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The European Union has drawn criticism from the administration as an over-regulated bureaucracy

BRUSSELS—President Trump and his team have spent much of the year railing at Europe, complaining about what they see as a cluster of countries too soft on immigration, weak on preserving democratic freedoms and unwilling to pay for the full cost of their defense.

Their biggest target, though, is the European Union. The U.S. helped create the institution from the wreckage of World War II, but Washington now regards it as an over-regulated bureaucracy incapable of responding swiftly to events and fulfilling its role as a U.S. ally

Trump’s antipathy to the bloc represents the most fundamental reassessment of U.S. trans-Atlantic policy since the Cold War and is upending America’s most important alliance. Administration officials say they are trying to strengthen the West and put a wayward Europe back on track.

The position, most recently articulated in Trump’s new national-security strategy, hews to a longstanding MAGA criticism of the bloc as a supranational body squelching national character and initiative. Vice President JD Vance, a vocal proponent of the view, helped launch the administration’s push in February with a speech in Munich, where he referred to EU officials as “commissars,” using a title for Soviet officials.

The administration will “encourage the revitalization of the industrial bases of all our allies and partners to strengthen collective defense,” the new strategy says, and urges Europe “to abandon its failed focus on regulatory suffocation.”

U.S. Trade Representative Jamieson Greer, acting on that admonition, earlier in December threatened the EU with tariff hikes or other trade action if it doesn’t stop imposing fines on American tech companies, days after the bloc levied a $140 million penalty on social-media platform X. An EU spokesman said the bloc’s rules apply equally and fairly to all companies that operate in it.

Secretary of State Marco Rubio said Tuesday the U.S. would bar a former E.U. official from entering the country over his role in creating and enforcing an online-content law that the administration has criticized for allegedly censoring Americans.

By targeting the EU—also a longtime focus of Russian vitriol—Trump is dispensing with decades of U.S. policy and putting the West in uncharted territory.

For European leaders, however, the EU—with some 450 million consumers and a combined economic heft of more than $20 trillion—is key to their nation-states’ ability to defend themselves and exert force on the world stage. They acknowledge the 27-country bloc is unwieldy but see it as a defender of European sovereignty. The EU is also now working to lighten regulatory burdens that European companies say hurt their global competitiveness, although results aren’t yet clear.

“Europe’s independence will depend on its ability to compete in today’s turbulent times,” said European Commission President Ursula von der Leyen, who heads the bloc’s executive arm, in her annual State of the EU speech in September. “But we know the economic and geopolitical headwinds are strong,” she said.

Still, EU officials reject U.S. criticism of European democracy. Many view the attacks as based on American commercial self-interest.

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“There will be no freedom of speech if citizens’ freedom of information is sacrificed to defend the tech oligarchs of the United States,” said European Council President António Costa, who oversees the grouping of EU national leaders, in response to the national-security document.

For many Europeans, including former European Central Bank President Mario Draghi, the EU—far from being a problem—offers the best hope for jump-starting their lagging economy. By deepening economic ties among members, the argument goes, the bloc might finally achieve the efficiencies and scale its vast market has long promised but failed to deliver.

The dispute is crucial to trans-Atlantic ties because Europe’s economic strength underpins its ability to arm itself against intensifying external threats. Most EU countries are also members of the North Atlantic Treaty Organization, and in June they yielded to pressure from Trump and agreed to more than double their military spending. They are also now shouldering most of the cost of supporting Ukraine in its fight against Russia’s invasion.

External threats continue to metastasize, and if Russia were to attack Europe, the continent’s military spending “would grow massively,” NATO Secretary-General Mark Rutte said recently in Berlin. “There would be emergency budgets, cuts to public spending, economic disruption, and further financial pressure,” he said.

The EU’s importance to NATO isn’t incidental, because the two share common roots. They both emerged after World War II, at a time with parallels to today: Europe’s economy was struggling, external threats were growing and Washington didn’t want to continue policing the continent. Top U.S. officials saw deeper European integration as a path to resilience.

“The U.S. was trying to disengage from Europe at the end of the war,” said Benn Steil, director of international economics at the Council on Foreign Relations in New York. The U.S. diplomatic and military establishment faced a challenge, said Steil: “How do we defend our vital economic and security interests in Europe without troops?”

As the State Department analyzed how to jolt Europe’s economy, “they came to the conclusion very quickly that it could only be done by integrating the economies—or reintegrating them” to restore prewar linkages, Steil said.

Unlike today’s comity among most European leaders, wartime distrust lingered and cooperation proved elusive. President Harry S. Truman and his secretary of state, George C. Marshall, told the Europeans that the U.S. would help fund them if they presented a unified reconstruction proposal, not national pleas.

The result was the Marshall Plan. NATO emerged as the security umbrella to safeguard Europe’s recovery just as the Soviet Union swung from wartime ally to Cold War adversary.

“NATO came to be seen as the necessary military escort for Marshall aid. The two went together,” said Steil, who wrote a book on the Marshall Plan. The North Atlantic Treaty was signed a year and day after Truman signed the Economic Cooperation Act, launching the Marshall Plan.

The plan worked better than expected, and what began in 1951 as a six-country European customs union covering coal and steel evolved over decades into the EU. The bloc’s unified market for goods and services became a one-stop shop for companies to ply their offerings under common rules and fairly standardized regulations. U.S. multinationals were—and remain—among its biggest boosters.

Over the past two decades, as Europe’s economy slumped, the EU shifted from focusing primarily on integrating its markets to other objectives, such as working to protect citizens’ online privacy. The bloc responded to emergencies that leaders saw as existential, including the eurozone debt crisis, Brexit and the Covid-19 pandemic.

But military spending lagged behind and national leaders have yet to take emergency measures in response to the threat Rutte spelled out.

“Europe has a pretty good playbook for crises. It doesn’t have a very good playbook for governing in normal times,” said Mujtaba Rahman, managing director for Europe at Eurasia Group, a risk-management consulting firm.

In a flip from the late 1940s, when Europe was able to focus on economic recovery thanks to U.S. help, today Europeans increasingly see the Trump administration as a commercial adversary. Friction with the U.S. is amplifying calls for more EU reforms.

If the U.S. also came to be seen as a security threat, said Rahman, “it would absolutely trigger a revival around this economic conversation in Europe.”

Crisis has laid bare the increasingly fraught relations between Riyadh and Abu Dhabi

Saudi Arabia has launched air strikes against a separatist faction in Yemen that is backed by the United Arab Emirates, underscoring a deepening rift between the Gulf’s two powerhouses.

The UAE-backed Southern Transitional Council said on Friday the Saudi bombardment was of “serious concern” and that it targeted some of its elite forces in central Yemen’s Hadhramaut province, which borders Saudi Arabia.

Riyadh did not comment on the strikes. Its military intervention comes three weeks after the STC launched an offensive to take control of Hadhramaut after clashing with factions aligned to the Saudi-backed Yemeni government, as well as al-Mahra province in the south-east, which borders Oman.

Analysts said it was unlikely the STC would have launched the offensive without the UAE’s acquiescence.

Hadhramaut is Yemen’s largest and richest region and has close ties to Saudi Arabia. The STC’s advance was regarded as a direct threat to the kingdom’s national security interests, as well as Riyadh’s role in Yemen, where it backs the internationally recognised government.

The crisis has laid bare the fraught relations between Saudi Arabia and the UAE, traditional allies that have become increasingly at odds over conflicts in Yemen and Sudan.

The STC launched its offensive three weeks after Saudi Crown Prince Mohammed bin Salman raised his concerns about the civil war in Sudan with US President Donald Trump during his visit to the White House.

Some analysts suspected the two events were linked, with the UAE annoyed that Prince Mohammed had raised the role of the paramilitary Rapid Support Forces in the Sudanese conflict and intended to send a message to the kingdom.

The UAE’s role in Sudan has come under increasing scrutiny because it is alleged to have supplied weapons to the RSF, which has faced accusations of genocide. Abu Dhabi denies that it arms the RSF.

Saudi Arabia is considered a supporter of the Sudanese Armed Forces, the RSF’s main rival.

“The developments in eastern Yemen point to a quiet but consequential Riyadh—Abu Dhabi rivalry, one whose spillover effects risk intensifying proxy violence across both Yemen, Sudan and beyond,” said Mohammed Albasha, founder of Basha Report, a US-based risk advisory group

Saudi Arabia considers Sudan vital to its national security as it shares a long border with the Red Sea.

The UAE, one of the region’s most assertive nations, also views it as strategic to its interests and fears the Sudanese Armed Forces have been infiltrated by Islamists.

In Yemen, Saudi Arabia led an Arab coalition that intervened in that country’s civil war in 2015 to fight Iranian-backed Houthis after the rebels seized Sana’a, the capital, and ousted the government.

The UAE was its main partner in the coalition, but it and Saudi Arabia backed different anti-Houthi factions that have at times fought with each other.

Abu Dhabi began pulling its forces out of Yemen in 2019 as it shifted its policy. That year, it was accused by the Yemeni government of bombing its forces.

It continues to back the STC, which is the most powerful southern group. The STC is ostensibly part of the Yemeni government, but it wants the south to become a separate state, as it was before Yemen’s unification in 1990.

Saudi Arabia on Thursday condemned the group’s military advances, saying they were carried out unilaterally without the approval of Yemen’s government or in co-ordination with the Saudi-led coalition.

“As such, these movements resulted in an unjustified escalation that harmed the interests of the Yemeni people,” the Saudi foreign ministry said.

It added that it had been working with the “brotherly” UAE and the Yemeni government to “contain the situation”. It was hopeful, it said, that the “public interest would prevail through ending the escalation” by the STC and “the withdrawal of its forces” from the two provinces.

On Saturday, Saudi defence minister Prince Khalid bin Salman posted an open letter on X to “our people in Yemen”. He said the kingdom had always considered the southern cause to be a “just political cause that cannot be ignored” and urged the STC to act rationally.

“It is time for the STC in this sensitive period to prioritise the voice of reason, wisdom, public interest and unity by responding to the Saudi-Emirati mediation efforts to end the escalation, withdraw their forces from the camps in the two governorates, and hand them over peacefully to the National Shield forces and the local authority,” he said.

The UAE has said Abu Dhabi’s position was in line with Saudi Arabia’s in supporting the political process to end the war.

The STC said it launched its offensive after local factions halted crude production in Hadhramaut, the main source of oil revenue for the southern authorities. The offensive also aimed to combat Islamist extremists and to prevent weapons smuggling to the Houthis, who control most of the populous north, the STC said.

The group claimed the offensive gave it control across Yemen’s southern provinces, triggering a crisis in the Riyadh-backed government and undermining Saudi Arabia’s influence in Yemen.

It has shown no willingness to withdraw, with Amr al-Bidh, a senior STC official, saying this was “not an option”.

Saudi Arabia has been seeking to extract itself from the war for several years, after agreeing to a truce with the Houthis in 2022.

Europe’s growth prospects depend on German spending spree, economists say

Rate of increase in output expected to slow despite Berlin’s fiscal push, FT survey finds

Europe’s hopes of a return to growth in 2026 rest largely on Germany’s €1tn debt-funded spending drive on infrastructure and defence, according to a Financial Times survey.

Yet the 88 economists polled are split over whether Berlin’s fiscal push will deliver a “European renaissance” or fade amid entrenched structural weaknesses and geopolitical uncertainty.

With its largest economy stuck in recession since late 2022, Europe needed a return of “animal spirits” to power a recovery driven by domestic demand, said Nick Kounis, chief economist at ABN Amro.

Eurozone growth is expected to slow by 0.2 percentage points next year to 1.2 per cent in 2026, before picking up to 1.4 per cent in 2027, according to the FT survey. The forecast broadly matches the European Central Bank’s latest staff projections.

Last year’s prediction of 0.9 per cent growth for 2025 proved too downbeat, after the bloc’s economy expanded by 1.4 per cent. Concerns voiced by economists in last year’s FT poll that the ECB had been too slow to cut rates now appear misplaced. “Overall we have been positively surprised about growth resilience in 2025,” said Pia Fromlet, an economist at SEB.

But economists were unsure “whether the fiscal impulse can translate into durable domestic momentum rather than merely cushioning external shocks”, said Léa Dauphas, chief economist at TAC Economics. TD Securities analyst James Rossiter predicts a “tug of war” between geopolitical uncertainty and expansive fiscal policy.

Optimists expect that underlying resilience will be reinforced by fiscal stimulus next year. Jan von Gerich, chief strategist at Nordea and among the most bullish respondents with a 2026 growth forecast of 1.5 per cent, said “private consumption has a lot of potential to surprise to the upside”.

Reijo Heiskanen, chief economist at Finnish lender OP Pohjola, is even more sanguine, predicting a “comeback of [Europe’s] North”.

While views on growth are split, there is broad consensus that the ECB has brought inflation back under control. A large majority of economists expect it to meet its medium-term 2 per cent target in 2027, after undershooting slightly at 1.9 per cent in 2026.

Three-quarters of respondents expect the ECB to keep its key deposit facility rate unchanged at 2 per cent through the end of 2026. By the end of 2027, economists on average foresee a single rate rise to 2.25 per cent.

Looking ahead, growth would “hinge less on monetary policy and more on fiscal execution, confidence and progress on structural reforms”, said Sabrina Khanniche, an economist at Pictet Asset Management.

But not everyone is convinced that Berlin can deliver. “Increased government spending will mechanically lift German growth, but the key question is whether or not it translates into a broader recovery,” said Henry Cook, an economist at MUFG Bank.

Sceptics warn that billions of euros in new borrowing could end up funding welfare and other current spending rather than fresh investment, while the money allocated to defence might have only a limited impact on growth.

“The optimism that greeted Friedrich Merz’s announcement earlier this year has faded in recent months,” said Ben Blanchard, an analyst at Absolute Strategy Research.

“Anyone expecting a significant bounce in Germany’s economic fortunes in 2026 is likely to be disappointed,” warned Aberdeen economist Felix Feather.

At the same time, large parts of Europe’s industrial base are under mounting pressure from US President Donald Trump’s 15 per cent tariff rate and intensifying competition from Chinese rivals, leaving consumers rattled and reluctant to spend.

While US tariffs “so far have not had a meaningful negative impact on Eurozone growth”, said HSBC euro area economist Fabio Balboni, “we might only have seen the tip of the iceberg”. A narrow majority of poll respondents believe that more than half of the overall negative impact from the tariffs has already materialised.

Apolline Menut, economist at French asset manager Carmignac, warned about the fierce competition from Chinese exporters threatening to “further hollow out” EU industry. The bloc as a whole and individual governments were pursuing a “too-little-too-late approach” to deal with an intensifying “China shock”, she said.

A bursting of what some economists describe as an “AI bubble” in American equity markets could also weigh on Europe’s growth. “A sharp correction in US tech valuations remains the biggest global risk,” warned Christian Schulz, chief economist at Allianz Global Investors.

Steep falls in US equities and the dollar would “reverberate also through Europe”, potentially pushing up borrowing costs for governments and companies.

“The risk of a financial crisis of some sort that spills over into the US economy and the financial sectors and economies of other countries is high and rising,” said John Llewellyn, former OECD chief economist and partner at advisory firm Independent Economics. 

But some economists sketch more optimistic scenarios, including an end to the war in Ukraine — or at least a durable ceasefire. If a peace deal were “credible and not unfavourable to Ukraine”, it could “significantly reduce geopolitical uncertainty and improve confidence”, argued Christophe Boucher, chief investment officer at ABN AMRO Investment Solutions.

In that scenario, energy prices could fall while investment and exports rise. Combined with fiscal stimulus from government spending programmes and a potential reversal of households’ high saving rates, this could even trigger a “virtuous cycle” and a “European renaissance”, said Reinhard Cluse, an economist at UBS.

Pezeshkian warns that Iran’s military forces are ‘more prepared’ than ever

Iran’s President Masoud Pezeshkian said Tehran was engaged in an unprecedented “all-out war” with the US, Europe and Israel as US President Donald Trump prepared to meet Israel’s prime minister in Washington.

Pezeshkian warned that Iran’s military forces were “more prepared” than ever and would respond to any new aggression, as Trump and Israeli Prime Minister Benjamin Netanyahu were expected to discuss Iran in their meeting on Monday.

“We are in an all-out war with the US, Israel and Europe,” Pezeshkian said.

“They do not want our country to stand upright . . . and are surrounding us from all sides: economically, culturally, politically and from a security perspective,” he told Khamenei.ir, the supreme leader’s news website, in an interview published on Saturday.

“While they raise society’s expectations, they block our [oil] sales and our trade, undermining people’s livelihoods.”

Many Iranians fear that Netanyahu could receive a green light from Trump to attack Iran again, while fears of further conflict have weighed on the economy and the national psyche after the US joined Israel in its 12-day war in June against Iran and bombed key nuclear sites.

Pezeshkian said Iran’s arch-foes had capitalised on public discontent in the Islamic republic, maintaining that their plan during the war was to bring about regime change — an effort he said had been replaced by a new plot to achieve the same goal “within 36 months”.

He gave no further details but warned that the country’s military forces were working hard to strengthen their capabilities and foil the threats.

“Our military forces are stronger than they were when we were attacked, and they are moving forward decisively in terms of equipment and manpower, despite all the problems we face,” he said.

“If we maintain unity at home, they will be disappointed and rethink any attack on our country. They are counting on domestic developments to intervene.”

He urged political factions to keep their infighting behind closed doors and present a united front, adding that Ayatollah Ali Khamenei, in his weekly meetings with the president, focused exclusively on people’s livelihoods.

Economic hardship has deepened since the June war. Iranians are increasingly anxious about soaring inflation and the sharp fall of the national currency, which has hit new lows against the dollar in recent weeks.

The economy contracted from late March 2025 to late September, according to the latest official figures, while annual food inflation hit 72.3 per cent between November 22 and December 21.

Pezeshkian acknowledged his government was struggling with declining revenues, saying in the interview that a drop in global oil prices had also dealt a heavy blow to Iran’s income.

That added to what he described as “extensive” problems in “water, financial management, politics, social affairs, the economy and culture”.

“Under the pressure [of sanctions], our revenues have declined on the one hand. On the other hand, there was a war, and some of our services and production have been disrupted,” he said.

Talks with the US towards an agreement on Iran’s nuclear programme and a potential lifting of some western sanctions were abruptly suspended during the June war. Deep disagreements between the sides remain, with Tehran maintaining it will not accept a reduction of its uranium enrichment to zero, as requested by the US.

McCain Foods french fries dynasty split over heir’s buyout demand

Eleanor McCain wants C$1bn for stake in company but family members dispute her price

An internal family conflict is roiling McCain Foods, the world’s largest producer of frozen french fries, as the daughter of its co-founder seeks a payout of more than C$1bn (US $725mn) to leave the privately held group.

Three decades after McCain Foods’ founders fought a bitter succession battle over the company, the next generation is now locked in a new dispute over the global empire, a top supplier to McDonald’s with annual revenue of C$16bn.

Eleanor McCain, a 56-year-old Toronto musician, wants to sell her stake to focus on “philanthropy and for portfolio diversification and estate-planning purposes”, her spokesperson said in a statement to the Financial Times.

But other family members do not accept her valuation of her stake, although negotiations remain ongoing, according to a person familiar with the governance structure.

It is the latest flashpoint in an intergenerational conflict involving multiple branches of rich and influential siblings and cousins, who remain scarred by a costly court battle that tore the family apart in the 1990s.

Dimitry Anastakis, a professor at the University of Toronto’s Rotman School, described it as “one of the deepest schisms in Canadian business history”.

Eleanor’s father, Wallace McCain, who co-founded McCain Foods in 1957 with his brother Harrison, built a global frozen food company that made them one of the richest families in the country.

“One in every four fries in the world is a McCain Foods fry,” according to the company website.

The brothers’ “brutal” clash over strategy and control triggered a three-year court fight that ultimately saw Harrison’s side win. Legal costs exceeded C$20mn, and members of the Wallace branch later went on to take control of Maple Leaf Foods, he said.

While Eleanor McCain has no role in the daily running of McCain Foods, her brother Scott McCain is chair of the company.

McCain Foods is governed through a two-tier structure, with a family holding company overseeing a separate operating board that includes independent directors.

It was designed to insulate management from family disputes but is “somewhat complicated”, according to a company history.

That structure must now determine how Eleanor McCain’s stake is valued, or risk another lengthy court battle.

“To effect an exit, Ms McCain is not demanding anything. She is simply exercising her unrestricted right to sell her shares, the exact same right available to all other shareholders in the company,” the statement said. “(Eleanor) has consistently engaged constructively, in good faith, and would like to conclude this matter in a fair, timely and confidential fashion.”

A friend of Eleanor McCain, who spoke on the condition of anonymity, said her desire to exit raised complicated questions about the family business structure. “There’s a lot of emotion, this business was co-founded by her dad,” the friend said. “It is a big thing to walk away from.”

McCain secured the contract to supply McDonald's continental European and UK restaurants with McCain-made fries in 1977. But success and fortune also brought challenges for the family.

Court battles over the years have revealed details of their lavish lifestyle and fortune, including net worth in the hundreds of millions of dollars, multiple homes and boats and eye-popping bills for private school tuition, landscaping, yoga and pilates coaching.

Eleanor McCain’s divorce from her husband Jeff Melanson in December 2017 generated scrutiny during a two-year legal fight over whether he had “tricked her” into marrying him.

Court documents showed her net worth was C$365.8mn when she sought an annulment of the marriage, to avoid paying the C$5mn agreed in their prenuptial agreement.

Another family friend of Eleanor, who also spoke on condition of anonymity, told the Financial Times no one wants a repeat of the past where the buyout ends up in a messy public court battle, adding he hoped “it can be resolved without too many lawyers”.

Tony Maiorino, director of the Royal Bank of Canada’s family office services, said family-run businesses often end up in disputes over equity, leadership and vision if proper governance structures are not in place.

“You’re in a situation where there’s an opportunity for that complexity to lead to poor outcomes,” he said.

A representative of the McCain family declined to comment.

The ugly memes driving crypto sales

A grotesque set of manufactured characters have emerged on social media to inflate memecoin prices

The writer, known online as Etymology Nerd, is the author of ‘Algospeak: How Social Media Is Transforming the Future of Language’

This year, a dark new underside has emerged on Instagram Reels. Offensive memes are being manufactured in order to push cryptocurrency scams — and no one seems interested in removing them.

Since January, a grotesque set of characters has emerged on the social media app, uniquely enabled by the widespread availability of AI tools and decreased hate speech regulations on Meta platforms.

There’s “George Droyd,” an android reincarnation of George Floyd, created in April to promote the $FLOYDAI cryptocurrency. The “Kirkinator” was made in September following the death of political commentator Charlie Kirk in order to promote the $KIRKINATOR coin. There’s also a recurring cast of minor stock characters, including “Epstron” and “Diddytron” — parodies of Jeffrey Epstein and the rapper Sean Combs — also known as Diddy.

These accounts, which occupy the same narrative universe, have garnered millions of views, often by playing into racist and antisemitic tropes. The short videos include frequent use of bigoted language and recurring plot lines about race purification.

The shocking content is meant to generate engagement. The end goal is to draw attention to new “memecoins” — cryptocurrencies that ostensibly increase in value when a meme spreads. While early memecoins like $DOGE capitalised on existing memes, the George Droyd derivative and its ilk were created by crypto speculators.

The wheeze begins with pump.fun, a platform that enables users to register and trade digital coins with ease. Once a developer sets up a coin, they share it to trusted Telegram groups or X communities, where investors think of ways to manufacture attention, or so-called “mindshare”, for the meme connected to it. Next, they use AI to generate provocative videos, hoping to make their meme go viral and make their coin popular with normies — unsuspecting crypto investors less steeped in memecoin culture. After the value goes up, the original cabal “rug pulls”, abandoning the coin and selling out at a profit.

Realistically, only a few thousand people will ever buy these coins. And yet, because of the ease of creating cryptocurrency and posting AI slop, coin creators are able to play the game with ease by manufacturing cultural phenomena.

Meanwhile, the memes take on a life of their own. Once other creators see that they have viral potential, they replicate them for their own profit or internet clout. Both the “Kirkinator” and “George Droyd” characters have been used by other influencers who are unaffiliated with the original coin creators.

Yet with each reiteration, the crypto hustlers also continue to benefit. After one tweet about the Kirkinator reached 8mn views in October, for example, the $KIRKINATOR coin shot up five times in value before falling a few days later. For the investors who sold at the top, this increase in profit came as a result of millions of X users seeing a video that portrayed “George Droyd” being killed after stealing the Epstein files from the Kirkinator. 

Unfortunately, the more shocking the videos, the more likely they are to go viral. Violent, offensive imagery generates more comments and higher viewing times, both of which are rewarded by the algorithm. Coin creators have learnt to use this pattern to enrich themselves. Even the people on Instagram or X who are not aware of the crypto coins may still have to endure seeing deeply disturbing clickbait.

We are caught in a maelstrom between deregulated cryptocurrency websites, accessible AI tools and social media platforms that allow offensive memes to be published.

As an internet etymologist, I find it alarming that online trends are being manufactured for the sole purpose of manipulating us. We can no longer trust that memes are genuine — there is now the risk that someone is attempting to profit on the other end.

Even when a meme isn’t directly created by crypto hustlers, it can be immediately co-opted by them. Every new reference is almost immediately registered on pump.fun and then artificially propped up for someone to make a profit.

The result is that this leaves us all less tethered to reality. More memes are going to be invented or amplified, leaving online viewers to question what they can believe. And greater exposure to a deeply unpleasant kind of discourse risks making it seem more acceptable. The only solution is to fight to reclaim the internet from those who are attempting to poison it.

Key Points

The U.S. economy just delivered another shock. Third-quarter gross domestic product grew at a 4.3% annualized pace, far exceeding expectations and marking the biggest expansion in two years. Growth was well above consensus forecasts, and stronger than even the most optimistic forecasts.

The added sizzle raises new questions that have little to do with the impact of tariffs, government spending, or other details contained in the GDP report. What if the economy isn’t defying gravity, but operating under a different set of rules than analysts and economic models assume?

Increasingly, that seems to be the case. Business and consumer spending are on an impressive upward trajectory, notwithstanding still-elevated inflation and interest rates, trade disruptions, and a cooling labor market—which also may be hotter than official data suggest. The economy’s strength was explained away in the past two quarters as temporary or distorted. But the numbers have improved anyway, suggesting a rethink is in order.

Third-quarter GDP was boosted, in part, by unusual trade dynamics: Exports rose by 8.8% and imports fell by 4.7%, adding roughly 1.6 percentage points to headline growth. That contribution is unlikely to persist and may partially reverse in coming quarters. But the report also showed something harder to dismiss.

Excluding volatile trade and inventory swings, real final sales to private domestic purchasers rose 3%, a measure economists view as one of the cleanest reads on underlying demand. Consumer spending grew at a 3.5% pace, far stronger than in the first half of the year. Business investment increased as well, led by spending on equipment and intellectual property.

No Sign of a Slowdown

The U.S. economy grew at a 4.3% annual rate in the third quarter, outstripping even the most optimistic forecasts.

In other words, domestic demand was strong, even as borrowing costs stayed high and hiring slowed.

One of the most puzzling features of the expansion is the growing disconnect between output and jobs. Payroll growth has slowed over the past year, and the unemployment rate has edged higher, recently reaching its highest level in more than two years. On its face, that looks like an economy losing momentum.

Yet, GDP growth is accelerating. One possible explanation is a boost in productivity. Capital-intensive investment, particularly in technology and artificial-intelligence-related equipment, boosts output without requiring large additions to payrolls.

Another is the K-shaped economy. Spending by higher-income households, which are less sensitive to interest rates and labor market shifts, continues to drive a disproportionate share of consumption.

“A closer look at the data shows the K-shaped economy at work: Household consumption driven by higher-income consumers and AI-related investment accounted for just under 70% of total growth during the quarter,” said Joe Brusuelas, chief economist for RSM US. “This disconnect helps explain why the public, particularly those with lower incomes, remains sour on the economy heading into the holiday season.”

There is also a measurement question. Traditional labor-market data may be capturing less of the economy’s true activity than they once did. Gig work, contract labor, informal employment, and multiple job-holding complicate headline payroll figures.

Immigration flows and demographic shifts also blur the signal. That means the data may be less effective at gauging economic heat in a capital-heavy, technology-driven expansion.

Several forces suggest the economy could continue running above trend into 2026. A number of favorable tax provisions for businesses are set to take effect next year, including incentives tied to capital investment. Those changes arrive at a moment when companies are already pouring money into automation, data centers, and other AI infrastructure.

Asset prices matter too. Equity markets have climbed steadily, rebuilding a wealth effect that supports consumer spending, particularly among upper-income households. Home prices have held up better than many expected, even as mortgage rates rose.

And, as Charles Lieberman of Advisors Capital tells Barron’s, GDP showed that inventories were “nearly flat after a large decline in the second quarter.”

That implies that “future growth will not be hurt by any need to destock and may even get some boost from a need to rebuild inventories,” he says.

The economy also has proved more resilient than expected in the face of high interest rates. Businesses have adapted. Consumers have adjusted. Balance sheets aren’t pristine, but they aren’t particularly fragile, either.

None of this means the expansion is unstoppable. Stubbornly elevated inflation remains an issue, with core price growth still above the Federal Reserve’s target. The personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose faster than expected in the third quarter. If growth stays strong, inflation risks could re-emerge, possibly forcing the Fed to raise, or at least pause lowering interest rates.

The Fed’s ability to balance slowing job growth against persistent inflation will be tested in the months ahead. Cutting rates by too much, too soon, or holding them too high for too long could destabilize the expansion.

A sharp correction in equity markets could also undermine GDP growth. A wobble in technology stocks would “likely lead to a tightening of lending conditions, which could squeeze capex and hurt those high-income households via negative wealth effects,” wrote James Knightley, chief international economist at ING.

Federal Reserve data show that the top 20% of U.S. households by income owns 70% of the wealth in America. “That style of financial hit would be the most likely event to lead to a change in their spending patterns,” said Knightley.

Trade is a third wild card, or “the elephant in the room,” said Adrian Helfert of Westwood. “The U.S.-China trade framework deal reached in November extended the 24% reciprocal tariff reduction through Nov. 10, 2026, providing some near-term certainty,” he wrote. “However, ongoing negotiations throughout 2026 will be critical—any escalation or inability to reach a longer term agreement could reignite volatility.”

For now, though, growth keeps beating expectations and domestic demand is holding up. The usual warning signs keep flashing, but the slowdown is nowhere in sight.

If this economy can generate strong output growth with fewer jobs, driven by capital investment, asset prices, and productivity gains, then policymakers and forecasters may need to rethink how they define overheating and how they measure success. The question for 2026 may be not whether the economy will cool, but whether the frameworks used to understand it need revision.

Seligman’s Paul Wick: Selective AI Plays & "Old Tech" Bargains

Veteran tech investor Paul Wick (Seligman Investments) argues that the AI trade is maturing and shifting away from pure chip hype toward undervalued software, infrastructure, and "power-adjacent" plays. Wick emphasizes public market valuations over "overheated" late-stage private ventures.

Top Investment Convictions

Sector Strategy & Market Themes

The "Avoid" List

Paul Wick of Seligman Investments has piloted his winning fund through numerous technology cycles. How he is playing AI, and why he is skeptical of quantum computing stocks.

Has artificial intelligence been excessively hyped, and are AI-related stocks vulnerable? To assess the risks, it makes sense to check in with someone who has invested through prior hype cycles—and lived, professionally, to tell the tale. Veteran technology investor Paul Wick fits the bill.

Wick, the chief investment officer and lead portfolio manager for Seligman Investments at Columbia Threadneedle Investments, has been investing in tech companies for more than 35 years. His fund, Columbia Seligman Technology & Information Strategy, is up 36.6% this year, well ahead of the S&P 500’s 17% gain.

Barron’s spoke with Wick on Dec. 15 about AI risks and opportunities, how energy plays into the AI theme, and which one (or two) of the tech mega-giants he would buy now. An edited version of the conversation follows.

Paul Wick: That’s my sense. The development and adoption of AI may not go straight from point A to point B. It may very well zigzag, just as the internet economy did. We don’t see as many speculative indicators or red flags today as we saw in the late 1990s when many internet companies were born. Areas that look to be overheating today tend to be in late-stage venture [private companies backed by venture capitalists] more than in the public markets.

Chips have garnered most of the benefits so far. Software has been viewed as an AI loser. People are worried that AI agents are going to look fairly similar at software companies. And there have been fears that people will create their own AI applications instead of using, say, Workday or Salesforce. Those fears are somewhat overstated, simply because the purchasers of enterprise software don’t change their work flows quickly.

Software stocks have also struggled this year because there have been a lot of layoffs in Corporate America. The economy outside of AI hasn’t been particularly strong. A lot of companies have been shedding workers, and enterprise software is typically sold on a per-seat basis.

Some companies viewed as AI losers right now will probably end up doing reasonably well. They will get revalued higher as the worst-case scenarios don’t come to pass. Over time, it is probable that AI use will broaden out, and things like robotics and industrial automation will have more AI technology built in. This is going to be positive for a range of areas in tech.

We are fans of Wix.com, an Israeli company that is a leader in website design software. There had been concern that AI “vibe coding” would replace the need for professional software for designing websites. [Vibe coding is a programming method that uses conversational prompts to guide AI in creating and revising code.] That fear has been blown out of proportion. Wix’s base business has continued to do pretty well, and it bought a vibe coding start-up in Israel back in June named Base44, which has been doing extremely well.

Wix stock is down about 50% this year because people fear competition from companies like Cursor, which is privately held. Cursor, an AI code editor, was just valued at $29 billion in a late-stage venture-financing round. It has annual revenue of $1 billion heading into 2026. Wix is profitable. It has a $5.5 billion market cap and generates more than $500 million a year in free cash flow. We see more positive risk/reward in the public markets than in late-stage private companies.

One of the most controversial names is Marvell Technology. People have been too much glass-half-empty on Marvell. The stock is down 25% this year, even though the company has delivered good results. It has a large backlog that it announced on a recent earnings call. Marvell indicated that its ASIC [chip] business should grow more than 20% in 2026, and it expects to double that in calendar 2027.

Marvell isn’t particularly expensive anymore. It has grown into its valuation. The company could earn close to $5 per share in 2027. The stock is $85. That looks pretty reasonable to us.

The narrative that Nvidia will inevitably lose share in AI processors is in the stock. But this is still a fast-growing market. Nvidia just grew revenue by 62% year over year in the latest quarter, and is guiding to 67% growth in its January quarter. It isn’t as though the company’s growth rate has slowed to a crawl or gone negative.

That is reasonable. The stock has cooled down. The company has grown into its valuation. Based on yardsticks such as the price/earnings ratio and enterprise value to free cash flow, the valuation isn’t egregious.

There are areas that feel higher-risk, including the so-called neocloud data-center companies such as Nebius Group and CoreWeave. This is something of a commodity business. It is inherently riskier because these companies don’t have significant intellectual property.

Jensen Huang, the CEO of Nvidia, has said multiple times that power is the single biggest constraint on AI. As a result, there is strong demand for adding things like nuclear power. Old nuclear plants such as Three Mile Island are being recommissioned. There is strong demand for gas turbines at companies such as GE Vernova.

The rising tide has lifted a lot of companies that are speculative—things like Fermi, which has land in Texas and plans to put in gas and nuclear power plants. The idea is that people will put data centers near Fermi’s power plants. We have been skeptical of companies such as Oklo and NuScale Power, which are building small modular reactors. It takes a long time to get approval and build a nuclear plant.

Bloom Energy has a unique story and many attributes. It makes the most-efficient fuel cells in the world. You can get these installed next to data centers within six months, as opposed to waiting years for your local utility to provide power. Bloom got a 30% tax credit from Trump’s tax bill that no one expected. It has been able to lower the cost of its fuel cells by 10% a year for many years. Conceivably, these products will be meaningfully cheaper than gas turbines over time.

Bloom can add capacity fairly easily. It has said it can add a gigawatt of capacity for a little over $100 million. We expect Bloom to grow at a high rate possibly for the next decade.

We think next year’s earnings estimates are too low. The consensus is $1 a share, and we expect Bloom to earn between $2 and $3. In 2027, the company could earn more than $7 a share. Bloom is going to be growing its top line by 50% for a few years. Next year, it could generate something like $3 billion in revenue. The company has a market value of $22 billion. It isn’t particularly expensive.

We are skeptical of the quantum computing space. Let’s keep in mind that the four most prominent public-market quantum stocks were all created through SPACs [special purpose investment companies]. Quantum is an area that is perpetually five to 10 years away, and that has been the case for the past 15 years. It isn’t a replacement for AI processors. It can’t ingest huge amounts of information.

We feel that the total addressable market for quantum computing is small. It is useful for certain difficult mathematical problems and encryption. This is the reason governments are interested in quantum computing; they are nervous about people being able to break encrypted codes. But the commercial applications for quantum computing look like they are relatively trivial.

Sure.

Alright. Broadcom’s stock has sold off a bunch. In the next four quarters, the company will have AI-related revenue of $79 billion.

Google parent Alphabet would be my other pick. Google is the leader in AI. It makes Waymo self-driving cars. The company’s YouTube and YouTube TV are both doing well. The new chief financial officer seems like she is running a very tight ship. The company has been buying back a lot of stock. It has the best free cash flow profile of all of the Magnificent Seven. There is a lot to like about Alphabet.

Thanks, Paul.