Individual Economists

Fed's Favorite Inflation Indicator Refuses To Show Any Signs Of Runaway 'Trump Tariff' Costs

Zero Hedge -

Fed's Favorite Inflation Indicator Refuses To Show Any Signs Of Runaway 'Trump Tariff' Costs

Before we all get too excited, bear in mind that this is November's data - so still horribly stale (and also missing October's data point entirely) - but it's all we have for now, so let's dive in...

The Fed's favorite inflation indicator - Core PCE - rose 0.2% MoM (as expected), which leave it up 2.8% YoY (as expected), slightly lower than September's +2.9%...

Source: Bloomberg

Bear in mind that this morning's third look at Q3 GDP printed a +2.9% YoY for Core PCE.

Under the hood, the biggest driver of Core PCE remains Services costs - not tariff-driven Goods prices...

Source: Bloomberg

In fact, on a MoM basis, Non-durable goods prices saw deflation for the second month in a row...

Source: Bloomberg

Headline PCE rose 2.8% YoY (es expected), stubbornly refusing to show any signs of runaway Trump tariff costs...

Source: Bloomberg

The closely-watched SuperCore PCE rose 0.2% MoM which ticked up the YoY rise to 3.1%...

Source: Bloomberg

After surging in October, November saw Financial Services & Insurance and Healthcare cost inflation slow...

Source: Bloomberg

Meanwhile, amid rising prices, Americans' spending outpaced incomes once again...

Source: Bloomberg

...with wage growth slowing for all:

  • Private worker wages and salaries: 4.1% YoY, down from 4.5%, lowest since June 2025

  • Govt work wages and salaries 2.6%, tied for lowest since March 2021

All of which dragged the savings rate down to its lowest since Nov 2022...

TL/DR: While this data is admittedly stale, it shows no signs of 1) tariff-driven inflation or 2) a slowing consumer.

Tyler Durden Thu, 01/22/2026 - 10:12

Fed's Favorite Inflation Indicator Refuses To Show Any Signs Of Runaway 'Trump Tariff' Costs

Zero Hedge -

Fed's Favorite Inflation Indicator Refuses To Show Any Signs Of Runaway 'Trump Tariff' Costs

Before we all get too excited, bear in mind that this is November's data - so still horribly stale (and also missing October's data point entirely) - but it's all we have for now, so let's dive in...

The Fed's favorite inflation indicator - Core PCE - rose 0.2% MoM (as expected), which leave it up 2.8% YoY (as expected), slightly lower than September's +2.9%...

Source: Bloomberg

Bear in mind that this morning's third look at Q3 GDP printed a +2.9% YoY for Core PCE.

Under the hood, the biggest driver of Core PCE remains Services costs - not tariff-driven Goods prices...

Source: Bloomberg

In fact, on a MoM basis, Non-durable goods prices saw deflation for the second month in a row...

Source: Bloomberg

Headline PCE rose 2.8% YoY (es expected), stubbornly refusing to show any signs of runaway Trump tariff costs...

Source: Bloomberg

The closely-watched SuperCore PCE rose 0.2% MoM which ticked up the YoY rise to 3.1%...

Source: Bloomberg

After surging in October, November saw Financial Services & Insurance and Healthcare cost inflation slow...

Source: Bloomberg

Meanwhile, amid rising prices, Americans' spending outpaced incomes once again...

Source: Bloomberg

...with wage growth slowing for all:

  • Private worker wages and salaries: 4.1% YoY, down from 4.5%, lowest since June 2025

  • Govt work wages and salaries 2.6%, tied for lowest since March 2021

All of which dragged the savings rate down to its lowest since Nov 2022...

TL/DR: While this data is admittedly stale, it shows no signs of 1) tariff-driven inflation or 2) a slowing consumer.

Tyler Durden Thu, 01/22/2026 - 10:12

"Totally Absurd": Circle CEO Rejects Bank-Run Fearmongering Over Stablecoin Yields

Zero Hedge -

"Totally Absurd": Circle CEO Rejects Bank-Run Fearmongering Over Stablecoin Yields

Authored by Helen Partz via CoinTelegraph.com,

Jeremy Allaire, CEO of the publicly listed stablecoin issuer Circle, said interest payments on stablecoins do not pose a threat to banks.

Speaking Thursday at the World Economic Forum in Davos, Allaire described concerns that stablecoin yields could cause bank runs as “totally absurd,” citing historical precedents and existing reward-based financial services already in use.

“They help with stickiness, they help with customer traction,” Allaire said, adding that interest itself is not large enough to undermine monetary policy.

Allaire’s comments came amid heated debate over stablecoin yields, including in discussions over the US CLARITY Act, which aims to establish a federal market structure framework for digital assets.

Allaire points to money market funds as a historical parallel

Allaire pointed to government money market funds as a historical parallel, noting they faced similar warnings about draining bank deposits.

Yet it has been “around $11 trillion of dollar money market funds that grew in various different circumstances,” Allaire said, adding that this has not stopped lending.

Circle CEO Jeremy Allaire at the WEF panel on Thursday. Source: WEF

“Meanwhile, lending is already shifting away from banks toward private credit and capital markets. In the US, much of GDP growth over multiple cycles has been funded through capital-market debt, not bank loans,” he said. “We want to build models for lending that build on top of stablecoins.”

Circle CEO says stablecoins are the only viable money for AI agents

Allaire also highlighted artificial intelligence as a major driver of future stablecoin adoption.

He said “billions of AI agents” will need a payment system, adding that “there is no other alternative other than stablecoins to do that right now.”

Former Binance CEO Changpeng Zhao. Source: YZi Labs

Similar views were echoed elsewhere at the forum. Former Binance CEO Changpeng Zhao said Thursday at Davos that crypto payments could be essential for AI-driven transactions.

In September, Galaxy Digital CEO Michael Novogratz predicted that AI agents will become the biggest stablecoin user “sometime in the near distant future.”

Tyler Durden Thu, 01/22/2026 - 10:00

"Totally Absurd": Circle CEO Rejects Bank-Run Fearmongering Over Stablecoin Yields

Zero Hedge -

"Totally Absurd": Circle CEO Rejects Bank-Run Fearmongering Over Stablecoin Yields

Authored by Helen Partz via CoinTelegraph.com,

Jeremy Allaire, CEO of the publicly listed stablecoin issuer Circle, said interest payments on stablecoins do not pose a threat to banks.

Speaking Thursday at the World Economic Forum in Davos, Allaire described concerns that stablecoin yields could cause bank runs as “totally absurd,” citing historical precedents and existing reward-based financial services already in use.

“They help with stickiness, they help with customer traction,” Allaire said, adding that interest itself is not large enough to undermine monetary policy.

Allaire’s comments came amid heated debate over stablecoin yields, including in discussions over the US CLARITY Act, which aims to establish a federal market structure framework for digital assets.

Allaire points to money market funds as a historical parallel

Allaire pointed to government money market funds as a historical parallel, noting they faced similar warnings about draining bank deposits.

Yet it has been “around $11 trillion of dollar money market funds that grew in various different circumstances,” Allaire said, adding that this has not stopped lending.

Circle CEO Jeremy Allaire at the WEF panel on Thursday. Source: WEF

“Meanwhile, lending is already shifting away from banks toward private credit and capital markets. In the US, much of GDP growth over multiple cycles has been funded through capital-market debt, not bank loans,” he said. “We want to build models for lending that build on top of stablecoins.”

Circle CEO says stablecoins are the only viable money for AI agents

Allaire also highlighted artificial intelligence as a major driver of future stablecoin adoption.

He said “billions of AI agents” will need a payment system, adding that “there is no other alternative other than stablecoins to do that right now.”

Former Binance CEO Changpeng Zhao. Source: YZi Labs

Similar views were echoed elsewhere at the forum. Former Binance CEO Changpeng Zhao said Thursday at Davos that crypto payments could be essential for AI-driven transactions.

In September, Galaxy Digital CEO Michael Novogratz predicted that AI agents will become the biggest stablecoin user “sometime in the near distant future.”

Tyler Durden Thu, 01/22/2026 - 10:00

NatGas Jumps 75% As Extreme Cold, Blizzard Risks Threaten Appalachian Gas Supply

Zero Hedge -

NatGas Jumps 75% As Extreme Cold, Blizzard Risks Threaten Appalachian Gas Supply

US natural gas futures are ripping higher, up roughly 75% in just three trading days, and are on pace to post the largest weekly gain on record.

The move has all the signs of a classic winter-driven short squeeze, with traders scrambling to cover as a polar blast descends into the Lower 48.

An intense Arctic blast and a sprawling winter storm system, drawing comparisons to the Blizzard of '96, are set to sweep across the eastern half of the US this weekend.

Weather models point to prolonged sub-freezing temperatures, raising the risk of freeze-offs in the Appalachian Basin, a critical US NatGas supply region.

Energy research firm Criterion Research was the first to warn that NatGas production disruptions across Appalachia could materially tighten balances at the worst possible time, just as heating demand spikes. Any sustained freeze-offs would not only pressure spot supply but could also stress regional power grids.

Criterion Research explained:

Winter is Coming for Appalachia

This week's Appalachian nat gas production is already down 1.1 Bcf/d versus last week, and the extreme cold is just getting started.

Pittsburgh overnight lows are headed to -6.8°F at their most intense levels next week, with this cold coming in lower and longer than Winter Storm Elliott (Dec 2022.)

During Eliott, regional production dropped 25-30%.

We cited Criterion Research on Wednesday (read here), which outlined where the production freeze-offs are likely to emerge.

At least 175 million people across the Lower 48 will face snow, rain, sleet and ice through the weekend as record-breaking cold pours into the eastern half of the US. Below-zero temperatures are expected to boost heating demand at a time when pipeline freeze-offs could disrupt gas production.

We warned on Wednesday:

Recall Winter Storm Uri in 2021, when extreme cold paralyzed the NatGas supply and collapsed the ERCOT grid in Texas for a week. A scenario like that could be in play in parts of the eastern US, regions where power grids are already tight because of bad 'green' energy policies colliding with the era of data centers.

Ole Hvalbye, an analyst at SEB AB, commented on Natty prices ripping higher: "This is a textbook winter-driven squeeze: fast, violent, and sentiment-shifting."

Tyler Durden Thu, 01/22/2026 - 09:00

NatGas Jumps 75% As Extreme Cold, Blizzard Risks Threaten Appalachian Gas Supply

Zero Hedge -

NatGas Jumps 75% As Extreme Cold, Blizzard Risks Threaten Appalachian Gas Supply

US natural gas futures are ripping higher, up roughly 75% in just three trading days, and are on pace to post the largest weekly gain on record.

The move has all the signs of a classic winter-driven short squeeze, with traders scrambling to cover as a polar blast descends into the Lower 48.

An intense Arctic blast and a sprawling winter storm system, drawing comparisons to the Blizzard of '96, are set to sweep across the eastern half of the US this weekend.

Weather models point to prolonged sub-freezing temperatures, raising the risk of freeze-offs in the Appalachian Basin, a critical US NatGas supply region.

Energy research firm Criterion Research was the first to warn that NatGas production disruptions across Appalachia could materially tighten balances at the worst possible time, just as heating demand spikes. Any sustained freeze-offs would not only pressure spot supply but could also stress regional power grids.

Criterion Research explained:

Winter is Coming for Appalachia

This week's Appalachian nat gas production is already down 1.1 Bcf/d versus last week, and the extreme cold is just getting started.

Pittsburgh overnight lows are headed to -6.8°F at their most intense levels next week, with this cold coming in lower and longer than Winter Storm Elliott (Dec 2022.)

During Eliott, regional production dropped 25-30%.

We cited Criterion Research on Wednesday (read here), which outlined where the production freeze-offs are likely to emerge.

At least 175 million people across the Lower 48 will face snow, rain, sleet and ice through the weekend as record-breaking cold pours into the eastern half of the US. Below-zero temperatures are expected to boost heating demand at a time when pipeline freeze-offs could disrupt gas production.

We warned on Wednesday:

Recall Winter Storm Uri in 2021, when extreme cold paralyzed the NatGas supply and collapsed the ERCOT grid in Texas for a week. A scenario like that could be in play in parts of the eastern US, regions where power grids are already tight because of bad 'green' energy policies colliding with the era of data centers.

Ole Hvalbye, an analyst at SEB AB, commented on Natty prices ripping higher: "This is a textbook winter-driven squeeze: fast, violent, and sentiment-shifting."

Tyler Durden Thu, 01/22/2026 - 09:00

US Q3 GDP Revised Up to 4.4%, Highest In Two Years

Zero Hedge -

US Q3 GDP Revised Up to 4.4%, Highest In Two Years

While it's ancient history now - even preceding the record long government shutdown - and nobody will care, moments ago the BEA reported that its first revision of third quarter GDP came in a bit hotter than expected as US GDP grew slightly more than initially reported, supported by stronger exports. Due to the recent government shutdown, this updated report for the third quarter of 2025 replaces the release of the third estimate originally scheduled for December 19, 2025, the BEA reported.

Inflation-adjusted gross domestic product increased at a revised 4.4% annualized rate, the fastest in two years, and up 0.1% from the initial estimate, primarily reflecting upward revisions to exports and investment that were partly offset by a downward revision to consumer spending. That said, the change was minuscule: it went up from an unrounded 4.340% to 4.370%.

Compared to the second quarter, the acceleration in real GDP in the third quarter reflected upturns in investment, exports, and government spending, as well as an acceleration in consumer spending. Imports decreased less in the third quarter than in the second. 

Real GDP was revised up 0.1 percentage point from the initial estimate, primarily reflecting upward revisions to exports and investment that were partly offset by a downward revision to consumer spending. Imports were revised up. 

Here is the breakdown: 

  • Personal consumption contributed 2.34% to the bottom line, slightly lower than the 2.39% originally reported.
  • Fixed Investment added 0.15%, also revised lower from 0.19%
  • Change in private inventories was a net improvement, raising from -0.22% to -0.12%, if still subtracting from the bottom line
  • Net trade (exports less imports) was also revised favorably up from 1.59% to 1.62%
  • Finally, government added 0.38% to the bottom line print, effectively the same as 0.39% before.

And visually:

Real gross output increased 3.2% in the third quarter, reflecting increases of 4.4% for private services-producing industries and 2.1% for government that were partly offset by a decrease of 0.1% for private goods-producing industries. Real gross domestic income (GDI) increased 2.4% in the third quarter, the same as previously estimated. The average of real GDP and real GDI increased 3.4%, the same as previously estimated.

From an industry perspective, the increase in real GDP in the third quarter reflected increases of 5.3 percent in real value added for private services-producing industries and 3.6 percent for private goods-producing industries that were partly offset by a decrease of 0.3 percent in real value added for government.  

Finally, while it's beyond ancient history now, the price index for gross domestic purchases increased 3.4% in the third quarter, the same as previously estimated. The personal consumption expenditures (PCE) price index increased 2.8 percent, and the PCE price index excluding food and energy increased 2.9%, both the same as previously estimated. A much more timely print of core PCE for November will be reported at 10am today.

Tyler Durden Thu, 01/22/2026 - 08:57

House To Vote On Bill To Fund The Government

Zero Hedge -

House To Vote On Bill To Fund The Government

Authored by Joseph Lord via The Epoch Times,

The U.S. House of Representatives will vote on a multi-bill package to fund the federal government on Thursday.

The legislation includes funding for the departments of Defense, Homeland Security, Labor, Health and Human Services, Education, Transportation, and Housing and Urban Development.

Most portions of the bill are expected to pass easily as members of both parties seek to avoid a repeat of the 43-day government shutdown, the longest in U.S. history, that accompanied the previous government funding fight.

House Minority Leader Hakeem Jeffries (D-N.Y.) and Senate Minority Leader Chuck Schumer (D-N.Y.) are among those, and both leaders have expressed a desire to work with Republicans to pass the 12 annual government funding bills ahead of the Jan. 30 funding deadline.

Though it includes some spending cuts, the package largely holds funding levels at fiscal year 2025 rates.

Republicans are expected to back the legislation largely along party lines.

Rep. Tom Cole (R-Okla.), the lead Republican on the House Appropriations Committee, praised the bill in a statement, saying it “reflects the core tenets of American strength: combat-ready forces, secure communities, effective education and health systems, and modern transportation. At every level, it applies innovation and discipline to deliver results without waste.”

In line with leadership’s desire to avoid a government shutdown, the sections of the bill related to funding for the departments of Defense, Labor, Health and Human Services, Education, Transportation, and Housing and Urban Development are expected to gain Democratic support as well.

However, one segment of the funding has proven divisive.

DHS Funding Controversy

Ahead of the vote, Democrats came out en masse against the portion of the bill that would fund the Department of Homeland Security (DHS).

Democrats have been increasingly critical of the agency that oversees Immigration and Customs Enforcement (ICE), criticism that has only intensified in the wake of the ICE-involved shooting of Renée Nicole Good in Minneapolis.

In the aftermath of the shooting, Democrats have called for President Donald Trump to back off on the deployment of ICE agents to Democrat-run areas, while the party’s progressive wing has renewed calls to “abolish ICE.”

In Congress, lawmakers have largely urged funding cuts or policy reforms.

While this package includes reforms, several Democrats have indicated that they don’t go far enough and have expressed an intention to oppose the bill.

Despite this opposition, the DHS funding measure is expected to pass with wide GOP support and support from some Democrats.

ICE Reforms

The bill would implement several changes to ICE’s policies and procedures.

One measure in the bill would provide $20 million to ICE for the procurement and deployment of body cameras for ICE and other immigration agents engaged in domestic law enforcement activities. It would similarly require standardization of ICE and immigration agents’ uniforms.

It provides additional funding for civil liberties-related oversight of ICE activities.

The bill would also mandate additional training for immigration agents operating within the U.S. interior, with a focus on de-escalation.

It also instructs DHS Secretary Kristi Noem to ensure that all immigration agents are properly trained on Americans’ First Amendment right to record federal agents during public operations.

It also provides substantially fewer detention beds than were requested by the administration, instead cutting the number. While 50,000 beds were requested, an increase, the bill would cut the total number of detention beds to 41,500, marking a decrease of 5,500 beds.

It also slightly reduces funding for enforcement and removal operations, cutting $115 million.

However, for many Democrats, these reforms don’t go far enough.

Democrats Split

Democrats are split on the issue, though many have expressed opposition to the bill.

Rep. Lauren Underwood (D-Ill.), a member of the House Appropriations Committee, expressed opposition to the bill in a post on X.

“The 2026 Homeland Security funding bill that the House is voting on this week is an easy NO for me. It’s a blank check with no accountability for DHS’s outrageous abuses,” Underwood wrote.

Several other House Democrats on the Appropriations subcommittee have similarly indicated plans to oppose the bill.

However, others have indicated plans to support the bill or have otherwise said they’re undecided.

Rep. Rosa DeLauro (D-Conn.), the lead Democratic appropriator, has said she'll back the legislation, citing the reforms.

Rep. Henry Cuellar (D-Texas), a moderate in a red-trending district, has also expressed his intention to support the bill.

Tyler Durden Thu, 01/22/2026 - 08:45

House To Vote On Bill To Fund The Government

Zero Hedge -

House To Vote On Bill To Fund The Government

Authored by Joseph Lord via The Epoch Times,

The U.S. House of Representatives will vote on a multi-bill package to fund the federal government on Thursday.

The legislation includes funding for the departments of Defense, Homeland Security, Labor, Health and Human Services, Education, Transportation, and Housing and Urban Development.

Most portions of the bill are expected to pass easily as members of both parties seek to avoid a repeat of the 43-day government shutdown, the longest in U.S. history, that accompanied the previous government funding fight.

House Minority Leader Hakeem Jeffries (D-N.Y.) and Senate Minority Leader Chuck Schumer (D-N.Y.) are among those, and both leaders have expressed a desire to work with Republicans to pass the 12 annual government funding bills ahead of the Jan. 30 funding deadline.

Though it includes some spending cuts, the package largely holds funding levels at fiscal year 2025 rates.

Republicans are expected to back the legislation largely along party lines.

Rep. Tom Cole (R-Okla.), the lead Republican on the House Appropriations Committee, praised the bill in a statement, saying it “reflects the core tenets of American strength: combat-ready forces, secure communities, effective education and health systems, and modern transportation. At every level, it applies innovation and discipline to deliver results without waste.”

In line with leadership’s desire to avoid a government shutdown, the sections of the bill related to funding for the departments of Defense, Labor, Health and Human Services, Education, Transportation, and Housing and Urban Development are expected to gain Democratic support as well.

However, one segment of the funding has proven divisive.

DHS Funding Controversy

Ahead of the vote, Democrats came out en masse against the portion of the bill that would fund the Department of Homeland Security (DHS).

Democrats have been increasingly critical of the agency that oversees Immigration and Customs Enforcement (ICE), criticism that has only intensified in the wake of the ICE-involved shooting of Renée Nicole Good in Minneapolis.

In the aftermath of the shooting, Democrats have called for President Donald Trump to back off on the deployment of ICE agents to Democrat-run areas, while the party’s progressive wing has renewed calls to “abolish ICE.”

In Congress, lawmakers have largely urged funding cuts or policy reforms.

While this package includes reforms, several Democrats have indicated that they don’t go far enough and have expressed an intention to oppose the bill.

Despite this opposition, the DHS funding measure is expected to pass with wide GOP support and support from some Democrats.

ICE Reforms

The bill would implement several changes to ICE’s policies and procedures.

One measure in the bill would provide $20 million to ICE for the procurement and deployment of body cameras for ICE and other immigration agents engaged in domestic law enforcement activities. It would similarly require standardization of ICE and immigration agents’ uniforms.

It provides additional funding for civil liberties-related oversight of ICE activities.

The bill would also mandate additional training for immigration agents operating within the U.S. interior, with a focus on de-escalation.

It also instructs DHS Secretary Kristi Noem to ensure that all immigration agents are properly trained on Americans’ First Amendment right to record federal agents during public operations.

It also provides substantially fewer detention beds than were requested by the administration, instead cutting the number. While 50,000 beds were requested, an increase, the bill would cut the total number of detention beds to 41,500, marking a decrease of 5,500 beds.

It also slightly reduces funding for enforcement and removal operations, cutting $115 million.

However, for many Democrats, these reforms don’t go far enough.

Democrats Split

Democrats are split on the issue, though many have expressed opposition to the bill.

Rep. Lauren Underwood (D-Ill.), a member of the House Appropriations Committee, expressed opposition to the bill in a post on X.

“The 2026 Homeland Security funding bill that the House is voting on this week is an easy NO for me. It’s a blank check with no accountability for DHS’s outrageous abuses,” Underwood wrote.

Several other House Democrats on the Appropriations subcommittee have similarly indicated plans to oppose the bill.

However, others have indicated plans to support the bill or have otherwise said they’re undecided.

Rep. Rosa DeLauro (D-Conn.), the lead Democratic appropriator, has said she'll back the legislation, citing the reforms.

Rep. Henry Cuellar (D-Texas), a moderate in a red-trending district, has also expressed his intention to support the bill.

Tyler Durden Thu, 01/22/2026 - 08:45

Rate-Cut Odds Tumble As Jobless Claims Hover Near 56-Year-Lows

Zero Hedge -

Rate-Cut Odds Tumble As Jobless Claims Hover Near 56-Year-Lows

Following last week's plunge back below 200k, analysts expected a small rise to 209k this week but the number of Americans filing for jobless benefits for the first time remained flat at 200k. Notably, as is usual at this time of year, non-seasonally-adjusted claims spiked...

Source: Bloomberg

...basically hovering at its lowest levels since 1969...

Source: Bloomberg

New York and Georgia saw the largest drops in jobless claims while Puerto Rico saw a modest increase in claims...

Continuing jobless claims also ticked down (to 1.849 million Americans) - the lowest since November...

Source: Bloomberg

All of which fits with the ebbing of rate-cut expectations for this year...

Source: Bloomberg

...likely much to the chagrin of President Trump.

Tyler Durden Thu, 01/22/2026 - 08:35

10 Thursday AM Reads

The Big Picture -

My morning train WFH reads:

• Donald Trump vs. the World: “The bond market cannot be bullied, fooled, or bribed. It does not flatter or make deals. It reveals all.” (The Bulwark)

• Greenland Clash Risks Undermining America’s Place in World Economic Order: The U.S. has long been a beacon of safety when uncertainty reigns. That is changing. (Wall Street Journal) see also Canada Flexes on Global Stage: With an Eye to Its Own Survival Prime Minister Mark Carney got a standing ovation in Davos for starkly describing the end of Pax Americana. He is looking for new allies to help his country survive it. (New York Times)

• They quit their day jobs to bet on current events. A look inside the prediction market mania: Reminds me of people quitting their jobs to become Day-Traders in the 1990s — and we know how that worked out…. (NPR)

• Can America build beautiful places again? Ugliness has more to do with the housing crisis than you think. (Vox)

• Chinese EVs Blow Past Tesla and Tariffs En Route to Global Reign: U.S., European Union and Mexico try to quash accelerating demand for China’s hottest electric vehicles. (Wall Street Journal) see also BYD’s Cheap EVs Are Suddenly Everywhere in Mexico as Tariffs Take Hold: Chinese brands find growth in EV, plug-in segment other carmakers bypassed. (Bloomberg)

• Maybe we’re all doomed. Or maybe Japanese bonds are getting cheap: Japanese government bonds have been having a monumentally awful time. The yield on 40-year JGBs on Monday sailed clean through 4 per cent for the first time. Investors in ultra-long maturity JGBs have now lost a cool fifth of their money over the past year alone. (FT Alphaville)

• Apple lost the AI race — now the real challenge starts: It’s time to turn Apple Intelligence into something people actually care about. (The Verge)

• In the AI economy, the ‘weirdness premium’ will set you apart. Lean into it, says expert on tech change economics. The word “weird” didn’t always mean strange. In Old English, descended from a mix of Germanic and Norse concepts, it meant something closer to “destiny” or “becoming” or even “fate.” Once upon a time, human beings in that culture thought that the way someone’s life would turn out was unseverable from the fundamental weirdness of being alive. (Fortune)

• What Happened to Pam Bondi? How the attorney general became a person who loves telling Trump yes (also, she has been corrupt since the GFP, so we have that going for us, which is nice) (The Atlantic) see also Lindsey Halligan leaves DOJ as judge calls her use of title ‘charade’ Judges threatening actions against people INDIVIDUALLY— not against the office —is the best way to enforce Rule of Law. (USA Today)

• How Gen Z is making millennials look cool again: Gen Z is reimagining the trends of its elders, embracing low-rise baggy and flare jeans, baby doll tops, and sweatpants with numbers. (Washington Post)

Be sure to check out our bonus edition of Masters in Business interview with Cory Doctorow — science fiction author, activist, journalist and blogger. We discuss the power of large companies over the Internet is “Enshittification: Why Everything Suddenly Got Worse and What to Do About It.”

 


When Chaos Reigns, So Does Gold

Source: Bloomberg

Sign up for our reads-only mailing list here.

The post 10 Thursday AM Reads appeared first on The Big Picture.

Trump Unveils His Board Of Peace In Davos: A Replacement To The UN Or A US-Led Coalition Of The Willing?

Zero Hedge -

Trump Unveils His Board Of Peace In Davos: A Replacement To The UN Or A US-Led Coalition Of The Willing?

On the second and final day of his visit on Jan. 22, U.S. President Donald Trump released the Board of Peace charter, which is part of the peace process between Israel and Hamas to end the war in Gaza.

The White House on Jan. 16 named several members of the Trump administration, as well as international leaders, to positions within the Board of Peace, which aims to provide strategic insight, mobilize international resources, and ensure accountability during Gaza’s transition and reconstruction.

Trump will chair the board, which will be tasked with overseeing the next phase in Gaza. Dozens of countries have been invited to join.

As Emel Akan reports for The Epoch Times, members will be tasked with managing the Gaza Strip’s “governance capacity-building, regional relations, reconstruction, investment attraction, large-scale funding, and capital mobilization,” according to the White House.

During a Jan. 20 White House press conference, Trump said the Board of Peace might end up replacing the United Nations.

“I wish the United Nations could do more. I wish we didn’t need a Board of Peace,” Trump told reporters. 

“The U.N. just hasn’t been very helpful. I’m a big fan of the U.N. potential, but it has never lived up to its potential.”

Despite criticizing the U.N., Trump didn’t call for the dissolution of the international body.

U.S. Secretary of State Marco Rubio, special presidential envoy Steve Witkoff, Trump’s son-in-law Jared Kushner, and former British Prime Minister Tony Blair are among those tapped to serve on an executive board for the Board of Peace. Others on the executive board are private equity executive Marc Rowan, World Bank Group President Ajay Banga, and U.S. deputy national security adviser Robert Gabriel.

The Board of Peace will include a National Committee for the Administration of Gaza, led by Palestinian Authority official Ali Abdel Hamid Shaath.

President Donald Trump speaks during a reception for business leaders at the World Economic Forum (WEF) Annual Meeting in Davos, Switzerland, on Jan. 21, 2026. Chip Somodevilla/Getty Images

Nikolay Mladenov, a Bulgarian diplomat and former U.N. envoy to the Middle East, has also been named to serve as the high representative for Gaza. This role entails acting as a link between the Board of Peace and the National Committee for the Administration of Gaza.

As part of the peace process, Hamas has agreed to disarm.

During his remarks to the World Economic Forum in Davos, Trump said failure to comply would result in severe consequences, saying Hamas will “be blown away.”

“We have 59 countries that are part of that whole peace deal,” Trump said during his speech.

“And they want to come in and take out Hamas. They want to come in. They want to do whatever they can. There’s a problem with Hezbollah in Lebanon. And we'll see what happens there.”

Additionally, as Andrew Korybko details below, Putin might accept Trump’s invitation to participate in order to avoid offending him and not lose a seat at the table where members provide input on US policy towards settling various conflicts.

Kremlin spokesmen Dmitry Peskov confirmed that the US invited Putin to join the Board of Peace, which refers to the UNSC-endorsed Trump-chaired group for implementing his Gaza peace plan.

Interestingly, Gaza isn’t mentioned anywhere in its charter, thus lending credence to some observers’ assessments that Trump envisages it de facto replacing the UN upon broadening its scope with time.

That same charter also grants enormous power to the group’s Chairman, the first of which will be Trump.

He’s the only one who can invite countries to join, terminate their membership, select the Executive Board, approve decisions (without which they won’t enter into force), veto decisions at any time even after they’re already being implemented, and has full power over subsidiary entities, et al.

Just as importantly, he also chooses his successor, who automatically replaces him once he ends his duties. Trump will basically run the Board of Peace like Mar-a-Lago, which has obvious pros and cons.

On the positive side, this group might actually get things done, unlike the UN. After all, Trump’s companies have a track record of tangible accomplishments, and taking full responsibility for everything motivates him to ensure that this effort doesn’t fail otherwise it’ll stain his legacy. On the negative side, all members have to defer to Trump, which some might consider humiliating. They might still tolerate it for the sake of rebuilding Gaza, however, but then leave after three years’ time.

The last point segues into the clause about how the invitees can serve for three years free of charge but then have to leave the group unless they pay $1 billion within the first year to become permanent members.

This money will go towards rebuilding Gaza. It’s also possible that the Board of Peace amends the charter to mandate a smaller amount with Trump’s approval. In any case, becoming a permanent member legally buys influence with Trump, but it doesn’t guarantee that he’ll do what’s asked of him.

There’s also the question of what would happen if the Republicans don’t keep the presidency.

The Board of Peace, whether still run by Trump or whoever his successor might be (perhaps one of his sons), would then lose the ability to influence the president and thus just become another international group. It could still foster dialogue among its members, but that’s not the same as shaping US policy towards Gaza in accordance with Trump’s vision with potential input from others like it’s presently poised to do.

For these reasons, the Board of Peace is less a replacement to the UN and more akin to a “coalition of the willing” therein which has the political will to facilitate US-led efforts to rebuild Gaza, but this “coalition” might also broaden its focus to tackle other conflicts in the future.

It’s with this in mind that those invitees embroiled in such conflicts which could occupy the Board of Peace’s attention before the end of Trump 2.0 might buy permanent membership in order to keep this influence channel open.

The aforesaid calculation would contextualize Russia’s possible participation on the Board of Peace, especially as a permanent member, which could even be for the simple purpose of not wanting to provoke Trump by risking him being offended by Putin’s rejection of his invitation into escalating.

A supplementary motive could be that this is a political insurance policy in the scenario, however far-fetched it might seem, that the Board of Peace ultimately de facto replaces some of the UN’s functions.

Tyler Durden Thu, 01/22/2026 - 06:30

Cocoa Prices Set For Worst Monthly Drop On Record As Demand Craters

Zero Hedge -

Cocoa Prices Set For Worst Monthly Drop On Record As Demand Craters

Cocoa futures in New York tumbled to two-year lows as fresh grinding data confirmed that consumers are balking at high chocolate prices.

Contracts are now down more than 28.5% on the month, and if the decline holds through the end of next week, January would register the largest monthly percentage drop on record, with Bloomberg data going back to 1970.

The great cocoa panic of 2023-24, which sent prices from $2,190 a ton to as high as $13,000 a ton by December 2024, has now retraced nearly the entire bull move to the 76.4% Fibonacci level. This latest downward pressure comes as new grinding data in Europe, cited by Bloomberg, shows clear demand deterioration:

  • Demand is deteriorating: European cocoa grindings fell to the lowest quarterly level since 2013, Asia also declined, while North America was roughly flat.

  • Reduced grindings have hit processors hard: Barry Callebaut AG reported a 22% drop in cocoa division volumes and nearly 10% lower overall sales volumes.

Goldman analyst Natasha de la Grense provided clients with more color on Barry Callebaut's earnings, which showed negative market demand for chocolate:

Barry Callebaut – Q1 volumes in line (-9.9%) with a better outcome in Gourmet (-3.6% vs -5.5%) and Food Manufacturers (-7.4% vs -8.0%) offset by worse volumes in Cocoa Products (-22% vs -16.5%). The miss at the latter was impacted by negative market demand notably in AMEA and the prioritisation of volume towards higher return segments. Pricing was +19% YoY (vs +40% last quarter) so sequentially improving and now passed its peak. They say that global chocolate volumes were -6.8%. No change to FY26 outlook but they note lower bean prices are encouraging for chocolate market stabilisation. With this release, a new CEO has been announced which is a bit of a surprise (and Mr Feld is leaving almost immediately). However, the newly appointed Mr Schumacher is former CEO of Unilever and well-liked by investors. On the call, the Chairman suggested there will be no major change in strategy or need for reinvestment under new management. Note that BC also said it is committed to its integrated business model which should pour cold water on speculation around a split.

Barry Callebaut CFO Peter Vanneste told investors on an earnings call, "We believe consumers will adapt and adjust to these new price levels and ultimately continue to buy chocolate given the high engagement of the category."

We told readers in December that sliding cocoa prices would produce "Tailwinds" for the badly beaten-down Hershey stock ...

Read the note here.

Tyler Durden Thu, 01/22/2026 - 05:45

UK Data Center Planning Hits Record High Amid Scramble For AI Infrastructure

Zero Hedge -

UK Data Center Planning Hits Record High Amid Scramble For AI Infrastructure

Via City AM,

  • Data centre planning applications in England and Wales jumped 63% in 2025, driven largely by AI-related demand and investor enthusiasm.

  • Developers are increasingly targeting unconventional sites, from abandoned hotels to former coal mines and landfills, to secure planning approval.

  • Power availability and grid constraints are likely to limit how many approved projects are ultimately built, encouraging “bring your own power” models.

Data centre planning applications hit an all-time high in the UK in 2025, City AM can reveal, as investors rushed to gain a foothold in the burgeoning AI market.

More than 60 separate planning applications for the construction of new data centres were filed in England and Wales over the course of the year, according to a City AM analysis of more than 300 local authority planning databases, representing an increase of 63 per cent compared to 2024.

The analysis excluded extensions to existing data centre sites, revisions to past applications  and applications for other developments which included a data centre as part of the plans, meaning the true figure for the number of data centres seeking planning approval is likely to be significantly higher.

The surge in applications lays bare the scale of the demand for compute by the nascent AI industry, with large language models requiring more and more power to operate, and property businesses racing to re-invent themselves as data centre developers to cash in on investor appetite.

Dame Dawn Childs, chief executive of Pure Data Centres, told City AM: “With this AI bubble that everyone’s talking about…because of the increased valuations for powered land, everyone’s trying to get a piece of the pie, and that creates a bunch of fizziness.

“We’re seeing lots of people who are sending out on a daily basis: ‘we’ve got this significant plot of land with all of these megawatts of power in the middle of nowhere, it’ll be an AI gigafactory, buy it for a gazillion pounds’ – they’re absolutely trying to get increased valuations for scrappy industrial land.”

The lion’s share of the demand came from AI applications by Magnificent 7 firms, Childs said, but added that even without AI, there would likely have been a significant increase in applications due to increased cloud computing adoption across the British economy.

The analysis found that around half of the planning applications were situated in London and the South East, regions known as a European hotspot for data centres, though there were also signs of a growing number of data centres being constructed across different parts of the UK. Seven different applications were submitted in Wales during the year, along with another seven in the East Midlands, four in the North West and four in Yorkshire.

The analysis also found property firms becoming more and more creative over the sites chosen to redevelop into data centres in a scramble to gain planning approval. In Watford, developers picked the site of an abandoned Mercure hotel to build a data centre, while in Hackney, the old Truman brewery has been earmarked for conversion. In Nottinghamshire, a shuttered coal mine could be turned into a data centre, while in Chesterfield, a former landfill site could find a new lease of life churning out AI content.

These more ambitious developments were being led by technological advances by data centre hyperscalers, Childs said.

“Previously they needed their cloud regions to be within a certain geography, driven by the cost of power, the availability of power and the price of land,” Childs said.

“They’ve extended that margin now and for some of them they’ve actually doubled the circumference within which they’d be happy to have a child data centre site linked back to their central hub in a cloud region.”

The surge in data centre planning applications is also thought to have been propelled by the launch of the government’s AI Opportunities Action Plan just under a year ago, in which it called for the creation of ‘AI Growth Zones’ – areas designed to build AI infrastructure and attract outside investment and expertise. To date more than 200 submissions for AI Growth Zones have been made by local authorities across the UK.

Planning and power challenges

But the total number of AI data centres ultimately built is likely to be substantially lower than the number of planning applications filed, amid competition for investment and a scarcity of power supplies.

Google’s first UK owned and operated data centre, which opened last year, suffered a series of setbacks before it was ultimately completed.

When the first planning application for the site was submitted in 2018, Thames Water warned it had “identified an inability of the existing water network infrastructure to accommodate the needs of this development proposal”, while a utilities report found the local power supply was inadequate and a new 6km-long cable would have to be dug underground (including drilling under the M25) to connect up to a second National Grid substation.

As a result of power constraints, the “bring your own power” model is also being seen more and more across Europe, in which data centre developers partner with energy specialists to ensure power demands can be met, Childs said.

“Investors are either cautious and savvy and really understand the market… or they are new entrants who are just throwing their hat in the ring to jump on the bandwagon.”

Tyler Durden Thu, 01/22/2026 - 05:00

US Lawmakers Push $2.5B Plan To Break China’s Grip On Critical Minerals

Zero Hedge -

US Lawmakers Push $2.5B Plan To Break China’s Grip On Critical Minerals

A bipartisan group of lawmakers has proposed creating a new $2.5 billion agency to accelerate U.S. production of rare earths and other critical minerals, according to AP and MSN. 

The effort comes as the Trump administration has already taken aggressive steps to weaken China’s control over materials vital to high-tech products, electric vehicles, and advanced weapons systems.

While it remains unclear how the legislation would align with White House policy, pressure is growing to cut U.S. dependence on China after Beijing used its dominance in the critical minerals market during the trade war. Presidents Donald Trump and Xi Jinping agreed last October to a one-year truce under which China would continue exports while the U.S. eased some technology restrictions.

The Pentagon has spent nearly $5 billion over the past year to secure access to these materials, highlighting how reliant the U.S. remains on China, which processes more than 90% of the world’s critical minerals. To counter that dominance, Washington has begun taking equity stakes in mining companies and, in some cases, guaranteeing prices—an approach more commonly associated with China’s industrial policy.

The Senate bill, introduced by Sens. Jeanne Shaheen of New Hampshire and Todd Young of Indiana, would establish an independent agency to build mineral stockpiles, stabilize prices, and encourage production in the U.S. and allied countries to support both national defense and the broader economy.

Shaheen called the legislation “a historic investment” to strengthen the U.S. economy against China’s leverage, while Young said the proposal is “a much-needed, aggressive step to protect our national and economic security.” Rep. Rob Wittman of Virginia introduced a companion bill in the House.

The AP report says that the urgency escalated after China imposed export restrictions last spring in response to U.S. tariffs, forcing Washington to seek a truce. Defense Secretary Pete Hegseth said the Pentagon has recently “deployed over $4.5 billion in capital commitments” to close deals that will “help free the United States from market manipulation.”

Those efforts include investments in domestic alumina, gallium, and rare earth production, as well as partnerships to strengthen the supply chain for rare earth magnets. Trump reinforced the strategy this week, declaring the U.S. is “too reliant” on foreign critical minerals and ordering negotiations for stronger supply terms.

“Reshoring manufacturing that’s critical to our national and economic security is a top priority for the Trump administration,” a White House spokesperson said.

Some analysts view the strategy as a shift toward state-backed industrial policy. “Despite the dangers of political interference, the strategic logic is compelling,” wrote Elly Rostoum, adding that it could be “a prudent way for the U.S. to ensure strategic autonomy and industrial sovereignty.”

Industry leaders have largely welcomed the approach. “He is playing three-dimensional chess on critical minerals like no previous president has done. It's about time too, given the military and strategic vulnerability we face,” said Jim Sims of NioCorp.

Alongside domestic investment, the administration is also working with allies, including major mining agreements with Australia and coordinated discussions among G7 finance ministers on supply chain resilience.

Tyler Durden Thu, 01/22/2026 - 04:15

Despite Rapes And Violence, Netherlands To Keep Migrant-Student Integration Project Alive

Zero Hedge -

Despite Rapes And Violence, Netherlands To Keep Migrant-Student Integration Project Alive

Via Remix News,

Despite sparking global news coverage documenting violence, sexual assaults, and drug-related crimes in the shared living integration project “Stek Oost,” the city of Amsterdam refuses to shut the project down.

According to public broadcaster BNNVARA, the municipality has rejected calls to shutter the facility early and plans to run the project until its scheduled end in April 2028.

The project, which launched in 2018, was the subject of a recent NPO 2 report where residents detailed an environment of frequent violence. Records indicate that the housing association responsible for the site, Stadgenoot, had requested an intervention plan from police and city officials as early as 2019 to address sexual abuse.

The news report highlighted serious cases and interviewed the victims in some instances, which has been translated by Remix News.

A Syrian resident was linked to a rape in 2019, but the case was initially closed due to insufficient evidence. However, the individual remained at the dormitory until March 2022, when a second sexual offense led to his expulsion and a subsequent prison sentence.

The former resident said that a Syrian raped her after she went to his room to watch a film and he would not let her leave.

He then raped her.

The woman, Amanda, said: “He wanted to learn Dutch, to get an education. I wanted to help him.”

In addition, students living in the shared spaces reported being threatened with kitchen knives. One student described a 20-centimeter-long blade.

Stadgenoot reportedly considered pulling out of the project in 2023 after its own employees faced threats.

“Stek Oost” was designed to foster social cohesion by housing asylum seekers and Dutch students together.

Initially, the 250 apartments were split in half between the two groups, so 125 places for each group. However, the ratio of asylum seekers was later reduced to 30 percent.

A “buddy system” was implemented to connect the groups and promote integration.

Despite the controversies, the City of Amsterdam has blocked attempts to close the project. District President Carolien de Heer (PvdA) defended the decision to the broadcaster, stating that “250 people could not be put on the streets at once.”

However, what he does not note is that the refugees could simply be removed to another facility, which would not total 250 people.

The project has long been a source of political friction. In 2022, Green Mayor Femke Halsema acknowledged she was aware of the ongoing problems. By 2024, parties including the VVD and JA21 called for the project’s termination.

A scheduled debate on the facility was recently removed from the Municipal Council’s agenda, despite a request for discussion from Anton van Schijndel of the nationalist FvD party (Forum for Democracy).

Now, there are potential political implications to closing the project early, which could be seen as a failure of integration, even when forced and facilitated by the state in a controlled environment.

Read more here...

Tyler Durden Thu, 01/22/2026 - 03:30

Tesla Cuts Berlin Gigafactory Workforce By 1,700 Employees

Zero Hedge -

Tesla Cuts Berlin Gigafactory Workforce By 1,700 Employees

Tesla’s workforce at its Gigafactory near Berlin has fallen by about 1,700 employees, according to a report by Germany’s Handelsblatt.

An internal document cited by the paper shows the Gruenheide site—Tesla’s only European production hub—now employs 10,703 people, a decline of roughly 14% from staffing levels disclosed ahead of works council elections in 2024. The company did not immediately comment, according to Handelsblatt.

The reduction follows CEO Elon Musk’s April 2024 announcement that Tesla would cut more than 10% of its global workforce to curb costs and boost productivity.

The move also fits a broader pattern in early 2026, as manufacturers and technology firms continue to streamline operations amid slower demand growth, tighter financing conditions, and a push to protect margins after several years of aggressive expansion.

In 2025, Tesla spent much of the year shifting from rapid expansion to consolidation. Management emphasized cost control, factory efficiency, and cash preservation as aggressive price cuts and softer demand compressed automotive margins.

Even as its traditional auto operations lost momentum, Tesla’s stock has been relatively resilient. Investors have increasingly focused on the company’s longer-term ambitions in robotaxi services, autonomous driving software, and artificial intelligence, viewing these as potential high-margin growth engines.

That optimism has helped support the share price despite slowing vehicle sales and a wider backdrop of job cuts across manufacturing and technology in 2026, as companies adjust to weaker growth and higher financing costs.

Tyler Durden Thu, 01/22/2026 - 02:45

Should India Be Concerned About Poland's Close Ties With Pakistan

Zero Hedge -

Should India Be Concerned About Poland's Close Ties With Pakistan

Authored by Andrew Korybko,

Pakistan’s reported indirect arming of Ukraine through Poland might expand into direct military cooperation between them that could then also elicit concern from Russia...

Top Indian diplomat Dr. Subrahmanyam Jaishankar said during a press conference with his Polish counterpart Radek Sikorski that he wants to discuss the latter’s “recent travels to the region” in an allusion to his trip to Pakistan last fall after spring’s Indo-Pak clashes.

He also said that “Poland should display zero tolerance for terrorism and not help fuel the terrorist infrastructure in our neighbourhood.”

Sikorski later abruptly ended an interview when asked about Pakistani terrorism against India.

India has good reason to be concerned about Poland’s close ties with Pakistan, not just due to Sikorski’s suspicious behavior during the aforesaid interview which hinted at a seemingly inexplicable fear of offending that country, but because of reports that Poland aids Pakistan’s indirect arming of Ukraine.

Although the Russian Ambassador to Pakistan dismissed them as lacking evidence, perhaps in order to not derail their big-ticket energy and infrastructure talks, it’s likely that India believes them.

After all, it wasn’t only Indian media that reported on Pakistan’s indirect arming of Ukraine, but also French media and The Intercept.

The second’s report alleged that “U.S. Helped Pakistan Get IMF Bailout With Secret Arms Deal For Ukraine, Leaked Documents Reveal”, which is believable given Pakistan’s financial problems and the US’ former interest in arming Ukraine to the teeth against Russia.

Pakistan also has a sizeable defense industry and is a “Major Non-NATO Ally” so this alleged deal is reasonable.

Lending credence to this claim was Pakistani Foreign Minister Ishaq Dar declaring after last fall’s talks with Sikorski that “We agreed to expand bilateral cooperation in trade, energy, infrastructure, defence, counter-terrorism, science and technology and education.”

Their defense cooperation might eventually expand beyond Pakistan indirectly arming Ukraine to it directly arming Poland given the latter’s unprecedented military buildup that’s sold to the public on the pretext of defending against Russia.

The lion’s share of its military-technical equipment comes from the US and South Korea due to how embarrassingly underdeveloped its domestic military-industrial complex is, but it would make sense for Poland to pragmatically diversify suppliers by exploring related options with Pakistan.

This is especially so if they’ve already been cooperating on indirectly arming Ukraine and Pakistan took the opportunity to market its other military-technical equipment to Poland. Any such deal would bother Russia and India.

Russia would dislike Pakistan arming Poland amidst their talks on big-ticket deals, which arguably require the US’ approval that Trump might not provide in order for US companies to take advantage of these opportunities instead, while India would object to Poland financing its rival through weapons deals.

Pakistan and Poland are also nowadays the US’ top partners in their home regions so each might lobby their shared US patron in support of the other’s interests as a goodwill gesture for bolstering their ties.

It’s therefore not just India which has good reason to be concerned about Poland’s close ties with Pakistan but also Russia, whose associated concerns could be exacerbated if India shares any intelligence with Russia that it might have obtained about their planned defense cooperation.

In that scenario, Russia would still be unlikely to end its energy and infrastructure talks with Pakistan since that’s not its diplomatic style, but it might become reluctant to further expand bilateral ties in other spheres.

Tyler Durden Thu, 01/22/2026 - 02:00

No White Men Need Apply

Zero Hedge -

No White Men Need Apply

Authored by Judge Glock & Christopher F. Rufo via City Journal,

On the campaign trail, President Donald Trump promised to end federal spending on diversity, equity, and inclusion (DEI) programs. Yet the government has continued to award contracts based on race and sex. Despite rampant fraud and multiple court rulings against the practice, the Small Business Administration (SBA) has used “disadvantage” essays from business owners to skirt the rules and continue discriminatory programs that dole out billions in government contracts.

For decades, the federal government has awarded certain special contracts exclusively to so-called disadvantaged businesses and women-owned small businesses. Until 2023, SBA presumed that racial minorities were “disadvantaged.” The resulting discrimination was absolute: according to an analysis conducted between 2020 and 2023, these programs made not a single award to white men.

Though the second Trump administration has taken steps to limit these contracts, the largest disadvantaged-business initiative—the SBA’s 8(a) program—is thriving. The program “is still one of the most lucrative and sought after” SBA certificates, one contracting lawyer said in November. In fact, fiscal year 2025 saw the largest 8(a) spending on record, totaling $26 billion.

President Trump signed an executive order forbidding federal DEI discrimination, and a federal district court struck down the SBA’s presumption that minorities are disadvantaged. How, then, has 8(a) survived?

Much as colleges have used personal essays to evade affirmative-action bans, the Small Business Administration has asked companies to submit “social disadvantage narratives” to qualify for the 8(a) program. These allow business owners to establish minority status through descriptions of racial taunts or alleged discrimination. Applicants might not check a racial box, but the implication is clear: no white men need apply.

The SBA’s “Guide for Demonstrating Social Disadvantage” reveals how the shell game works. The guide teaches applicants how to play the system, featuring examples of potential “disadvantage.” It gives minorities and women the magic words: “I believe my application [for a bank loan] was denied due to bias toward my race” and “I believe my request [to declare a business major] was denied based on sex bias.” Once the agency approves the application, the contracts can start flowing—no real evidence required.

Are these applicants always disadvantaged? No. Consider Earl Stafford Jr., a black contractor who wrote an essay to apply for the 8(a) program. The Washington Business Journal reported on Stafford’s “painstaking” ordeal of writing the essay, in which he described unspecified acts of discrimination that made him think that he did not have “what it took to be in business.” Yet his father, Earl Stafford Sr., founded a successful defense firm and started his own private foundation—hardly the background of a disadvantaged person.

As with any racialized initiative, the 8(a) program is ripe for fraud. White business owners can find a minority front man or a woman to head a nominally disadvantaged or woman-owned firm, which the white man continues to run behind the scenes. Another option is for minority-owned firms to receive the government contract but act as “pass through,” taking a cut off the top and paying another firm to do the contracted work. The Supreme Court ruled last year against a “disadvantaged” company that provided none of the required paint for a Philadelphia bridge and train station and passed the work to other firms.

Out-and-out dishonesty is also common. In 2023, Margarita Howard and her companies HX5 and HX5 Sierra were forced to pay the government almost $8 million for lying about Howard’s assets in order to participate in 8(a). At the time she claimed to be disadvantaged, Howard was living in a 14,000-square-foot waterside Florida mansion featured on HGTV’s Extreme Homes, the complaint against her alleges. Howard is still the CEO of HX5 (a “woman-owned small business”) and applies for federal money. The Trump administration awarded her company millions last year.

Other aspiring federal contractors have pretended to be Native American or embezzled funds intended for Natives. ProPublica recently highlighted the case of Charles Dawson, a contractor whose companies won hundreds of millions of dollars on a promise to use his profits to help “Native Hawaiians.” He funneled some of the money into private jets, Porsches, and polo. Even after a federal raid on Dawson’s house, the companies continued to win federal support.

Everyone within the system knows such fraud is rampant. A 2018 government audit reviewed 25 8(a) recipient firms which together received more than $100 million. Of these, 20 “should have been removed from the . . . program” due to ineligibility.

The Trump administration has taken important steps to address these problems. Late Friday, Secretary of War Pete Hegseth announced he was ordering a “line by line” investigation of 8(a) contracts. President Biden’s SBA sought to award 15 percent of all federal contracts to disadvantaged firms. Trump SBA administrator Kelly Loeffler has reduced the goal to the law’s actual standard of 5 percent. Her administration has also demanded financial records from 8(a) businesses to weed out fraud.

But the core problem with these programs is not fraud. It is that they systematically discriminate against one group: white men.

Instead of trying to reform 8(a), the Trump administration should abolish it. Under the Fourteenth Amendment’s Equal Protection Clause, the administration would be within its rights to stop all contracting based on race and sex, even if such contracting were justified under the fig leaf of a “disadvantage” essay. The White House could also support Senator Joni Ernst’s “Stop 8(a) Contracting Fraud Act,” which would pause 8(a) contracting until a thorough audit is completed, or call on Congress to end the program altogether.

When the administration says, “no DEI,” it should mean it. In federal contracting, that’s also what the Constitution requires.

Judge Glock is director of research at the Manhattan Institute and author of The Dead Pledge: The Origins of the Mortgage Market and Federal Bailouts, 1913–1939. Christopher F. Rufo is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and the author of America’s Cultural Revolution.

Tyler Durden Wed, 01/21/2026 - 23:25

How Canada's Only Leverage Over America Disappeared In An Instant

Zero Hedge -

How Canada's Only Leverage Over America Disappeared In An Instant

Authored by E.J. Antoni via The Epoch Times (emphasis ours),

I’d like to talk today about the recent events in Venezuela, specifically from an economic point of view, and who are the real winners and losers.

An aerial photo shows the Nave Photon crude oil tanker, carrying a shipment of Venezuelan oil, docked in Freeport, Texas, on Jan. 16, 2026. Mark Felix/AFP via Getty Images

Let’s start with the obvious. The Venezuela operation is a win for America and the Venezuelan people. American consumers and businesses will benefit from lower prices while oil companies have a chance for bigger profits.

Venezuelans will benefit from increased investment, jobs, and profits in their country as well. This is why their stock market jumped 50, 60, 70, 80 percent after the U.S. takeover.

And if we recall that economic security is national security, then the new order in South America also simultaneously supports U.S. national security while undermining our greatest rival, China. In war, dependable access to oil is as important as dependable access to kinetic arms.

Access to ample, reliable flows of oil represents a key strategic interest. Removing one such flow from the Chinese sphere of influence and bringing it into our own is tremendous progress toward this goal. But the biggest loser of all isn’t China or Russia, it’s Canada.

Western Canada sends over four million barrels a day of heavy crude to American refiners that are equipped to handle this type of oil. But now, with access to the massive flows of Venezuelan crude, which is similar to the Canadian flavor, the United States no longer needs to rely on Canada to keep the refineries on the Gulf of America running at full capacity.

Instead, the oil shipments that previously went to China are already being redirected to American refiners—tens of millions of barrels worth just days after Maduro’s capture. And while the United States is paying full market price for that oil, don’t be surprised if oil prices start coming down because of this redirection.

After all, increasing supply puts downward pressure on prices. As American investment rebuilds Venezuela’s severely neglected oil infrastructure, we can expect production and exports to the United States to only increase, simultaneously benefiting the American and Venezuelan people.

That’s why this is such a massive economic win for American families and businesses who will benefit from lower prices, courtesy of more energy supplies. And since energy affects the price of everything else in an economy, lower prices for products like gasoline will put downward pressure on countless other prices, providing relief after four years of inflation under the Biden administration.

Consider when you go to a grocery store how much of the price of food you’re buying is dependent on energy prices. First off, farmers and ranchers are fueling their tractors and other vehicles with diesel and gas. They’re also using synthetic fertilizers created with natural gas.

But how did the gallon of milk, the carton of eggs, or the bag of bread get to grocery store in the first place? It got there on a trunk. Fueled by oil. What I’m getting at here is that we seriously underestimate just how much the price of energy affects everything we do and everything we buy.

Bring down energy prices, and you put downward pressure on prices throughout the economy. That’s a win for American consumers and businesses alike.

And U.S. control of Venezuela is also a second chance for jilted American oil companies to again profit from nearly one-fifth of the world’s proven oil reserves.

Years ago, those American companies poured investment into Venezuela to essentially modernize the entire industry there. For their troubles, these oil firms had their physical property confiscated and their intellectual property copied as the communists “nationalized” Venezuelan oil.

Of course, communist rule there was a disaster, as it has been everywhere, and the oil industry languished as infrastructure decayed, investment lagged, and production fell well below its potential. Venezuela pumps much less oil today than they did a quarter century ago. But this is poised to reverse.

Venezuela will now assuredly receive billions of dollars of investment from American oil companies, many of whom are champing at the bit to regain access to the largest reserves in the world. That will mean a windfall of jobs and income for the Venezuelan people, all of which could have been Canada’s, bringing us back to the story of the biggest economic loser here.

It didn’t have to be this way for the fifty-first state. But instead of welcoming oil and gas investment from the United States and building valuable infrastructure like pipelines, Canada has preferred to prioritize far-Left causes and an anti-energy agenda.

After recent events, not only is Canada losing its biggest crude customer, but it’s also losing its only real leverage in trade talks with the United States. This is an economic reality that few professional pundits seem to have grasped.

To be clear, the flood of cheap Venezuelan crude will not arrive in the United States overnight. It will take time, years in fact, to rebuild Venezuela’s oil infrastructure and really ramp up production to replace most Canadian crude imports. But the writing is on the wall.

The United States, for a change, is firmly in the driver’s seat and master of its own destiny—and hemisphere.

The economic story here also goes well beyond oil too, although that’s what has gotten most of the attention. Venezuela is a veritable goldmine of other natural resources like rare earth minerals, lumber, bauxite (the primary source of aluminum), natural gas, and more. Canada just lost not only its leverage with oil, but just about every other one of its exports too.

Since the Canadian economy is much more dependent on exports than the U.S. economy is, and since nearly all Canadian exports come to the United States while relative few of ours go to Canada, the slowdown in trade between our two countries has very unequal effects.

In short, this has been very harmful to Canada and will be devastating in the long run. But it’s little more than a speedbump here in America.

President Donald Trump has effectively barred the door on Canada, and the latter will have few alternatives to completely opening every one of its markets to free and fair competition.

Of course, Canada can always choose to fall further into irrelevance and economic impoverishment by stubbornly continuing to snub American manufacturers, farmers, and workers.

Let me close by saying that if the Monroe Doctrine warned Europeans to stay out of the Western Hemisphere and the Roosevelt corollary established American intervention therein, then the Trump corollary has put a finer, and more economic, point on the matter that’s best summed up in two words: America first.

Opinions expressed in this article do not necessarily reflect the opinions of ZeroHedge. 

Tyler Durden Wed, 01/21/2026 - 22:35

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