, but could ensure there would be a process and a vote in the Senate.
• However, position of White House or House Speaker Johnson also unclear, as Johnson has continued to argue any negotiation over enhanced Obamacare subsidies needs to happen after government reopens (Politico).
• A federal judge on Wednesday temporarily blocked Trump administration from conducting mass layoffs during the shutdown (NY Times), while Democrats now pushing for commitment that employees subjected to reductions-in-force would be rehired before agreeing to reopen government (Politico), adding new complexity to negotiations, could extend timeline of shutdown.

Markets rebounded a bit yesterday after more dovish Fed comments.  This time it was from Trump appointee Miran – who sees US-China tensions as further reason to cut rates:

• Governor Miran (voter) said he expects two more rate cuts this year and noted he sees substantial disinflation on the horizon over the coming year, particularly in housing.
• Continued he sees less value in changing policy gradually though does not see need for more than 50 bps worth of cuts.
• Also commented US-China trade tension poses new risk for outlook and that there is no evidence in data tariffs are causing inflation (CNBC).
• Separately, Treasury Secretary Bessent said he would present President Trump with a list of candidates to serve as the next Fed Chair in December. Noted he has narrowed potential candidates from 11 to 5 (Bloomberg).

More Bessent and Trump headlines from yesterday…..These two are making the rounds.

First this from Bessent….

Why would he make this comment now?

• BESSENT: TRUMP NEEDS EMERGENCY POWERS TO PROTECT U.S. ECONOMY

He added on China…..

• U.S. TREASURY SECRETARY SCOTT BESSENT ON CHINA: “THEY CAN’T BE TRUSTED.”
• BESSENT: “I AM OPTIMISTIC THIS CAN BE DE-ESCALATED,”
• JUST IN: Scott Bessent has reportedly aaked the world bank to end support for China, per FT

Finally, looks like the Trump Administration is looking to add price controls.  These are not typically associated with Republican, free market ideals….

• BREAKING: The Trump administration will set price floors across a range of industries to combat market manipulation by China, Treasury Secretary Scott Bessent said.

Trump also on China last night….

• TRUMP: WE’RE IN A TRADE WAR WITH CHINA NOW

President Trump also said he will go to the Supreme Court to watch their ruling on his Tariff Power.

• “That is why I’m going down to the Supreme Court to WATCH.”
• “I have not done that, but I think it is ONE of the MOST IMPORTANT Cases EVER Brought!”

That is must see TV.

A few quotes…..

The leader of the biggest bank in America, Jamie Dimon, says:

• “Gold could easily go to $5,000, $10,000 in environments like this.”

How about this stat….

• 73% of Americans say it’s a bad time to buy a house, per FORTUNE

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Articles of Interest:

• Trade/Tariffs:
  • China ratcheted up rare earths restrictions in response to US decision in late September to expand number of companies blacklisted from acquiring American technology (NY Times)
  • China says recent rare earth export controls not an outright ban and US misinterpreting the measures; notes that rare earths exports used for civil purposes will be approved (Newsweek)
  • China’s rare earths restrictions a key topic at G7 finance ministers meeting (Bloomberg)
  • Amid pickup in trade tensions with US, China’s Vice Premier He Lifeng to meet global CEOs in Beijing this week (Bloomberg)
  • Trump claims India promised they will halt purchases of Russian crude, but not immediately (Bloomberg)
• Markets:
  • Traders wagering on 50 bp Fed rate cut, betting delayed data will offer more evidence of economic weakness (Bloomberg)
  • Asset managers scaling back exposure to high yield bonds amid large decline in credit spreads (FT)
  • Goldman Sachs says top hedge fund traders are earning nearly 25% of profits they generate for investors (FT )
• Economy:
  • US seasonal job searches surged 27% while employer postings rose only 2.7%, indicating tough competition (Bloomberg )
• Washington:
  • Shutdown persists as both parties believe they hold the upper hand, with Trump not indicating potential support for a deal (link )
  • Treasury says federal government shutdown may cost the US economy up to $15B weekly, not daily (Reuters )
• Geopolitics:
  • US officials maintain that a White House-brokered Middle East plan is on track (Politico, FT )

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Charts of the day:

The below chart and commentary highlights how investors are taking their bullish convictions to extremes by using leverage.

The chart shows margin loans – which are surging.

What the chart does not include is the massive number of leveraged ETF’s that are now in place, with new ones rolling out almost daily.  Investors can now use leveraged ETF’s that offer 2X, 3X or more leverage on a specific investment to juice their returns.  When you include the surging assets in those leveraged ETF’s, you get a real sense of just how extreme the leverage is getting out there.

Everyone is talking about the AI bubble – proclaiming it or denying it – but this is what it looks like from the leverage point of view https://wolfstreet.com/2025/10/15/stock-market-leverage-blows-out/

10 15 25

A new record! 

The ratio of Growth stocks to Value stocks in the US hit another record high in September and is above the peak of the dot-com bubble in March 2000.

Clearly driven by tech stocks.

This too will reverse at some point in the future – just like it did in 1980, and in 2000.

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Quote of the day:

“For what shall it profit a man, if he gain the whole world, and suffer the loss of his soul?”

Jesus