Riskier Business.
Outwardly strong, inwardly brittle.
“I start every day pretty much the same way: Coffee and News Items.” — Richard Haass, president emeritus, Council on Foreign Relations.
1. Bloomberg ‘Big Take’:
Private equity firms and other alternative asset managers — including Ares Management Corp., Blackstone Inc., Brookfield Corp. and KKR & Co. — are reshaping the once-staid world of life insurance. Over the past decade, they’ve bought, built or partnered with insurers that sell policies and annuities, collectively commanding hundreds of billions of dollars.
In a previous era, life insurers parked their money in the safest corners of the market — mostly high-grade bonds and big-name stocks. But as Wall Street firms expanded into the business, they adopted bolder strategies to boost profits.
Many are shifting liabilities to offshore affiliates subject to less detailed disclosure requirements than in the US. Insurers and those overseas entities are also pursuing higher returns with more sophisticated and potentially less-liquid investments — such as exotic asset-backed securities and other bets tied to private credit or private equity.
Read the rest. (Source: bloomberg.com)
2. On Saturday, we posted Mary Williams Walsh’s well-reported take on “private equity firms and other alternative asset managers……reshaping the once-staid world of life insurance”. Read it in tandem with the Bloomberg ‘Big Take’ above. (Source: substack.news-items.com)
3. Financial Times:
A flood of capital from private credit firms is pushing reinsurers into taking on riskier business through more lightly regulated intermediaries, industry bosses told the Financial Times.
Private capital firms have been muscling into the $2 trillion property and casualty sector with direct acquisitions, and by providing reinsurance capital through asset management agreements.
“We’re seeing private credit, specifically, being much more aggressive — shifting their focus from the life sector, looking more at casualty,” Kevin O’Donnell, chief executive of RenaissanceRe, said at the Financial Times/PwC Insurance Summit in Bermuda.
“Because they’re not a regulated reinsurance company, they can have much more leverage and a different investment appetite,” he said. “It’s really an arbitrage between the restrictions we have in our investments, and the freedom that they have on theirs.” (Source: ft.com)
4. Just a little more than a month after reaching an all-time high, Bitcoin has erased the more than 30% gain registered since the start of the year as the exuberance over the pro-crypto stance of the Trump administration fades. The dominant cryptocurrency fell below $93,714 on Sunday, pushing the price beneath the closing level reached at the end of last year, when financial markets were rallying following President Donald Trump’s election victory. Bitcoin soared to a record $126,251 on Oct. 6, only to begin tumbling four days later after unexpected comments on tariffs by Trump sent markets into a tailspin worldwide. (Source: bloomberg.com)
5. Eurointelligence:
If we had to pinpoint the biggest foreseeable financial and monetary shock that is coming our (Europe’s) way, it is US-dollar stablecoins. We just heard an estimate from Stephen Miran, a Trump-appointed Fed governor, that the issuance volume until the end of the decade would be in the order of $1-3 trillion. The entire volume of Fed asset purchases during the Covid era was $3 trillion. The total amount of Treasury bills outstanding today is $7 trillion. The planned issuance of stablecoins will constitute a large and permanent expansion of US debt, and lower interests in the US. We think that the recently passed Genius Act, which regulates the US domestic stablecoin industry, is one of the economically most consequential piece of legislation in our time.
Formally, a US-dollar stablecoin are crypto assets that promises to pay a value of $1. They are financial instruments, backed one-to-one by US government debt, that can be used as payments for transaction. The big economic consequence is that they will allow the US government to borrow a lot more money. The reason why this will be a shock for the rest of the world is that the stablecoins will interfere in other people’s monetary systems. (Sources: federalreserve.gov, eurointelligence.com)
6. The European Central Bank could be forced to adjust monetary policy if a run on stablecoins were to send shockwaves through the economy, a top ECB policymaker told the Financial Times. “If stablecoins in the US increase at the same pace as they have been increasing . . . they will become systemically relevant at a certain point,” Dutch central bank governor Olaf Sleijpen said in an interview, adding the digital tokens could create risks for financial stability, the economy and inflation in Europe that would potentially force the ECB’s hand. This year, the volume of digital tokens that track currencies such as the US dollar has shot up by 48 per cent to more than $300 billion as US President Donald Trump enacted new rules paving the way for stablecoins to be issued by the private sector. Many are backed by US Treasuries as underlying assets. (Source: ft.com)
7. Helen Gao:
Behind the orderliness of everyday life, a quiet desperation simmers. On social media and in private conversations, there is a common refrain: worry over joblessness, wage cuts and making ends meet…
Internationally, China looks strong…That muscular facade is punctured here in China, where despair about dimming economic and personal prospects is pervasive. This contrast between a confident state and its weary population is captured in a phrase Chinese people are using to describe their country: “wai qiang, zhong gan,” roughly translated as “outwardly strong, inwardly brittle.”
Many now feel the very state policies that have made China appear strong overseas are hurting them. They see a government more concerned with building global influence and dominating export markets than in addressing the challenges of their households…These days, there is a sense of bitter anger among the people at being the voiceless victims of the state’s obsession with world power and beating the United States…The government recently began cracking down on social media content it considered “excessively pessimistic” — a clear sign it is concerned about this public unease undercutting its agenda. (Sources: fairbank.fas.harvard.edu, nytimes.com, bloomberg.com)
8. Most Medicare enrollees will face premiums that are 10% higher next year, creating budget anxiety for millions of seniors. Older adults and people with disabilities will pay almost $203 per month in 2026 for their Medicare Part B premium, the Trump administration said late Friday. That’s about 10% higher than the $185 per month that Medicare beneficiaries pay this year. Rising health care costs are a major concern among voters, and more expensive Medicare premiums could add to that frustration ahead of next year’s midterm elections. (Source: statnews.com)
9. The Committee for a Responsible Federal Budget:
The Social Security and Medicare trust funds are only a little more than seven years from insolvency, based on projections from the programs’ own Trustees in combination with our estimates of the impact of the One Big Beautiful Bill Act (OBBBA). The law dictates that when the trust funds deplete their reserves, payments are limited to incoming revenues. For the Social Security retirement program, we estimate that means a 24 percent benefit cut in late 2032, after the enactment of OBBBA.
We estimate that this would be equal to an $18,100 annual benefit cut for a dual-earning couple retiring at the start of 2033 – shortly after trust fund insolvency. At the same time, those retirees might experience reduced access to health care due to an 11 percent cut in Medicare Hospital Insurance payments. The cuts would grow over time as scheduled benefits continue to outpace dedicated revenues. (Source: crfb.org, 24 July 2025)
10. Princeton University engineers have created a superconducting qubit that remains stable for three times longer than the strongest designs available today. This improvement represents an important move toward building quantum computers that can operate reliably. “The real challenge, the thing that stops us from having useful quantum computers today, is that you build a qubit and the information just doesn’t last very long,” said Andrew Houck, leader of a federally funded national quantum research center, Princeton’s dean of engineering and co-principal investigator on the paper. “This is the next big jump forward.” (Source: sciencedaily.com)
11. The new nuclear race has begun. But unlike during the Cold War, the U.S. must prepare for two peer rivals rather than one—at a time when it has lost its clear industrial and economic edge. China, which long possessed just a small nuclear force, is catching up fast, while Russia is developing a variety of new-generation systems aimed at American cities. Russian President Vladimir Putin has already used nuclear saber-rattling to throttle American support for Ukraine. He has deployed nuclear weapons to Belarus and, in recent weeks, tested a nuclear-powered missile and a nuclear-powered submarine drone that he claims are impervious to American defenses. While Russia and the U.S. are still abiding by some arms-controls limits, such as the New Start treaty that expires in February, China, unconstrained by any commitments, is quietly but rapidly leaping ahead. According to American estimates, Beijing will reach rough parity with the U.S. in deployed nuclear warheads by the mid-2030s. (Source: wsj.com)
12. The U.S. is falling behind China in one of the defining technologies of the modern battlefield. Drones have proven indispensable in conflicts like Ukraine, where troops rely on them to destroy tanks, lay mines, evacuate wounded fighters, and deliver food and medication. Advances in artificial intelligence increasingly allow unmanned systems to operate with minimal human direction, such as tracking and attacking targets on their own. For years, the U.S. led in quality while China won on quantity. But across the spectrum, from stealth drones capable of flying at the edge of space to cheap foldable quadcopters that fit in a soldier’s backpack, Chinese technology has either drawn even with the U.S. or nudged ahead. (Source: wsj.com)
13. Chileans rallied behind hard-line conservatives in elections yesterday as rising anger over crime and immigration pushes the mineral-rich country to the right, setting the stage for a possible alignment with President Trump. In the first round of a presidential vote, some 70% of voters backed the four leading right-wing candidates. José Antonio Kast, a 59-year-old ultraconservative former congressman, secured 24% of the vote, earning a spot in the Dec. 14 runoff vote. Jeannette Jara of the Communist Party, allied with President Gabriel Boric’s leftist government, placed first with some 27%, but far short of the majority needed for an outright victory. With other leftist candidates failing to garner support, Jara is widely expected to lose to Kast in next month’s runoff, polls show. (Source: wsj.com)
14. Several thousand people took to the streets of Mexico City on Saturday to protest crime, corruption and impunity in a demonstration organized by members of Generation Z, but which ended with strong backing from older supporters of opposition parties. The demonstration was mostly peaceful but ended with some young people clashing with the police. Protesters attacked police with stones, fireworks, sticks and chains, grabbing police shields and other equipment. In several countries this year, members of the demographic group born between the late 1990s and early 2010s have organized protests against inequality, democratic backsliding and corruption. (Source: apnews.com)
15. Hundreds of thousands of Filipinos gathered Sunday in the capital in the largest rally so far to demand accountability for a flood-control corruption scandal that has implicated powerful members of Congress and top government officials. Various groups have protested in recent months following the discovery that thousands of flood defense projects across one of the world’s most typhoon-prone countries were substandard, incomplete or simply did not exist. (Source: asia.nikkei.com)
16. Across the planet, animals are increasingly suffering from chronic illnesses once seen only in humans. Cats, dogs, cows, and even marine life are facing rising rates of cancer, diabetes, arthritis, and obesity — diseases tied to the same factors affecting people: genetics, pollution, poor nutrition, and stress. A new study led by scientists at the Agricultural University of Athens proposes a unified model linking these conditions across species. (Sources: sciencedaily.com, onlinelibrary.wiley.com)
17. A hidden physical change in the body may be helping to drive the prolonged malaise some people experience after contracting Covid-19. Analyzing blood samples from patients with long Covid, a team of medical researchers has identified unusual microscopic structures that may contribute to symptoms such as brain fog and fatigue. If this is the case, it offers a hopeful target for future treatment. (Source: sciencealert.com)
Quick Links: Japan’s economy contracts for first time in six quarters on tariff hit. Iran starts cloud seeding as water crisis forces rationing. Number of new foreign students in US falls 17% over visa worries.
Financialization Links: Ant International, UBS partner on blockchain-based cross-border payments. Spain’s deficit to fall below Germany’s for the first time in two decades. Daily Dave!: Goldman Sachs on brink of best M&A performance in 24 years.
Political Links: President Trump said House Republicans should vote to require the Justice Department to release its files on Jeffrey Epstein. Trump: “The House Oversight Committee can have whatever they are legally entitled to, I DON’T CARE!” The data center resistance has arrived. Inside the multimillion-dollar plan to make mobile voting happen. Nearly half of Western voters think democracy is broken, international poll finds. Hundreds of thousands rally in Manila against flood-control corruption scandal
Science/Technology Links: The future of AI, according to six people at the forefront of AI development. A tool called AI-Newton can derive scientific laws from raw data, but is some way from developing human-like reasoning. Alibaba’s Qwen app challenges AI subscription models with free access. Libel? New court cases seek to define content created by artificial intelligence as defamatory. Skin cancer cluster found in 15 Pennsylvania counties with or near farmland. Ethiopia confirms outbreak of deadly Marburg virus.
War: Hamas’s popularity has edged up among Palestinians in Gaza since the cease-fire. President Trump said the U.S. may hold talks with Venezuelan President Nicolás Maduro. Russia seizes land after Kyiv diverts troops.