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By Michael Every of Rabobank

US CPI, even weaker-than-expected 0.1% m-o-m headline and core and 2.4% and 2.8% y-o-y, wasn’t the main event. Neither was President Trump again calling for the Fed to cut 100bps at its next meeting to lower US debt-servicing costs (when our Fed-watcher Philip says it will cut 25bps in September, then stop.) Instead - again - it was geoeconomics and geopolitics.

The ECB’s Lagarde used a platform at the PBOC to state that “coercive trade policies are not a sustainable solution to today’s trade tensions” -- in the same way violence is never a solution to violence?-- and are “far more likely to provoke retaliation and lead to outcomes that are mutually damaging” – which is exactly where the threat of violence can come in. Was that aimed at the US or China though? She also added, “That means both surplus and deficit countries must take responsibility and play their part.” Was that aimed at China and Germany as well as the US?

Trump tweeted an unwritten “framework” based on the unwritten Geneva “consensus” would see Chinese students back at US universities and rare earths provided to US firms “up front”, with China facing a 55% US tariff and the US a 10% China tariff. However, the Wall Street Journal says the rare earths are only for six months. It seems this on-off process will continue until one side builds a Harvard or the other gets now-weaponised rare earth processing in place (as Bloomberg puts it: ‘China Hit World’s Pain Point on Trade – and Will Do So Again’). Guess which is easier?

Trump also said he’ll set unilateral tariff rates within two weeks for countries not negotiating in good faith, while Treasury Secretary Bessent added the 90-day tariff pause could be extended for those who are - and that China can’t export its way to prosperity and must prove it’s a reliable trade partner.

Russia offered to help Iran remove the weaponized parts of its nuclear programme and build its civilian reactors. That looks a quid pro quo for the US stepping back on support for Ukraine, toppling other dominoes in the Great Game at the expensive of Kyiv and Brussels.

However, that was eclipsed by the US announcing the removal of non-essential staff from its Iraqi and regional embassies and military bases, the former having been placed on high alert with emergency action committees activated after Iran’s defence minister said they would strike those targets if attacked. Moreover, US Senator Cotton stated: “Today @SecDef confirmed that Iran’s terrorist regime is actively working towards a nuclear weapon. For the sake of our national security, the security of our allies, and millions of civilians in the region this cannot be allowed to happen.” Western intel sources also reportedly state Iran has exploited negotiations to actively diminish the potential impact of military strikes on its nuclear sites.

As such, there are press reports the US will announce the end of Iran nuclear talks within hours. That only appears to leave one option – albeit with the Russian offer in the background, perhaps. None of this is a cheap bluff, if that’s what it is; it’s a card you play knowing it’s costly and only works once… unless it’s an essential move because of expected developments.

To say oil, up around 4% at the time of writing, is not where it would be if an attack on Iran were to transpire is an understatement – if it’s not just US military bases and embassies that Iran hits in response. Welcome to one of the key, stacked, geopolitical, binary scenarios I’d flagged for 2025 as The Year of Living Dangerously.

As if that were not enough, the Pentagon also announced it’s reviewing the AUKUS defence treaty as it can’t build enough nuclear subs (or ships) to provide Australia with them ahead. That’s awkward for those who think stuff just appears and don’t get that, as with rare earths, it doesn’t – with disastrous supply-chain consequences. We now see the same dynamic in the world’s military hegemon - it can’t make enough of what it needs. That’s why --alongside structural reforms-- it needs to bring back industrial production. Yet the same people who lambaste the US for doing that, “because markets”, also lambaste it for not protecting them everywhere for free. Just as awkwardly, this US move comes just after Australia’s PM Albanese said he wouldn’t be bossed around on defence spending by the US and, alongside the UK and New Zealand, sanctioned two Israeli ministers in a way the US didn’t like. 

The message is clear: the US can step back from defending Australia (and New Zealand) just as it has from Europe if the latter won’t step up at a far higher cost than Australia or New Zealand are currently budgeting for.

At the very least, the US seems to be insisting that Canberra pledges to use any US subs vs China in a potential war over Taiwan. Do that and maybe Australia can keep AUKUS - yet they will likely pay a high price elsewhere, including on trade; and if they don’t, they will have to pay an even higher price for defence, at the very least – the US could squeeze Australia (and New Zealand) in many ways, just as it can Europe. In short, it looks like the D for Decision Day I have long warned of may finally loom Down Under after years of have-your-cake-and-eat-it-ism.

Yet showing somebody is still on a sugar high, Australia reportedly thinks a new security pact with Europe, ahead of a possible FTA, is an answer. Sleep well, Aussies (and Kiwis): Spain and Germany are ready to protect you at the drop of a hat, just as you are ready to fight Russia. Even France, which had wanted to play that role, is going to be overstretched with a huge budget deficit and a lot of Europe to patrol now the Baltic states are being mentioned by Russia.

Similarly, geopolitical events have again eclipsed a careful UK government spending review assuming they wouldn’t even when everyone could see they could. In particular, yesterday’s 4-year plan only sees defence meeting at a 2.6% of GDP level from 2027 onwards, then stopping, even as NATO will require 3.5% to 5%, and a failure of AUKUS would send a further shock through Whitehall. That’s not just ‘what is GDP for?’ but ‘who is paying for that GDP?’

Indeed, Bloomberg notes ‘Britain Counts the Mounting Cost of Taxing Wealthy 'Non-Doms’’, where “Over 4,400 business leaders have disclosed an overseas move in the last year”; and as the Telegraph bewails ‘Britain ‘surrendering Gibraltar’ after agreeing to EU passport controls’ where Brits “will have to deal with Spanish guards when they land on the Rock after deal agreed.” Yes, The Rock which once underlined British global naval dominance is now to be in the Schengen zone.

You might want to think none of this really matters compared to a 0.1%. In which case, I would suggest that is about as much of the big picture impacting on inflation that you see.

Authored by Matthew Vadum via The Epoch Times (emphasis ours),

A civil rights lawsuit filed on June 11 in federal court for the Eastern District of Tennessee claims that a program providing federal money to colleges and universities if Hispanic students make up at least 25 percent of the student body is unconstitutional.

The U.S. Supreme Court in Washington on June 3, 2025. Madalina Vasiliu/The Epoch Times

The lawsuit was brought by the state of Tennessee and Students for Fair Admissions, a group whose lawsuit led the U.S. Supreme Court in 2023 to strike down the use of racial criteria in student admissions at institutions of higher learning in a case called Students for Fair Admissions v. Harvard College.

Wednesday’s complaint names the U.S. Department of Education and Education Secretary Linda McMahon as defendants.

The plaintiffs argue that the federal government’s Hispanic-Serving Institutions (HSI) grant program unconstitutionally discriminates based on race and ethnicity, according to the complaint.

The Education Department’s Hispanic-Serving Institutions Division provides “grant funding to institutions of higher education to assist with strengthening institutional programs, facilities, and services to expand the educational opportunities for Hispanic Americans and other underrepresented populations,” the Department of Education’s website states.

Congress appropriated $350.6 million for the program in fiscal 2024, education think tank New America reports.

The department may not discriminate on the basis of race or ethnicity, “even when Congress orders it to,” the complaint states.

Despite this, under the federal Higher Education Act the department allocates HSI program funding to colleges and universities only if they meet the “arbitrary ethnic threshold of 25 percent Hispanic” student enrollment, according to the complaint.

Tennessee operates a variety of colleges and universities, all of which serve Hispanic students and low-income students. “But not one of them qualifies to receive grants under the HSI program” because they don’t possess “the right mix of ethnicities on campus,” the complaint states.

“Funds should help needy students regardless of their immutable traits, and the denial of those funds harms students of all races,” according to the complaint.

In its current form, the program engages in “unconstitutional racial balancing” and operates outside the constitutional authority of Congress. The 25 percent minimum Hispanic enrollment provision functions as “a strict racial gatekeeper,” determining which schools may receive millions of dollars under the program, Students for Fair Admissions said in a statement.

Racial balancing is the practice of using race as a factor to seek proportional representation of racial groups in institutions such as schools. Even before its ruling in Students for Fair Admissions v. Harvard College, the Supreme Court held that racial balancing policies must be weighed under the strict scrutiny standard, which means they must advance a compelling governmental interest and be narrowly tailored.

Tennessee argues the HSI program presents its schools with an impossible choice: they must either forgo millions of dollars in federal grants or participate in illegal racial balancing in admissions so they can boost Hispanic enrollment. A new state law specifically forbids race-based preferences in education, so now state schools are “at risk of violating either state or federal law no matter which direction they turn,” the statement said.

Students for Fair Admissions president Edward Blum said the HSI program is unconstitutional because it conditions receipt of government money on a student body’s racial composition.

The Supreme Court determined in the 2023 ruling that such practices are “patently unconstitutional.”

“Discriminating against colleges, universities, faculty, and students based on race violates the fundamental principle of equal protection under the law,” Blum said in a statement.

The Epoch Times reached out to the Department of Education for comment. No reply was received by publication time.

Sen. Rand Paul (R-KY) continues to be a prominent holdout against President Donald Trump’s ambitious “Big, Beautiful Bill,” drawing frustration from the White House. However, the Kentucky Republican - who was reportedly disinvited and then reinvited to the annual White House picnic - has indicated he could ultimately support the legislation if a key condition is met: removing the debt ceiling increase from the bill.

In a Tuesday interview with Charlie Kirk, Paul voiced concerns over the federal government’s reliance on omnibus spending bills or continuing resolutions, calling them a “terrible way to run government.” Paul also criticized GOP leadership in both the House and Senate for failing to deliver on promises of fiscal responsibility, accusing them of prioritizing political expediency over conservative principles that they claim to uphold. 

"It's going to be an omnibus or a continuing resolution. It'll be all the bills crammed together. It's a terrible way to run government.But then we would ask them at that point, all right, you promised us you were going to do better. And once again, this isn't an accusation against the president,” Paul told Kirk. "This is an accusation against GOP leadership on both sides.I'm saying, I don't believe them or trust them. So, in three months, we'd get another bite at the apple and we'd say, all right, what have you done? And they would say, oh, we're going to do it next time. And that's what they say."

"Right now, from Speaker Johnson, we hear he's going to be conservative after the 2026 elections. The Senate has made it not just $4 trillion in borrowing, they want to do $5 trillion in borrowing, and they've explicitly told us it's to get through the 2026 elections without talking about the debt,” the senator added. All of these things were conservatives would oppose, but now they, because they support the president so much, they're willing to look the other way. I like the president. I like him personally.”

Paul then took aim at the recurring pattern of massive, last-minute spending bills that combine multiple legislative priorities into a single package. “It’s all the bills crammed together,” he said, arguing that this approach lacks transparency and accountability. He expressed frustration with Republican leaders who, he claims, repeatedly defer meaningful reforms with vague promises of action after future elections. “Right now, from Speaker Johnson, we hear he’s going to be conservative after the 2026 elections,” Paul remarked skeptically.

"I was his biggest defender against two impeachments. We'll do it again. I've supported his nominees, but I'm just not going to go against all principle to support $5 trillion in borrowing because I don't know who we would be or where we would be of a movement if nobody opposes this,” Paul said. "I've told them I will vote for the bill. Separate out the debt ceiling so I don't have to give up all of my principles and I'll vote for the bill."

Despite Paul's opposition, House Speaker Mike Johnson (R-LA) remains optimistic that Congress can pass the sweeping bill by July 4, despite ongoing challenges in the Senate. “We certainly hope, I believe, we can still meet that,” Johnson told reporters Monday. “It’s up to the Senate, the bill’s in the Senate’s hands now. But I spoke with Leader Thune as recently as last night, he’s feeling very optimistic.”

“I think it’s gonna go pretty quickly,” Trump added. 

Meanwhile as noted above, Rand accused the White House of "immaturity" and "petty vindictiveness" on Wednesday after he and his family were disinvited from the annual White House picnic held with members of both parties.

"The level of immaturity is beyond words," said Paul, adding that he's "lost a lot of respect" for Trump.

"It’s just incredibly petty," he told CNN Wednesday evening. "I’m arguing from a true belief and worry that our country is mired in debt and getting worse. And they choose to react by uninviting my grandson to the picnic. I don’t know. I just think it really makes me lose a lot of respect I once had for Donald Trump."

Paul: “I like Donald Trump, but when they want to act this way, it's where they begin to lose a lot of America who just wonders, ‘Why does everything have to descend to this level?’”

Also takes a whack at Stephen Miller for “casually talking about getting rid of habeas corpus” pic.twitter.com/0ojRjYIIV9

On Thursday, however, Trump posted on Truth Social: "Of course Senator Rand Paul and his beautiful wife and family are invited to the BIG White House Party tonight. He’s the toughest vote in the history of the U.S. Senate, but why wouldn’t he be?"

The House of Representatives on Wednesday approved a procedural resolution to strip provisions out of the House-passed One Big Beautiful Bill act that would make it ineligible for a filibuster-proof vote in the Senate. Why they were in there is anyone's guess. 

The U.S. Capitol building in Washington on May 22, 2025. Madalina Vasiliu/The Epoch Times

The resolution passed in a 213–207 vote along party lines, which changes the vote without requiring yet another vote on the full package.

The most notable change was the removal of a planned crackdown on the "employee retention tax," which Republicans were eyeballing as a source of more than $6 billion in savings. They also scrapped $2 billion in funding for DoD intelligence programs and approximately $500 million set aside for missile development. 

As The Epoch Times notes further, the changes to the mammoth tax and spending bill were included as part of a vote on another rule that would allow leadership to bring a vote on a $9.4 billion rescissions package on June 12.

Rep. Thomas Massie (R-Ky.) was critical of the approach, writing in a post on X that the rule “changes the text of [the One Big Beautiful Bill Act] after it already passed the House. Sneaky!”

The approach may have headed off a more intense showdown between House Speaker Mike Johnson (R-La.), who was looking to force greater changes to the bill, and members in the Republican conference, as some were dissatisfied about aspects of the original legislation passed by the House for its lack of serious cuts to spending.

The changes seek to align the bill with the rules of the reconciliation process in the Senate, where the Byrd Rule places significant limits on what can and can’t be included in a reconciliation bill. The rule was adopted in 1985 to limit the ability of either party to use reconciliation bills, which aren’t subject to a filibuster, for simple policy ends.

Senate Parliamentarian Elizabeth McDonough, who enforces the upper chamber’s rules, said the provisions stripped from the bill were flagged as problematic.

Had they not been nixed from the bill, it would have been declared ineligible for passage without a filibuster vote, which would have required that Republicans get Democrats’ help to pass the legislation.

Some Democrats urged Republicans ahead of the vote to use it as an opportunity to stall progress on the bill.

House Minority Leader Hakeem Jeffries (D-N.Y.) acknowledged that most of the changes to the tax bill were technical corrections but he said the vote also gave Republicans who have expressed concern about the bill a chance to stop it.

“Now you have a second chance to actually stop this one big, ugly bill and the provisions you disagree with,” Jeffries said.

House Rules Committee Ranking Member Jim McGovern (D-Mass.) also urged Republicans to reject the changes in a June 10 letter.

He specifically cited prohibitions on the bill against regulation of artificial intelligence by states for ten years, provisions restricting federal judiciary contempt orders, the termination of Inflation Reduction Act energy tax credits, its impact on the national debt, and the eligibility requirements for able-bodied adults who receive Medicaid and the Supplemental Nutrition Assistance Program (SNAP).