Individual Economists

FCC Chair Pushes Back On Allegations Of Censorship Over Stephen Colbert Interview

Zero Hedge -

FCC Chair Pushes Back On Allegations Of Censorship Over Stephen Colbert Interview

Authored by Jack Phillips via The Epoch Times,

The chairman of the Federal Communications Commission (FCC) on Wednesday pushed back against allegations of censorship from CBS late-night host Stephen Colbert and a Democratic Texas Senate candidate.

FCC Chairman Brendan Carr said Colbert could have aired his interview with Texas state Rep. James Talarico, a Democrat running for the U.S. Senate, if the late-night TV show he hosts complied with federal equal time rules by airing interviews with other Democrats vying for the seat.

“There was no censorship here at all,” Carr told reporters.

“Every single broadcaster in this country has an obligation to be responsible for the programming that they choose to air, and they’re responsible whether it complies with FCC rules or not, and it doesn’t, and those individual broadcasters are also going to have a potential liability.”

Talarico has alleged in posts on his X account that the FCC and the Trump administration had tried to censor the interview and barred him from appearing on Colbert’s program, although the interview was published online.

“The reason the Trump administration and their billionaire friends are trying to silence me and this movement is because they’re worried that we are going to flip Texas in November,” he said in a video, which was posted on X.

Aside from Talarico’s allegations of censorship, Colbert, who is set to leave “The Late Show” in May, also criticized CBS and the Trump administration during his program.

“Then I was told, in some uncertain terms, that not only could I not have him on, I could not mention me not having him on,” the “The Late Show” host said on Tuesday, adding that “because my network clearly doesn’t want us to talk about this, let’s talk about this.”

The interview with Talarico was uploaded to Colbert’s YouTube channel on Tuesday evening.

In statements to media outlets in response to Colbert’s claims, CBS denied that “The Late Show” was barred by the network from airing the Talarico interview and instead said that its lawyers advised the company that the broadcast could trigger the equal time rule.

“The show was provided legal guidance that the broadcast could trigger the FCC equal time rule for two other candidates, including Rep. Jasmine Crockett, and presented options for how the equal time for other candidates could be fulfilled,” CBS said in the statement.

It noted that the interview was published on the show’s YouTube channel instead.

The issue came just hours before early voting opened Tuesday in Texas’s primary elections, which feature hotly contested Senate nomination races in both parties.

Talarico’s main opponent in the primary is Crockett (D-Texas) and both have built national profiles through viral social media clips.

On the Republican side, four-term incumbent Sen. John Cornyn is facing the political fight of his career against Texas Attorney General Ken Paxton and Rep. Wesley Hunt (R-Texas).

In a notice last month, the FCC said that it is changing the rules exempting certain late-night and daytime talk shows from being mandated to provide equal airtime to opposing candidates.

“Importantly, the FCC has not been presented with any evidence that the interview portion of any late night or daytime television talk show program on air presently would qualify for the bona fide news exemption,” the FCC said on Jan. 21.

“Moreover, a program that is motivated by partisan purposes, for example, would not be entitled to an exemption under longstanding FCC precedent.”

The Epoch Times contacted the FCC for comment Wednesday.

Tyler Durden Wed, 02/18/2026 - 21:45

Watch: Humanoid Robots In China Put On Jaw-Dropping Show

Zero Hedge -

Watch: Humanoid Robots In China Put On Jaw-Dropping Show

Our coverage of humanoid robots has ramped up for a very good reason: global production is set to surge this year, these bots are getting "brains," and dual-use concerns are rising.

In China this week, state-owned international news network, China Global Television Network, provided coverage on a Spring Festival gala showcasing the country's technological advancements, including a wild performance featuring humanoid robots.

Four rising humanoid robot startups - Unitree Robotics, Galbot, Noetix, and MagicLab - demonstrated their robots on state TV. In one show, a dozen Unitree humanoids performed sophisticated fight scenes.

China's humanoid robot industry is preparing for two major initial public offerings this year: AgiBot and Unitree.

As we've previously reported, these bots are beginning to push beyond scripted video stunts - such as shown in the video above - into real-world applications. The factory floors are now being invaded, then these bots will be battlefield-ready.

Related research and roadmap of what's ahead:

We should note that President Xi Jinping met with five robotics startup founders in the last year, compared with four electric vehicle and four semiconductor heads over the same period. Xi's focus suggests Beijing sees humanoid robotics as the next frontier it aims to dominate.

Tyler Durden Wed, 02/18/2026 - 21:20

Surprising Revival: Gen Z Men & Highly Educated Lead Return To Religion

Zero Hedge -

Surprising Revival: Gen Z Men & Highly Educated Lead Return To Religion

Authored by Joel Kotkin, Bheki Mahlobo via RealClearInvestigations,

The decline of religion remains a fundamental reality in most Western countries, particularly in Europe, where over 50% of those under age 40 do not identify with any faith. Even in more religious America, some estimate that as many as 100,000 churches will close in the near future. Meanwhile, the ranks of “Nones,” those outside religious communities, have grown so large that their numbers rival those of Catholics and evangelical Protestants.

Yet, as we document in a new report for the Chapman Center for Demographics and Policy, there are signs that religion is enjoying more than a nascent revival. Data emerging from the 2020s suggest that we are witnessing a complex spiritual restructuring that intersects with economic mobility, demographic resilience, and a profound intellectual realignment.

For the first time in decades, Pew Research notes, in the U.S. at least, Christianity has stopped its nosedive as more people begin to see the efficacy, and the rewards, of religious faith and practice.

This fragile development is especially noteworthy as it exposes growing divides and fault lines in American politics and culture. Drawing on a vast array of longitudinal studies, interviews, and other sources, one startling finding in both America and abroad is that, contrary to past assertions, today the faithful are not poor and ignorant but increasingly from the educated upper middle class. 

Even the cognitive elites are experiencing a growing trend to embrace religious activity. Indeed, in a rebuke of the aggressive New Atheism of the early 2000s advanced by thought leaders such as Richard Dawkins and Christopher Hitchens, a counter-movement appears to be growing among scientists, philosophers, and public intellectuals who view religious tradition not as a delusion to be eradicated but as a sustainable civilizational operating system. 

As our politics splinter along gender – with women increasingly forming the base for Democrats and men, for Republicans – it is men who are leading the return to church. Reversing a 25-year-long trend, men reported higher church attendance than women in 2025. This growing divide may continue to separate men and women, with grave implications at a time when rates of marriage and parenthood are declining.

Even in places where religion continues to decline, the remaining faithful are shifting away from more liberal faiths to those hewing closer to traditional values. For many, more orthodox sects provide existential security and create a sustainable sense of community.

As our report makes clear, the budding religious revival taking place in the U.S. reflects a global trend, especially strong in Africa, which is now the most demographically robust place on the planet. 

The implications and promise of this trend cannot be overstated. Data show that religious communities function as potent engines of human capital accumulation, risk mitigation, and social capital. These mechanisms effectively propel adherents up the socioeconomic ladder. 

There is considerable evidence that faith is again gaining adherents, even in Europe. Last year, for example, there was a 45% increase in the number of people baptized in France. In the U.K., according to an April study by the Bible Society, the number of 18- to 24-year-olds saying they attended church at least monthly has jumped from 4% in 2018 to 16% today. Among young men, it’s increased 21%. Most of this growth is concentrated among Catholics and Pentecostals; the Bible Society suggests there are now more than 2 million more people attending church than in the last decade. 

Spiritual Hunger

In the U.S., there are also signs of spreading spiritual hunger, according to Pew. Relatively few “nones” identify as either atheist or agnostic but consider themselves spiritual outside organized faith. One recent survey showed young people are increasingly embracing a higher power, often using the internet to access traditional beliefs. Research also suggests that most Gen Z teens are interested in learning more about Jesus, with younger cohorts leading the way in the growth of new commitments.

This is particularly marked among men, marking the closing of the so-called “God Gap” between the sexes. In both the U.S. and the U.K., Gen Z men are now retaining or adopting Christian identity at rates equal to or higher than their female peers. Many young men report feeling culturally dislocated or villainized by progressive secular discourse regarding masculinity. Traditional forms of Christianity, particularly Catholicism and Orthodoxy, offer a narrative of responsibility, sacrifice, and hierarchy that appeals to men seeking a defined role in a fluid world. 

Public intellectuals like Jordan Peterson have played a crucial role in re-enchanting the Bible for a secular male audience. By framing biblical narratives as psychological maps for meaning rather than just metaphysical claims, they create an on-ramp for secular men to enter religious spaces. The internet has further facilitated this through the rise of digital orthodoxy, where the aesthetic of antiquity and rigorous discipline appeals to young men to the spiritual vacuity of modern life.

More surprising may be the nascent embrace of religion by scientists and other learned classes. In the early 2000s, the New Atheism gained traction for the view casting religion as a dangerous delusion. By 2025, this movement has largely exhausted itself, replaced by nuanced curiosity and, in some cases, a robust defense of religion among the epistemic elite. 

Longitudinal research by sociologist Elaine Howard Ecklund, based on surveys of scientists in eight regions, including the U.S., the U.K., Turkey, India, and Taiwan, reveals that scientists in Taiwan, Hong Kong, and India are often more religious than the general public. They view science and religion as overlapping or independent spheres, not enemies.

This perspective is emerging in the U.S. as well. Although still a distinct minority, younger scientists under the age of 35 are more likely to attend religious services than the older baby boomer cohort, suggesting that the rigid secularism of the academy is softening with the new generation. Even two decades ago, only 15% of scientists considered religion in conflict with science, while 70% did not see that conflict.

There are even signs of a revival in the technological heartland of secular America – Silicon Valley. Leading figures, including Pat Gelsinger, former head of Intel, Gary Tan, CEO of Y Incubator, and the venture capitalist Peter Theilopenly embrace Christianity. The world’s most important innovator, Elon Musk, has recently become more public in his embrace of Christianity, which he described as “ a religion of curiosity” and “greater enlightenment.”

Membership at Our Lady of Peace Church and Shrine in Santa Clara has risen to more than 3,000 families, according to Father Brian Dinkel, who said the Catholic church hears an estimated 50,000 confessions a year. “People who may be doing well also want something more,” notes Father Dinkel. “Our people work at Google and Apple, but there’s a real search for the truth beyond tech.”

Orthodoxy Flourishing

Even amidst a fledgling religious revival, mainline Protestantism, once a primary cultural and political pillar of American life, is in freefall. Episcopalians, Methodists, Presbyterians, Lutherans, and others now account for less than 11% of the population, down 40% since 2007, according to the Pew Religious Landscape Study. Since 1960, for example, the Episcopalian share of the population has dropped by two-thirds, the Disciples of Christ and United Church of Christ by even more. Lutherans and even Baptists have seen their share shrink by 50%.

More recently, traditional faiths, such as Greek Orthodoxy, have done particularly well. A survey of Orthodox churches around the country found that parishes saw a 78% increase in converts in 2022, compared with pre-pandemic levels in 2019. And while historically men and women converted in equal numbers, vastly more men have joined the church since 2020. The average age of attendees is 42, with 62% between 18 and 45. That’s significantly younger than other major traditions. 

The appeal of Greek Orthodoxy, notes religious intellectual and convert Matt Mattingly, actually lies not in politics or race, but in ancient values. Mattingly, himself a convert, notes in conversations with recent American converts, “I have talked with, I would estimate, 100+ young men headed into Orthodoxy in the past decade or so. It is true that most are strong supporters of this ancient faith’s teachings on marriage, family, sexuality, and gender. Many of these single men are highly motivated to get married and start families. Yes, they are worried about trends in American life and many mainline pews.

Even more ascendant are the Pentecostals, who emphasize direct contact with God. Their numbers have swelled, particularly among immigrants and in the developing world, as well as in the U.S. By some accounts, it is the fastest-growing religion in the world, with over 600 million adherents today and projected to reach one billion by 2050. 

Similarly, among Jews, reform and even conservative synagogues are struggling while those of Orthodox Judaism, particularly the thriving Chabad movement, have gained both members and influence. Critically, it has enjoyed the greatest growth in engagement since the Oct. 7 attack on Israel. In contrast to Chabad’s assertive embrace of the Jewish state, some progressive reform rabbis have embraced anti-Zionism, even in the face of overwhelming support among Jews for Israel. Today, Orthodoxy represents one in seven Jews, but by 2040, that is projected to be one in five

Elite Marker

A central tenet of secularization theory was that higher education would inevitably lead to lower religiosity. This pattern still holds in Europe, but the 2022-2023 Cooperative Election Study, which included nearly 85,000 respondents, indicates a positive correlation between educational attainment and religious attendance in the United States. High school graduates report attending religious services weekly at a rate of approximately 23%, whereas graduate degree holders report attending weekly at a rate of approximately 30%. 

This suggests that religion is becoming an elite marker in America.[i] Increasingly, at least in the U.S., religious affiliation has become a form of elite social behavior associated with stability, community leadership, and bourgeois respectability. Indeed, a deep dive into the data shows that, over the past 15 years, religiously engaged people have become more likely to be well-educated, while atheists are less so. Generally, the nones tend to be somewhat less schooled than their more religious counterparts.

These findings shatter the notion that religious people are generally less curious, less ambitious, and less intelligent than their non-believing counterparts. Religious groups such as Jews and Hindus, as well as Episcopalians, also outperform atheists and agnostics, while many others, such as Mormons, Lutherans, and other Protestant groups, do as well.

Nowhere is the efficacy of religion more obvious than among poorer Americans. Inner-city boys who attend religious school are twice as likely to graduate from college as their socio-economic counterparts in public schools, notes Tulane sociologist Ilana Horwitz. Critical here, notes Horwitz, are the attributes of the religiously engaged, such as respect for elders and learning, with the deepest divergence felt among working- and middle-class children.

This may be one reason enrollment in private Christian schools has shot up across the nation in recent years. The K-12 enrollment at the Association of Christian Schools International, “one of the country’s largest networks of evangelical schools,” increased 12% between 2019-20 and 2020-21. Since then, particularly during and after the pandemic, private schools, mostly religious, gained 300,000 new students between 2019 and 2023 while public schools lost 1.2 million.

That jump mirrors other migrations out of public school systems, including a doubling in the percentage of kids being homeschooled. In the 2019-20 school year, 6% of all American students, some 3.5 million, attended religious schools. The rise of voucher programs, including in such large states as Texas and Florida, has largely benefited religiously oriented schools. 

Pathway to Success

One subtle effect, most importantly for the poor, is that religious institutions provide a connection to the more affluent. This is a critical factor for success as outlined in the “Social Capital Atlas” project led by Harvard economist Raj Chetty. Utilizing privacy-protected data from 21 billion Facebook friendships linked to tax records and census data, the report found the degree of social interaction between low-income and high-income individuals as the single strongest predictor of whether a poor child would rise out of poverty. High exposure to wealthier peers increases lifetime earnings by an average of 20%.

Chetty’s team found that poorer people associate more with the affluent at religious institutions than at secular institutions like high schools, colleges, and workplaces. A low-income individual attending a religious congregation is significantly more likely to form a meaningful friendship with a high-income congregant than they would be in a workplace, school, or neighborhood group.

Perhaps most critically, religion provides a sense of community and ties that are more tangible than those found online, at school, or in the workplace. For instance, just 10% of religious observants say they have no close friends; the number almost doubles for those who have no faith. For young families, in particular, the religious community offers a village in which to raise children in an era of atomized parenting. This functional utility is a major driver of individuals returning to church in their thirties.

The church, notes Aaron Renn, a leading protestant intellectual, provides a mechanism, particularly for the young, to escape the loneliness and alienation associated with the “negative world.” Even though plagued at times by racial and ethnic division, the church’s role was “not merely socially useful but as “part of a gospel obligation.”

Three-quarters of those who attend church weekly give to the poor, compared with 41% of non-observants. Overall, 73% of all charitable contributions come from religious sources, while 60% of all beds for the homeless are from faith-based institutions.

Indeed, when volunteerism has been on a decline among the young, the young religious are more likely to perform community work than their nonreligious Gen Z counterparts. Data from a nationally representative survey of nearly 2,000 young adults ages 18 to 25 coordinated by Neighborly Faith reveals that half of religious Gen Zers report volunteering in the community often or very often, compared with 30% of slightly religious Gen Zers and just 21% of not religious Gen Zers. 

In the end, our report finds that the growing evidence of religion’s basic utility, including its provision of a spiritual anchor, seems likely to grow, by offering a viable alternative to hyper-competition and individualism rife in secular-driven societies. 

Tyler Durden Wed, 02/18/2026 - 20:55

CNN Issues Dire Warning To Democrats On 2026 Governors' Races

Zero Hedge -

CNN Issues Dire Warning To Democrats On 2026 Governors' Races

Midterm elections have rarely been kind to the party in the White House. Republicans lost both chambers in 2006 under George W. Bush; Democrats were crushed under Barack Obama in 2010 and again in 2014; Republicans lost the House under Donald Trump in 2018; and Democrats narrowly lost the House under Biden in 2022. The lone exception was 2002, when Republicans gained seats in both chambers after 9/11. Otherwise, the pattern is clear: the president’s party almost always faces setbacks.

With the 2026 midterm elections months away, Democrats have many reasons to feel confident they will, at the very least, win back control of the House, which would be enough to effectively stall Trump’s agenda, and most certainly find something to impeach for. 

Over at RealClearPolitics, Democrats currently hold an average lead in the generic congressional ballot of +4.6 points. Only one pollster in the average - RMG Research - shows Republicans ahead, and even then by just 2 points. The Democratic advantage isn’t particularly large, and there’s ample reason to believe that a strong economy could boost the GOP in November, but when you look at gubernatorial elections, the advantage is clearly with the Republican Party.

On Wednesday, CNN's Harry Enten painted an unflattering picture of the Democrats when it comes to this year’s gubernatorial races.

"Look at this, a majority, a majority, 26. That is, at this point, the number of governors that are expected at least tilting towards the Republican Party at this point. Democrats come in at just 20. The rest of the races are toss-up,” Enten said. “Of course, you sum up to 50. And I will note that the Republicans right now hold a 26 to 24 gubernatorial seat advantage.”

That's the current baseline. Republicans enter 2026 holding more governor’s mansions, and the trajectory doesn't appear to favor a Democratic reversal. But, according to Enten, even accounting for toss-up races, the GOP is likely to come out ahead. "So at this point, it doesn't look like Republicans on the net and the aggregate are actually going to lose any governorships. In fact, when you add in those toss-ups, they may gain," he explained. "So this should stand as a major wake-up call to Democrats, because if there's a wave building, it has not, at least at this point, hit the state level when it comes to governorships."

Democrats have not held a majority of governorships since 2010 - the longest stretch of gubernatorial minority status the party has endured in at least a century. Republicans have controlled a majority of state legislatures since 2012. One might call that a structural realignment that's been hiding in plain sight while national media fixates on presidential elections and control of Congress.

Why does any of this matter? Enten answered that directly. "This is a massive problem for Democrats, because as we mentioned at the top, a lot of the policy is determined on the state level. And if all of a sudden you can't actually lead a majority of governorships, the executive branch on the state level, that means Republicans are in fact forming and implementing most of the policies in the states, and therefore a lot of the policies nationwide," he said.

The way Enten sees it, congressional seats may generate headlines, but governorships generate policy at the state level, which could have nationwide implications, including Medicaid expansion decisions, election integrity, redistricting, and regulatory enforcement - all of it flows through state executives. 

Democrats clearly enter the 2026 midterm elections with a structural advantage in winning control of Congress, but the GOP may still have a hidden advantage due to its majority of governorships. 

Tyler Durden Wed, 02/18/2026 - 20:30

Mortgage Recast Versus Refinancing: Which Works For You?

Zero Hedge -

Mortgage Recast Versus Refinancing: Which Works For You?

Authored by Anne Johnson via The Epoch Times (emphasis ours),

If you come into some extra funds, you might want to consider applying them to your mortgage. It’s a great way to pay down the principal or lower your monthly mortgage payment. Lowering your monthly mortgage payment is particularly helpful if you often have cash-flow issues.

William Potter/Shutterstock

There are ways to lower your monthly mortgage by using recasting or refinancing. Each option works differently, so it’s important to understand how they compare.

Recasting a Mortgage

Mortgage recasting is when you make a lump-sum payment to your principal balance. Once done, your lender then calculates a new, lower monthly payment. Your interest rate stays the same.

For example, suppose you owe $250,000 on your mortgage and receive a $50,000 inheritance. If you use all of it to recast your mortgage, your lender will recalculate your monthly payments based on a $250,000 balance, lowering your monthly payment.

Refinancing a Mortgage

With refinancing a mortgage, you take out a new home loan and use it to pay off the outstanding balance of your existing mortgage. This is often done to secure a lower rate. Typically, the new rate results in a lower monthly payment and less overall cost.

Refinancing doesn’t require a lump sum payment toward the principal.

Costs of Recasting and Refinancing a Mortgage

According to Experian, both recasting and refinancing come with costs. For example, you will be charged an administrative fee for a mortgage recast. This typically runs a few hundred dollars, depending on the lender.

Mortgage refinancing has a different cost structure. Closing costs can total two to five percent of the loan amount.

Can All Types of Mortgages Be Recast or Refinanced?

Conventional loans can be recast, but according to PNC Insights, not all mortgage types are eligible. Government-backed loans, including those from the Federal Housing Administration, Veterans Affairs, and the U.S. Department of Agriculture, are not eligible for recast.

Conventional and government-backed mortgages are eligible for refinancing.

When Do Borrowers Refinance or Recast a Mortgage?

Refinancing, technically, gives you a new mortgage with new interest and terms. For example, if you have a 30-year mortgage, you can refinance to a 15-year mortgage or vice versa.

Most borrowers refinance to obtain a better interest rate or switch from an adjustable-rate to a fixed mortgage. They also may use it to switch equity to cash.

A mortgage recast uses cash to pay down some of the loan’s principal. It is often used when a borrower receives a large sum of money, such as a bonus or an inheritance.

According to PNC Insights, it can be used when a borrower purchases a house before selling the current one. When the previous home sells, the proceeds can be used to recast the new home’s mortgage.

However, the lender may require two months of on-time payments before authorizing a recast.

Advantages of a Mortgage Recast

There are several benefits of a mortgage recast. By reducing your principal, you lower your monthly payment without extending your loan term.

A recast mortgage is not a new loan. So, you will not need a credit check or home appraisal to apply.

If you’re already locked into a low interest rate, it’s a way to keep your current rate while lowering your monthly payment.

There usually are lower administrative fees associated with a recast mortgage. According to Alcova Mortgage, they typically fall between $150 and $500.

According to SoFi Learn, if you make a lump-sum payment to bring your loan down to 80 percent of the home’s value, you can request to stop paying the private mortgage insurance or have it automatically dropped when the value reaches 78 percent.

Disadvantages of a Mortgage Recast

According to Rocket Mortgage, there are cons to a mortgage recast. One disadvantage is that your lender may not allow a recast. You are also limited to a conventional loan, because government-backed loans don’t allow a mortgage recast.

The loan-repayment term is not shortened, either. Your payment goes down, but if you have a 30-year loan, you can’t change it to a 15-year or other-year loan.

Losing access to equity is a problem. Your contributed cash will be tied up in your home equity. This means you’ll need to refinance or apply for a home equity loan or home equity line of credit if you need access to your home’s equity.

Refinancing Mortgage Advantages

You have options when refinancing. The loan conditions can be changed. For example, you can shorten or lengthen your term, take a lower interest rate or refinance to a new loan.

Almost any loan qualifies for a refinance. It may be your only option if you want a lower payment and you have a government-backed loan.

You also have the option to choose a new lender if you’re not satisfied with the current one.

Refinancing Mortgage Disadvantages

Refinancing is a new loan and usually has more costs than a recast. Refinanced loans include origination fees, appraisal fees, and other closing costs.

The clock turns back with a refinanced loan. This means if you’re 15 years into a 30-year loan, if you finance for another 30-year loan, it starts over. You lost the 15 years you already paid for.

With refinancing, since it’s technically a new loan, you pay more in interest at the beginning of your loan. You don’t start paying on the principal until later in the term. This means you could end up paying more interest throughout the life of the loan.

Mortgage Recasting and Refinancing

A mortgage recast lowers your monthly payments and saves you money on long-term interest. But you tie up equity.

However, not everyone qualifies for a recast. If you have a government-backed loan, for example, you’ll need to refinance.

The Epoch Times copyright © 2026. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times and ZeroHedge hold no liability for the accuracy or timeliness of the information provided.

Tyler Durden Wed, 02/18/2026 - 20:05

80% Plunge In Immigration Is Reshaping Labor Market Math, But AI Wildcard Looms: Goldman

Zero Hedge -

80% Plunge In Immigration Is Reshaping Labor Market Math, But AI Wildcard Looms: Goldman

The Trump administration's crackdown on illegal immigration has resulted in an 80% collapse in net immigration to the USA, and has fundamentally altered the mathematics behind the nation's labor supply to the point where the level of job growth needed to maintain economic stability is now far lower, according to a new Goldman analysis. 

After a flood of more than 10.8 million illegal immigrants (official figure) entered the United States under Biden, net immigration - both legal and illegal - has gone from roughly one million people per year in the 2010s to around 500,000 in 2025, with a further drop to just 200,000 projected by Goldman for 2026. This has sharply reduced labor-force growth and lowered the economy's "breakeven" pace of job creation, the bank opines.

Here's Goldman vs. Brookings vs. the Congressional Budget Office on net immigration:

Now, the US will only need around 50,000 new jobs per month by the end of this year to keep the unemployment rate from rising, down from roughly 70,000 today.

At the same time, Goldman says labor demand still looks "shaky" because job growth is narrow and job openings are trending lower - with the main downside risk being a faster, more disruptive AI-driven adjustment that could tamp down hiring or raise job losses beyond current estimates. 

Elevated deportations, tighter visa / green-card policies, a pause in immigrant visa processing that affects dozens of countries, and the loss of Temporary Protected Status for some groups, Goldman suggests there is additional downside risk to the workforce.

A shakier demand picture

Of course, new math on the labor supply doesn't mean the labor market is strong (duh)... In fact, Goldman describes demand as “shaky,” writing that job growth has become increasingly narrow - dominated by healthcare - and that job openings have continued to fall. Openings are now around seven million, below pre-pandemic levels and still declining.

Because fewer new workers are entering the economy, hiring no longer needs to run as hot to prevent unemployment from drifting higher. “A small pickup is all that should be needed to sustain job growth at the breakeven pace,” according to the report, arguing that weaker-looking payroll numbers may increasingly mask a labor market that is merely treading water rather than deteriorating.

Official data from the Bureau of Labor Statistics show a similar trend, with job openings drifting toward the mid-six-million range late last year. A continued slide in openings, Goldman warns, would increase the risk that unemployment rises more meaningfully, even with slower labor-force growth.

There is also a risk that tighter immigration enforcement is pushing more workers into informal or off-the-books employment. If so, official payroll data could understate the true level of labor-market activity, complicating the Federal Reserve’s task of gauging economic momentum.

AI looms as the wildcard

Goldman sees artificial intelligence (AI) as the largest downside risk to the labor outlook - not because it has already triggered mass layoffs, but because it may restrain hiring at the margin. So far, the firm estimates that AI-related substitution has shaved only 5,000 to 10,000 jobs from monthly growth in the most exposed industries. But a faster or more disruptive deployment could weigh more heavily on demand.

...the main reason that we worry about downside risk to our baseline forecast that the labor market will stabilize going forward is the possibility of a faster and more disruptive deployment of artificial intelligence (AI). While plenty of recent anecdotes point to a potentially faster rate of adoption and corresponding job losses, it is hard to know how these will translate to macroeconomic outcomes. -Goldman

The bank shows that job growth has slowed and turned slightly negative in several subindustries where AI is most ready to deploy, while company-level anecdotes indicate that AI is already reducing the need for workers. The impact, while visible, remains 'moderate' so far. 

For now, the bank expects the unemployment rate to drift only modestly higher, toward 4.5%, while Goldman chief economist Jan Hatzius said in a separate note (available to Pro subs) that the probability of a recession next year is "moderate" at 20%. The labor market, in the firm’s words, is taking “early steps toward stabilization.”

The paradox is that stability may increasingly look like weakness. As immigration slows and the workforce grows more slowly, payroll gains that once signaled trouble may soon be enough to keep the labor market steady - at least on paper.

h/t Capital.news

Tyler Durden Wed, 02/18/2026 - 19:40

Iran Leans On Russia To Develop Oilfields

Zero Hedge -

Iran Leans On Russia To Develop Oilfields

By Tsvetana Paraskova of OilPrice.com,

Iran and Russia are strengthening their economic and energy cooperation and consider joint development of another Iranian oilfield, top officials from the countries said on Wednesday.    

Russian Energy Minister Sergei Tsivilev led a high-level Russian delegation on a visit to Tehran this week during which Tsivilev and Iran’s Oil Minister Mohsen Paknejad discussed deepening the economic and energy cooperation.

In the face of increased pressure from U.S. sanctions, Iran and Russia have boosted their bilateral relations to strategic cooperation and Russian companies help develop oilfields in Iran.  

“Within the framework of four contracts and in the field of development of oil and gas fields, we are jointly implementing the development of seven oil fields with Russian companies, and fortunately some of these projects have led to production, which is considered a valuable achievement,” Paknejad said on Wednesday, as carried by Iran’s Islamic Republic News Agency, IRNA. 

Some of these oil and gas fields have started up production, the officials said.  

Commenting on this week’s Iran-Russia talks, a senior official at the Iranian Oil Ministry said that the share of Russia-developed fields in Iran’s oil production is set to double in the coming years. 

Russia is currently investing in seven Iranian oil fields, which account for about 6% of Iran’s total oil production, said Mostafa Barzegar, Director General for Europe, America and the Commonwealth of Independent States at the Ministry of Oil’s International Affairs Department.  

Expectations are that the share could jump to 12% over the next few years, Barzegar said. 

In the energy sector, the official said that cooperation in oil and gas is one of the pillars of Iran–Russia relations, Iran News Daily reports. 

Iran and Russia have also signed a $25-billion memorandum of understanding for the construction of new large-scale and small-scale nuclear power plants in the Sirik region in southern Iran. 

Tyler Durden Wed, 02/18/2026 - 19:15

US Withdrawing All Forces From Syria, Over A Year After Regime Change By Proxy War

Zero Hedge -

US Withdrawing All Forces From Syria, Over A Year After Regime Change By Proxy War

Last week we and others reported that American forces finally after many years withdrew from the remote Al-Tanf Garrison, a base in southern Syria near the borders of Iraq and Jordan. US troops had long operated out of Tanf to pressure the Assad government as part of the long-running US-backed regime change project. The US primarily trained the Syrian Free Army (FSA) in that remote desert area - which was an umbrella group of various factions, among them jihadists, armed and funded by Washington.

But the majority of US forces had long occupied the northeast of the country, where the oil and gas fields are concentrated, specifically Hasakah and Deir Ezzor provinces. But over several weeks, the Pentagon has been handing over its constellation of small bases to the Syrian government of Ahmed al-Sharaa (al-Qaeda and ISIS name: Abu Mohammad al-Jolani). At times throughout the Syrian proxy war, the US had anywhere from 800 to 2000 troops on the ground, but likely also more contractors and intelligence operatives.

Under Trump, Washington has been weighing a complete withdrawal since the year's start, having fully backed the Jolani regime in the wake of the overthrow of Bashar al-Assad. This has been awkward to put it mildly, given Jolani had long been on the US terror list, after being dropped once he took control of Damascus.

On Wednesday, The Wall Street Journal reports, "The U.S. is in the process of withdrawing all of its roughly 1,000 troops from Syria, according to three American officials, ending a decadelong military operation in the country."

Getty Images

One question is whether this is connected to the Pentagon's Iran-related build-up a little further to the east. WSJ notes on this, "The officials said the withdrawal was unrelated to the current U.S. deployment of naval and air forces in the Middle East for potential strikes against Iran if talks about that country’s nuclear program fail."

Another issue is the Kurds. The US for a decade trained and armed the Kurdish-dominated Syrian Democratic Forces (SDF), but now is cutting them lose. Kurdish leaders have warned of attacks by hardline Sunni militants under the new Damascus government.

"The Trump administration has decided that a U.S. military presence in Syria is no longer necessary, two U.S. officials said, because of the near-total disbandment of the Kurdish-led Syrian Democratic Forces, the main U.S. partner in countering Islamic State in Syria for the past decade," WSJ continues.

And yet US officials previously admitted to the same publication that post-Assad Syrian Army is "riddled with jihadist sympathizers, including soldiers with ties to al-Qaeda and ISIS and others who have been involved in alleged war crimes against the Kurds and Druze."

This has been extremely controversial as the US-backed Kurds and SDF forces have been attacked while Damascus forces move in. Abandonment of the stateless Kurds has been a clear pattern of Washington policy over time.

Tyler Durden Wed, 02/18/2026 - 18:50

Waste Of The Day: Principal Bought Lobster With School Funds

Zero Hedge -

Waste Of The Day: Principal Bought Lobster With School Funds

Authored by Jeremy Portnoy via RealClearInvestigations,

Topline: Most New York public school lunches consist of room temperature chicken nuggets or reheated pizza. But at Wyandanch Memorial High School on Long Island, principal Paul Sibblies dined on steak and lobster at taxpayers’ expense.

Sibblies reimbursed himself a total of $35,519 from 2021 to 2024 using cash meant for a school club, without approval or supervision from anyone besides his own secretary, according to an audit obtained by Newsday.

Key facts: Sibblies paid himself 41 times using money from the high school’s Kappa League club, a leadership program affiliated with the Kappa Alpha Psi fraternity.

The most concerning was the steak and lobster Sibblies and an unidentified person ate at a restaurant in Delaware. Sibblies reimbursed himself $126 for the bill, which also included alcohol. He logged the transaction as “EOY Academic Success.”

Larry Aronstein, the district’s former interim superintendent, told Newsday that Sibblies was paying himself back for expenses he had laid out on behalf of the school. Sibblies told Newsday the steak and lobster meal was “school-related” but declined to answer other questions.

The school board appears unsatisfied with that explanation. They appointed legal counsel in November 2025 to investigate the audit’s findings, according to Newsday.

We know what is personal and what is for the sake of students,” board trustee Jarod Morris told Newsday. “A steak and lobster dinner in Delaware is personal.”

Separately, auditors flagged other questionable expenses at the Wyandanch Free Union School District, including a jet ski rental in Bermuda. The school district was also missing records showing how much was spent on field trips and donated to clubs.

The audit was completed in early 2025 and made public last month.

Background: Sibblies likely could have afforded his luxury meal himself. He made $192,479 in 2024, according to payroll records obtained by Open the Books.

That made him the fourth-highest paid person in the district. He was one of 24 people making at least $150,000.

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com

Supporting quote: "I know his character, and for whatever that's worth, I think he's a good man,” Aronstein told Newsday about Sibblies. “He runs a very good school and is committed to providing his students enrichment experiences that they can have going beyond the borders of Wyandanch.”

Summary: Even a high school student knows that taxpayer money should not be spent without basic checks and oversight.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com

Tyler Durden Wed, 02/18/2026 - 18:25

Japan's Top Toilet Maker Is 'Undervalued, Overlooked' AI Play Over 'Cryogenic Etching' Technology, Activist Investor Says

Zero Hedge -

Japan's Top Toilet Maker Is 'Undervalued, Overlooked' AI Play Over 'Cryogenic Etching' Technology, Activist Investor Says

Japan's top toilet maker, Toto, is an undervalued AI play according to activist investment fund Palliser Capital. 

Employees bond a toilet bowl with a rim. The work is demanding, requiring muscles to lift bowls and tanks, as well as a delicate touch to smooth surfaces. David Walter Banks for The Wall Street Journal

The UK-based fund sent a letter to Toto's board asking for more disclosure over its advanced ceramics segment, which produces electrostatic chucks used in NAND manufacturing - specifically for a process called cryogenic etching. Toto's chuck technology uses ceramics designed to remain stable at very low temperatures, which can help firmly secure silicon wafers during chip production. 

According to Palliser, Toto is "the most undervalued and overlooked AI memory beneficiary," and says that the Japanese company has a five-year competitive "moat" before other companies can catch up, adding that the advanced ceramics segment could deliver 30% or more revenue growth over the next few years, "driven by Nand upgrade cycle and stable replacement demand."

Palliser also says that Toto is doing a terrible job of explaining the importance of electrostatic chucks to shareholders, and too little of the company's planned investment was devoted to growing the highly profitable segment. 

The activist investor began its involvement with Toto roughly six months ago and is a top-20 shareholder in the business, according to the Financial Times. The fund's other investments include holdings in property company Tokyo Tatemono, Keisei Electric Railway, which runs trains in Tokyo, and Japan Post Holdings.

Toto has set up an automated production line at its ceramics factory in Japan's Oita prefecture. (Toto)

Palliser thinks Toto shares could rise over 55% if it expands its advanced ceramics business, sold cross-shareholdings, and used its $496 million (¥76bn) in net cash better. 

Toto is best known for its heated toilet seats and "Washlet" bidet features, however Palliser says they've "quietly evolved from a traditional domestic sanitary ware champion into a rising powerhouse in advanced ceramics for semiconductor manufacturing."

Shares in the company have already risen over 60% in the past year. 

In late January, Goldman upgraded Toto from Neutral to Buy - writing "We expect significant profit growth in its new domain business segment (which mainly
produces electrostatic chucks for NAND and accounts for 55% of Toto’s operating profits) on the back of increased demand for NAND associated with the build-out of AI infrastructure and a tight supply/demand environment."

Tyler Durden Wed, 02/18/2026 - 18:00

No 'Gentlemen's Agreement' With Russia To Continue Compliance With New Start Treaty: Top Official

Zero Hedge -

No 'Gentlemen's Agreement' With Russia To Continue Compliance With New Start Treaty: Top Official

Via The Libertarian Institute 

Assistant Secretary of State for Arms Control and Nonproliferation Christopher Yeaw said that there was no informal agreement between the US and Russia to maintain the limits on nuclear weapons imposed by the New Start Treaty. The pact expired earlier this month.

During an event at the Hudson Institute on Monday, Yeaw was asked if there was a "gentlemen’s agreement" with Moscow to abide by the New Start Treaty. He responded, "I know of no such agreement. And that is still in the President’s hands."

Russian Foreign Minister Sergei Lavrov explained that Moscow was willing to continue to comply with the New Start Treaty, but Washington did not respond to the proposal. "The initiative put forward by President Putin for the parties to the Treaty on Strategic Offensive Arms to continue voluntarily observing its central quantitative limits was left without an official response from the American side," he told the Russian Duma last week.

"We proceed from the understanding that the moratorium announced by President Putin remains in force on our side, but only as long as the United States does not exceed the above limits." Lavrov added, "We will act responsibly and in a balanced manner based on daily analysis of US military policy and the overall strategic environment."

Yeaw claimed that the death of the New Start Treaty could usher in a "Renaissance" of arms control. However, the outlook for a new treaty to cap nuclear weapons appears unlikely.

"The president certainly wants China in this agreement. I don’t know exactly the path that we will take to get there," he admitted.

"I imagine it will be a difficult one. I don’t think anyone is under any illusions that this will be easy. It wasn’t easy in 2020, we tried to get to a similar spot," Yeaw added.

The relationship between the US and Russia is at a historic low. Western sanctions have nearly eliminated trade with Russia, and NATO’s support for Ukraine has further eroded ties.

Additionally, President Donald Trump is demanding that any new nuclear deal include China. While Beijing is a nuclear power, its stockpile is far smaller than Washington’s and Moscow’s strategic arsenals.

Yeaw went on to say President Trump was considering testing a nuclear weapon. The Assistant Secretary asserted the US was confident China had conducted nuclear weapons tests in recent years. Yeaw argued that the US was at an "intolerable disadvantage" if it was maintaining a nuclear test ban while other countries were testing weapons [hint, hint: China].

Tyler Durden Wed, 02/18/2026 - 17:40

GLP-1 Anti-Obesity U.S. Drug Market In Four Charts

Zero Hedge -

GLP-1 Anti-Obesity U.S. Drug Market In Four Charts

Beyond the most recent GLP-1 feud between Hims & Hers and Novo Nordisk, UBS analysts shift attention to anti-obesity drug trends in the U.S. market for the first week of February.

Analysts led by Matthew Weston focused on new data that show new-to-brand prescriptions (NBRx) for starter doses and all doses across the major obesity GLP-1s in a series of charts:

Obesity GLP-1 starter dose NBRx (up to 2/6/2026)

GLP-1 starter dose NBRx trends (up to 2/6/2026)

GLP-1 starter dose NBRx market share (up to 2/6/2026)

Obesity GLP-1 all doses Total Prescriptions (TRx, up to 2/6/2026)

Weston concluded:

NBRx trends for Wegovy continue to look strong with an encouraging start to the Wegovy pill launch. The uptick in NBRx at the start of the year for Wegovy pen is also going in the right direction. Importantly, the high proportion of Wegovy NBRx pill to TRx and high proportion of Wegovy pill starter dose NBRx to total NBRx suggest that there is very little cannibalisation of Wegovy pen volumes through the pill launch. Further focus points later in the year will be Medicare coverage from July, high dose Wegovy (7.2mg) launch and competitive dynamics from LLY's orforglipron launch (UBSe April).

The latest GLP-1 headline came from Europe earlier on Tuesday, when the European Commission cleared Novo to use a higher 7.2 mg maintenance dose of Wegovy. This approval reinforces that even greater demand for semaglutide is inbound.

In markets, Novo shares in Copenhagen have been pummeled by market share losses to rival GLP-1 drugs, a public feud with Hims & Hers over copycat GLP-1 offerings, and a recently downbeat outlook for the year. Still, the stock’s downside momentum has eased in recent quarters, although it remains about 70% below its 2024 peak.

Meanwhile, Goldman analyst Faris Mourad previously told clients that "obesity drug narrative sentiment is on the rise" and "it's an opportunity to buy the dip." James Quigley (Novo superbull) has remained bullish during Novo's bear market.

Professional subscribers can read the full UBS GLP-1 note on our new Marketdesk.ai portal​​​.

Tyler Durden Wed, 02/18/2026 - 17:20

Not How This Works…

The Big Picture -

 

 

“Let me tell you how this works:  A twenty-six-year-old quantitative analyst at a hedge fund in midtown Manhattan—a person who has never managed an employee, never sat across from a customer, never had to explain to someone that their position has been eliminated—opens a spreadsheet, sees that your company’s headcount is 14% higher than a competitor’s, and writes a note to institutional investors that your stock is overweight.

That note gets circulated and your stock drops. Your board panics. They call the CEO, who was hired eighteen months ago specifically to “unlock shareholder value,” a phrase that should be studied by future anthropologists as one of the great euphemisms of our time. An all-hands meeting is called. Two weeks later, 3,000 people get a calendar invite from HR titled “Quick Chat.”

This is the system working exactly as designed.”

 

No, this is not how this works.

I see this stuff all the time. Sometimes it’s a news item, or a Substack post, or a video clip that purports “a great truth” about markets and companies. Clients, friends, even family members who don’t work in finance share this with me (the excerpt above was from a Substack).

The implication: the system is somehow both already broken and fragile.

This is a fundamental misunderstanding of how markets operate, what drives stocks, and how information truly gets reflected in prices.

Let me explain why this is decidedly not how things work.

The information this 26-year-old analyst “discovered” is a simple ratio. It shows the number of employees relative to some other metric, such as revenue or profits. Assume it came from a well-known (trustworthy) data source. It’s available to various market participants: the 400,000 professionals who pay $3,000 per month for a Bloomberg Terminal; the near-professionals who subscribe to other databases or free versions available in broker research. You can even find variations on Yahoo Finance or Google.

Each of these participants has huge financial incentives to apply this analysis to their own portfolios. But they don’t, because of one simple reason: Zero edge. A widely reported ratio that every other investor has access to provides no advantage over other market participants with that same ratio.

It is already in the stock price.

When I was a newbie trader, it took me a good long time to understand why this is true – and indeed, could not be any other way.

All fundamental information that is widely distributed and/or well known by the investment community is already priced in. Hundreds of thousands of people are deeply incentivized to identify alpha — information that allows you to outperform the markets – and then to deploy capital based on that.

That already happened here.

What is the edge in the story above? What is the insight this “discovery” – and I believe it’s nothing of the kind – uniquely provides to this person?

There is simply no alpha in widely available information, such as an obvious, well-known, easily discovered ratio.

~~~

Let’s do a quick thought experiment:

Imagine the scenario outlined above was successful: what would happen if some inexperienced kid at some fund spotted an aberrational datapoint, wrote up a research note, took it public, which led to a hugely profitable trade?

What would happen next?

Some of you know exactly what would come next: Every fund would unleash every MBA in their shop (along with anyone half decent with Excel) to find the next version of that trade. No data point would go unnoticed, no ratio would sit unanalyzed, no possible combination of variables would remain untried. Any and every possible source of Alpha would be explored, war-gamed, backtested, and modelled.

If other trade possibilities like this one existed, someone would find it and act on it. Others would quickly follow. Soon, the “proper” alignment between these ratios would fall into place. Any upside would be thoroughly arbitraged away…

Markets are not perfectly efficient; I have described them as kind of sorta eventually efficient. I have yet to find anything that disproves this thesis.1

But as far as the major issues go — the big obvious things found in newspaper headlines, in any datapoint in every Bloomberg terminal, in the free research via brokers or online websites — you may safely assume that 98% of the time, it’s already in the price.

What is not in the price?

Many things, across many vectors:

-Genuinely new, unknown information. (FDA Approves new drug!)

-A unique analytical framework no one else has access to (Renaissance Technologies’ 3000 separate proprietary, unique trading algos)

-Insight into a product (The Cybertruck sucks!)

-Recognition of a deeply flawed business model (short Microstrategy!)

-Grasp of a market unknown (Rivian R2 is going to be a global bestseller!)

-Legal insight (SCOTUS will overturn Tariffs — retailers and industrials will benefit)

-Complex risk analysis (Securitized subprime mortgages are sure going to be problematic if rates go up!)

-Behavioral recognition of a crowd mania (Silver sure looks bubbly over $75 100!)

All of these and more can be sources of alpha. But they must genuinely be poorly known or misunderstood by the crowd, and acted on even less.

Good bets made by active traders and managers amid fierce competition look different than bets made on very publicly available information.

They tend to start with a variant perception versus crowd consensus; one where price was significantly impacted, and this perception hasn’t been acted on (yet), and hopefully remains that way until you establish your position. The crowd, correct most of the time (we call this a trend), is wrong in this instance; once it recognizes its mistake, it shifts away from what is now seen as an incorrect consensus and adjusts its portfolios accordingly.

Not all active players trade this way, but enough do. These great insights do not come along every day, but they occur frequently enough to entice an entire active segment of the market to consistently hunt for them.

And that 26-year-old spreadsheet jockey? He is going to need more than a simple headcount ratio to find any alpha…

 

 

 

Previously:
Tariffs Likely To Be Overturned (November 5, 2025)

The kinda-eventually-sorta-mostly-almost Efficient Market Theory (November 20, 2004)

 

 

 

__________

1. Indeed, even the Nobel Prize committee acknowledged this by recognizing in the same year both Eugene Fama for his efficient market hypothesis and Robert Shiller for studies of how bubbles develop and pop.

 

The post Not How This Works… appeared first on The Big Picture.

Voter ID Is Common Sense, But It Won't Fix Anything

Zero Hedge -

Voter ID Is Common Sense, But It Won't Fix Anything

Authored by Connor O'Keefe via The Mises Institute,

As panic builds within the GOP over the approaching midterm elections, Republicans have renewed a push for one of their most popular policy proposals: voter ID.

In the latest version of the so-called SAVE America Act—formerly just the SAVE Act—Congressional Republicans added a requirement for every voter in federal elections to provide poll workers with a valid government-issued photo ID if they’re voting in person or a copy of a valid photo ID if they’re voting by mail.

On Friday—a day after the House passed the law and sent it to the Senate—President Trump put out a post in support of voter ID requirements, which led Senate Democrats to issue familiar denunciations of the policy while promising to block this version of the bill.

The arguments in favor of voter ID are pretty straightforward. If every eligible American citizen is entitled to one vote, poll workers and election officials should confirm that the person voting is who they say they are, so that people cannot submit extra or fraudulent votes by pretending to be someone else. And the best way to do that is the same way identities are confirmed in most other clerical settings—with an officially-recognized photo ID.

The vast majority of Americans, including over 70 percent of Democrats, are in favor of this measure. But that hasn’t stopped top Democratic leaders and many of the Left’s most vocal activists from blocking legislation and loudly opposing any step towards a federal voter ID law.

However, the arguments most often made against voter ID do not stand up well to even the slightest scrutiny. 

First, opponents will often point out—correctly—that there is no undisputable evidence of “widespread” voter fraud. They’ll then use that fact to argue that voter ID is a burdensome solution to a fake problem.

But if there was an actual conspiracy to either foment or permit voter fraud in a way that successfully flipped an election, it would not be “widespread,” it would be targeted. Even in large national elections like the presidential race, the outcome is almost always decided by a small handful of precincts. So a conspiracy to commit or allow “widespread” voter fraud would not only be pointless, it would all but guarantee its discovery.

Next, critics often assert that an ID requirement would prevent millions of legitimate voters from casting their ballots because they do not currently have a valid photo ID. But if that’s really true, the emphasis has been in the wrong place. The difficulties faced by people without any form of photo ID go far beyond voting, since ID requirements have become an increasingly frequent aspect of American public life. The obvious way for politicians to fix that problem would be to make it easier for people to get photo IDs, not to leave all those clerical barriers in place while preserving a gap that could allow people to commit voter fraud.

Finally, with the SAVE America Act specifically, its opponents in Congress are trying to frame this as an illegal “nationalization” of elections. There may be something to this argument if Trump tries to do this through executive action. But the Constitution gives Congress a fair amount of control over federal elections, which it has used with recent legislation like the National Voter Registration Act, the Voting Rights Act, and the Help America Vote Act.

Overall, it’s quite clear that the arguments against voter ID are not genuine arguments but excuses to preserve a status quo that has been advantageous to the party making them.

The lopsided polling on this issue indicates that most people, in both parties, aren’t falling for these talking points anymore.

So even if the SAVE America Act stalls in the Senate, it is certainly possible that some version of voter ID will become federal law in the near future.

But while that would probably be great for Republican politicians, candidates, and RNC officials focused on beating Democrats in elections, there is no reason to think it alone will genuinely put this country on a better path.

Because, while there are indeed some meaningful differences between the parties which keep elections from becoming an entirely meaningless ritual, the lesson of the last twenty years—at least—is that people tend to significantly overestimate how much elections matter, and, in doing so, get distracted from the most malicious and damaging government programs, which tend to have quiet, bipartisan support.

In the past two decades, almost every single presidential election has been won by a so-called “change” candidate who presented themselves as a sharper departure from the status quo than their opponent.

Obama won in 2008 by presenting himself as a repudiation of the financial cronyism and foreign interventionism of the W. Bush years. Trump won in 2016 by campaigning against the foreign wars, lax immigration restrictions, and crony neoliberalism of both the establishment Democrats and Republicans. Even in 2020, Biden rode to victory on a wave of utter exhaustion with the chaos of Trump’s media war with the establishment and the pandemonium set off by the government’s response to the covid pandemic—presenting himself as an abrupt deviation back to the “normalcy” of the Obama years. Finally, in his second victory, Trump and his team presented themselves as being ready and able to really deliver all the change he had promised the first time around, having totally learned from their mistakes in the first term.

But each and every time, the “change” candidate ended up delivering the exact kind of crony, inflationist, interventionist status quo with, at most, a few minor and easily-reversible executive actions to keep their base happy for a bit.

As Ryan McMaken laid out in an article earlier this month, this shouldn’t surprise anybody who understands where power truly resides in this country. It does not lie mostly with the handful of bombastic politicians and political appointees who fill the heavily-televised halls and briefing rooms on Capitol Hill, at the White House, and in the various executive agencies, as we learn in elementary school.

The bulk of federal power lies with a large group of governing elites, most of whom are faceless, seemingly unimportant bureaucrats, “nonpartisan” federal officials, and well-connected heads of industry. And that class of people—call them the establishment, the political class, the elites, whatever—are not willing or interested in surrendering their power.

Primarily by using their institutional control to determine which candidates voters get the option of voting for, the established governing elites have brought about a comfortable political status quo for them where both major parties spend all their time fighting ferociously over issues that—while certainly not unimportant—pose no actual risk to the establishment’s interventionist, inflationist, crony rackets that are quietly expanding their power and transferring a tremendous amount of the American public’s wealth to the elites and their friends.

This has been great for the establishment. But the whole scheme requires keeping the population blind to how badly it’s being ripped off. And, as I hinted at above, one of the main ways the current governing elites in America do that is by aggressively playing up the differences between establishment Republicans and establishment Democrats, to keep us all in a state of perpetual certainty that nearly all of our current societal problems will be, if not solved, greatly diminished if “our party” just wins the next election.

Look back at the unbridled joy and overwhelming sense of accomplishment and hope that voters on both sides felt after their party won each of the elections I talked about before. With Obama in 2008, Trump in 2016, Biden in 2020, and Trump again in 2024, there was a palpable sense among their supporters after the election that the battle was won, and things would now, finally, be alright. The same goes for a lot of midterm elections—most famously the “Republican Revolution” in 1994 and the Democrats’ “Blue Wave” in 2018.

All that optimism looks almost delusional in hindsight, knowing where we’ve ended up. But that isn’t really the fault of the voters in question. They were deliberately tricked. Because there is no better way for the current elites to fortify their power than to convince roughly half of the population at any given time that they are in control now, that they are in power, that they are winning.

If we’re ever going to truly escape this awful status quo—as a sizable portion of the American public clearly desires—it won’t come from a policy like voter ID. It will happen once “both sides” understand that they are losing.

Tyler Durden Wed, 02/18/2026 - 17:00

Teacher Loses Career Over Two-Word Facebook Post Supporting ICE

Zero Hedge -

Teacher Loses Career Over Two-Word Facebook Post Supporting ICE

James Heidorn, who taught at Gary Elementary School in West Chicago, found himself at the center of a community firestorm that cost him not just his teaching position but his identity as an educator, all for posting two words on Facebook: "Go ICE." 

The incident began in late January when Heidorn, a 14-year physical education teacher, responded to a news story about a local police department pledging cooperation with Immigration and Customs Enforcement. His personal Facebook post sparked immediate backlash in the heavily Hispanic district, with local activists circulating screenshots and demanding action against him.

School officials quickly notified Heidorn on Jan. 22 about growing social media chatter.

After meeting with HR staff that same day, he resigned briefly, then rescinded his decision hours later.

He was set to return on Monday pending an investigation. The investigation never got that chance.

"This process has been professionally and personally devastating and surreal," former West Chicago teacher James Heidorn told Fox News Digital.

"I’ve spent 14 years building my career, pouring my heart into teaching kids, building relationships and being a positive role model. To see it all upended over two simple words, ‘Go ICE,’ where I expressed my personal support for law enforcement felt like a severe blow to my career."

Indeed, the outcry was relentless. 

Illinois state Sen. Karina Villa, a Democrat, publicly condemned the post.

"I stand in unwavering solidarity with families upset about the disturbing comments reportedly made by an educator," Villa said.

West Chicago Mayor Daniel Bovey joined the pile-on before any investigation concluded. In a Saturday Facebook video, he explained why Heidorn's comments were "hurtful" and "offensive" to the community.

"So to have someone cavalierly rooting on—as if it's a football game or something, yeah go—events which have traumatized these children… that is the issue," Bovey said.

Meanwhile, parents organized online, planning a boycott by keeping their kids from school, and the city held a “listening session” on Jan. 26 at Bovey’s request, complete with a Spanish translator. Attendees described the post as "cruel" and said "kids do not feel safe."

Heidorn maintained that his post meant nothing beyond supporting law enforcement.

"This started with a two-word comment on my personal Facebook page supporting law enforcement—nothing more," Heidorn said. "It wasn't directed at any student, family or school community."

The distinction made no difference to the community or to the school administrators.

"I was placed on leave and faced intense pressure before any full investigation or fair process could play out, with this it led to my resignation," Heidorn said. He resigned a second time rather than face termination after a hearing with school officials.

A West Chicago Elementary School District 33 spokesperson called the post "disruptive" and said it "raised concerns and caused disruption for students, families and staff." The district declined to specify which rule Heidorn violated or whether teachers who publicly disrupt in favor of opposing immigration enforcement would face similar consequences. In fact, teachers across the country have protested President Trump's immigration policies without repercussions. In Chicago specifically, teachers even stormed a Target and harassed employees over the same policies without losing their jobs. But expressing support for law enforcement in Chicago is apparently controversial. 

"It does feel like a double standard—due to my viewpoint being different from others within the community that I taught in," Heidorn said. "Fairness should apply equally, regardless of those viewpoints. If personal political speech is grounds for punishment, it should be consistent—not selective based on what side you're on."

The fallout extended beyond his teaching position. Heidorn lost his coaching job at a nearby private school. He must now inform future employers that he resigned and explain why. "I really don't know what is next for me, as the teaching profession has been, up to this point in time, all that I ever wanted to do," Heidorn said.

He earned a master's degree in educational leadership to become the best teacher possible. Now he spends time healing. "I lost my career, my income and the chance to close out my time with my students properly—no farewell, no goodbyes," Heidorn said.

Despite the loud outcry, Heidorn has received some local support, including a GoFundMe being set up for him. 

“James Heidorn, a beloved physical education teacher at Gary Elementary School, resigned after a single social media comment ignited outrage and a one-sided account that quickly spiraled beyond control,” the GoFundMe page reads. “What followed was not reflection or fairness, but permanent consequences that have changed the course of his life.”

As for his future, he’s not sure what’s going to happen.

"I really don’t know what is next for me, as the teaching profession has been, up to this point in time, all that I ever wanted to do," he said. "It is all I have ever studied for and teaching is what has defined me. Even advancing my education with a master's degree in educational leadership because I wanted to become the best teacher I can be."

Heidorn said he’s exploring other options in education or related fields. “I want people to know I’m grateful for the outpouring of support from those who reached out, donated or shared my story,” he said. “It reminds me that most people value fairness and second chances. I’m determined to move forward positively and keep contributing to kids’ lives in whatever way I can.”

Tyler Durden Wed, 02/18/2026 - 16:40

Panics, Politics, & Power: America's 3 Experiments With Central Banks

Zero Hedge -

Panics, Politics, & Power: America's 3 Experiments With Central Banks

Authored by Andrew Moran via The Epoch Times,

The Federal Reserve, established more than a century ago, is the United States’ third experiment with central banking.

For much of its existence, the institution maintained a low public profile.

Only after the 2008 global financial crisis did the Fed begin communicating more openly, introducing post-meeting press conferences and allowing monetary policymakers to engage more frequently with the media.

Greater transparency, however, has brought greater scrutiny.

Public sentiment toward the Fed and its leadership has fluctuated over the years. Today, YouGov polling suggests the central bank is viewed favorably by 44 percent of Americans and unfavorably by 18 percent.

If the Fed pursues a series of reforms, it will have “another great 100 years,” said Kevin Warsh, who was nominated by President Donald Trump to serve as the institution’s next chair.

Comparable to past central banks, Warsh said, the current Federal Reserve System is beginning to lose the consent of the governed.

“You can think about the Jacksonians of prior times say that the central bank seems like they’re trying to focus and they’re all preoccupied with those special interests on the East Coast, and they’ve lost track of what’s happening to us in the center of the country,” Warsh said in a July 2025 interview with the Hoover Institution’s Peter Robinson.

“It’s a version of what worries me today.”

What happened in the past, and why is it relevant to today’s central bank?

The First Bank of the United States

In the aftermath of the American Revolution, the United States faced a series of immense economic disruptions, forcing the nation’s architects to rebuild the economy.

The objective was to lower inflation, restore the value of the nation’s currency, repay war debt, and revive the economy.

Alexander Hamilton, the first secretary of the Treasury under the new Constitution, proposed establishing a national bank modeled on the Bank of England. Hamilton stated that a U.S. version would perform various duties, including issuing paper money, serving as the government’s fiscal agent, and protecting public funds.

Not everyone shared Hamilton’s ebullience over a central bank.

Thomas Jefferson, for example, feared that such an institution would not serve the nation’s best interests. Additionally, Jefferson and other critics argued that the Constitution did not grant the government the authority to create these entities.

Nevertheless, Congress enacted legislation to establish the Bank of the United States. President George Washington then signed the bill in February 1791.

Two of America's founding fathers: Thomas Jefferson (L) and Alexander Hamilton. The White House

While bank officials did not conduct monetary policy as modern central banks do, they did influence the supply of money and credit, as well as interest rates.

The entity managed the money supply by controlling when to redeem or retain state‑bank notes. If it sought to tighten credit, it would require payment in gold or silver, thereby draining state banks’ reserves and limiting their ability to issue new notes. If it wanted to expand credit, it simply held on to those notes, boosting state‑bank reserves and enabling them to lend more.

By 1811, the national bank’s charter expired.

While there had been discussions of allowing it to continue maintaining operations, Congress—both chambers—voted against renewing its mandate by a single vote.

Its closure came shortly before the War of 1812, which fueled inflation and weakened the currency.

Second Bank of the United States

Lawmakers believed another central bank was critical at a time of fiscal, inflationary, and trade pressures.

Congress used a similar 20-year model to produce the Second Bank of the United States, headed by Nicholas Biddle. The second incarnation had a federal charter, was privately owned, and was tasked with regulating state banks (with gold and silver for note redemption).

President James Madison, who opposed the first central bank on constitutional grounds, supported the new institution out of financial necessity.

Its creation stabilized credit and brought down inflation. However, by the 1830s, the bank faced strong opposition, particularly from President Andrew Jackson.

Labeled the Bank War, Jackson engaged in a years-long initiative to dissolve the central bank.

Jackson claimed the national bank was a tool for the wealthy eastern elite and a threat to self-government.

“The Jacksonians described themselves as conscious hard-money men who supported the rigid discipline of the gold standard, yet they opposed the newly powerful national Bank because it restrained the expansion of credit and, thus, thwarted robust economic expansion,” author William Greider wrote in “Secrets of the Temple.”

In 1832, Jackson vetoed legislation to recharter the bank four years early, delivering a fiery message that historians say was one of the most important vetoes in the nation’s history.

“It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government,” Jackson wrote.

“There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me, there seems to be a wide and unnecessary departure from these just principles.”

The charter expired in 1836, leading to the panic of 1837.

An economic crisis unfolded, leading to bank failures, business bankruptcies, rising unemployment, and contracting credit. While the collapse of the central bank is often considered a leading cause, the British also urged London banks to reduce credit to American merchants, causing a sharp drop in global trade.

As the smoke cleared and dust settled, it was not until the 1840s that the United States embarked on a historic economic recovery, now known as the Free Banking Era.

Banking was decentralized, and finance was largely unregulated. Despite an erratic financial system, the U.S. economy grew rapidly: agricultural production accelerated, railroads were built, and the country expanded westward. Additionally, deflation was paramount throughout most of the economic expansion.

The Federal Reserve System

The panic of 1907 led to the creation of the Federal Reserve System.

Following years of heavy borrowing, speculative commodities investments (mainly copper), and enormous stock market gains, a financial crisis was brewing. The event nearly brought down the U.S. banking system.

J.P. Morgan, a financier, intervened and emulated the actions of modern central banks. He met with the nation’s top bankers, facilitated emergency loans to financial institutions, and backed stockbrokers. The damage had been done as the United States fell into a year-long recession, marked by high unemployment and widespread bank failures.

The Federal Reserve Board of Governors seal in Washington on Oct. 29, 2025. Madalina Kilroy/The Epoch Times

Washington realized that it could not rely on private bailouts to prevent sharp downturns.

Sen. Nelson Aldrich (R-R.I.) is widely regarded as one of the chief architects of the modern Federal Reserve System.

In 1910, Aldrich hosted the famous Jekyll Island meetings, a gathering of U.S. officials and bankers, to discuss the blueprint of a new central bank.

While the initial draft laid the foundation for the institution, the official Federal Reserve Act was drafted by President Woodrow Wilson, Rep. Carter Glass (D-Va.), and H. Parker Willis, an economist on the House Banking Committee.

The new system was a public-private hybrid, with the federal government firmly in charge, and bankers running the regional reserve banks.

“It was Wilson’s great compromise,” wrote Greider, “creating a hybrid institution that mixed private and public control, an approach without precedent at the time.”

The legislation triggered a contentious political debate over the extent of its independence from the Treasury and the degree of authority delegated to policymakers over currency issuance.

Days before Christmas, the bill cleared both chambers and was signed into law by Wilson on Dec. 23.

“Wilson’s conviction that he had struck the right moderate balance seemed confirmed, however, by the reactions to his legislation,” Greider noted.

“It was attacked by both extremes—the ‘radicals’ from the Populist states and the bankers in Wall Street and elsewhere.”

Since its inception in 1913, the modern Federal Reserve has undergone numerous changes and has gained greater power.

The New Deal, for instance, allowed the Fed to become the lender of last resort as Washington learned the central bank could not prevent bank failures.

In 1951, the Treasury-Fed Accord restored central bank independence after the Federal Reserve had been forced to keep interest rates artificially low throughout the Second World War.

Congress then enacted the Federal Reserve Reform Act in 1977, establishing the dual mandate of promoting maximum employment and maintaining price stability.

2026 and Beyond

Over the past 50 years, the Fed has undergone modest changes, including the issuance of forward guidance and the disclosure of emergency lending facilities.

But while each new regime has nibbled around the edges, Warsh has suggested he could effect substantial reforms at the central bank.

“Until there’s regime change at the Fed and new people running the Fed, a new operating framework, they’re stuck with their old mistakes,” Warsh told Fox Business Network in October 2025.

“Bygones aren’t just bygones.”

Tyler Durden Wed, 02/18/2026 - 16:20

Three Key Constraints That Could Derail The Data Center Buildout Story

Zero Hedge -

Three Key Constraints That Could Derail The Data Center Buildout Story

The data center investment macro story centers on hyperscalers such as Microsoft, Alphabet, Meta, and Amazon Web Services, whose massive cloud computing services are becoming the backbone for AI workloads, including ChatGPT and others. However, as we've previously noted, the data center buildout has run into supply-chain snarls, including memory chip shortages, power-grid constraints, and even a shortage of turbine blades for natural-gas generators.

The data center boom powering the AI revolution is certaintly impressive to watch unfold, but it won't be a straight line from here as the US attempts to hold the number one spot in the global AI race. Challenges are mounting, and the latest coverage on this comes from a conversation Goldman analyst Brian Singer had with Mark Monroe, a former principal engineer in Microsoft's Datacenter Advanced Development Group, who warned that data center buildouts face three major headwinds.

Here's a recap of the conversation between Singer and Monroe, which focused on three key constraints: power, water, and labor.

1. Energy: Power remains the most critical near-term constraint for data center deployment, while flexible load management and Behind-the-Meter solutions could help close the power gap. While cloud and AI inference workloads generally require proximity to end-users -- creating power shortages in these congested markets -- AI training workloads are location-agnostic and migrating to remote areas with available power. Grid conditioning or flexible load management for data centers during peak electricity consumption could unlock significant capacity. A Duke University study suggested that 76 GW of new load (10% of US aggregate peak demand) could be integrated if data centers accepted average annual load curtailment of 0.25% (99.75% up time) and 98 GW added for curtailment of 0.5% (99.5% up time). While this could potentially unlock ~100 GW of capacity, Mr. Monroe notes that adoption: (a) is hindered by the industry's inherent risk aversion of cycling IT equipment off and on; and (b) may require stronger financial or regulatory incentives.

Behind-the-Meter power is a costly and likely temporary bridge to initial grid gaps. While a single digit percentage of data centers in the pipeline have BTM requests, Mr. Monroe highlighted this can still be significant for power demand given these are typically larger data centers. Primarily deploying natural gas simple cycle generators, onsite power solutions cost 5x-20x more than grid power. However, Mr. Monroe highlighted that deploying BTM solutions to push forward data center startups can be an economically viable choice given the immense profitability of large scale AI data centers. According to Mr. Monroe, data centers deploying BTM power ultimately aim to connect to the grid eventually over three years, while either relocating to other data centers, integrating and selling power back into the grid, or retiring BTM assets.

2. Water: Community, regulatory and chip advancement pressures likely to shift the industry towards more water-efficient cooling technologies coming at significant energy costs. The industry is seeing a shift from the traditional water-intensive evaporative approaches towards more waterless designs, especially among hyperscalers, as community, regulatory and technological pressure mounts. According to Mr. Monroe, the shift towards closed-loop and waterless cooling systems is likely to raise Power Usage Effectiveness (PUE) from best-in-class levels of 1.08 to 1.35-1.40, representing a 35%-40% energy overhead versus 8% in evaporative systems. Although innovations such as direct-to-chip liquid cooling and higher-temperature water cooling could enable more efficient heat transfer in more geographic locations, co-location data centers are likely to remain committed to chiller-based designs given their diverse customer base and need to commit to cooling architecture early in construction. Regardless of any diminishing share of overall data center cooling solutions, according to Mr. Monroe the demand for chillers is expected to continue to see a material increase over the next decade, driven by overall growth in data center capacity.

3. Labor: Skilled labor shortage could become the next gating factor for data center deployment. Data centers are differentiated from generic industrial buildings by the specialized electrical and mechanical systems required, making electricians and pipefitters critical to the continued data center build out. According to Mr. Monroe, the skilled labor shortage represents the next major constraint after power. Industry organizations, in collaboration with technical universities and colleges, are actively developing training programs to address this gap, while attempting to reach students as early as middle school to make skilled trades more attractive career paths. We estimate the US will require >500,000 net new workers across manufacturing, construction, ops & maintenance, and transmission and distribution to deploy all the power to meet demand by 2030.

Related coverage:

Looking ahead, the key question is whether the U.S. can sustain a largely uninterrupted surge in data center capex, given how much these buildouts are now embedded in both the macro narrative and tech valuations. The investment thesis assumes that continued buildout translates into measurable productivity gains and, in turn, a multi-year uplift in growth. Overall, the execution risk boils down to critical inputs and infrastructure, including core components, grid access, and related supply chain bottlenecks, which could slow buildouts and stymie overly optimistic expectations.

To bypass these ground-based constraints, that's why the narrative of data centers in space has emerged.

Professional subscribers can see the full note on our new Marketdesk.ai portal​​​​.

Tyler Durden Wed, 02/18/2026 - 15:25

Calm Market Waters Hide Fierce Undercurrents

Zero Hedge -

Calm Market Waters Hide Fierce Undercurrents

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

The price movement in the broad S&P 500 index is relatively calm. Yet the market’s undercurrent, as measured by sharply diverging returns across stock sectors and factors, is anything but calm. The current market picture we paint is well embodied by a quote from Jules Verne in 20,000 Leagues Under the Sea.

“The sea was perfectly calm; scarcely a ripple disturbed its surface. But beneath this tranquil exterior, powerful currents were flowing with irresistible force.”

Given this divergence between the calm market surface and the volatility of its underlying stocks’ returns, let’s get a better grip on the market’s undercurrent and decipher what it may be trying to tell us.

A Calm Market

The graph below shows that the S&P 500’s upward trend has recently flattened into a tight range with minimal volatility. Such consolidation is common after a sharp upward price trend, as the market experienced since early April. 

The next graph shows the average true range (ATR) for the index. ATR is a measure of realized volatility. As we define it, ATR is the percentage difference between the highest and lowest intraday prices over a rolling 20-day period. The current ATR is only about 3%, near the bottom of the range since 2015. It is also less than half the ten-year average.

Both charts point to a relatively calm market with limited volatility. It’s worth noting that implied volatility (expected volatility) on the S&P 500 is around 20. While not low, it doesn’t suggest that investors expect significant volatility in the weeks ahead.

The Markets Undercurrent

While the broad S&P 500 market index is relatively calm, its undercurrent is anything but tranquil. Significant rotation trades, characterized by heavy trading activity in and out of various sectors and factors, have led to large daily divergences in the performance of certain sectors and stock factors.

We use the dispersion of returns to quantify the market’s fierce undercurrent. For this article, we take the 20-day percentage price changes for sector and factor groups and then calculate the standard deviation of those changes. The more divergent the returns, the higher the standard deviation.

The first graph below shows that the current standard deviation of returns across all sectors is at its second-highest level since early 2023.

The following graph uses factors such as growth and value, market cap, and momentum. It also shows that returns among various factors are highly dispersed.

Next, we share a graph, courtesy of Nomura, that delves deeper into the recent dispersion. It compares the average move for all S&P 500 stocks over the last 20 days to that of the S&P 500 index.  As the graph shows, the relative volatility of individual stock returns versus the market is now at levels last seen during the financial crisis and the dotcom crash.  

Cross-Sector Correlation

To further quantify the market’s strong undercurrent, we examine the correlation of returns among the S&P 500 sectors.  The first table shows the correlation between the weekly returns thus far this year. The second table is for 2025.

In 2026, the average correlation among all sectors is a mere 0.066, compared to the statistically significant 0.517 in 2025. Moreover, the standard deviation of the correlations is much greater this year than last year. This, as with the graphs above, further indicates that the various sectors are currently showing a large divergence in weekly returns compared to last year.

We also ran the average correlation from 2019 through 2025, including the tumultuous pandemic sell-off and sharp recovery, and arrived at an average correlation of .68 and a standard deviation of .175.

Our Takeaway

The market’s surface may look calm, but beneath it, passive investors are actively shifting between narratives, valuations, and risk exposures. This reflects changing sentiment among investors about economic growth, inflation, monetary and fiscal policy, and the current political leadership.

Historically, periods of elevated sector dispersion tend to occur during market transitions rather than steadily trending bull or bear markets. However, high dispersion after a long bullish trend is not automatically bearish. It may just represent the market searching for its next regime rather than distress.

Furthermore, as we shared, high sector and factor dispersion is occurring alongside low cross-sector correlations. Typically, correlations between stocks are high during periods of crisis. As the old saying goes, “correlations go to one during a crisis.”

Therefore, if correlations begin to rise and the market heads lower, the recent bout of high dispersion may not be a lasting shift in investor preferences but an omen of a downward trend. 

Summary

Periods of high return dispersion are an opportunity for investors. As return performance gaps widen and valuation spreads develop, the ability to quantify the current rotation regime and anticipate the next one can deliver outperformance relative to the broader index.

While the calm market undercurrent is fierce, it is in and of itself not of great concern. But, as we noted earlier, if we start to see returns among sectors and factors become more aligned, especially downwardly, our concern will heighten.

Tyler Durden Wed, 02/18/2026 - 14:15

FOMC Minutes Confirm Divided Fed: "Several" Suggest Rate-Hikes Possible, Fear Private Credit "Vulnerabilities"

Zero Hedge -

FOMC Minutes Confirm Divided Fed: "Several" Suggest Rate-Hikes Possible, Fear Private Credit "Vulnerabilities"

Since the last FOMC meeting (where they held rates with two dovish dissents) on Jan 28th, Bitcoin has been the biggest underperformer (along with gold) while bonds and the dollar have rallied with stocks lagging...

Source: Bloomberg

March is 'off the table' for a rate-cut now (following last week's payrolls beat) but overall 2026 rate-cut expectations are dovishly higher since the last FOMC meeting...

Source: Bloomberg

With macro data confirming Powell's positive narrative (for now)

Source: Bloomberg

With Growth surprising to the upside and inflation drifting lower...

Source: Bloomberg

Today's Minutes could be more interesting than recent months since The Fed displayed a hawkish tone with Powell talking up a “clear improvement” in the US outlook during the press conference, and said the job market shows signs of steadying.

So here's what The Fed wanted you to know about the last FOMC Meeting:

A very divided Fed sees more rate-cuts (or hikes) possible and embraces lower inflation (and fears higher inflation)...

Almost all supported maintaining 3.50-3.75%, while a couple preferred a 25bps cut, citing restrictive policy and labor market risks; "some" judged rates should be held steady for some time.

(h/t Newsquawk)

Policy outlook & rate guidance

  • Almost all supported maintaining 3.50-3.75%, while a couple preferred a 25 basis point cut, citing restrictive policy and labor market risks.

  • Several said further rate cuts would likely be appropriate if inflation declines as expected.

  • Some judged rates should be held steady for some time pending clearer disinflation evidence.

  • Some said it would likely be appropriate to hold the policy rate steady for some time while assessing incoming data.

  • A number judged further easing may not be warranted until clear evidence shows disinflation is firmly back on track.

  • Several favored two-sided guidance, noting upward adjustments could be appropriate if inflation remains above target.

  • Vast majority saw downside employment risks as moderated, while inflation persistence risks remained; some judged risks more balanced.

  • Several warned further easing amid elevated inflation could signal reduced commitment to 2% goal.

  • A few cautioned overly restrictive policy could significantly weaken labor conditions.

Neutral rate & financial conditions

  • Those favoring no change said, after 75 basis points of cuts last year, policy was within estimates of neutral.

  • Most expected growth support from favorable financial conditions, fiscal policy, or regulatory changes.

Inflation views

  • Inflation had eased markedly from 2022 highs but remained somewhat elevated relative to 2%.

  • Elevated readings largely reflected core goods boosted by tariffs; some noted continued disinflation in core services, especially housing.

  • Most cautioned progress toward 2% may be slower and uneven; risk of persistent above-target inflation seen as meaningful.

  • Some cited business contacts planning price increases this year due to cost pressures, including tariffs.

  • Several said sustained demand pressures could keep inflation elevated.

  • Several expected ongoing housing services moderation to exert downward pressure on inflation.

  • Several anticipated higher productivity growth would help restrain inflation.

  • A few reported firms automating to offset costs, reducing need to raise prices or cut margins.

  • Most longer-term inflation expectations remained consistent with 2%; several noted near-term expectations had declined from spring peaks.

Labor market & growth

  • Most said unemployment, layoffs and vacancies suggested stabilization after gradual cooling.

  • Almost all observed layoffs remained low but hiring was also subdued.

  • Several said contacts remained cautious on hiring amid outlook and AI uncertainty.

  • Some cited lower net immigration as contributing to weak job gains.

  • Vast majority judged stabilization signs and diminished downside labor risks.

  • Most nonetheless said downside labor risks remained, including sharp unemployment increases in a low-hiring environment.

  • Some pointed to soft survey measures and part-time for economic reasons as signs of lingering weakness.

  • Activity seen expanding at solid pace; consumer spending resilient, supported by household wealth.

  • Several cited disparity between strong higher-income and soft lower-income consumer spending.

  • Several noted robust business investment, particularly in technology; several judged productivity gains would support growth.

FOMC Minutes explicitly state high valuations, Mag 7 concentration, off-balance sheet funding, K-shaped economy and hedge funds piling into basis trades: 

  • In their discussion of financial stability, several participants commented on high asset valuations and historically low credit spreads.

  • Some participants discussed potential vulnerabilities associated with recent developments in the AI sector, including elevated equity market valuations, high concentration of market values and activities in a small number of firms, and increased debt financing.

  • A few participants commented that the financing of the AI-related infrastructure buildout in opaque private markets warranted monitoring.

  • Several participants highlighted vulnerabilities associated with the private credit sector and its provision of credit to riskier borrowers, including risks related to interconnections with other types of nonbank financial institutions, such as insurance companies, and banks' exposure to this sector.

  • Several participants commented on risks associated with hedge funds, including their growing footprint in Treasury and equity markets, rising leverage, and continued expansion of relative value trades that could make the Treasury market more vulnerable to shocks.

  • A couple of participants commented that although consumer credit quality remained solid in the aggregate, there were signs of weakness in the financial positions of low- and medium-income households.

  • A few participants noted the need to monitor potential spillovers from volatility in global bond markets and foreign exchange.

Finally, The Fed commented on the yen "rate check" on behalf of the BOJ

"In the days leading up to the meeting, the dollar had depreciated markedly after reports that the Desk had made requests for indicative quotes, known as "rate checks," on the dollar–yen exchange rate.

The manager noted that the Desk had requested those quotes solely on behalf of the U.S. Treasury in the Federal Reserve Bank of New York's role as the fiscal agent for the U.S."

Read the full FOMC Minutes below:

Tyler Durden Wed, 02/18/2026 - 14:10

Nestle Weighs Scaling Back Ice Cream Unit As Investors Seek Turnaround Plan From CEO

Zero Hedge -

Nestle Weighs Scaling Back Ice Cream Unit As Investors Seek Turnaround Plan From CEO

Update (1405ET)

Nestlé SA reports full-year results on Thursday. Ahead of the release and investor call, CEO Philipp Navratil is expected to outline a turnaround plan, while a new report says the Swiss foodmaker is considering a smaller footprint in its ice cream business.

People familiar with the discussions told Bloomberg:

The Swiss food giant has been studying possibilities including cutting its stake in Froneri, an ice cream joint venture with private equity firm PAI Partners which includes brands like Häagen-Dazs and Mövenpick, according to the people. It could also consider selling some of its remaining fully owned ice cream operations to the Froneri venture, one of the people said.

Deliberations are ongoing and there's no certainty a deal will eventually materialize. PAI could opt to increase its stake in Froneri if Nestlé decides to cut its holding, or the Swiss group could sell part of its Froneri stake to another investor like the Abu Dhabi Investment Authority, according to some of the people.

Shares of Nestlé are trading at 2018-2019 levels as the food giant grapples with the fallout from the infant formula crisis.

Analysts will focus on Navratil's turnaround plan, expected to be unveiled tomorrow, with hopes that it will provide enough confidence for investors to lift shares from depressed levels."

*   *   *  

Nestlé SA CEO Philipp Navratil is feeling the heat after the world's largest food company recently carried out the biggest recall in its history, pulling infant formula off supermarket shelves after a contaminated ingredient was discovered in late 2025. Shares have taken a beating, and scrutiny of the recall is intensifying, with prosecutors in Europe opening an investigation.

Navratil and his management team are expected to present a turnaround plan for the Swiss foodmaker on Thursday, following the December recall of its infant formulas. Multiple production sites were found to have cereulide, a toxin that can cause nausea and vomiting.

French authorities have received complaints from eight consumers who say their children vomited after consuming Nestlé baby formula, prompting Paris prosecutors to open investigations. In the UK, there have also been 36 reports of suspected food poisoning linked to baby formula consumption.

BBC News provided more color to those investigations:

Prosecutors in Paris will seek to establish whether the baby formula producers are liable for distributing a tainted product. It will be co-ordinated with local probes into whether there was a causal link between the contaminated formula and the deaths of three babies in France. Nestlé and France's health ministry have stressed there was as-yet no evidence to indicate such a link.

In Switzerland, the food giant's shares are little changed year to date, with uncertainty surrounding the baby formula debacle still hanging over sentiment. Zooming out, the stock has retraced to 2018-19 levels.

Vontobel analyst Jean-Philippe Bertschy told clients, "The pressure is enormous ... and full-year results have become almost anecdotal, as investors are now squarely focused on the robustness of quality controls in the infant nutrition case and on the strategic update pledged by the new management team."

Investors' attention now shifts to Thursday, when the Swiss giant reports full-year results and is expected to unveil its turnaround plan.

Bloomberg noted, "Thursday's strategy update may include a reorganization to streamline businesses. Navratil has signaled that he wants to focus on four core divisions — pet care, coffee, nutrition and health, and food and snacking — while centralizing functions such as marketing, an area the company did not invest enough in during years of short-term margin expansion."

Vontobel's Bertschy said, "It will be crucial that we receive an update on some of the under-performing units, how they want to reduce the net debt level and how they plan to accelerate the free cash flow. The market will look for a precise roadmap rather than another broad reassurance – a plan that is clearly underpinned by concrete actions, milestones and measurable commitments."

Tyler Durden Wed, 02/18/2026 - 14:05

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