As Washington’s shutdown drags on, consumer sentiment has crashed to a three-year low, with Americans feeling poorer, worried about their jobs, and convinced the economy is running on political circus fumes.

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While the geopolitical chess match with the American Empire drags on, China’s inflation finally showed a pulse: CPI rose 0.2% year over year after September’s drop, beating expectations and proving the economy isn’t entirely in hibernation. Food prices fell less sharply, non-food costs crept higher, and core CPI hit its strongest level since March 2024. Even PPI deflation eased, helped by fewer price wars and better capacity management in everything from solar gear to batteries. In short, China’s price data isn’t booming—but at least it’s no longer flatlining.

When observing the spread between China’s core CPI and PPI—positive for 38 consecutive months—we see a reflection of corporate vitality and resilience. In a highly competitive market, companies that offer better quality at lower cost naturally rise, while others yield and make room, much like the Confucian principle that harmony emerges when each fulfils its proper role. This dynamic resembles the true spirit of “Darwinian” capitalism that many nations praise but no longer fully practice. China’s experience reminds us of that prosperity stems from diligence, discipline, and the continuous refinement of one’s offerings, not from complacency or boastful claims about economic superiority.

In a nutshell, China’s inflation finally stirred, and a 38-month positive CPI–PPI spread shows its most competitive firms quietly thriving while weaker ones bow out—a Confucian lesson in economic discipline.

In a curious twist worthy of a Confucian eyebrow raise, the land that prides itself on capitalism watches as Donald Copperfield, the eternal conjurer of political sleight-of-hand, announces yet another vanishing act for fiscal gravity: a “dividend of at least $2,000” for most Americans, magically funded by tariffs. With a flourish on Truth Social, he declares that these tariffs have summoned “trillions” into the treasury, 401(k)s are at “Highest EVER,” and inflation—poof! —has disappeared like a poorly performed illusion. One can almost hear Confucius sigh: “He who chases applause with illusions may find the people clapping, yet the Way remains unmoved.”

In the grand theatre of American finance, Treasury—loyal soldier of the Keynesian deep state and former scribe to George Soros—announces $195 billion collected from tariffs, dreaming of $500 billion annually. He claims the aim is “rebalancing trade,” yet whispers of $2,000 dividends, delivered via tax tricks or creative deductions, float like incense over the markets. Confucius might observe: “When rulers scatter gold from the sky, the people rejoice, yet the Way of moderation quietly shakes its head.”

https://www.youtube.com/watch?v=jv7uLF9F41I

In a nutshell, when political magicians shower the people with $2,000 “tariff dividends,” the crowd cheers, the markets dance, but the Way of moderation quietly shakes its head.

While everyone is talking about ‘Tariff Dividends, American household debt has hit a new zenith—$18.59 trillion after a $197 billion jump in Q3—leaving consumers, the supposed backbone of the economy, wobbling under mountains of mortgages, student loans, and credit card balances. Manufacturing slumbers in contraction, trade winds falter, and confidence has fled like a startled bird.

Mortgages cling to pandemic-era rates, bidding wars fade, and young people watch homeownership as a distant legend. Student debt now tops $1.65 trillion, with delinquencies ticking up, while credit cards swell to $1.23 trillion.

The lesson, whispered in the Confucian winds: when the people are shackled by debt, the nation’s prosperity teeters; applause cannot mask fragility, and even the smallest shock reverberates through the whole household of America.

The Macro Butler rolled out of bed at dawn—before even the coffee knew what was happening—to join BFM 89.9 and unpack how the U.S. government shutdown is turning the economy into a sitcom, what the Fed might (or might not) do next, and why the smart money is quietly sneaking out of energy-consuming sectors and into energy producers as America drifts toward its inevitable inflationary bust.

https://themacrobutler.substack.com/p/interview-with-bfm-899-malaysia-1011

As the shutdown circus limped to an end, the U.S. threw $58B of 3-year paper onto the market—investors showed up like it was Black Friday. The yield crept to 3.579% from 3.576%, nudging past the “When Issued” price by 1 basis point for the third straight time—the biggest poke-through since February 25.

The bid-to-cover jumped to 2.850 from 2.663 in October—the highest since August ’23 and well above the 2.583 average. Indirects held steady at 62.96%, above their 62.36% norm, while Directs rose to 27.32%, the strongest since August. Dealers got stuck with just 9.7%, below both last month’s 10.7% and the 13.8% average.

Overall, a surprisingly solid auction—but many investors still haven’t realized that in a U.S. increasingly resembling a banana-republic portfolio, the only assets worth owning are stocks and gold, while bonds and cash are just expensive IOUs.

While everyone was lost in the drama of Washington’s latest shutdown soap opera, the Fed quietly slipped $125 billion into the repo market — like a magician pulling cash from a hat, only this time the trick drained straight out of the Reverse Repo rabbit hole.

The widening SOFR–Fed Funds spread is flashing red, screaming “liquidity crisis,” but the problem runs deeper—the system’s spring is coiling tight again. With bank reserves at a four-year low of $2.8 trillion, the Fed’s back in the repo game, quietly swapping Treasuries for cash so banks can offload debt without calling it a bailout.

The public must trust the banks, and the banks must trust that the Fed will catch them when they fall. In 2025, a few small banks quietly vanished—small enough not to spook the herd. The Fed fears panic more than inflation; Powell knows price control is gone, but fear control isn’t—yet. The cycle can’t be stopped. As 2032 nears, expect tighter rules, frozen credit, and the final act: when banks stop trusting the Fed, and people stop trusting banks.

While the bond market was taking a well-deserved nap for Veterans Day and Washington was still performing its never-ending shutdown soap opera, the Treasury decided to sneak in a casual $42 billion 10-year auction—because what’s a little more debt between friends? The notes priced at 4.074%, slightly down from last month’s 4.117%, marking the second-lowest yield since October and, for extra drama, managed to tail the When-Issued by a whopping 0.6 bps. Nothing says fiscal discipline like celebrating veterans by selling more IOUs.