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Plummeting bank stocks lead global selloff as fear of private credit ‘contagion’ hits across equities and the dollar

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S&P 500 futures were down more than a full percentage point this morning, after markets in Asia and Europe sold off heavily in reaction to two small regional U.S. banks that reported exposure to a potentially fraudulent loan worth only $60 million. 

The “contagion”—as ING called it in a note this morning—spread to Nasdaq 100 futures, which were down 1.4% this morning. The VIX “fear” index (which measures volatility) spiked 32% today. It has not been that high since President Trump roiled the market with his Liberation Day tariffs in April.

Until yesterday afternoon, few people outside of Utah and Arizona had ever heard of Zions Bancorporation or Western Alliance Bank. The lenders disclosed that they were exposed to $50-$60 million in bad loans that were potentially fraudulent.

What happened next was extraordinary: 74 American bank stocks lost $100 billion in market cap as the S&P 500 declined 0.63%. “The S&P Regional Banks Select Industry Index fell 6.3% on Thursday – the worst fall since Liberation Day,” Peter Schaffrik of RBC told clients in a note this morning.

Investors are spooked by the First Brands scandal, in which the car parts supplier took more than $10 billion in loans on the private credit market and then went bankrupt.

Although Goldman Sachs, JPMorgan and Citi all used their earnings calls this week to insist that their due diligence in rating the loans they give out to companies via private credit is both diversified and sound, traders this morning are running for the hills.

In Europe, the Stoxx 600 and the FTSE 100 both lost more than a full percentage point immediately after they opened. 

ING’s Francesco Pesole noted, “The contagion to other risk assets shows not only that markets are still sensitive to regional bank concerns (a legacy of SVB’s 2023 collapse), but potentially to the broader credit market, which has been operating on exceptionally tight spreads over the past few months.”

It is even hurting the dollar, which was down 0.08% this morning and has lost 0.73% of its value against foreign currencies in the last five days, as measured by the DXY index.

“Unlike in 2023, the risks appear more isolated this time, but they could feed into a narrative that the U.S. business environment and credit quality are in a poorer state than what data suggests, perhaps also due to AI distortions. Expect great scrutiny over upcoming regional bank earnings, with any further spillover into U.S. stocks set to extend the dollar sell-off,” Pesole said.

Peter Sidorov and his colleagues at Deutsche Bank told clients that the selling had moved into high-yield credit as investors switched into the safe haven of U.S. government bonds. “Other risk assets also struggled, with US HY credit spreads +10bps wider. Treasuries rallied with the 2yr yield dropping -7.3bps to a 3-year low of 3.42%,” he said.

Chatter among analysts is gloomy. “Inside credit markets for more than a year, there has been a grudging recognition that there was and is a series of credit problems that could be substantial and could be dangerous to the overall economy,” Andrew Milgram, chief investment officer of Marblegate Asset Management told the Financial Times.

Finally, banks have unexpectedly borrowed money via the U.S. Federal Reserve’s “repo” facility for a second straight day. They normally only do that at the end of the month or the quarter, the Wall Street Journal said—suggesting the supply of cash reserves at some banks is tighter than expected.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

  • S&P 500 futures were down 1% this morning. The index closed down 0.63% in its last session.
  • STOXX Europe 600 was down 1.58% in early trading. 
  • The U.K.’s FTSE 100 was down 1.61% in early trading. 
  • Japan’s Nikkei 225 was down 1.44%.
  • China’s CSI 300 was down 2.26%. 
  • The South Korea KOSPI was flat. 
  • India’s Nifty 50 was up 0.47% before the end of the session. 
  • Bitcoin was down to $104.9K.



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49-year-old Democrat who owns a gourmet olive oil store swipes another historically Republican district from Trump and Republicans

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Democrat Eric Gisler claimed an upset victory Tuesday in a special election in a historically Republican Georgia state House district.

Gisler said he was the winner of the contest, in which he was leading Republican Mack “Dutch” Guest by about 200 votes out of more than 11,000 in final unofficial returns.

Robert Sinners, a spokesperson with the secretary of state’s office, said there could be a few provisional ballots left before the tally is finalized.

“I think we had the right message for the time,” Gisler told The Associated Press in a phone interview. He credited his win to Democratic enthusiasm but also said some Republicans were looking for a change.

“A lot of what I would call traditional conservatives held their nose and voted Republican last year on the promise of low prices and whatever else they were selling,” Gisler said. “But they hadn’t received that.”

Guest did not immediately respond to a text message seeking comment late Tuesday.

Democrats have seen a number of electoral successes in 2025 as the party’s voters have been eager to express dissatisfaction with Republican President Donald Trump.

In Georgia in November, they romped to two blowouts in statewide special elections for the Public Service Commission, unseating two incumbent Republicans in campaigns driven by discontent over rising electricity costs.

Nationwide, Democrats won governor’s races by broad margins in Virginia and New Jersey. On Tuesday a Democrat defeated a Trump-endorsed Republican in the officially nonpartisan race for Miami mayor, becoming the first from his party to win the post in nearly 30 years.

Democrats have also performed strongly in some races they lost, such as a Tennessee U.S. House race last week and a Georgia state Senate race in September.

Republicans remain firmly in control of the Georgia House, but their majority is likely fall to 99-81 when lawmakers return in January. Also Tuesday, voters in a second, heavily Republican district in Atlanta’s northwest suburbs sent Republican Bill Fincher and Democrat Scott Sanders to a Jan. 6 runoff to fill a vacancy created when Rep. Mandi Ballinger died.

The GOP majority is down from 119 Republicans in 2015. It would be the first time the GOP holds fewer than 100 seats in the lower chamber since 2005, when they won control for the first time since Reconstruction.

The race between Gisler and Guest in House District 121 in the Athens area northeast of Atlanta was held to replace Republican Marcus Wiedower, who was in the seat since 2018 but resigned in the middle of this term to focus on business interests.

Most of the district is in Oconee County, a Republican suburb of Athens, reaching into heavily Democratic Athens-Clarke County. Republicans gerrymandered Athens-Clarke to include one strongly Democratic district, parceling out the rest of the county into three seats intended to be Republican.

Gisler ran against Wiedower in 2024, losing 61% to 39%. This year was Guest’s first time running for office.

A Democrat briefly won control of the district in a 2017 special election but lost to Wiedower in 2018.

Gisler, a 49-year-old Watkinsville resident, works for an insurance technology company and owns a gourmet olive oil store. He campaigned on improving health care, increasing affordability and reinvesting Georgia’s surplus funds

Guest is the president of a trucking company and touted his community ties, promising to improve public safety and cut taxes. He was endorsed by Republican Gov. Brian Kemp, an Athens native, and raised far more in campaign contributions than Gisler.



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Rivian CEO says it’s a misconception EVs are politicized, with a 50-50 party split among R1 buyers

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If Rivian’s sales are any indication, owning an electric vehicle isn’t such a partisan issue, despite President Donald Trump’s rollbacks of mandates, incentives, and targets for EVs.

At the Fortune Brainstorm AI conference in San Francisco on Tuesday, Rivian CEO RJ Scaringe said it’s a misconception that electrification is politicized, explaining that most customers buy a product based on how it fits their needs, not their ideology. The questions car buyers ask, he said, are the same whether they’re purchasing one with an internal-combustion engine or a battery: “Is it exciting? Are you attracted to the product? Does it draw you in? Does the brand positioning resonate with you? Do the features answer needs that you have?”

Buyers of Rivian’s R1 electric SUV are split roughly 50-50 between Republicans and Democrats, Scaringe told Fortune’s Andrew Nusca. “I think that’s extraordinarily powerful news for us to recognize—that this isn’t just left-leaning buyers,” he added. “These are people that are saying, ‘I like the idea of this product, I’m excited about it.’ And this is thousands and thousands of customers. This is statistically relevant information.”

Buying an EV was once an indication of left-leaning politics, but the politics got scrambled after Tesla CEO Elon Musk became the top Republican donor and a close adviser to Trump. That drew some new customers to Tesla, and turned off a lot of progressive EV buyers, with many existing owners putting bumper stickers on their Teslas explaining that they bought their cars before Musk’s hard-right turn. Trump and Musk later had a stunning public feud, in part over the administration’s elimination of EV and solar tax credits.

But Scaringe said he started Rivian with a long-term view, independent of any policy framework or political trends. He also insisted that if Americans have more EV choices, sales would follow. Right now, Tesla dominates a key corner of the market, namely EVs in the $50,000 price range. Rivian’s forthcoming R2 mid-size SUV will represent a new choice in that market, with a starting price of $45,000 versus the R1’s $70,000.

Ten years from now, Scaringe said he hopes—and believes—that EV adoption in the U.S. will be meaningfully higher than it is today across the board, explaining that the main constraint isn’t on the demand side. Instead, it’s on the supply side, which suffers from “a shocking lack of choice,” especially compared to Europe and China, he added. EV options in the U.S. are limited by the fact that Chinese brands are shut out of the market.

More choices for U.S. EV buyers would presumably create more competition for Rivian—and indeed, the flood of low-priced Chinese EVs in other auto markets has created a backlash, with countries such as Canada imposing steep tariffs on them. But Scaringe appears to view more competition as positive for the market overall.

“I do think that the existence of choice will help drive more penetration, and it actually creates a unique opportunity in the United States,” he said.



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Powell warns of a ‘very unusual’ economy as inflation remains high amid a weakening job market

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Federal Reserve Chair Jerome Powell on Wednesday described the U.S. economy as “very unusual,” saying policymakers are navigating a rare combination of tariff-driven goods inflation and a labor market that may already be weaker than official data suggests.

The Fed cut interest rates for the third consecutive meeting, a quarter-point reduction Powell framed not as a confident pivot toward easier policy, but as a defensive move meant to keep the labor market from slipping further. He repeatedly emphasized risks to employment have risen “in recent months,” and noted that behind the headline numbers, job creation may already be negative.

Powell made the striking admission the Fed believes the official payroll figures—which have slowed sharply since the summer—are overstating job growth by roughly 60,000 per month. 

“Forty thousand jobs could be negative 20,” he said, adding this dynamic is not well understood by the public because unemployment claims remain historically low—something both economists Mark Zandi and Claudia Sahm recently toldFortune could be giving people a false sense of security about the job market.

“I think a world where job creation is negative… we need to watch that very carefully,” Powell said. 

It is this weakening backdrop Powell said makes the current moment “very unusual”: Inflation remains elevated, but most of the remaining overshoot comes from goods categories directly affected by tariffs, as opposed to domestic economic overheating, which he said the Fed has worked hard to cool since its 2022 highs; inflation excluding tariff-affected goods is “in the low [two percent],” he said. Services inflation is cooling, wage pressures are easing, and neither the labor market nor business surveys suggest a “Phillips-curve” kind of inflation threat, Powell said, referring to the inverse relationship between inflation and unemployment. 

Instead, Powell said, the bulk of the problem is a “one-time price increase” pushing up goods categories as import levies work their way through supply chains. Goods inflation, he noted, should peak around the first quarter of 2026, assuming no additional tariff rounds.

Those crosscurrents have fractured the Fed. Three officials formally dissented from the rate cut on Wednesday, and several others offered what Powell described as “soft dissents,” when an official’s personal projection falls out of what they ultimately voted for. There were six such “soft dissents” this time, during one of the deepest divides inside the FOMC in years, driven by disagreement over how to weigh the risks of lingering inflation against the possibility that job growth is weaker—and much more fragile—than reported.

Powell stressed that policymakers cannot simply choose one mandate to prioritize. 

“There is no risk-free path,” he said, a refrain he’s repeated for months. “When both sides of the mandate are threatened, you should be kind of neutral.” 

He characterized the current stance as being at the “high end” of neutral, allowing the Fed to “wait and see” how the data evolve.



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