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Swan Dive

A Tsunami Warning

Loading ...Addison Wiggin

July 30, 2025 • 5 minute, 18 second read


debtdebt refinancing

A Tsunami Warning

Overnight, the Pacific Rim stirred: a magnitude-8.8 earthquake struck Russia’s Far East — the strongest globally since 2011. Four-foot tsunami waves reached Hawaii, and tremors were felt as far as California, where emergency alerts briefly jolted residents awake.

One could only hope for such a warning in the economy and financial markets.

🌊 A Wave of Debt Is Upon Us

Just as seismologists track ocean waves for signs of destruction, we’re tracking an even more dangerous swell: The U.S. government must roll over $722 billion in debt this week alone.

In just the last two days, Washington pushed $476.5 billion in securities— from short-term T-bills to 5-year notes—into the market.

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New debt issuance by the U.S. Treasury in the first two days of this week alone (Source: Wolf Street)

Not all of it adds to the national debt (some replaces maturing securities), but much of it will pad deficits and refill the Treasury General Account at the New York Fed.

Turn Your Images On

Since the debt ceiling was lifted in early July, total government debt has surged $519 billion, to $36.73 trillion. If Treasury forecasts hold, we’ll end the year at $37.8 trillion. The river of debt has become a flood.

Here’s a fun exercise: The U.S. Debt Clock site puts the national debt at $37 trillion and change this morning, racking up at lightning speed.

If you scroll to the right on the banner of the page and open the “secret window,” you can download a new, free, graphic novel depicting the history of money and debt since pre-biblical times to our own crypto era.

Entertainment for the kids!

📉 Markets Wobble Ahead of the Fed

U.S. equity futures struggled for traction this morning, with the S&P 500 pulling back from record highs. Trump’s trade blitz continues — India may soon face a 20–25% tariff, although details remain scarce. Meanwhile, the U.S. and China resumed tariff ceasefire talks in Stockholm.

The dollar strengthened, hitting a one-month high against the euro on trade hopes, and oil jumped amid renewed threats of sanctions against Russia.

All eyes now turn to the Federal Reserve: Today’s interest rate decision — and Jerome Powell’s 2 p.m. press conference — will set the tone for the rest of the summer.

While markets expect no move, the stakes are enormous. As we noted yesterday, economist William Silber suggested the Fed may actually raise rates to cool elevated inflation (2.7%), despite Trump’s loud calls for cuts.

🏥 Great Society Echoes and the Road to Ruin

On this day in 1965, President Lyndon B. Johnson signed Medicare into law. With Harry Truman at his side, LBJ touted the program as a bold leap toward his Great Society.

But as detailed in our laboriously researched Empire of Debt, this noble ambition came at a price: two wars, one hot (Vietnam), one cold (poverty). The pattern of spending—on promises and foreign entanglements—outpaced the nation’s ability to pay.

By 1971, Nixon closed the gold window, severing the dollar’s tie to real value. Reagan’s deficits on a borrowed dime only deepened the addiction. Today’s $37 trillion debt isn’t new—it’s just the logical conclusion of a half-century of fiscal denial.

💊 Novo Nordisk Steps on the Scale

Novo Nordisk plummeted 21% after slashing its full-year forecast. The culprit? Weaker U.S. sales of its top drugs, Ozempic and Wegovy, and increased competition from Eli Lilly, whose Zepbound now leads in prescriptions.

Novo underestimated demand early on and got burned by FDA shortages and knockoff drugs. The board replaced CEO Lars Fruergaard Jørgensen with longtime executive Maziar Mike Doustdar — a move that has yet to impress investors.

📉 Shrinking Birth Rates, Growing Dynasties

Birth rates across the developed world are tanking — 1.59 in the U.S., and just 1.38 in Europe. But for billionaires, it’s boom time. Elon Musk has 14 kids, Pavel Durov claims over 100 heirs via donation, and Bernard Arnault’s brood runs the LVMH empire.

As countries get richer, fertility usually declines—but the wealthy seem determined to leave a legacy, not just an estate. The new status symbol isn’t just a Gulfstream or an AI fund—it’s a dynastic bench deep enough to field a soccer team.

📱 Smartphone Shift: India Overtakes China

For the first time ever, India is now the No. 1 exporter of smartphones to the U.S., thanks largely to Apple’s quiet shift away from Chinese factories. India accounted for 44% of U.S. smartphone imports last quarter, up from 13% the year before.

Even Vietnam shipped more than China. It’s the clearest signal yet that U.S.–China decoupling is more than talk—it’s production lines moving at scale.

📊 The Data Deluge Continues

The next 48 hours may decide whether this summer rally ends with fireworks or a fizzle.

This morning, investors await the ADP employment report, a snapshot of private sector hiring that offers clues ahead of Friday’s big nonfarm payrolls number. We’ll also get a look at second-quarter GDP and pending home sales—each carrying weight as markets search for clarity on the health of the economy.

But make no mistake: the main event is today’s Fed announcement and Powell’s press conference at 2 p.m. With inflation still hot and pressure from the White House mounting, Powell’s message will echo well beyond the Eccles Building. Catch the replay of our investor’s summit here, before 2 p.m.

🩻 Robinhood Rides the Meme Wave

Robinhood shares are up 400% in the past year, and it reports earnings tomorrow. Analysts are skeptical of the valuation—but retail trading remains white-hot, and Robinhood’s peers just posted record quarters.

Consensus: $0.34 EPS, $914.08 million in revenue. If Schwab and Interactive Brokers are any guide, the numbers could surprise to the upside.

📉 Margin Debt and Consumer Strain

Margin debt just hit a record $1.01 trillion, jumping $87 billion in June alone—the largest monthly increase in history. That surpasses the peaks seen before both the dotcom bust and the 2008 crisis. Relative to M2 money supply, it’s the highest since 2018. Risk appetite is off the charts.

Meanwhile, in the real economy: housing defaults just hit their highest level since 2011, and credit card defaults at small lenders are at record levels.

These pressures explain Trump’s desperate push for rate cuts… but if Powell resists, the fallout could be swift and severe.

~ Addison

P.S. Your thoughts? Please send them here: addison@greyswanfraternity.com


Disorderly Conduct

July 31, 2025 • Addison Wiggin

The Personal Consumption Expenditures (PCE) Index is the Fed’s favorite inflation gauge. Economists expect it to rise from 2.3% to 2.5% as tariff pressures bleed through. Core PCE, which strips out food and energy, is widely expected to hold at 2.7%.

Earnings season update: We’ll also hear from Apple, Amazon, Mastercard, Coinbase, Ferrari, and S&P Global, among many others. It’s a crucial read on whether this earnings rally has legs—or if it’s a sugar high.

Retail investors are likely to respond when the indexes move in a clear direction up or down. We suspect it’s going to take an exogenous event to make record retail investor sentiment come down off market euphoria.

In other words, the market remains a bubble in search of a pin… ‘cept earnings seem to be keeping a few key stocks aloft.

Disorderly Conduct
“Free Money” – And Other New Age Delusions

July 30, 2025 • Addison Wiggin

The Bureau of Labor Statistics changed the way it calculated productivity. It began to look at what it called a “hedonic” price index that took into account not just the price of computer equipment, but its computational power.

On the surface, this makes some sense. If a dollar buys twice as much computational power one year as the next, it is as if the price of computing power had fallen in half. The third quarter of 1995 was the first time this change took effect. It miraculously transformed $2.4 billion in computer spending into $14 billion of output, instantly boosting GDP by 20%, lowering inflation, and increasing productivity (output per hour).

The number for the fourth quarter, to repeat, was spectacular. Incredible. It was revised later to an even more incredible 6.9%. The only trouble was that it was not real.

It was, like the New Era that supposedly made it possible, a fraud. More computational power is not the same as economic growth. And being able to turn out more computational power for each hour of labor input is not the same as an increase in labor productivity.

“Free Money” – And Other New Age Delusions
Lies, Damn Lies, and Government Statistics

July 30, 2025 • Addison Wiggin

CPI, which drives inflation, is usually based on the costs of about 90,000 goods across the economy. But with one-third of the data now based on an estimate — or worse, a guesstimate — it makes CPI data suspect.

This makes other measures, like PPI, suspect, making it impossible for the Fed to accurately determine inflation or its trend.

Lies, Damn Lies, and Government Statistics
The Crack-Up Boom – Part II

July 29, 2025 • Addison Wiggin

Never in the history of man had any people been able to get rich by spending money  .  .  .  nor had investment markets ever made the average buy-and-hold investor rich  .  .  .  nor had paper money, unbacked by gold, ever retained its value for very long.

In the late 1990s, however, all these things seemed not only possible, but inevitable. Everything seemed to be going in Americans’ favor. Then, suddenly, at the beginning of this new century, everything seemed to be going against them.

How could US consumer capitalism, which had been phenomenally successful for so long, fail them now? It can’t, they will say to themselves. Why should they have to accept a decline in their standards of living, when everybody knew that they were getting richer and richer? It cannot be.

Besides, said Americans to themselves in early 2003, if there were problems, they must be the fault of others: terrorists, greedy CEOs, or policy errors at the Fed.

The Crack-Up Boom – Part II