Ukraine Defies Vance Warning With Massive Strike On Russia's Key Black Sea Port, Shuttering Grain Terminals

Did President Zelensky and the Ukrainian armed forces not listen to US Vice President JD Vance's warnings and request after all?

On Wednesday a "massive" Ukrainian drone and missile strike was unleashed on Russia's port city of Novorossiysk, which badly damaged grain export terminals at what also constitutes the the last major Russian naval base on the Black Sea.

via Retuers

Three were killed, including an eight-year-old child, and also 24 people were injured in the Wednesday nighttime attack.

Zelensky acknowledged the rocket and underwater drone attack in what he hailed as a "unique operation" to strike the Russian naval base at Novorossiysk.

It seems Zelensky is distinguishing this instance as a hit on a purely 'military target' given he did not mention the grain export terminal aspect to the destruction.

"The occupying fleet and all the infrastructure that supports it will not be safe as long as Russian aggression continues," Zelensky said.

Many Russian assets previously docked at the longtime Russian fleet's home base of Sevastopol were forced to vacate during earlier phases of the war, given the frequent prior targeting of the historic Crimean naval hub. Some ships have even been relocated as far away as the Caspian Sea in order to protect them.

The attack could seriously impact global food supplies, particularly in the African continent.

Reuters has said shutdowns resulted: "Two of Russia's biggest grain terminals at the southern port of Novorossiysk have suspended operations as a result of overnight Ukrainian drone strikes, four industry sources told Reuters on Wednesday."

"Russia is the world's ​largest wheat exporter and most of those exports are shipped via its Black Sea ​ports like Novorossiysk. Russia's main grain lobby group warned last month that Ukrainian ⁠drone attacks could shut down grain exports via the Black Sea in the near future, ​pushing up prices and causing hunger in Africa and the Middle East," the report added.

Novorossiysk is also home to vital oil export ​infrastructure. Kiev has essentially declared open season on Russian oil exports, arguing that proceeds fuel Russia's military machine.

A state of emergency has been declared in Novorossiysk after a Ukrainian drone attack

Due to the rupture of two water mains, the city’s water supply system has been damaged, and water delivery to residents has been restricted.

The Novorossiysk port area is covered in thick… pic.twitter.com/nWpeIfcf5Q

— Visegrád 24 (@visegrad24) August 12, 2026

We reported earlier that at the urging of Vice President Vance, Ukraine indicated that it has suspended attacks on oil tankers using Novorossiysk. The request was made in late July, but first reported today by the Financial Times, citing Ukrainian officials. 

Vance's plea sprang from the Trump administration's worries that Ukraine's attacks were creating dangerous instability in global fuel markets. There were also concerns that strikes on vessels transporting Kazakhstan crude oil to the Caspian Pipeline Consortium (CPC) terminal at Novorossiysk were detrimental to American companies. 

So it will be interesting to see if in the wake of this latest Wednesday attack, Washington ramps up the pressure on its Ukrainian ally - or whether such attacks will continue and be met with US silence.

Tyler Durden Wed, 08/12/2026 - 15:20

AI Hyperscalers Are Pricing Bitcoin Miners Off The Grid. Here's Why Its A Massive Win-Win...

Authored by Nick Ward via BitcoinMagazine.,com,

If you’ve scanned headlines over the last year, you’ve likely seen the prevailing market narrative: Bitcoin miners are abandoning their operations and pivoting to AI data centers, signaling a retreat from proof-of-work.

To casual observers, this looks like a surrender.

Proof that Bitcoin was just a temporary placeholder until a “better” compute workload arrived.

However, if you look through the lens of power infrastructure and thermodynamics, that story gets the reality completely backwards. The migration isn’t a sign of bitcoin weakness; but a long-overdue, structurally bullish rebalancing of global energy pricing.

Here is the underlying reality that the market completely misunderstood.

AI vs. Bitcoin: Why Big Tech and Bitcoin Rigs Need Totally Different Data Centers

The misconception stems from assuming all digital workloads are created equal. In reality, Artificial Intelligence and Bitcoin Mining require completely opposite physical and digital environments:

An AI training cluster is fragile. If a 100-megawatt facility drops power mid-run, millions of dollars of training state are destroyed. It demands high-grade baseload power, ultra-low latency fiber, and 99.999% continuous uptime.

Bitcoin mining, by contrast, is completely indifferent to latency, location, or uptime. ASICs can operate in a remote desert, next to a stranded hydro dam, or on an off-grid flare gas pad. If grid power prices spike, a miner can shut down in seconds without losing data or damaging its hardware.

The Power Grid Eviction: How AI Is Pushing Bitcoin to Stranded Off-Grid Energy

For the past decade, Bitcoin miners operated on major electrical grids simply because that was where power substations already existed. But using prime, grid-connected baseload electricity to run an interruptible, location-agnostic program was always an economic inefficiency.

Now, AI hyperscalers are running into a massive bottleneck: getting new 100+ megawatt grid interconnections approved by utilities can take 3 to 5 years.

Hyperscalers are buying up every megawatt of prime, grid-tied power real estate they can find. In doing so, AI is pricing Bitcoin off the main electrical grid.

Far from destroying Bitcoin, this eviction restores it to its ideal thermodynamic role. Pushed off the grid, miners are forced to seek out energy that no one else can use: stranded wind in West Texas, flared natural gas in remote oil fields, or off-peak hydro in mountain ranges.

AI takes the expensive grid power; Bitcoin captures the world’s wasted energy at the edge, and acts as the buyer of last resort for stranded, wasted, or curtailed energy sources.

Eliminating the Miner Sell Pressure

The primary structural weakness of pure-play Bitcoin mining companies has always been balance sheet volatility during bear markets. When hash price drops, debt-heavy miners are forced to dump their mined Bitcoin reserves onto the open market just to pay electricity bills and corporate overhead. This forced liquidating creates artificial downward pressure on Bitcoin’s price.

The AI pivot fundamentally fixes this balance sheet flaw:

1. Fixed USD Cash Flow: Multi-year hosting leases signed with AI companies generate steady, high-margin dollar income.

2. Eliminating Forced Sales: With corporate overhead and debt service fully covered by AI lease revenue, operators no longer need to liquidate their Bitcoin treasury at market bottoms.

3. The “Mullet” Data Center: Forward-thinking operators run a hybrid model, using high-margin AI workloads on grid-tied power to pay fixed bills, while maintaining flexible Bitcoin operations to monetize off-peak power and balance local grid loads.

The Big Tech Paradox: Why AI Hyperscalers Will Eventually Hold Bitcoin

The final piece of this puzzle is a paradox that tech hyperscalers are only beginning to confront.

Big Tech is spending hundreds of billions of dollars to build an AI infrastructure that makes intelligence and digital content infinitely abundant. But when a digital good becomes infinitely abundant, its marginal cost trends toward zero.

How do you protect a multi-trillion-dollar tech balance sheet when your primary product, digital output, is unconstrained?

While AI makes digital intelligence infinite, Bitcoin imposes absolute, unalterable digital scarcity (capped strictly at 21 million units). Furthermore, Bitcoin is the only monetary asset whose issuance is directly bound to the same thermodynamic laws of work and energy that run data centers.

Consider the staggering opportunity cost already compounding on hyperscaler balance sheets. Data from Bitcoin for Corporations reveals that if Amazon (AMZN) had allocated its $123.03B cash reserve to Bitcoin over a 3-year period instead of cash and short-term Treasuries, its treasury productivity would have surged from 12.21% to 119.55%—a 10x increase in capital efficiency representing over $132 billion in unrealized gains.

(Try the Bitcoin Treasury Simulator with any stock ticker)

Just as a tech company signs a long-term Power Purchase Agreement (PPA) to lock in electricity costs, holding Bitcoin operates as a PPA for monetary value. By sitting on massive cash stockpiles that yield nominal paper returns while spending billions fighting for physical energy, Big Tech leaves hundreds of billions in value on the table.

The shift taking place across data centers isn’t a trade-off where one technology wins and the other loses. It is a market optimization.

AI gets the high-speed, grid-connected real estate it needs to build synthetic intelligence. Bitcoin gets pushed further into the wilderness to capture cheap, wasted energy, backed by miners who no longer have to sell their coins to keep the lights on. And as the opportunity cost of holding depreciating fiat cash becomes too massive to ignore, hyperscalers will realize that securing the power grid is only half the battle: the ultimate reserve asset for an empire of infinite compute is physical digital scarcity.

Tyler Durden Wed, 08/12/2026 - 15:00

Global Oil Deficit To Hit 1.8 Million Bpd This Quarter, IEA Forecasts

The IEA slashed its 2026 global oil supply forecast, with output now expected to plunge 4.3 million barrels per day this year as the failure to reopen the Strait of Hormuz pushes the market deeper into deficit, OilPrice reported.

The latest forecast is considerably worse than the 3.7-million-bpd decline the agency projected just last month and would leave global supply at 102.02 million bpd, its lowest forecast for 2026 yet.

Supply is now expected to fall 1.27 million bpd short of demand for the year, compared with an 860,000-bpd deficit implied by the IEA’s July forecasts.

The squeeze will be even more severe this quarter. The IEA now expects a 1.8-million-bpd deficit between July and September, a 1-million-bpd downward revision from July and the deepest quarterly oil deficit since the fourth quarter of 2021.

According to the IEA, Middle East oil flows briefly returned to pre-war levels in early July, with loadings reaching 20 million bpd, before falling to 12 million bpd later in the month. Middle East production remained 8.3 million bpd below pre-war levels in July.

The IEA cited the Hormuz shutdown, the U.S. blockade of Iranian exports, attacks in the Bab el-Mandeb Strait and reduced Kazakh CPC Blend exports among the forces keeping global supply below demand.

The supply shock is also destroying demand, with the IEA now expecting global oil consumption to contract by 1.6 million bpd this year, compared with a roughly 1-million-bpd decline forecast in July, as high prices and restricted supplies of refined fuels force consumers to cut consumption, particularly in Asia and the Middle East.

Refining is also becoming a major constraint, with global crude processing falling 5 million bpd year-over-year in July, while Russian refinery runs remained near a 20-year low of 3.9 million bpd following Ukrainian drone attacks. Russian fuel exports plunged to 1.4 million bpd, nearly half their July 2025 level.

The prolonged shortage is eating away at inventories. The IEA estimates global stocks have fallen by 410 million barrels since the Iran war began, while observed inventories dropped below 7.9 billion barrels in July for the first time since April 2025.

The agency forecasts supply could exceed demand by 4.61 million bpd in 2027, but that outlook assumes Middle East hostilities de-escalate and disrupted oil flows recover.

The latest IEA assessment adds to evidence challenging U.S. claims that Middle East oil flows have returned to normal. Energy Secretary Chris Wright said Tuesday that total regional oil flows were averaging about 15 million bpd and exceeded pre-war levels on Sunday. Kpler said its vessel-tracking data could not be reconciled with those figures, while the EIA said Hormuz transits remain severely constrained.

Tyler Durden Wed, 08/12/2026 - 14:40

Nature Is Healing: Most S&P100 Companies Dump DEI Criteria From Board Selection

To be clear, Diversity, Equity, and Inclusion (DEI) initiatives drew heavily on radical Marxist theory and systematically displaced merit-based standards with unproductive, identity-driven politics. What corporate America marketed as a governance priority proved to be a short-lived ideological fad. Most S&P 100 companies are now dumping explicit diversity criteria from their board-selection policies amid growing recognition that mandates conceived in far-left academic institutions prioritized social engineering over productivity, competitiveness, and preserving America's economic dominance.

Bloomberg News cited a new report from research firm ESGAUGE that showed that 61 S&P 100 companies have removed explicit diversity requirements from their director-selection policies, marking a sharp reversal from three years ago.

This means these companies have removed explicit references to gender, race, ethnicity, and underrepresented groups from their board-selection criteria. Apple, Alphabet, Amazon, Starbucks, and Wells Fargo are among those that eliminated the woke provisions.

The reversal suggests that DEI's cancer-like spread across corporate America during the Marxist riots of 2020 was less a durable governance reform and more an act of corporate self-sabotage.

The retreat signals growing recognition that policies rooted in radical Marxist ideology weakened merit-based decision-making and proved more destructive to corporate cohesion, productivity, and competitiveness.

Beyond corporate America, the Trump administration has stripped toxic DEI programs from federal agencies, the military, universities, and government contractors.

The very people who pushed this radical Marxism in corporate America are much of the same activists aligned with the Democratic Socialists of America who quite literally say they want to "destroy the nation from within."

The United States has successfully confronted Marxist attempts to derail it from its historic path of economic success, liberty, and order. Right now marks yet another point in history when the far left is attempting to systemically dismantle the nation. It is not just us saying this...

...DSA leaders say it in their own words.

And even in their own agenda, in which they want to seize power of the largest corporations. 

Should make sense now. 

Tyler Durden Wed, 08/12/2026 - 14:00

Trump Admin Ends Medicaid Funding For Sex-Change Procedures On Kids

Via American Greatness,

The Trump administration announced Tuesday that Medicaid and the Children’s Health Insurance Program will no longer pay for sex-change procedures for minors, ending the use of federal taxpayer dollars for treatments officials say carry potentially irreversible health risks without sufficient evidence of clinical benefit.

The Centers for Medicare & Medicaid Services said the new rule applies to puberty blockers, cross-sex hormones and sex-change surgeries for children. Mental health treatment for gender dysphoria and other conditions will remain eligible for coverage under Medicaid and CHIP.

CMS Administrator Dr. Mehmet Oz said the policy reflects the administration’s effort to protect children from medical interventions whose long-term effects remain uncertain.

“Children deserve our protection, not experimental interventions that pose serious risks and convey no proven benefits,” Oz said.

“By cutting off federal funds for these sex-rejecting procedures, we’re following the science, saving taxpayer dollars, and, most importantly, protecting children from potentially irreversible harm so they can truly flourish.”

The decision marks a significant reversal of federal policy on transgender medical procedures for minors and follows years of conservative opposition to using taxpayer money to finance medical transitions for children.

The Department of Health and Human Services said the affected procedures can cause lasting consequences, including infertility, impaired sexual function, reduced bone density and other physiological effects.

HHS Secretary Robert F. Kennedy Jr. said the administration’s decision followed a review of domestic and international research into medical interventions for minors experiencing gender dysphoria.

“Today, we are ending federal taxpayer funding for sex-rejecting procedures on children,” Kennedy said.

“These interventions carry serious risks and can cause irreversible harm.”

The administration said its review found substantial gaps in the evidence supporting the treatments, along with safety concerns that officials concluded did not justify continued taxpayer funding.

CMS cited the United Kingdom’s Cass Review as part of the evidence underlying its decision. The independent review, led by Dr. Hilary Cass and published in 2024, found limited evidence concerning the use of puberty blockers and cross-sex hormones for minors and concluded that medical practices had developed faster than the supporting evidence base.

“The Trump Administration is drawing a clear line: America’s children will not be subjected to life-altering interventions on the taxpayer’s dime without reliable evidence of safety and clinical benefit,” HHS Press Secretary Emily Hilliard said.

The funding restrictions will not take effect immediately for children already receiving hormone treatments. CMS will provide a six-month transition period after the rule takes effect, allowing Medicaid and CHIP funding for existing hormone treatments to be gradually phased out.

The policy represents the administration’s latest effort to restrict federal support for medical gender transitions involving minors while preserving coverage for mental health care.

Tyler Durden Wed, 08/12/2026 - 13:40

Tailing 10Y Auction Prices At Highest Yield Since 2007

When discussing yesterday's stellar 3Y auction, we said that the impressive demand for 3 year paper indicated that nobody was worried about today's CPI print... and as we learned this morning, that was justified, since the CPI came in right as expected. And since inflation is tame, and the labor market is not overheating, virtually nobody were worried that today's 10Y auction would have any issues finding new holders. Well, they were right: moments ago the US sold $42 billion in 10Y coupons, the week's second refunding auction. It priced at a high yield of 4.683%, up from 4.586% a month ago, and just wide of the 4.682% When Issued, translating to the first tail since May. Perhaps more notably, today's 10Y auction priced at the highest yield since 2007.

The bid to cover was virtually unchanged from last month, and in line with where it has been for much of the past decade: plus or minus 25bps of 2.50%. Sure enough, at 2.532, the bid to cover was a bit lower than the 2.592 a month ago, but above the six auction average of 2.47.

Internals were also solid, if hardly great, with Indirects awarded 76.73%, down from 81.49% in July - one of the highest ever - but above the recent average of 71.33, as foreign buyers once again park their excess cash in the US. And with Directs awarded 14.67%, up from 10.73% in July and the highest since May, Dealers were left holding 8.6%, one of the lowest on record.

Overall, this was a solid auction, and following yesterday's impressive 3Y, we expect tomorrow's 30Y sale to have no problems finding buyers.

Tyler Durden Wed, 08/12/2026 - 13:26

US Now Expects Iran War Oil Supply Disruptions To Last Through End Of 2027

At first, the Hormuz lockdown was supposed to last a few weeks, tops. Not any more: the US now expects oil supply disruptions stemming from the US-Iran war to reach about 600,000 barrels per day through the end of next year as the conflict continues to crimp shipments via the critical Strait of Hormuz.

Oil transported through the waterway averaged 4.9 million barrels per day in the second quarter of this year, according to estimates from the US Energy Information Administration’s Short-Term Energy Outlook. That compares to an average of 21.6 million in the last quarter of 2025, before the US and Israel launched attacks on Iran.

The figures indicate that a brief intermission in fighting, when a so-called memorandum of understanding was signed, did little to blunt the impact of one of the worst disruptions to global energy markets in history. A deal between Iran and Oman to reopen the strait remains elusive, though officials indicate talks are progressing.

"The ongoing closure of the Strait of Hormuz and elevated fuel prices continue to weigh on oil consumption," the Paris-based IEA said.

As the conflict extends into a sixth month, consumers around the world are once again facing the prospect of higher fuel prices and inflation. The EIA hiked gasoline and diesel price forecasts for 2026 by 3.7% and 5.4% respectively and increased its 2027 forecast for retail gasoline prices by 6.5% from its estimates a month earlier.

The volume of oil moving through the Strait of Hormuz remains difficult to pin down in real time, as vessels going dark obscure shipping activity, leading to discrepancies in estimates among market participants. About 9 million barrels of oil a day exited the strait on average over the past week, according to Energy Secretary Chris Wright, however independent tanker tracking services put the number far lower. 

The agency also estimates that Middle East production shut-ins eased to average about 5.5 million barrels a day in July, compared to 7.5 million barrels a day in June. The volume of oil shut in is expected to swell again to 6.6 million barrels a day in the third quarter.

Multiple Middle Eastern countries have been forced to curtail output as limited access to global markets strains available storage capacity.

The report assumes that recent threats to vessels carrying Saudi Arabian crude through the Bab el-Mandeb Strait have not resulted in additional production shut-ins. If that assumption holds, the agency expects most production and trade flows to take until early 2027 to return to pre-war levels.
 

Tyler Durden Wed, 08/12/2026 - 13:20

Venezuela & Israel Restore Consular Ties After 17 Years Of No Diplomatic Relations

Venezuela and Israel have agreed to restore consular relations, in a major historic shift, following the US orchestrated overthrow of longtime leader Nicolas Maduro back in January.

Interim President Delcy Rodriguez, who was Maduro's VP, is at the head of a state system that is still fundamentally the same - which can be summed up as Chavismo Socialism - except the government now serves to do Washington's bidding from opening up oil access to foreign policy realignment. 

via Reuters

This external realignment has been seen most on the world stage on issues where Caracas was once among the most outspoken Global South countries condemning 'Western hegemony'.

Venezuela’s minister of foreign relations, Felix Plasencia Gonzalez, announced on X on Tuesday: "The Governments of the Bolivarian Republic of Venezuela and the State of Israel report that they have agreed to continue bilateral technical cooperation derived from the emergency and recovery efforts following the double earthquake, as well as to establish a coordination mechanism for the provision of consular services to their respective citizens residing in both countries."

Caracas had severed ties 17 years ago in light of Israeli bombardment of Gaza at the time. Venezuela had also very openly aligned itself with America's longtime foe Iran, in addition to Russia and China. 

The former Maduro government had even pursued military cooperation with these countries, and hosted some of their military deployments over the years.

For its part, the Israeli government announced on X on its Spanish-language account that "both governments recognize the importance of the bond between the State of Israel and the Jewish community residing in Venezuela, which constitutes an important historical bridge of friendship between the two countries."

And a group called the Confederation of Jewish Associations of Venezuela announced that "After 17 years without consular relations, Venezuela and Israel are advancing in a confidence-building process that began with the various Israeli and Jewish organizations that came to Venezuela on the occasion of the double earthquake that struck the country on June 24, and which on that occasion provided great technical and humanitarian aid in the face of the tragedy and devastation."

Consulates are expected to open up in each country, to facilitate travel and help deepen relations to between the countries, now that relations are moving toward normalization again.

Venezuela and Israel have agreed to start offering consular services for each other's citizens.

There is still no talk of sending diplomats or opening permanent missions, however. pic.twitter.com/zuOQS5UEz5

— Elias Ferrer (@FerrerBreda) August 11, 2026

Since the Spring, American consular activity has been up and running, along with presumably the Caracas CIA station, also as even the Pentagon has held military drills in and around the Venezuelan capital.

Tyler Durden Wed, 08/12/2026 - 12:40

Ceuta Migrants Reach Mainland Spain Despite Government Denials; Report

Via American Greatness,

Dozens of migrants who entered the Spanish territory of Ceuta during last month’s massive border surge have reportedly reached mainland Spain, contradicting the socialist government’s insistence that none had left the North African enclave.

Sky News reported Tuesday, citing Spanish police sources, that about 75 migrants who entered Ceuta in late July had reached Andalucía in southern Spain.

“Spanish sources in Andalucía said that around 75 migrants out of the estimated 72,000 who entered Ceuta illegally in a mass rush to the border at the end of July had reached the mainland,” Sky News reported.

The report directly conflicts with assurances from the government of socialist Prime Minister Pedro Sánchez.

“Nobody has left the city towards the peninsula, nor can they do so,” Foreign Minister José Manuel Albares said Tuesday during a visit to Ceuta.

Tens of thousands of mostly male North African migrants entered Ceuta on July 30, overwhelming the territory’s law enforcement, migrant processing facilities and other public services. Estimates have placed the number of arrivals between 60,000 and 80,000, approaching Ceuta’s normal population of about 80,000.

The surge followed a Spanish judicial ruling preventing authorities from immediately returning migrants who reach Spanish territory by land and requiring a longer legal process before removal.

Ceuta President and Mayor Juan Jesús Vivas has sharply criticized Madrid’s response and disputed the government’s portrayal of the crisis as under control.

“Ceuta has suffered and continues to suffer an invasion,” Vivas said Tuesday.

“We calculate that 10,000 immigrants are still in Ceuta and this creates an unsustainable situation.”

“The reaction of the government has not been on par with the demands of what occurred,” he added.

“A violation of the territorial integrity of Spain has occurred.”

The numbers provided by Madrid and local officials have also raised questions about the whereabouts of thousands of migrants. El País reported that the Sánchez government says 70,000 people entered Ceuta and 7,000 have been deported. El Mundo reported Monday that local officials estimate about 11,000 remain in Ceuta out of roughly 80,000 who entered.

Police sources told Sky News the crossings to mainland Spain represented a “worrying reactivation” of the migration route across the Strait of Gibraltar.

Albares nevertheless maintained Tuesday that the government would ultimately remove those who entered illegally.

“Up to the last person who entered irregularly into Spain will return to Morocco,” he said.

El País noted that Albares did not provide a specific timetable or mechanism for carrying out those removals.

The reports that migrants have reached mainland Spain add to mounting questions over Madrid’s handling of the crisis and whether the Sánchez government has accurately accounted for those who entered Ceuta.

Tyler Durden Wed, 08/12/2026 - 12:20

Putin Threatens Seizures Of European Ships Over EU's "Piracy & Banditry"

Russian President Vladimir Putin on Wednesday addressed the persisting issue of European governments and navies seizing what they deem Russian 'shadow fleet' vessels off Europe's coast.

The past year alone has seen several examples, sometimes involving French or Swedish commandos descending onto a tanker's deck from helicopters and arresting crew members. The seized vessels are then taken to nearby European ports.

The latest European Union sanctions package passed last month stipulates that EU members can sell the oil or any seized cargo obtained from these 'shadow fleet' vessels.

Putin has reiterated Kremlin outrage at this scheme, condemning it as "piracy and banditry". This after Sweden has lately declared its intent to hand seized Russian grain over to Ukraine.

Pool Sputnik Kremlin via AP

The Russian leader's patience has reached its limit, apparently, as he is now putting European governments that their own ships become at risk of seizure in return.

"We will be forced to respond in kind," Putin said while overseeing naval drills in Russia's Far East, aboard the Russian cruiser Varyag off the island of Sakhalin.

Russian forces will act "wherever we ourselves deem necessary and appropriate — anywhere," he added.

According to some of his fuller remarks as translated and presented in Reuters:

"We can see that the authorities of certain countries, in violation of international maritime law, are attempting to restrict the movement of our economic operators’ vessels..., and ​have recently gone so far as to consider the possibility of seizing our vessels and selling off ⁠the ⁠property they have plundered from ⁠us," said Putin.

"Naturally, ​this is nothing less than piracy and robbery. And if this begins to be put into ​practice, we shall be forced ⁠to respond in kind. And not necessarily in those waters where raids on our ships and vessels are planned, but wherever we ourselves deem it necessary and appropriate."

So while Russia would not likely act in European waters, such a scenario would be more likely to go down in places like the Black Sea or Baltic region, or perhaps the faraway Indian Ocean.

Russian President Vladimir Putin threatens to seize ships belonging to European countries in retaliation for plans to intercept and seize Russian vessels suspected of being part of Moscow’s “shadow fleet.” pic.twitter.com/k6Dig6bvni

— Al Arabiya English (@AlArabiya_Eng) August 12, 2026

Putin also took the opportunity to address broader tensions with NATO and spillover from the Ukraine conflict, but also as it specifically impacts the Pacific and Arctic regions...

"We can see that, unfortunately, the potential for conflict is growing here; NATO is making inroads here; new military-political blocs are being formed; and new weapons systems are being deployed here, or are planned for deployment, which ​also pose a threat to our country," the president said.

Tyler Durden Wed, 08/12/2026 - 12:00

Trump Mulls Capital Gains Relief As Midterm Sweetener

President Donald Trump is looking for new policy pledges to put before voters ahead of November, and two of them involve cutting capital gains taxes, according to National Economic Council Director Kevin Hassett and former NEC chief Larry Kudlow, who discussed the proposals on Fox Business Tuesday.

Kudlow, who ran the council during Trump's first term and remains close to the president, said he had raised two ideas with Trump directly. The first is indexing capital gains to inflation, so investors would be taxed only on real gains rather than on the portion of an increase that simply reflects the dollar losing value. The second is exempting home sales of $2 million or less from capital gains taxes entirely.

"I spoke to him, he liked the idea of the indexing, he liked the idea of a bigger exemption," Kudlow said, adding that "the boss is very interested."

Hassett confirmed the broader effort and was unusually direct about the political strategy behind it. "He wants to hit people with the things that are promises that we're going to do if the Republicans have power in the future," he said. "So you can expect a lot more policy between now and the midterms."

The catch

Neither idea can happen without Congress, which means neither is likely to take effect before November. These are campaign commitments contingent on Republicans retaining power, a point Hassett effectively made explicit.

There is a potential workaround, and it has been tried before. Trump's first administration considered indexing capital gains through executive action, without legislation, but ultimately abandoned the effort. The obstacle is that the tax code's definition of an asset's "cost" has long been interpreted to mean the nominal price paid, making any change a matter for Congress rather than Treasury. Kudlow was pushing the unilateral approach as far back as 2018. It didn't happen then, either.

The legislative route isn't dead, but it is expensive. Republican Senators Ted Cruz and Tim Scott introduced an indexing bill earlier this year that was estimated to reduce federal revenue by roughly $200 billion. Indexing has never commanded unanimous Republican support, and versions of the idea have repeatedly failed since the Reagan years. Congress passed one in 1995, only for Bill Clinton to veto it as a tax cut for the rich.

Home Sale Exemption

The home-sale exemption may have better bipartisan prospects, for a reason that goes beyond either party's talking points. The current exclusion - $250,000 for single filers and $500,000 for married couples - was set in 1997 and has never been indexed for inflation, even as the median US home price has nearly tripled. A $500,000 exemption in 1997 dollars would be worth more than $1 million today.

The National Association of Realtors estimates that roughly 34% of American homeowners - about 29 million people - could already exceed the $250,000 single-filer cap, while about 10%, or 8 million, are above the $500,000 joint threshold. The group expects both figures to rise by 2030 and has warned of a "capital gains cliff" that can discourage homeowners from selling, further constraining supply and putting upward pressure on prices.

Midterms

The party holding the White House typically loses ground in midterm elections, and this cycle is not shaping up as an obvious exception. Republicans are contending with voter dissatisfaction over the economy and the war in Iran, while a recent Reuters/Ipsos poll reportedly gave Democrats an edge when voters were asked which party they trusted more to manage the economy.

White House spokesman Kush Desai kept his distance from the specifics. Trump is "always exploring new ideas to Make America Wealthy Again," he said, "but any policy announcements will come from the Administration directly."

Which is to say: two proposed tax cuts, no clear legislative path, and eleven weeks until the election.

Tyler Durden Wed, 08/12/2026 - 11:20

Lacy Hunt Turns Bearish Bonds: Studying His Reversal

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Economist Lacy Hunt has been a bond bull longer than most money managers have been in the business.

Recently, he made a surprising U-turn on his bullish stance. The following paragraph opens his Second Quarter Review and Outlook.

The structural backdrop for U.S. inflation increasingly suggests that the long-run equilibrium range is migrating from roughly1.5–3.5% toward 3.5–4.5%, with a significant risk of episodes of inflation above 5%. An important core reason is the steady erosion of the disinflationary architecture that dominated the 1990–2020 period, even as various cyclical pressures also play a role.

For nearly four decades, Lacy Hunt has been pounding the table for lower yields. As chief economist of Hoisington Investment Management, Hunt bought long-term bonds, betting that globalization and excessive debt impede economic growth, keeping a lid on inflation and interest rates. Despite the extraordinary monetary efforts to stem the 2008 financial crisis, the decade of extremely loose monetary policy following the crisis and even through the pandemic-related surge in the money supply and high inflation, Hunt held his deflationist line.

So, when Lacy Hunt and his partner Van Hoisington posted their Second Quarter Review and Outlook titled “Capital Scarcity and the End of Globalization’s Disinflationary Era,” heads turned. Backing their words with action, Hoisington Investment Management, managed by Hunt and Hoisington, sharply reduced their clients’ bond duration and put the proceeds in Treasury bills.

That reversal of such long-held opinions deserves serious attention. We provide a summary of their new views and some counterpoints to help you assess their new stance.

Our objective in this article is not to support Lacy Hunt or rebut his work, but to present his case and accompanying data to help you better assess his warning.

A Broken Production Function

Lacy Hunt’s basic bond bullish thesis for the last thirty-plus years rested on the core economic framework that economic output is a function of labor, capital, technology, and resources. Thus, anticipating changes to those four factors is paramount to forecasting output and inflation.

Hunt argues that the collapse of the Iron Curtain and China’s entry into global trade, along with economic globalization involving many other countries, introduced “One of the largest positive supply shocks in modern economic history.”

Hundreds of millions of low-cost workers entered the global economy, with manufacturing concentrating in the regions that could do so most cost efficiently. Simply, those countries that could produce at the cheapest costs did so to the benefit of the global economy. From the US perspective, outsourcing production resulted in cheaper goods.

Moreover, with enhanced global trade, global capital flows increased, and resources became more abundant. Further, because of the dollar’s reserve status, steadily increasing global trade boosted demand for US dollars and dollar investments like US Treasury debt.

Deflationary Debt

Hunt claims that the macroeconomic environment of the last 30 to 40 years helped explain why increasing debt levels were disinflationary. Per Hunt:

Diverted income away from consumption, restraining aggregate demand growth, while expanding global productive capacity absorbed liquidity and credit expansion without generating broad pricing pressure.

Further to his case, monetary velocity fell. Velocity calculates how often a dollar circulates through the economy. Inflation is a function of the supply of money and, often overlooked, the velocity of money. For the better part of the last 40 years, velocity declined as money was increasingly parked in financial assets rather than investments in plant and equipment or consumption. Corporate executives increasingly favored financial engineering, like stock buybacks, over capital investments. This inflated financial asset prices while doing little for the economy’s underlying productive capacity.

Hunt’s Shift

Hunt’s new stance appears to be predominantly based on three factors.

First, in his opinion, globalization is reversing. Tariffs, reshoring and friendshoring, alongside security-related trade protectionism, replace the “lowest-cost producer” model with a more expensive “secure and resilient producer” model.

Second, labor supply growth is slowing. The combination of lower birth rates, an aging population, and reduced immigration is decreasing the supply of labor, thus raising wage costs. Furthermore, with deglobalization, less outsourcing forces corporations to use more expensive labor domestically.

Third is capital scarcity. AI data centers, electrical grid modernization, and semiconductor fabs are all vying for the same scarce pool of capital, commodities, and skilled labor. At the same time, government deficits require significant capital, and it comes at a time when the national savings rate is near historic lows.  

Hunt’s Argument Versus Data

While Hunt makes a very convincing argument, we must analyze recent and historical data to see if the trends he envisions are starting to play out.

Inflation Expectations

The market isn’t buying into Hunt’s inflation forecast.  As we share below, the 5-, 10-, and 30-year breakeven inflation rates, as determined by TIPS and nominal Treasury securities, are at the same level they have been for the last four years and not that different from the post-financial crisis era. For context, Hunt is forecasting a 3.5-4.5% equilibrium range, and “episodes above 5%” which he flags as a real risk.

While expected long-term inflation hasn’t budged, long-term real yields have risen appreciably as shown below.

Given that Treasury yields are a function of expected inflation, current inflation, and the term premium, the graphs suggest that the term premium is largely to blame for higher interest rates. Investors are demanding higher yields as they are likely worried about the government’s growing borrowing needs alongside the massive capital being allocated to AI. This feeds into Hunt’s scarcity-of-capital argument, which we discuss next.

Capital Scarcity- Savings Rate

The United States appears to be entering a period in which the demand for capital is rising far faster than the domestic supply of saving.

Debt must be financed by domestic saving, foreign capital, or government intervention like quantitative easing (QE). A low domestic savings rate, shown below, means a greater reliance on the other funding sources. Hunt warns that expanding the money supply via increasing the Fed balance sheet (QE) can help the scarcity problem, but it can also drive inflation higher.

The U.S. has operated with a low net national saving rate for most of the last twenty-five years. This shortfall of an important funding source for US Treasury debt has in part been financed by foreign capital requiring dollar assets and QE at times. Despite the recent bout of higher inflation, poor bond returns, large fiscal deficits, and recent policy actions like tariffs, the international inflow of capital to the US Treasury has continued to grow, offsetting the low saving rate.

Whether we can continue to depend on foreign investors depends heavily on the dollar’s reserve-currency status, a variable Hunt’s letter doesn’t directly address.

We view the military actions in Venezuela and Iran, as well as some recent trade deals, as viable attempts to strengthen the dollar’s reserve currency status, thus bolstering foreign demand for US debt.

Furthermore, forcing crypto stablecoins to hold US Treasury securities as collateral should provide a multi-trillion-dollar source of new funding for the Treasury.

QE

Hunt mentions QE as another possible source of future deficit funding. He views this as inflationary. To wit, he provides recent evidence:

Substantial liquidity injections occurred from mid-December 2025 through June 2026. In this period, the Federal Reserve purchased approximately $290 billion of Treasury securities, igniting a surge in bank deposits and loans. ODL rose at a torrid 8.9% annualized rate in this year’s first six months—more than 1.6 times faster than its ten-year compounded growth rate… This Fed-driven liquidity event, along with the recovery in velocity, may explain a sharp February reacceleration in inflation prior to the latest geopolitical energy shock.

Hunt assumes that a recent seven-month bout of QE was inflationary. It may have been, but the graph below shows a weak but negative historical correlation between QE and inflation.

Hunt does concede that QE may not be an inflationary concern. He credits Fed Chair Kevin Warsh’s balance-sheet restraint as “an important monetary offset to fiscal expansion.”

Warsh, a Fed governor from 2006 to 2011, was arguably the Fed’s most consistent skeptic of asset purchases, and after his term ended, he became one of the most vocal outside critics. Warsh as the Fed chair, on its face, is a bet against the QE playbook Hunt says just reignited inflation. Hunt’s 3.5 – 4.5% inflation range may hold water if fiscal and market pressures overwhelm Warsh’s instincts.

Global Trade

President Trump has imposed tariffs and other protectionist measures on many imported products. He has also incentivized domestic companies to shift production back home. While the actions may appear to have an anti-globalization impact, the data so far tell a different story.

Global trade, exports plus imports relative to world GDP, climbed to an estimated 68.5% in 2025, the highest level in 46 years, per the World Bank. Moreover, despite Trump’s trade policies, 2025’s 68.5% was a big jump from 56.7% in 2024. If tariffs and reshoring were meaningfully unwinding globalization, that ratio would be flat or falling. Similarly, the US trade deficit is bouncing around the same levels as it was under President Biden and worse than any reading before 2020.

AI And Productivity

Moving on to AI and productivity, Hunt rightly blames the capital intensity of building data centers and the resulting upgrades to the electrical grid for making capital scarcer and pushing interest rates higher. However, he gives little weight to the possibility that AI-driven productivity gains show up sooner rather than later and act as a disinflationary force, much as prior technology waves eventually did.

In our opinion, it is unknown when the productivity benefits of AI, including lower inflation, will ease the capital scarcity argument. History shows that the benefits could accrue rapidly or they could take time.

Summary

None of the recent evidence we share indicates Lacy Hunt will be wrong. He is forecasting a regime change to the macroeconomic environment that recent data trends haven’t picked up on. 

Hunt also acknowledges his forecast is not necessarily that of higher interest rates. He writes:   

The result is not a simple forecast of continuously rising interest rates, but rather a more volatile interest-rate regime.

He notes that a recession, a favorable supply shock, or successful balance-sheet restraint under Chairman Warsh could still deliver lower inflation and falling rates. His Treasury Bill purchases appear to be not just a bet on higher inflation and a sustained high term premium, but equally a desire to avoid volatility in the long end of the curve.

While we have the utmost respect for Lacy Hunt, we must remember that he is making a forecast, an educated guess. His warnings may prove correct. But he is forecasting a big change in the way the global economy operates and its impact on capital flows. Further, he is making assumptions about one of the greatest technological innovations that is just in its infancy.

Might the Covid echo be coming to an end and the historical disinflationary trends of the last forty years be reasserting themselves, or are we in the early innings of the macroeconomic regime change Hunt is calling for?

Tyler Durden Wed, 08/12/2026 - 11:00

WTI Dips After Massive Crude Inventory Build, Big SPR Drain, Surge In Imports

Oil prices are marginally lower this morning as OPEC again cut its forecast for global oil-demand growth for this year, but stalled talks to reopen the critical Strait of Hormuz waterway and risks in the Red Sea prolong disruptions to global supplies.

Physical disruptions are spreading beyond Hormuz. Refinery attacks and fires have hit Russia and Libya, while the Houthis claimed another attack on Saudi Aramco’s Jazan complex. The Red Sea has become a key alternative export route for the Kingdom, and Houthi attacks are putting that release valve under pressure.

Overnight saw API report a huge crude inventory build and 

API

• Crude +9.1mm

• Cushing +1.6mm

• Gasoline -1.5mm

• Distillates -600k

DOE

• Crude +17.4mm (-1.4mm exp) - biggest build since Jan 2023

• Cushing +1.61mm

• Gasoline -968k

• Distillates -10k

After API's reported large build, the official data showed an almost unprecedented 17.4mm barrel build in crude stocks (the biggest since Jan 2023), Cushing saw another build while products saw draws for the second week in a row...

The massive oil stock build was driven by imports which rose to the highest level since November 2024. The US imported over a million barrels a day of oil last week, in part driven by a rise in Venezuelan imports and a return of Saudi Arabian oil. This is a sharp reversal from only a few months prior when oil was flowing abroad in massive quantities.

Net Imports at their highest since June 2025 (thanks in addition to a big slump in US crude exports to the lowest since Nov 2025) ...

Stocks at the critical Cushing Hub are limping off 'tank bottoms'...

As we detailed here, the Strategic Petroleum Reserve saw drawdowns re-accelerate last week (with 6.1mm barrels leaving the caves of salt), back below $300 million barrels to its lowest level since January 1983. Nevertheless, total commercial crude stocks rose 11.3mm barrels last week - the largest since February...

A total of 117 million barrels of crude has been taken out of the SPR since late March under a program to release 172 million barrels as part of a relief plan coordinated by the IEA aimed at lowering energy costs.

US Crude production also limped higher near record highs as the rig count continues to rise...

The oil stock build comes even as refiner runs rose and are sitting at the highest seasonal level since 2019. Fuel makers have signaled they intend to run harder-than-usual through the third quarter, a time when plants typically go down for maintenance.

WTI dipped back below $83 after the official data, holding gains from Friday's close around $77...

Interestingly, Bloomberg points out that US gasoline demand continued to remain resilient in the face of elevated gasoline prices. US retail gasoline prices are averaging over $4 per gallon, almost $1 per gallon (29%) higher than last year’s level at this time, according to data from the American Automobile Association. However, this week’s gasoline demand is only 36,000 barrels per day -- 0.4% lower compared to last year. 

Finally, as we noted yesterday, quoting Bloomberg macro strategist, Michael Ball, market structure reflects that stress better than outright prices. Brent and WTI curves remain backwardated and refining cracks are elevated, signaling near-term scarcity. Options are less aggressively bullish, with 25-delta call skews in both benchmarks dropping to their least bullish levels since July 10.

That points to a market vulnerable to spot disruptions while increasingly pricing a path toward de-escalation.

Tyler Durden Wed, 08/12/2026 - 10:39

Speaking Loudly And Leaning On A Big Schtick

By Michael Every of Rabobank

Yesterday saw the regular schtick where the Middle East situation remains worrying, but markets reacted to more positive narratives. After four crew and two rescuers were killed in a Houthi Red Sea attack on a ship and the US struck another in the Gulf of Oman’ trying to break its Iran blockade; Iran said Hormuz will stay closed unless the US meets its over-reach conditions; Trump doubled down on economic warfare vs Tehran because he thinks it’s “bleeding badly” -with the other option still being to “hit them really hard”; yet the Wall Street Journal reported ‘Iran Is Defying US Pressure by Becoming a ‘Survival Economy’; Pakistan claimed a US-Iran deal is close, and US Energy Secretary Wright said far more oil is flowing through Hormuz than others estimate, suggesting the US doesn’t really need to act.

This routine will likely continue through to the US midterms – and then we will see what happens. The old presidential adage is that one should speak softly and carry a big stick. Speaking loudly and leaning on a big schtick is not going to work for ever. On which, recent reports that the US is ‘out of munitions' are true for precision varieties, not more traditional types that need to be used in greater proximity. If the US isn’t ultimately prepared to take those kinds of risks in a war against Iran, it will carry a geopolitical message that will not speak softly at all.

What the US (and allies) are running low on is Patriot missile defences. Yet just after the Pentagon gave US military industries 21 days to submit plans for “significantly faster” weapons production, Boeing has unveiled a cheap radar seeker built from off-the-shelf parts. They say necessity is the mother of invention; just not of higher margins, perhaps. (Then again, as I have repeatedly stressed, wars are won with bullets, not profits.) Yet much broader structural shifts in economics, not just economies, is evident on the ground and the Establishment intellectual level.

The pro-free trade Economist argues China’s neo-mercantilist, Leninist trade model is so effective that no form of western capitalism can withstand it. Stop looking at your screen for a moment and contemplate what that implies both right now and going forwards.

The sine qua non free trade academic Paul Krugman just admitted two hundred years of positive-sum free-trade thinking has been a ”sunny view… based on the assumption that we care about economic prosperity, not national power” – which is not true. War is raging and economies, currencies, and commodities have been weaponised. He admits we now need to look at ‘geoeconomics’ instead, which is the history of zero-sum economic statecraft and neo-mercantilism.

Foreign Affairs (‘The Right Way to Balance Trade: What Comes After the Neoliberal Order’) attacks Trump’s tariffs but argues for a West+ bloc common tariff against China and any trans-shipment, with low intra-bloc trade restrictions for those who also don’t run large trade surpluses, and industrial policies. Regular readers might recall this is what we have previously argued was the logical US grand macro strategy – and that attacks on Canada and Europe, etc., could be attempts to force them into accepting the common external tariff over the heads of vested interests vociferously against them. (If so, would a carrot not be better than a stick? Perhaps: but this wasn’t a normative call, just a descriptive one.)

Some also point out that even as Europe warms up for a potential trade war with China, it does not grasp the scale of the change in the world economy is lives in.

In particular, the Chinese industries the EU will likely take aim at are now mature, so require few direct subsidies that the EU will be looking for; the Leninist Chinese model helps supersize future industries so they can then stand on their own two feet. What policy framework, and working with whom, will Europe ultimately put in place within a ‘rules-based approach’ to try to retain its mature industries and to ensure that it develops new ones? (The same question also applies to the US, of course.)

As a signal, Vietnam -- a GDP growth star via a low valued-added, FDI-based, export-driven economic model-- is pivoting: it now wants to grow its own Korean-style ‘chaebol' conglomerates to boost productivity and growth longer term on its terms. Is it wrong to do so when it could instead be focusing on quarterly earnings reports and outsourcing everything that it can?

Football provides an analogy to what the above may mean for us all in time: the world’s Beautiful Game --which recall isn’t actually big in India, China, or the US, the three most populous and first-, second-, and fifth-largest economies-- might split.

Trump backs FIFA President Infantino, under furious attack over a World Cup sale plan dreamed up during a hydration break. UEFA, with some other federations, are developing a new rival framework for running world game. Might we end up with World Cups with different rules, sponsors, and participants?

If so, note what was a medieval mob game took a long time to grow into the rules-based one played first by English gents before then becoming a globalized money-making behemoth; and that there were early splits between those who wanted to play only with feet and those who wanted to also handle the ball – which ultimately became other sports.

In short, the West needs to relearn the Beautiful Great Game. But are its universities teaching geoeconomics or neo-mercantilism to allow the next generation of leaders to think up, and the bureaucrats to implement, such policies? Are its economists really capable of adapting to that reality rather than giving the same old advice under a new label? Are its analysts capable of projecting the dots of what it all implies?

Notably, the ECB’s annual conference in September will be held under the title ‘Geoeconomics and the International Trading System’, but the participants are still economists rather than the likes of Edward Luttwak, who coined the phrase geoeconomics in 1990 to describe how the "logic of conflict" merges with the "grammar of commerce.”

Today, of course, we can put that all aside to focus on US CPI, as if it isn’t intimately tied up with the above backdrop. Here is an ugly game all of its own – and one where the ‘rules’ change all the time.

Tyler Durden Wed, 08/12/2026 - 10:20

First Morgan Stanley, Now BofA To "Mobilize And Deploy" $250 Billion Into America's Infrastructure Supercycle

Bank of America unveiled a massive 18-month initiative to mobilize and deploy $250 billion across critical US infrastructure, targeting the computing, energy, and industrial systems needed to support artificial intelligence and accelerate the transition toward physical AI.

The announcement comes just days after Morgan Stanley launched its US Innovation Infrastructure Initiative, which aims to facilitate $1.5 trillion in capital raising and financing over the next decade. The back-to-back commitments signal that Wall Street is positioning for a multiyear capital-spending supercycle spanning data centers, power generation, grid modernization, semiconductors, advanced manufacturing and robotics.

*MORGAN STANLEY TO FACILITATE UP TO $1.5T OVER 10 YRS

this explains why they went so bullish on credit in the past 3 months https://t.co/nnhdOyD5x5

— zerohedge (@zerohedge) August 10, 2026

"Without hard infrastructure, it's difficult to preserve our competitiveness and leadership for the next generation," Karen Fang, global head of infrastructure and sustainable finance and co-head of global capital solutions, said in an interview with Bloomberg. "Old infrastructure has to be modernized."

BofA's financing will span three broad categories:

• Digital infrastructure, including data centers, computing equipment, chips, telecommunications and semiconductors
• Energy and power, including conventional and renewable generation, storage and distribution systems
• Core infrastructure, including transportation, electricity transmission, grid modernization, water systems, critical minerals and mining

Surging demand for computing power, energy, manufacturing capacity and more resilient supply chains is driving a new investment cycle across the US. BofA said the initiative could support tens of thousands of jobs in construction, manufacturing, technology and long-term operations.

Morgan Stanley mapped out the AI infrastructure supply chain:

Nancy Lazar, Piper Sandler's chief global economist and head of the firm's economics research team, recently outlined how data center construction, reshoring, infrastructure upgrading and the reenergizing of America's industrial base are creating an all-American blue-collar comeback as goods-producing jobs begin to reverse their multidecade downturn and shift higher.

Lazar noted:

Bullish on Goods-Producing Jobs vs. Hotel & Restaurant Jobs.

When China joined the WTO in 2001, U.S. goods-producing jobs began a decade of decline, while leisure & hospitality and education & health jobs continued to rise...

...so today, goods-producing jobs are less than half those of low-paying service jobs; their share was over 50% in the mid-1980s.

That employment mix shift gave us the bifurcated consumer, as lower-paying jobs gained share. Goods-producing jobs pay more than overall service-producing jobs, and lots more than leisure & hospitality or education & health care jobs.

Good news: That mix is now shifting the other way, as the long-running (not just tech) capex cycle raises productivity and margins, encouraging companies to add headcount.

Look at relative earnings growth by sector below.

Let's come back to our "Powering Up America" and nuclear-power investment themes (began Decemeber 2020) over the last several years. They were right on the money, and both remain intact ahead of the multiyear capital-spending supercycle that BofA and Morgan Stanley are about to unleash.

Related:

• Nvidia Confirms Record $500 Billion Off-Balance Sheet SPV Deal To Fund The World's Biggest Circle Jerk

The infrastructure required to power the AI economy, strengthen energy security, and support the AI revolution will be central to writing the next chapter ofAmerica'ss growth story into the 2030s.

Tyler Durden Wed, 08/12/2026 - 10:05

 

 

An interesting article about investors carrying too much cash was in today’s Wall Street Journal. There’s nothing in the piece that is inaccurate or misleading; it’s just a little narrow and could use better framing.1

I want to address five elements that put the issue of how much cash you should be carrying into a broader perspective:

1. House Money: Everybody wants to compare the current market boom to the late 90s – I disagree on valuations and bubbliciousness, but allow me to share my experience from the 90s; people who were not managing money then might not be aware of the history.

I have vivid mid-1990s recollections of clients calling to sell stocks. It was the 14th or 15th year of a 19-year bull market. They wanted to roll out of some highly appreciated equities into real estate – a vacation property or an upgrade to their primary residence. They willingly gave up a few years of future equity returns in exchange for an immediate improvement to their lifestyle.

A reminder for individual investors: you are not hedge fund managers competing in league tables for bragging rights; you are individuals trying to live and enjoy your life, giving your family the best opportunities and experiences you can.

Today, we are 17 years post-GFC bottom; many people are sitting on huge gains. I never have a problem when clients want to take something off the table to make a major purchase that a) they can afford and b) brings them joy.

2. Why Not Bonds? If you’re in your 20s, 30s, or 40s, you’re probably better off in an all-equity portfolio (assuming you have the self-discipline to not panic every drawdown). The anecdote the WSJ starts with is a 75-year-old retiree with 85% equity and 15% money market. It asks, “Why not own some bonds instead of the money market?”

The short answer is certainty. If you are mapping out your annual spend, you know exactly what you have and what it will be when any of those bills come due.

The longer answer is the tradeoff: Are you getting paid enough yield to compensate for any additional risk you assume? SNAXX is a favorite Money Market yielding 3.65%. (0.19% expense ratio). In an era of 3% inflation, you are only slightly ahead.

Investment-grade (IG) bond funds yield ~4.4%; go out 5–10 years and, in exchange for more duration risk, yield ~4.9%. At 10+ years, you are at ~5.4%. The longer the duration, the more sensitive bonds are to changes in interest rates. If you look at Munis, you are getting ~4% – a 6.4% taxable equivalent yield for investors who are high-income and live in a high-tax state.

The trade-off? Most of these funds experienced a lot of volatility in 2024-25. The concern is the timing of when cash is needed into a bond drawdown.2

3. Good Planning: For a 65-year-old+ investor, keeping a modest pile of cash is not the worst thing they can do. Mapping out your liabilities for the year, whether it’s quarterly tax filings, philanthropy, mortgage payments, wedding gifts, or the like, is simply a comfortable form of planning.

If knowing these cash uses are not at risk of a bond fund drawdown; if it makes it easier to budget your annual spending; if all of the above allows you to sleep well at night, then you have your answer to the MM or Bond fund question.

4. My priors: I do not believe individual investors need to wring out every last basis point of yield at the cost of their own comfort levels. Sometimes, we give up rounding errors or returns in exchange for less stress.

Everything in investing (and life) is a series of tradeoffs; we want to make the best decisions we can with limited information about an uncertain future. This includes yields, inflation, and the direction of future interest rates.

5. Embrace Joy: The time to defer gratification is when you are young, with decades of compounding ahead of you.

My favorite stories from advisors and clients are about families who are reluctant to spend because they are nervous, having lived through the Dotcom implosion, the GFC, Flash Crash, COVID, and 2022. But if the numbers say they can easily afford to take the entire extended family to visit the old country, or to buy that vacation property, or to pay for their kids’ first-home down payments or their grandkids’ college, then why the hell not?

What else is the purpose of money if not to live and be joyful in our limited time on this planet?

~~~

If you are the kind of person who wants to squeeze every last basis point of yield out of your cash, then – depending upon your income and tax situation – an intermediate IG Corp or Muni fund makes a lot of sense.

If a few thousand dollars in additional yield over the course of spending down a pile of cash each year isn’t as important as your peace of mind, if it makes you more comfortable, then perhaps a money market fund is the right answer for you. It depends on the specifics of your circumstances, preferences, and individual psychology.

Like so much in this space, there is no one-size-fits-all solution.

The key to making a good cash management decision is understanding the trade-offs and the dollars involved. An informed, thoughtful process that considers all of these factors will lead you to the best decision for you and your individual circumstances.

 

 

See also:
Wealth Management Has a $3 Trillion Problem: Investors Are Keeping Too Much Cash
By Miriam Gottfried
WSJ, Aug. 12, 2026

 

Previously:
Overvalued, Bubble, or Revolution? (July 17, 2026)

 

 

 

__________

1. The best news about this article? At least we are not talking about people sitting with 100s of 1000s of dollars in 0.25% checking accounts…

2. There may be some PTSD following the 16% drawdown in the Bloomberg US Aggregate Bond Index (AGG) in 2022.

 

The post Let’s Talk About Cash… appeared first on The Big Picture.

Turkey Thinks Israel Fabricated Trump Air Force One Assassination Plot

Authored by Dave DeCamp via AntiWar.com,

Turkish officials suspect that an Israeli intelligence report about an Iranian plot to assassinate President Trump at the NATO summit in Ankara last month was a ruse designed to derail diplomacy between the US and Iran, Middle East Eye reported on Tuesday.

The Washington Post first reported on Monday that the US thought there was a credible enough threat against Trump that he secretly swapped planes when he departed Turkey. The president flew into Ankara on a new version of Air Force One donated by Qatar, but made a public show of departing on the older Air Force One, saying he was doing so for "old time’s sake."

Trump boards Air Force One at Ankara Esenboga International Airport in Ankara, Turkey on Wednesday, July 8, 2026

According to the Post report, after boarding the older Air Force One, Trump was then moved to a third plane, an Air Force C-32A, via a catering truck.

Some White House staffers and reporters on the older Air Force One thought President Trump was also onboard as they flew to the UK, making them unwitting decoys.

Missing from the Post report was where the intelligence about a plot against Trump came from. According to Middle East Eye and also a report from The Wall Street Journal, it came from Israel, which aligns with reports from the time.

Sources told MEE that the Israeli intelligence report warned that Iranian covert forces could target Air Force One at the airport in Ankara using shoulder-fired rockets, known as MANPADS, from just one kilometer away.

MANPAD file image

Due to the alleged threat, the Secret Service moved the departure point from Ankara Airport to Esenboga Airport and wanted to switch from the new Air Force One to the old one.

"Of course, we took the report very seriously and tried to assist our American counterparts as much as possible," a source, described as a person familiar with the matter, told MEE. "Yet it was very clear to us that there was no way this report was true."

The report said Turkish officials believe that the government of Israeli Prime Minister Benjamin Netanyahu devised the plot to make it appear that Israel was protecting Trump, further derail diplomacy between the US and Iran, and also strain relations between Trump and Turkish President Recep Tayyip Erdogan, whom the US president repeatedly praised during the summit.

Israel has strongly opposed the idea of the US selling F-35 fighter jets to Turkey, something Trump has said he’s strongly considering.

US President Donald Trump says the decision to make a plane switch in Turkiye after the NATO summit was made by the Secret Service.

The Washington Post revealed Trump boarded Air Force One, but used a catering truck to move to another aircraft due to an alleged Iranian threat. pic.twitter.com/dg1jz2DdBI

— Al Jazeera English (@AJEnglish) August 12, 2026

Another source, described as an Ankara insider, told MEE that it was ironic that the Secret Service's decision to move Trump has been leaked just one month after it happened. "I guess they need heroes for an attack that never happened and, most likely, was never planned," the insider said.

Tyler Durden Wed, 08/12/2026 - 09:45

Who's Afraid Of The Big Bad Wolf?

Authored by Steve Watson via Modernity News,

Cambridge University has now decided that even Little Red Riding Hood is too dangerous for young minds.

Clare College issued an official content warning ahead of a free online humanities webinar for state sixth-form pupils, flagging "adult content including themes of violence, with reference to fairytales."

The session, part of a course designed to prepare GCSE and A-level students for university study, encouraged participants to "read beneath the surface" of bedtime stories. Official course notes still felt the need to caution: "Content warning: Please note this session will involve discussion of some adult content including themes of violence, with reference to fairytales."

Cambridge University slaps Little Red Riding Hood with trigger warning over 'themes of violence'
https://t.co/6TUushF83Y

— GB News (@GBNEWS) August 11, 2026

In Charles Perrault's original 1697 version, the wolf eats both grandmother and the girl. The later Brothers Grimm retelling keeps the violence but allows a huntsman to save them. Modern adaptations have dialled the darkness up further.

None of this is news to anyone who has ever heard the story. Yet Cambridge treated it as a potential trauma event for teenagers.

Lord Toby Young of the Free Speech Union cut through the nonsense: "Putting trigger warnings on fairytales is infantilising, even for Cambridge."

Professor Dennis Hayes, director of Academics For Academic Freedom, has long warned where this leads. "Once you get a few trigger warnings, lecturers will stop presenting anything that is controversial. Gradually, there is no critical discussion."

Commentator Adam Brooks captured the wider reaction in a short video that has been circulating widely. He called the move "ridiculous," asked what is wrong with a culture that raises perpetual victims, and accused left-wing universities of brainwashing students while staff appear "away with the fairies."

What was once a children's warning about talking to strangers has been reclassified as adult material requiring institutional protection.

The message to the next generation is clear: the world is too frightening to confront without official guidance, and the stories that once toughened character must now be handled with kid gloves.

This is just the latest chapter in a long campaign to wrap classic culture in the same cotton wool as modern culture.

For example, Disney has slapped outdated-cultural-depiction warnings on its own older films, and publishers have begun printing classic books with trigger warnings at the front.

The Wicked movie was mocked for warning audiences about discrimination against people with green skin.

One Massachusetts university even banned the phrase "trigger warning" itself because the words might be triggering.

A woke tech company tried to scrub "violent language" from everyday speech.

In a dark twist of irony, a 75th-anniversary edition of Orwell's 1984 arrived with its own trigger warnings and lectures about the book's "problematic" hero.

Shakespeare's plays have been systematically infested with the same notices.

The Royal Shakespeare Company even warned audiences that The Merry Wives of Windsor contains "body-shaming."

Universities that once prided themselves on forming adults now specialise in manufacturing fragility.

The wolf is no longer the danger. The real threat is an education system determined to keep students forever inside the cottage, doors locked, lights on, and every traditional tale carefully labelled for their own safety.

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Tyler Durden Wed, 08/12/2026 - 09:05

The post First, They Took our Wages; Now They Want Our Social Security appeared first on CEPR.

Futures Rise Led By Tech Before Key CPI Report

US: Futures are higher, led by Tech as AI infra earnings boost the theme while the Semis trade was bid overnight led by a surge in Korea's Kospi. As of 7:45am ET, S&P futures are up 0.2% ahead of today's CPI report, while Nasdaq futures gain 0.7% as investors react positively to updates from US technology firms. Semis / Memory are outpacing broader markets with Mag7 trading higher, too. Software is lower, so watch to see if the +Semi / -Software dynamic returns after a significant reversal. CoreWeave shares are up ~17% in premarket on stronger-than-expected sales growth. Super Micro Computer shares have climbed 9% after their revenue forecast topped estimates. Tech stocks also outperfomed in Asia where the Kospi climbed 3.7%. European stocks are inching higher. The market has seen muted volumes this week into today’s CPI print, with PPI and Retail Sales tomorrow, providing more details on the growth / inflation dynamic. Consensus sees Headline CPI MoM of +0.1% and Core MoM of +0.2%, which is 3.4% YoY for Headline and 2.5% YoY for Core (our preview is here). A dovish print today may remove Sept hike expectations, boosting stocks.Broader risk sentiment has improved as Brent crude futures turned negative and fell back below $89 a barrel after another well-time headline by Pakistan which said the 60-day deadline for a US-Iran MoU may be extended, but the larger peace process has stalled. Earlier, Donald Trump said the US “totally” controls the Strait of Hormuz. Treasuries extend gains ahead of the US CPI report, with US 10-year yields down 2 bps at 4.66%. European government bonds followed suit. The Bloomberg Dollar Spot Index is little changed. Precious metals are advancing, with spot silver up almost 3%. Looking at today's economic data calendar we get July CPI data at 8:30am and July federal budget balance at 2pm. Fed speaker slate is blank; Cleveland Fed’s Hammack and Richmond Fed’s Barkin have appearances slated Thursday

In premarket movers, Nvidia is the biggest gainer among Mag 7 stocks. The chipmaker’s partner Hon Hai reported a better-than-expected increase in quarterly profit, signaling robust global demand for AI hardware. (Nvidia +1.2%, Alphabet +0.8%, Meta +0.7%, Tesla +0.5%, Amazon +0.4%, Apple little changed, Microsoft -0.8%)

• Cava (CAVA) jumps 13% after the restaurant chain operator reported store comp sales for the second quarter that beat the average analyst estimate. Analysts again note positive trends for its pomegranate glazed salmon.
• CoreWeave (CRWV) rallies 18% after the cloud-computing provider reported second-quarter results that beat expectations. Analysts are positive about the company’s margins and note that AI demand remains robust.
• ERock (EROC) is up 13% after the power systems firm reported revenue for the second quarter that beat the consensus estimate, and said Anthropic has agreed to buy 470 megawatts of onsite power equipment.
• H&R Block (HRB) is up 15% after the tax preparation company gave a full-year forecast that was stronger than expected. It also reported fourth-quarter results that beat expectations.
• Hyliion Holdings (HYLN) is up 23% after the company boosted its full-year revenue forecast from $10 million to $15 million.
• Lumentum (LITE) gains 8%. Analysts are positive on the maker of optical equipment after it reported fourth-quarter results that beat expectations and gave an outlook above analyst consensus.
• Super Micro Computer Inc. (SMCI) jumps 9% after giving a revenue forecast for the current quarter that topped analysts’ estimates, a sign the booming artificial intelligence market continues to bolster sales of the company’s servers.
• US Antimony Corp. (UAMY) falls 14% after the natural resource company cut its full-year outlook for gross revenue.

Tech stocks are trading higher as CoreWeave Inc. surged 18% in premarket trading on stronger-than-expected sales, while Super Micro Computer Inc. gained 8.6% after its revenue forecast topped estimates. The latest slew of results was welcomed by investors looking for evidence AI infrastructure companies can deliver the earnings needed to propel the tech rally further.   

“The reports from CoreWeave and Super Micro are further evidence that AI infrastructure demand remains strong,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. However, he cautioned that strong earnings don’t automatically translate into higher valuations, especially given elevated financing costs.

Eslewhere, oil pared earlier gains after a Pakistan Foreign Ministry spokesperson said the deadline for a memorandum of understanding between the US and Iran can be extended. But with oil trading near $89 a barrel and no peace deal in sight, concerns remain that elevated energy prices could prompt a more hawkish response from the Federal Reserve. 

“A higher inflation reading would likely boost expectations of a hike in September and December and thereby putting pressure on equity and bond prices,” said Stephan Kemper, chief investment officer at BNP Paribas Wealth Management Germany.

Wednesday’s headline inflation gauge probably rose 0.1% in July following a 0.4% decline in the prior month (our CPI preview is here). Here is JPM's CPI Secnario Analysis for today's CPI print

• Core MoM prints above 0.30%. SPX declines 1.5% - 2.5%, odds: 5.0%
• Core MoM prints between 0.25% - 0.30%. SPX declines 50bp – 1.25%, odds; 25.0%
• Core MoM prints between 0.20% - 0.25%. SPX gains 25bp – 75bp, odds; 40.0%
• Core MoM prints between 0.15% - 0.20%. SPX gains 50bp – 1%, odds: 25.0%
• Core MoM prints below 0.15%. SPX gains 1% - 2%, odds: 5.0%

Both PIMCO’s Marc Seidner and Goldman’s Matheus Dibo say inflation will continue to moderate, allowing the Fed to hold policy steady in the foreseeable future. Dibo told Bloomberg TV he doesn’t see signs inflationary pressure is broadening, while Seidner pointed to a lack of growth in real incomes keeping prices suppressed.  

Strong earnings growth and a solid economy should help the S&P 500 withstand a modest increase in interest rates, according to RBC Capital strategists, who maintained their positive view on the benchmark over the next year.

European stocks are inching higher. Energy stocks rose with oil prices for a third day while healthcare was the worst performing sector. Here are the biggest movers Wednesday:

• Vestas shares rose as much as 19%, the steepest gain since July 2022, after the Danish turbine maker raised its guidance for this year’s adjusted Ebit margin and announced a new €400m share buyback program
• Balfour Beatty shares surged as much as 12%, hitting a new all-time high, after the engineering and construction group posted strong growth in first half revenue and adjusted pretax profit and raised its full-year guidance for profit from operations and net cash
• Kingspan shares rose as much as 8.3%, to the highest since January 2022, after announcing the acquisition of BMC Manufacturing Group for an initial consideration of €850m
• TKMS rose more than 15% after beating analyst expectations in the third quarter and lifting its guidance for the full year
• ABN Amro gained as much as 6.3%, the most since May and to a record high, after its latest quarterly earnings
• Zehnder climbed as much as 7.8%, to the highest since April 22, after Kepler Cheuvreux upgraded the stock to buy from hold
• Shurgard shares fell as much as 10%, the most since March 2020, after the self-storage company cut its FY26 guidance and said it isn’t reaffirming its medium-term outlook
• European luxury stocks dropped as Deutsche Bank lowers its price targets for heavyweights Hermes and LVMH, citing limited improvements during the second-quarter earnings season and a lack of catalysts for existing headwinds to ease
• Atalaya Mining Copper shares fell as much as 6.9% to 925.5 pence apiece on Wednesday after the offering of about 16.8 million shares by holder Trafigura prices at 915 pence per share
• Bilfinger shares fell as much as 9.3% to the lowest level in over a year after the industrial plant group posted weaker margins and orders in its second quarter results
• Raspberry Pi shares fell as much as 6.5% after being initiated at hold by Berenberg, which sees a fragmented customer base, a memory price surge and required capital spending capping upside for the stock
• TUI shares fell as much as 3.7%, the most in six weeks, after the travel and tourism group reported a miss on third-quarter Ebit as the Middle East conflict inflicted a €20 million hit to the group’s Cruise division

Asian stocks climbed, driven by gains in chipmakers, as earnings from US technology companies bolstered sentiment toward the region’s AI infrastructure firms. The MSCI Asia Pacific Index rose 0.8%, with Samsung Electronics, SK Hynix and TSMC the three biggest contributors. South Korea’s Kospi advanced for a third day, gaining 3.7%, as optimism over chipmakers’ shareholder returns and possible investment by Singapore’s Temasek added to momentum. Shares also rallied in Taiwan, Japan and mainland China. The AI trade got a boost after Super Micro Computer and CoreWeave jumped in late US trading following their earnings reports. Asia’s tech hardware stocks have recovered part of July’s big losses as investors refocus on the AI theme and overlook ongoing geopolitical uncertainty.  Equities also gained in Vietnam and Indonesia. Hong Kong’s benchmark Hang Seng Index declined 0.8% before heavyweight Tencent announced its results after the market closed. The firm’s net income of 56 billion yuan fell shy of analysts’ estimates, though revenue of 204.8 billion yuan was a slight beat. Here are the most notable movers:

• Situational Awareness bought shares in Japanese server components maker Taiyo Yuden Co. in late June and built up its stake to as much as 16.61% before cutting it back down, according to multiple filings by the artificial-intelligence hedge fund.
• South Korean chipmakers rallied as risk appetite returned after last month’s rout and traders weighed a local media report that Singapore’s Temasek Holdings Pte plans to invest in Samsung Electronics Co. and SK Hynix Inc.
• Sanrio shares dropped the most since 1985 after the Hello Kitty owner’s quarterly profit missed estimates.
• Rakuten Group Inc.’s shares sank the most in over two years after the Japanese e-commerce pioneer failed to erase persisting losses at its mobile unit.
• Chinese aluminum stocks, including Shandong Hongqiao Aluminum, advance as the metal extends rally after a key producer said it was slashing production. Tencent Music’s shares fall in Hong Kong after 2Q results.
• Tingyi shares rise as much as 5.5% in Hong Kong after the foodmaker reported first half earnings that Jefferies said beat market estimates.
• FleetPartners shares rise as much as 6.7% in Sydney to their highest since 2017, after the Australian fleet management company said it received multiple acquisition bids, including an offer raised from an earlier proposal.
• Sanrio Co. shares tumbled as much as 20%, the most in more than 12 years, after the company’s first quarter operating income missed market estimates.
• Tencent Music’s shares fall 11% in Hong Kong after 2Q results, while Citi cut the company’s target price citing challenging outlook for the second half due to decelerating growth in ad revenues and margin pressure.
• Rakuten Group’s shares plunge as much as 10%, the most since February, after the Japanese e-commerce and fintech company reported a smaller-than-expected second-quarter operating income.

In FX,the Bloomberg Dollar Index was little changed, while Treasury yields slipped 1-2bps; Swaps continued to imply 13bps of Fed rate increases at the September meeting. The yen was little changed around 159.17 per dollar. Investors are watching the currency as it approaches the key level of 160, which may trigger Japanese authorities to intervene again.  NZD/USD fell as much as 0.4% to 0.5856, leading G-10 losses against the dollar; New Zealand Prime Minister Christopher Luxon survived a leadership challenge, quelling for now a messy bout of infighting less than three months before a general election. USD/JPY dropped 0.1% to 159.16. GBP/USD rose 0.1% to 1.3520. EUR/USD steadied at 1.1538

In rates, treasuries are extending gains ahead of the US CPI report, with US 10-year yields down 2 bps at 4.66%. Yields are about 2bp-3bp lower with curve spreads little changed, off session lows reached concurrently with oil prices during European morning in response to signals about the ongoing Middle East war that has disrupted supply. European government bonds followed suit. $42b 10-year note auction at 1pm New York time has WI yield near 4.68%, which would match highest level in recent years Tuesday’s 3-year note auction stopped through by less than 1bp and has richened about 2bp from its 4.291% result; this week’s cycle concludes Thursday with $25 billion 30-year new issue. Ahead of July CPI data, Fed-dated OIS swap rates price in about 50% of a quarter-point rate hike at the September policy meeting, fully price in a move by year-end and mostly price in a second hike by mid-2027. IG credit new-issue calendar is bare so far and expected to remain muted by the risk CPI data move the market; 29 offerings priced over the past two days made for the market’s most active period since January. Focal points of US session include July CPI report and 10-year note new-issue auction. 

In commodities, Brent crude futures turned negative and fell back below $89 a barrel after Pakistan said the 60-day deadline for a US-Iran MoU may be extended, but the larger peace process has stalled. Earlier, Donald Trump said the US “totally” controls the Strait of Hormuz. Oil wavered. Precious metals are advancing, with spot silver up almost 3%.

Looking at today's economic data calendar we get July CPI data at 8:30am and July federal budget balance at 2pm. Fed speaker slate is blank; Cleveland Fed’s Hammack and Richmond Fed’s Barkin have appearances slated Thursday

Market Snapshot

Top Overnight News

• Iran-backed Houthi rebels killed six people aboard a cargo ship in the Bab el-Mandeb Strait on Tuesday, the first reported fatalities from attacks targeting Red Sea shipping in more than a year. CNBC
• Pakistan said the 60-day deadline for a US-Iran MoU may be extended, but the larger peace process has stalled. Earlier, Donald Trump said the US “totally” controls the Strait of Hormuz. Oil wavered. BBG
• President Trump is betting the pressure of sanctions and a naval blockade will force Iran to bend. But the country’s rulers are taking time-tested steps to keep their chronically battered economy functioning just enough to resist a drawn-out campaign. WSJ
• The oil market faces a severe supply deficit of 1.8 million b/d this quarter due to renewed Middle East conflict, despite high prices cutting demand by half to 1.6 million b/d, the IEA said. BBG
• US-Japan efforts to support the yen risk being undermined by tensions between Scott Bessent’s calls for BOJ tightening and Sanae Takaichi’s preference for accommodative policy, investors said. BBG
• CPI Preview: We expect a 0.19% increase in July core CPI (vs. +0.2% consensus), corresponding to a year-over-year rate of +2.47% (vs. +2.5% consensus). We expect a 0.05% increase in headline CPI (vs. +0.1% consensus), reflecting lower energy prices. Our forecast is consistent with a larger 0.26% increase in core PCE in July, reflecting a large increase in its portfolio management component.  GIR
• Democratic socialist Francesca Hong’s loss in Wisconsin’s Democratic gubernatorial primary Tuesday night revealed limits to the far left’s power — and is undercutting the narrative of an emerging insurgency. Politico
• President Donald Trump is looking for new policy pledges he can present to voters ahead of the midterm election, according to a top economic aide and a former administration official, including potentially calling on Congress to cut capital gains taxes and create an exemption for certain home sales. BBG
• Oracle has drawn up plans for a new round of job cuts to reduce payroll as it racks up billions in debt to fund AI infrastructure, according to people familiar with plans. Business Insider

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed amid geopolitical uncertainty, earnings releases and as participants await US CPI data. ASX 200 retreated as attention turned to earnings and with the top-weighted financial sector in the red after CBA posted full-year results, which mildly beat estimates and showed a 7% increase in cash profit, although its CEO warned that economic growth is slowing. Nikkei 225 was choppy on return from the holiday closure and amid a lack of tier-1 data, while participants continued to reflect on recent currency moves and increased BoJ rate hike expectations. KOSPI rallied on tech momentum and futures triggered a sidecar, with firm gains seen in both Samsung Electronics and SK Hynix propelling the index higher. Hang Seng and Shanghai Comp were mixed, with the Hong Kong benchmark pressured as markets await earnings results, including Tencent kicking off Chinese tech earnings, while sentiment was also contained after the PBoC skipped its 7-day Reverse Repo operations for a second consecutive day.

Top Asian News

• Japanese PM Takaichi may reshuffle the cabinet during mid-September at the earliest, according to Japan Times.

European bourses initially opened entirely in the green but has since pared back the earlier gains, now trading with slight losses. Similar price action was seen in Asia, with equities ending mixed. KOSPI was the clear outperformer, driven by gains in SK Hynix and Samsung Electronics (+5.5% and +6.7% respectively) after Asia Business Daily reported that Singapore's Temasek is planning to invest directly into the two Cos through its internal investment team. Newsflow has been light, with focus on the US CPI report at 13:30BST. Markets are expecting core CPI to tick lower to 2.5%, its lowest level since early 2021. After the close in Taiwan and Hong Kong, Foxconn and Tencent reported earnings. For Foxconn, its Q2 net income, revenue and operating profit beat consensus and guided Q3 revenue to rise strongly. For the latter, Tencent's revenue and capex topped forecasts however operating profit missed. Sectors point to a mixed picture. Basic Resources outperforms, followed by Construction and Telecoms. To the downside is Health Care, given the broker downgrade for Novo Nordisk (-2.8%), with Consumer Products & Services and Optimised Personal Care rounding out the sector laggards.

Top European News

• German HICP Final (Jul YY) 2.8% vs. Exp. 2.8% (Prev. 2.4%).
• German HICP Final (Jul MM) 0.9% vs. Exp. 0.9% (Prev. -0.2%).
• Italian HICP Final (Jul YY) 2.9% vs. Exp. 2.9% (Prev. 3%).
• Italian HICP Final (Jul MM) -1.0% vs. Exp. -1% (Prev. 0.0%).

FX

• G10s are mostly flat against the Buck, low-yielders CHF and SEK underperform despite a lack of specific catalysts.
• DXY is flat heading into the US CPI print. More weight on the CPI print today after those FT sources suggested Warsh was more attentive to the inflation side of the mandate, in the weeks ahead at least. Despite the recent USD action, the market is primed for a soft 0.2% M/M core print; a figure which could see some reduction of tightening bets. As it stands, the market sees September as a coin-flip between hold and hike. In terms of levels into CPI, the DXY's NFP low was 99.40 to the downside, 99.18 is the 200DMA. To the upside is 100.00, thereafter the 21/50DMAs are around 100.50, which could come into play on a hot print.
• No EUR move to unrevised Italian and German CPI; EUR likely to trade at the whim of the Buck on US CPI; the single currency currently flat at 1.1540 with catalysts absent, also flat against CEE, where focus remains on the implications of the European heatwave for energy supply.
• The same story for GBP, which is flat, but more resilient than others to the modest USD strength. For the moment eyes are on UK data with GDP scheduled tomorrow following yesterday's BRC report, which showed sales growth below expectations. Cable is within a c. 30 pip range.
• SEK and CHF are among the worst performers vs the USD. Despite headline specific newsflow being light, action is potentially a function of carry funding amid the recent unwinding of JPY shorts.

Fixed Income

• USTs are slightly firmer heading into US CPI for July. Currently, in a 108-13+ to 108-22 band. Today’s data is of note after the particularly weak NFP report last week, which saw a pullback in near-term tightening expectations leaving September essentially a coin-flip, as it stands. However, before the September Fed we get PPI, PCE, Jackson Hole, August NFP and then the August CPI series.
• Currently, CME pricing has September evenly split between a hold and hike; a 37% chance of a hold in October, 50% to a 25bps hike and just over 12% implied probability for a 50bps move. By end-2026 (i.e. December’s meeting) there is a 21% chance of the Target Rate still being at 3.50-3.75%, 45% probability of one 25bps hike, 28% chance to two and around a 5% likelihood of 75bps worth of tightening.
• EGBs devoid of specific catalysts in conditions more typical of summer markets. Bunds in a narrow 124.63-95 band, and unchanged in that. Gilts started with a little more pressure, opened lower by 24 ticks at 87.00 before paring around half of that and now trading in-line with EGBs.
• Aside from CPI, the docket also features US supply. As a reminder, Tuesday’s 3yr auction was strong, though not as well received as the last outing.
• Germany sells EUR 1.95bln vs exp. EUR 2.5bln 2038 and 2053 Bund.
• The UK sells GBP 1.5bln 1.125% 2035 I/L Gilt: b/c 3.37x (prev. 3.35x), real yield 1.725% (prev. 1.515%).
• Japan sells JPY 250bln 10-year I/L JGBs: b/c 3.27x (prev. 3.40x), Yield at the Lowest Accepted Price 0.860% (prev. 0.578%), Lowest Accepted Price 97.70 (prev. 100.20).
• Australia sells AUD 1bln 4.25% March 2036 bonds, b/c 4.73, avg. yield 4.9923%.

Commodities

• There has been little in terms of notable geopolitical updates throughout the European morning. The main recent development is that Iran’s Secretary of the Supreme National Security Council said the Strait of Hormuz would not open until the US accepts Iran's conditions, conditions that prove unfavourable for Washington. Elsewhere, Pakistan said it continues to activate direct and indirect diplomatic channels between the US and Iran and are working to bring both sides to the negotiating table in Islamabad, whilst Pakistan remains optimistic as a mediator.
• WTI Sept and Brent Oct futures initially held onto mild gains amid a lack of constructive updates to resume oil flows. This morning, the IEA OMR forecasted an oil market deficit of some 1.8mln BPD in Q3, more than double the prior month’s forecast of 800k BPD. IEA also noted that although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting. Note, OPEC will be releasing its oil market report at 13:00 BST, albeit the report is backwards looking. The space gradually dipped into flat territory throughout the morning. WTI resides the bottom end of a 82.57-84.35/bbl range (vs yesterday’s USD 84.61 high), while Brent trades in a USD 88.27-90.07/bbl range (vs yesterday’s USD 90.03/bbl peak).
• Precious metals are firmer despite a lack of newsflow in the runup to the US CPI report. The data will be key in shaping expectations for the September FOMC meeting; the weak July NFP report prompted participants to pare rate hike expectations, although the subsequent rebound in crude prices has helped push September pricing back towards a coin flip (full preview on the headline feed). Spot gold trades in a USD 4,363-4,424/oz range, within yesterday’s 4,356-4,435/oz range.
• Base metals are also firmer across the board but gains capped ahead of US CPI, whilst ongoing hopes of Chinese stimulus keep the complex underpinned. 3M LME copper resides in a USD 14,134.03-14,237.97/t range.
• IEA OMR: Oil Market in a 1.8mln bpd deficit in Q3 (prev. forecast 800k bpd), Sees World Oil Supply 1.27mln bpd lower than demand in 2026 (prev. 860k bpd), 2026 world oil supply to fall by 4.3mln BPD (prev. 3.7mln fall). Says that although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting.
• US Private Inventory Data: Crude Oil Stock Change (Aug/07)(bbls) +9.1mln vs. Exp. -0.5mln (Prev. +2.7mln), Gasoline -1.5mln (exp. -1.6mln), Distillate -0.6mln (exp. -1.6mln), Cushing +1.6mln
• Kuwait set September export crude to Asia at a USD 3.75/bbl discount.
• ADNOC sets the September Murban crude OSP to USD 79.07/bbl.

Central Banks

• Fed's Collins (2028 voter) told the FT that poor Americans are struggling to make ends meet, and warned that the central bank may need to raise rates to cool inflation. She added that she would be open to backing an increase as soon as September if the data dictated it.

Geopolitics: Iran

• US President Trump said they totally control the Strait of Hormuz, while he said regarding the flight change during the return trip from Turkey in early July that he was following what the Secret Service said and the plane he flew on was at greater risk. Furthermore, Trump said that he doesn't trust Iran.
• Pakistan's Foreign Ministry said it continues to activate direct and indirect diplomatic channels between the US and Iran and that they are working to bring both sides to the negotiating table in Islamabad. The Ministry added that they remain optimistic and not discouraged by escalations. Furthermore, the Ministry added that with the 60-day MoU deadline approaching, the deadline can be extended.
• Pakistani Interior Minister is said to have given an important message to Iran.
• Iranian Army official said Iran intends to maintain control and oversight of the Strait of Hormuz as a key source of its geopolitical power, Mehr News reported.
• Iran's IRGC said that if a threat against Iran occurs again, "hundreds of thousands of miles of energy transmission lines, thousands of power plants, all US and non-US systems, and even global infrastructure connected to the Internet are at risk," Sepah reported.
• Japanese PM Takaichi held a phone call with the Iranian President, on de-escalation of tensions in the Middle East and the security of maritime transit, Kyodo reported, citing sources.
• Yemeni Deputy Foreign Minister said there has been no direct or indirect negotiations with the Houthis, Al ArabyTV reported.
• Israel conducted airstrikes in southern Lebanon, according to IRIB.

Geopolitics: Ukraine and NKorea

• White House official told Al Jazeera that President Trump remains optimistic about the possibility of reaching a peace agreement between Russia and Ukraine.
• Ukraine Air Force said guided bombs were fired at southern Dnipropetrovsk and drones are heading to Sumy from the North.
• Russia said they targeted a Ukrainian forces fuel depot in Odessa.
• Russia's Novorossiysk grain terminal has halted operations after being hit by an attack and damaged, according to sources.
• Russia's Orsk refinery suspended processing on August 11th following a drone attack, according to sources
• North Korea fired an unidentified projectile. In response, the South Korean Presidential Office held a meeting regarding North Korea's missile launch and will call for a stop to provocations.

US Event Calendar

• 7:00 am: Aug 7 MBA Mortgage Applications, prior -2.9%
• 8:30 am: Jul CPI MoM, est. 0.1%, prior -0.4%
• 8:30 am: Jul Core CPI MoM, est. 0.2%, prior 0%
• 8:30 am: Jul CPI YoY, est. 3.4%, prior 3.5%
• 8:30 am: Jul Core CPI YoY, est. 2.5%, prior 2.6%
• 2:00 pm: Jul Federal Budget Balance, est. -346b, prior -291.14b

DB's Jim Reid concludes the overnight wrap

As we go to press this morning, markets have put in a pretty mixed performance across different asset classes. On the positive side, we’ve seen fresh equity gains overnight, as the latest earnings from CoreWeave and Super Micro Computer led to renewed optimism on the AI trade, with US equity futures pushing higher as well. Indeed, in South Korea this morning, the KOSPI is currently up +3.79%, which as it stands would be its best daily performance so far this month. However, the geopolitical news continued to raise concerns, with the Strait of Hormuz still blocked and there’s still no sign of a deal to reopen it yet. In turn, that’s led to further gains for oil, and this morning Brent crude is on track for a 6th consecutive increase, having risen another +0.93% to $89.74/bbl. So concerns about inflation remain top of the agenda, and investor attention is now shifting towards today’s US CPI report, particularly with market pricing for the Fed’s next decision still in the balance.

In terms of those geopolitical developments, we’ve seen competing headlines over the last 24 hours that have pushed oil prices in both directions. Initially, there was more optimism about some kind of deal that sent oil prices lower. For instance, Al Jazeera cited a spokesman from Qatar’s Foreign Ministry, who said that talks between Oman and Iran had reached an advanced stage. Then soon afterwards, oil prices saw an even bigger move lower after Pakistan’s defence minister said the US and Iran were “close to some sort of arrangement”, and that “things are shaping up in favor of peace”. So at the intraday low, Brent crude was down to $86.60/bbl.

However, oil prices then started to pick up from yesterday afternoon, and they’ve moved steadily higher since then, and are currently at $89.74/bbl. In part, that followed more hawkish Iranian comments reported by Iran’s state-run IRIB news. They reported an adviser to Iran’s supreme leader saying that “the Strait of Hormuz will not be reopened until Iran’s conditions are met”. And they also cited the recently-appointed Secretary of the Supreme National Security Council, who said that a deal between Iran and Oman on control of the Strait “will remain a separate issue from the Strait’s closure”. He also said that “The US must end the war, unfreeze Iran’s blocked assets, and the war must cease across the entire region, including Lebanon and Gaza”. So even as the mediating countries were suggesting a deal might be moving closer, there was little signal of that from either the US or Iran yesterday. Meanwhile, President Trump himself said that “We totally control the Strait of Hormuz” and that “Right now, we’re in a very good position”.

So after all those intra-day swings, Brent crude was ultimately up +1.36% to $88.91/bbl by the close, and this morning it’s up another +0.93% to $89.74/bbl. Moreover, there were signs of investors pricing in more protracted disruption, with prices moving up across the oil futures curve. For instance, the 12-month Brent future was up +0.33% yesterday to $76.53/bbl, and is up another +0.47% this morning to $76.89/bbl.

With concern about inflation mounting again, this makes it an interesting point to get the US CPI print for July, which is out at 13:30 London time. This is set to get particular attention, in part because of the quieter summer newsflow, but also because Fed pricing for the next meeting is completely in the balance. Indeed, futures this morning are pointing to a 51% chance of a September hike, so if we do get an upside or downside surprise today, that could help shift the balance one way or the other. In some respects, the recent newsflow has been more dovish, with the last CPI print surprising on the downside, and payrolls unexpectedly contracted in the latest jobs report. But there’s been plenty of hawkish arguments too, with oil prices picking up again, whilst the unemployment rate hit a 13-month low as well, so the CPI print today will really help set the narrative for the decision, particularly as we approach the Jackson Hole Symposium towards month-end.
In terms of what to expect, our US economists think that headline CPI will come in at a monthly +0.15% pace, which would bring the year-on-year rate down to +3.45%, with a decline in gas prices weighing on that headline number. Meanwhile, they see core CPI coming in a bit stronger at +0.26% on the month, which would leave the year-on-year reading at +2.51%. Remember as ever that the Fed’s official target is for the PCE measure of inflation rather than CPI, which isn’t out for another couple of weeks. But today’s CPI and tomorrow’s PPI (where a few components feed into the PCE) will offer us an initial steer on prices in July and will help to shape the upcoming market narrative. For more details, you can see our US economists’ full preview here.

Ahead of that, yesterday was a pretty mixed session for equities, with the S&P 500 down -0.32% amidst weakness from the Magnificent 7 (-0.90%). However, we’ve since had some more positive tech news after the US close, with results from CoreWeave and Super Micro Computer. CoreWeave shares surged by about +15% in extended trading after the AI cloud computing specialist reported a stronger sales outlook and a smaller-than-expected net loss. Meanwhile, SMC rose by more than +7% after-hours as its sales guidance for Q3 came in well ahead of estimates. So that’s boosted investor sentiment this morning, with S&P 500 futures up +0.10%, and NASDAQ 100 futures up +0.21%.

That trend has been clear in Asia overnight as well, where most of the major indices have moved higher this morning. That includes the KOSPI (+3.79%), which at current levels would be its strongest daily performance so far in August. Moreover, the Nikkei (+0.67%), the CSI 300 (+0.65%) and the Shanghai Comp (+0.32%) have all moved higher as well, although the Hang Seng (-1.17%) has lost ground.
Before those earnings however, there was a more subdued performance, with no huge moves on either side of the Atlantic. As mentioned, the main underperformer was the Magnificent 7 (-0.90%) which dragged on the S&P 500 (-0.32%). But otherwise, the rest of the index put in a steady performance, and the equal-weighted S&P 500 (+0.21%) hit another record high. There was also some optimism in Europe, where the STOXX 600 (+0.01%) just about posted a 7th consecutive gain for the first time in over a year, inching up to a new record. That included records for the DAX (+0.26%) and the IBEX 35 (+0.20%) as well, but the FTSE 100 (-0.17%) and the CAC 40 (-0.13%) both fell back.

Otherwise, sovereign bonds recovered on both sides of the Atlantic yesterday, with a small but clear fall in yields across the board. So in the US, the 2yr Treasury yield (-2.7bps) fell to 4.22%, the 10yr yield (-1.8bps) fell to 4.69%, and the 30yr yield (-1.1bps) fell to 5.24%. The outperformance in front-end Treasuries was helped by a solid 3-year auction that saw $58bn of notes issued -0.5bps below the when-issued yield. Meanwhile, over in Europe, yields on 10yr bunds (-2.1bps), OATs (-0.2bps) and BTPs (-1.4bps) all fell back as well. And overnight, we’ve seen the 10yr Treasury yield fall another -0.6bps to 4.68%.

Finally, we got a bit of US data yesterday for July, which generally came in on the positive side. That included the NFIB’s small business optimism index, which rose more than expected to an 11-month high of 99.8 in July (vs. 97.5 expected). Meanwhile, existing home sales came in at an annualised pace of 4.06m in July (vs. 4.05m expected), which was a 3-month low but slightly better than expected. That said, in another sign of a subdued US housing market, the New York Fed’s household debt report for Q2 showed the biggest quarterly decline in mortgage debt since 2013.

Looking at the day ahead, the main data highlight will be the US CPI print for July. Otherwise, today’s earnings releases include Cisco Systems.

Tyler Durden Wed, 08/12/2026 - 07:56