Whose-muz?

By Michael Every of Rabobank

Whose-muz?

Oil leaped 9%, the largest move since 2020. Today, it’s up another 2.5% to $85 at time of writing. It’s a good job we also have the Cleveland Fed’s trimmed-mean inflation measure out as well, right? Obviously, oil was driven by developments in Hormuz - or rather Whose-muz? There, besides reimposing the naval blockade of Iran, President Trump stated those using the waterway will now pay 20% of the value of cargo as compensation to the US, the strait’s new guardian. While the proposed Iranian toll the US rejected was $2m per tanker, or $1 per barrel of oil and $22 per tonne of LNG, Bloomberg estimates Trump fees at $30m per supertanker, the equivalent of $8 on oil and $177 on LNG. Naturally, the UN shipping agency is opposed to any fees for any strait and wants details on that Trump tariff – as if that will stop it.

More bluntly, Iran responded with missile attacks on tankers, with two from the UAE hit, as well as more strikes against the GCC and US military bases, the latter so far avoiding both energy and critical infrastructure. As we noted in ‘Comfortably Bomb’ yesterday, Iran can’t destroy such facilities and build bridges to the GCC if it sees itself defeating the US and gaining regional leadership. By contrast, the US is again in ‘take it down’ mode: Trump is reportedly weighing taking out Iran’s Pickaxe Mountain nuclear site, requiring a phenomenal explosion to neutralise.

Keeping out of the fight so far is Israel: the 2026 headline there from the New York Times is Mossad trying to recruit former Iranian President Ahmadinejad as an agent, and potential front man, in a failed plan for regime change. However, the Yemeni government, OK’d by the Saudis after Trump approval, bombed a runway in Houthi-occupied Sanaa to try to prevent an Iranian plane landing; now the Houthis are firing at the Saudis again for the first time in years, potentially endangering vital east-west oil flows via Yanbu on the Red Sea.

The realpolitik take is more evidence of a new (old) Mahan world disorder where countries use force to impose or restrict maritime trade flows: first Iran, now the US; the devastating Ukrainian attacks on Russian ships in the Sea of Azov is another concurrent example; and note the Hong Kong press asks, ‘Will Manila and Hanoi’s maritime deal challenge Beijing in the South China Sea?’

It’s also the US underlining that it’s fighting for a region, and world economy, that benefits from an open Hormuz but will no longer do it for free. Indeed, there’s a US message to the GCC and NATO/Europe/US allies – help us win this fight rather than saying ‘Not our war’ again. Don’t be surprised if anyone who aids the US now gets the 20% tariff lifted - which still implies it will have to be imposed on others to create that incentive.

If you think that’s cynical, in some see this as the US keeping Hormuz closed so it benefits as an LNG exporter. Indeed, as Dubai plans a new east-coast port for oil, LNG giant Qatar looks badly placed, Doha now looking at a project with the US (which likely won’t pay a penny?) for an Iraq-Syria pipeline. Even outside energy, the Asian press note the US has emerged as the helium winner amid the Iran war and China’s restrictions on exports of that key gas needed for chipmaking, with Taiwan, Japan, and South Korea turning to America for flows.

Which model?

Obviously not recalling all the reports on how Germany was artificially competitive within the Eurozone because of the low FX rate it was allowed to join at, Chancellor Merz just called for a dialogue with China on its monetary and FX policy, saying that the EU could not win, no matter how innovative or good the bloc may be, against a competitor that artificially manipulates its currency. He argued that CNY is 20-30% undervalued and needs to be allowed to float more freely so that it can appreciate to a fairer level. In this, listening to Europe in 2026 is like listening to the US in 2016.

To be clear, there is no world in which China will allow, or Europe is in any way able to impose, a new Plaza Accord on China: it is not going to happen. End of discussion. China could decide it wants to see CNY appreciate for its own reasons, such as to shift towards consumption as a growth driver, which is different. However, that’s a strategic theme echoed for decades by (mostly Western) economists, who are constantly surprised when it doesn’t happen and China’s trade surplus grows, and ever higher up the value-added ladder.

Yet the surging Chinese trade surplus with the EU, which is now larger than with the US and is close to doubling since 2020, must be addressed by October (by magic; or Chinese pledges of purchases of EU soybeans; or of Airbus aircraft when Beijing is also winking at Boeing?) or Europe says it will be forced to follow the US high tariff path after many years of patronising eyerolling at how disruptive such atavistic tactics are. China trade data today saw its imports up 36% y-o-y vs. 26.1% expected and exports up 27% vs. 19%: we will have to wait for the breakdown of the EU numbers, but they are unlikely to show what Brussels wants to see.

The larger point here is one repeatedly underlined in this Daily for many years: the problem is not one of FX levels, per se. Rather, it is of economic statecraft (a neomercantilist model) vs. neoclassical/neoliberal economic policy (a ‘free trade’ Merkelcantilist model), between which there is only one realpolitik winner: the former. If you dispute that fact, look at any pertinent production data, especially on the military side, or ask yourself which of the two is better placed to ride out an energy crisis. The logical trajectory on that basis is therefore to either assume the macroeconomic and market dynamic wherein:

• (i) the latter model adapts to the former by mirroring it, as we specifically projected in the case of the US vis-à-vis China in 2017 – and here we are in 2026; or
• (ii) the latter model doesn’t change, so continues to see ever-wider trade deficits, deindustrialisation, political polarisation, lack of strategic autonomy, and “slow agony,” as Draghi put it. And that’s before we get the fast-forward pain of who controls Hormuz.

Anyway, while we wait for Warsh’s take on the above, the Fed’s Waller has just warned of sticky inflation suggesting more rate hikes might be needed, as has the RBNZ’s Conway. Yet that all depends in large part on who wins the current battle in the Middle East, and how quickly - which is a reflection of the effectiveness of a given political-economy model.

Whocouldanooed?

Tyler Durden Tue, 07/14/2026 - 13:45

China's Helium Export Ban Raises New Risks For Global Supply Chains

Authored by Michael Zhuang via The Epoch Times,

China has imposed a temporary ban on helium exports, adding fresh uncertainty to global supplies of a gas essential to semiconductor manufacturing, aerospace, medical equipment, and other high-tech industries.

The first pilot helium production facility in Europe, located in Saint-Parize-le-Châtel, France, on Sept. 11, 2024. FREDERIC MOREAU/Hans Lucas via AFP/Getty Images

The July 10 announcement by China's Ministry of Commerce and General Administration of Customs comes as Beijing faces mounting pressure on its own helium supplies following disruptions to imports from Qatar and Russia.

Analysts who spoke to The Epoch Times say the move appears primarily aimed at safeguarding China's domestic supply rather than directly targeting the United States. However, since Chinese companies have increasingly served as intermediaries for Russian helium exports, the restriction could further disrupt global supply chains, particularly in Europe.

Beijing Announces Temporary Export Ban

The Chinese regime said the export restriction was imposed under the country's Foreign Trade Law. It took effect immediately. The regime did not specify how long the temporary measure would remain in place.

Helium is a colorless, odorless, non-toxic inert gas extracted as a byproduct of natural gas processing. Since it cannot be manufactured or replenished, it is considered a strategic resource.

The gas plays a critical role in semiconductor production, where it is used for wafer cooling, plasma etching, chemical vapor deposition, atomic layer deposition, photolithography support, and leak detection. It is also widely used in medical imaging, aerospace, scientific research, and advanced manufacturing.

Despite expanding domestic production, China still relies heavily on imported helium.

According to industry data from China Fortune Securities, approximately 84 percent of China's helium supply is dependent on foreign imports, with natural gas producers Qatar and Russia accounting together for nearly half of global helium production. The United States is the world's largest helium producer, producing more than 40 percent of global production.

China sources roughly 46 percent of its helium imports from Qatar and about 35 percent from Russia. But these import channels have come under increasing pressure this year.

According to a report on Chinese news portal Sina, maritime routes carrying Qatari helium through the Persian Gulf were disrupted amid the Iran war. In April, Russia announced temporary export controls on helium through the end of 2027, reducing export quotas to Asia to roughly 40 percent of 2025 levels. The China Liquefied Natural Gas Association estimated that those developments have created a helium supply shortfall exceeding 60 percent for China.

Cheng Cheng-ping, a professor of finance at Taiwan's National Yunlin University of Science and Technology, told The Epoch Times that Beijing's decision appears to be driven largely by domestic supply concerns rather than geopolitical retaliation.

"The timing suggests this is primarily an act of self-preservation," he said. "It is different from previous export controls on rare earths, which were more directly aimed at the United States."

Beijing has been working to expand China's domestic semiconductor industry while reducing reliance on advanced chips restricted by U.S. export controls.

"China is engaged in intense competition with the United States in high-end industries but remains behind technologically," Cheng said. "Restricting exports allows it to retain more resources to support its own advanced manufacturing."

Shen Ming-shih, a research fellow at Taiwan's Institute for National Defense and Security Research, told The Epoch Times that several factors likely influenced the decision, but domestic industrial demand appears to be the primary consideration.

"The Chinese Communist Party (CCP) can still import helium from Russia for now," Shen said. "But if Russian supplies tighten further through 2027 while imports from other sources remain constrained, China's own helium resources will become increasingly scarce."

China's Role as a Russian Helium Middleman

While the export restrictions may help preserve domestic supplies, they could also tighten international markets because Chinese companies have become important intermediaries in the global helium trade.

According to a June report by U.K.-based industry intelligence firm Gasworld, Western sanctions have largely prevented Russia from exporting helium directly to Europe. Instead, Chinese companies have been importing Russian helium at relatively low prices - often in volumes exceeding China's own domestic consumption - and re-exporting part of those shipments to overseas markets, including Europe.

Russian helium exports to China averaged 38 million cubic feet per month in 2025, a 60 percent increase from the previous year, according to the report. Shipments reached 71 million cubic feet in December alone.

China's export ban could further tighten global helium supplies because of the country's growing role as a redistribution hub for Russian helium.

Cheng said the United States is unlikely to be significantly affected because of its own supplies.

According to the U.S. Geological Survey, the United States accounted for 44 percent of global helium production in 2024, followed by Qatar at 34 percent, Russia at 9 percent, and Algeria at 6 percent.

"The impact will be much greater for Europe and other countries that previously relied on Russian or Qatari helium but increasingly obtained those supplies through China," Cheng said.

With Russian exports constrained by sanctions and Middle Eastern supplies facing periodic disruptions, China has gained considerable leverage as an intermediary, he said.

"By restricting exports now, China is increasing risks across the global supply chain," Cheng said.

He added that Beijing has previously leveraged its position in global supply chains to exert pressure on agricultural imports from Australia, Brazil, and Taiwan.

"Now, helium has become another example," Cheng said. "China is only an intermediary, but it is using that position as a tool to influence markets and supply chains. Companies trading with authoritarian regimes need to factor these risks into their supply-chain planning."

Shen said the ultimate impact of the export restrictions will depend on how heavily individual countries rely on Chinese helium exports and whether they can secure alternative suppliers.

European countries may experience greater short-term disruptions, he said, but the move could also encourage importers to diversify their sources and reduce dependence on China.

Tang Bing, Luo Ya, and Reuters contributed to this report.

Tyler Durden Tue, 07/14/2026 - 13:05

Just 27.6% Of Stocks Outperform The Market While 60% Destroy Shareholder Wealth, New Study Finds

From 1926 through 2025, just 27.6% of stocks beat the broader market. Nearly 60% actually destroyed shareholder wealth, and the median stock delivered a lifetime return of -6.9%. Yet despite those sobering odds, U.S. stocks collectively created roughly $91 trillion in wealth over the last century, with just 46 companies responsible for half of it.

Those are some of the headline findings from a new study by Hendrik Bessembinder of Arizona State University's W.P. Carey School of Business, who examined the performance of nearly 30,000 U.S. stocks over the last century. The research paints a striking picture of how wealth is actually created in the stock market: while broad market indexes have generated exceptional long-term returns, the vast majority of individual stocks have failed to keep pace.

Bessembinder analyzed 29,754 publicly traded U.S. stocks between 1926 and 2025. Over that period, the overall stock market produced an annualized return of about 10.1%, turning every dollar invested into more than $15,000, according to the study, detailed in this white paper. 

But those impressive aggregate returns mask an uncomfortable reality. The typical stock fared far worse. In fact, the median stock lost 6.9% over its lifetime, fewer than half of all stocks generated a positive lifetime return, only about 41% outperformed Treasury bills during the time they were publicly traded, and just 27.6% managed to outperform the market itself.

The reason is simple: stock market returns are incredibly uneven. While any stock can fall to zero, there is effectively no limit to how much a winner can rise. Over long periods, a tiny number of extraordinary companies generate gains so large that they more than offset the thousands of stocks that stagnate, disappoint, or disappear altogether. Those rare winners account for an outsized share of the market's overall success.

Perhaps the most surprising finding is that this concentration has become even more extreme. In Bessembinder's original research covering 1926 through 2016, 89 companies accounted for half of all shareholder wealth created by the U.S. stock market. After adding the last nine years of data, total wealth creation more than doubled to roughly $91 trillion, yet the number of companies responsible for half of it fell to just 46.

At the top of the list are many of today's biggest technology names. Apple ranks first, generating more than $5 trillion in shareholder wealth, followed by Nvidia, Microsoft, Alphabet and Amazon. Collectively, those five companies account for more than one-fifth of all net wealth created by the U.S. stock market over the past century, while Apple and Nvidia alone make up more than one-tenth of the total.

The concentration becomes even more remarkable further down the data. Out of more than 29,000 companies included in the study, just 1,082, less than 4% of the total, were responsible for all of the market's net wealth creation. Meanwhile, nearly six out of every ten companies actually reduced shareholder wealth relative to simply investing in one month Treasury bills.

The study also pushes back against the idea that market legends are built on impossible annual returns. Many of history's greatest investments didn't earn 50% or 100% per year. Instead, they compounded at annual rates in the low to mid teens over extraordinarily long periods. The lesson is that consistent returns sustained over decades are often far more powerful than eye popping gains that prove impossible to maintain.

For investors, the findings reinforce one of the strongest arguments for diversification. While the stock market as a whole has created enormous wealth over the past century, identifying the relatively small group of companies that ultimately drive those returns has always been exceptionally difficult. Missing just a handful of those long-term winners can dramatically reduce investment results, which helps explain why broad index funds have consistently outperformed most active stock pickers over long horizons.

Bessembinder concludes that the tendency for a small number of companies to drive most of the market's returns is unlikely to disappear because it is a natural consequence of how returns compound over time. The bigger question, he suggests, is whether technologies like artificial intelligence will make wealth creation even more concentrated in a handful of dominant firms, or broaden the playing field enough to create the next generation of market leaders.

You can read the full white paper here.

Tyler Durden Tue, 07/14/2026 - 12:45

AI Companies Absorbing Office Space At Record Pace: Report

Authored by Rob Sabo via The Epoch Times,

Artificial intelligence (AI) firms are absorbing office space in primary markets such as San Francisco and New York City at a record pace, and the sector’s voracious demand for office space to build out development teams and products has begun spilling into a select subset of submarkets as well.

National AI office demand was up 85 percent in the 12 months through May and spiked 179 percent in major AI hubs, a new AI report published on July 9 by AI-powered commercial real estate platform VTS states.

AI companies represented office demand of 16.8 million square feet across 17 markets during the period, VTS senior research manager Rene Moreira noted.

However, three metro areas represented nearly two-thirds of total office demand from AI companies, with San Francisco—the global epicenter for AI talent and development—accounting for 25 percent.

Office properties in San Francisco and Silicon Valley, California, and New York accounted for 63 percent of all current AI leasing, Moreira said.

“San Francisco alone sits at 5 million square feet, nearly a third of the national total,” he said.

Unprecedented office demand from AI companies in San Francisco is powering the city’s office market to a modest recovery after the COVID-19 pandemic. In the second quarter of 2019, San Francisco’s office market hit a vacancy rate of 4.7 percent. Vacancy soared following work-from-home initiatives, however, reaching 30 percent in 2023 and topping out at 35.7 percent as recently as the second quarter of 2025, the City of San Francisco reported.

San Francisco’s office vacancy stood at 32.6 percent at the end of the first quarter of this year.

“San Francisco’s 81 active AI requirements average 62,000 square feet, 2.3 times the average tech requirement across all markets,” Moreira said.

The 45 active AI office lease searches in New York average 61,00 square feet each, while the 58 active searches in Silicon Valley average about 48,000 square feet, or 2.8 million square feet of office space.

Each submarket caters to different AI users, VTS noted. San Francisco is the headquarters of AI pioneers Anthropic (Claude) and OpenAI (ChatGPT), while Silicon Valley’s AI firms tend to be chip designers, hardware manufacturers, and infrastructure providers. New York’s AI companies are skewed toward enterprise-level AI firms, a nod to the city’s massive financial, legal, and media industries. AI firms in Washington, such as Anduril, Palantir, and Shield AI, serve the defense industry.

Expansion

As the industry continues to grow, other markets are likely to become AI epicenters themselves, VTS said. Expansion will hit primary office markets such as Chicago, Los Angeles, Atlanta, and Austin, Texas.

Seattle has already experienced a 390 percent year-over-year spike in growth from AI-related demand, the report said, signaling that outward expansion is already underway.

“Three pressures will push demand outward: AI engineering talent is scarce, San Francisco real estate is expensive, and 25 percent of active AI demand concentrated in a single submarket will produce the crowding that pushed prior cycles outward,” VTS said.

Tyler Durden Tue, 07/14/2026 - 12:25

KeyBanc Downgrades Apple On New Growth Slowdown Fears

Apple shares fell 1% in premarket trading after KeyBanc Capital Markets downgraded the iPhone maker to "Underweight" from "Sector Weight" and set a 12-month price target of $250. This implies roughly a 21% decline from Monday's close, putting the stock in bear-market territory.

The downgrade by KeyBanc analysts Brandon Nispel and John Vinh is based on a widening disconnect between Apple's valuation and its underlying growth outlook. They cite soaring memory chip prices, which are pushing iPhone, Mac, and iPad prices higher. This increases the risk of demand destruction, slower unit sales, and a softer upgrade cycle.

At roughly 35 times forward earnings, Nispel warned that Apple's valuation leaves little room for a slowdown:

We downgrade AAPL to Underweight ($250PT; 19x '27 EV/EBITDA, 27.5x PE).

Our KFLD shows Indexed Spending -2% m/m, which is below the three-year avg of +9% m/m, another month of below-trend growth.

We think expectations NT are reasonable though we see: 1) slowing iPhone builds with price increases, weak U.S. upgrades, and changing device subsidy models; 2) '27 expectations that likely need to move lower for Mac, iPad, and Wearables; and 3) as unit growth likely slows, so will the growth in Apple's user base, likely pressuring Services. At 35x PE, we think AAPL is too expensive for this to occur

In mid-June, Apple CEO Tim Cook told the WSJ in an exclusive interview that price hikes were "unavoidable" because of the memory chip crunch.

While Apple doesn't report gross profit margins for individual products, TechInsights research suggests the margin on the $1,099 iPhone 17 Pro was a tidy 47%. Based on estimated costs, to maintain that profit margin for the iPhone 18 Pro, the company would have to charge $1,371. Because the company likes standardized pricing, the starting price tag would more likely be $1,299, yielding a 44% gross profit.

Source: WSJ

And this calculation doesn't account for a potential new camera system that will also cost Apple about 50% more than previous models, according to supply chain analyst Ming-Chi Kuo. In that case, following the same math, Apple could set the starting price of the iPhone 18 Pro at $1,399, or higher.

KeyBanc's view that consumers may push back on an upgrade cycle because of rising device prices - due in part to the memory chip crunch - is not the best news ahead of the iPhone 18 Pro and foldable iPhone launches in September.

The full KeyBanc report is available to professional subscribers.

Tyler Durden Tue, 07/14/2026 - 12:20

These Are The Riskiest States To Quit Your Job In

A new study from Affordable Contractors Insurance examined labor market conditions across all 50 states to identify where workers face the greatest challenges replacing a job after voluntarily leaving one. Researchers evaluated unemployment rates, hiring activity, competition for available positions, household income, and local living costs to create an overall risk ranking.

California finished at the top of the list as the most difficult state to recover after quitting a job, followed by Massachusetts, New York, Pennsylvania, and New Jersey, according to Affordable Contractors Insurance. 

California's combination of a sluggish labor market and high living expenses pushed it well ahead of every other state. The report found there are roughly 1.6 unemployed workers for every available job opening, while the state's unemployment rate stands at 5.5%—the highest in the nation. Employers are also adding workers at a relatively slow pace, with monthly hiring reaching just 3% of the workforce. Meanwhile, everyday expenses remain about 40% higher than the national average, increasing the financial pressure on anyone searching for work.

The ACI data shows that Massachusetts ranked second despite boasting one of the country's highest median family incomes. Researchers found that elevated wages are offset by a cost of living nearly 50% above the U.S. average, while hiring activity trails the rest of the country. Together, those factors can quickly drain savings for workers who leave without another paycheck lined up.

New York claimed the No. 3 spot. Although unemployment is slightly lower than California's, the state continues to face relatively weak hiring alongside living costs roughly one-quarter above the national average. The study suggests those conditions make extended job searches especially expensive.

Pennsylvania landed fourth on the list largely because employers are hiring at one of the slowest rates nationwide. While the state's cost of living is more manageable than many others in the top 10, researchers found that fewer employment opportunities increase the odds of remaining out of work for longer.

New Jersey rounded out the top five. Residents benefit from relatively high household incomes, but those earnings are partially offset by elevated living expenses and an unemployment rate near 5%, creating a competitive environment for anyone entering the job market.

The rest of the top 10 includes Hawaii, Washington, Oregon, Nevada, and Kentucky.

At the opposite end of the rankings, North Dakota was identified as the least risky place to leave a job. The state combines one of the nation's lowest unemployment rates—2.6%—with employers hiring about 4% of the workforce each month, giving job seekers a much stronger chance of finding work quickly.

Sean O'Keefe, CEO and founder of Affordable Contractors Insurance, said workers should evaluate how competitive their field is before resigning.

One simple way to gauge the market, he said, is by reviewing similar openings on LinkedIn and seeing how many applicants they attract. If most positions are drawing hundreds of candidates, job seekers should plan for a potentially lengthy search. O'Keefe also recommends securing financial flexibility—such as increasing an overdraft limit or arranging a short-term line of credit—before leaving a job, since those options are generally easier to obtain while still employed.

Tyler Durden Tue, 07/14/2026 - 12:05

Graham's Final Mission? Trump Backs Hard-Hitting Russia Sanctions Package

Apparently the late Senator Lindsey Graham's hawkish neocon legacy will continue to reverberate from beyond the grave. The 71-year old lawmaker died Saturday night "from a brief and sudden illness" - immediately after returning from Ukraine where he had toured drone and weapons factories.

President Trump is expected to support the passage of a new bipartisan Russia sanctions package that was long spearheaded by Graham, according to CNN citing a White House official.

via Associated Press

The South Carolina senator spent years trying to finally advance it across the finish line, but the Trump administration entered the White House loudly pushing diplomacy with Moscow and the idea that a swift end to the over four-year long war could be achieved by Trump's direct mediation and negotiating prowess. The policy reached an apex with the Trumpm-Putin Alaska summit, but failed to take off from there.

Instead, the world is currently witnessing the war's biggest escalatory phase in years, especially given the nightly major Ukrainian drone strikes on Russian energy sites and infrastructure. Russia's aerial bombardment of Ukrainian cities, including on the capital, has in turn stepped up.

The sanctions legislation would be America's toughest anti-Moscow move yet, greatly expanding on the original Sanctioning Russia Act:

Rather than requiring a presidential determination that Moscow had rejected peace efforts or violated a peace agreement, many sanctions would automatically take effect within 30 days of enactment.

The revised legislation would substantially broaden sanctions beyond Russian officials and financial institutions to include investment, sovereign debt, shipping, energy exports, uranium imports, financial messaging services, and other sectors of Russia's economy.

The legislation would also authorize the president to impose steep tariffs on imports from countries that continue purchasing Russian oil, natural gas, and uranium.

Pro-Ukraine hawks are salivating, with Sen. Jeanne Shaheen (D-N.H.), the ranking member of the Senate Foreign Relations Committee, having announced that passing the bill would serve as a "fitting memorial" to Graham and everything he represented.

"There can be no more fitting memorial to Lindsey, his legacy, or the causes he fought for, than to pass this legislation and realize his long-held dream of an independent and secure Ukraine," she said.

Senate Majority Leader John Thune (R-S.D.) agreed. He told reporters Monday that passing the legislation "would be a great legacy, great tribute to Lindsey."

Lindsay Graham (2022) about NATO's proxy army fighting a long war:
- "I like the structural path we are on here. As long as we help Ukraine with the weapons they need and economic support, they will fight to the last person" pic.twitter.com/gJTDWM8YJ9

— Glenn Diesen (@Glenn_Diesen) July 13, 2026

GOP Rep. Mike Turner of Ohio said Sunday on Face the Nation, "This bill would be an important symbolism to say, 'We're going to be with Ukraine.' And I certainly hope the Senate moves it this week." Yet such a passage is only going to more deeply embed the United States in a lose-lose proxy war with Moscow which could soon spiral dangerously into a WW3-style nuclear armed confrontation.

Tyler Durden Tue, 07/14/2026 - 11:25

Trump's Election Integrity Efforts Meet Resistance In Courts

Authored by Stacy Robinson via The Epoch Times,

President Donald Trump's efforts to overhaul U.S. voting systems have been stymied by court orders finding that his tactics were legally flawed.

People vote in the mayoral election in Washington on June 16, 2026.Madalina Kilroy/The Epoch Times

During his second term, Trump issued two executive orders on election integrity. Among other provisions, they required proof of citizenship and asked multiple federal agencies to compile a list of eligible voters in each state.

Some courts blocked his actions, saying that the requirements intruded on Americans' privacy rights and could exclude eligible voters. At least one court ruled in Trump's favor, however, creating a conflict between two judges.

Here's what to know about Trump's efforts and the legal battles surrounding them.

Trump's Orders

The president's first executive order, signed in March last year, mandated proof of citizenship when registering to vote and blocked funding for states that didn't adequately enforce election laws.

Trump also ordered the Secretary of Homeland Security to give state and local officials access to free, "appropriate systems for verifying the citizenship or immigration status of individuals registering to vote or who are already registered."

The administration did that by modifying the Systematic Alien Verification for Entitlements (SAVE) database. That system was already being used to track the citizenship status of foreign-born residents in the United States since 1986.

The new system allowed users to simultaneously check data of multiple individuals - the old system did not. It also added more data from the Social Security Administration.

Trump issued a second order in March 2026, directing multiple federal agencies to compile a list of eligible voters in each state, and mandated that the United States Postal Service only send mail-in ballots to voters on that list.

That order required cooperation from multiple agencies to compile a list of eligible voters in each state.

All of those initiatives were hit with lawsuits by groups alleging they violated privacy rights, could exclude eligible voters, or were an overreach of executive authority.

Federal Voter List

After Trump's order to compile a national list of eligible voters, a host of states and the District of Columbia - led by California - sued. Meanwhile, Florida, Texas, and other red states joined on behalf of the government.

Massachusetts District Court Judge Indira Talwani ruled on June 25 that "the Constitution does not grant the President any specific powers over elections," and his executive order did not cite any law giving him that power.

In her ruling, she said the Elections Clause of the Constitution lets state control their election laws, and Congress only had a limited power to override those laws, not the president.

"Both Congress and the President lack any role regarding voter eligibility," she wrote.

The new rule might accidentally exclude eligible voters, Talwani wrote, because "the federal government may be unaware of name changes (such as when a woman changes her name at marriage) or residence changes (where a citizen moves from state to state)."

She also struck down a provision of Trump's order requiring states to hold onto election records for five years, since Congress already set the retention time at 22 months under Title III of the Civil Rights Act.

Updated Citizenship Verification Database

Data concerns also led a judge in Washington to block Trump's updated verification database.

U.S. District Judge Sparkle Sooknanan ruled on June 22 that the new system violated the Privacy Act of 1974 and the Social Security Act.

"All in all, the federal government has knowingly trampled on the privacy rights of American citizens in a manner that threatens the sacred right to vote. This Court cannot stand idly by while that happens," she wrote in her ruling.

The Privacy Act prohibits "nonconsensual disclosure of any information that has been retrieved from a protected record," and the Social Security Act restricts sharing of social security numbers.

The laws contain exceptions for "routine use," but Sooknanan said those don't apply in this case. The social security data were originally collected for work verification and benefits purposes, not to determine citizenship, she said.

Texas, which joined the case on behalf of the government, argued that another exception applied: The records could be used when they are part of a law enforcement action. But Sooknanan noted that exception required DHS to make a written request to the Social Security Administration, which did not happen in this case.

The government argued that the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 overruled the other statutes.

That law says no federal, state, or local law can be used to "prohibit, or in any way restrict, any government entity or official from sending to, or receiving from, the Immigration and Naturalization Service information regarding the citizenship or immigration status, lawful or unlawful, of any individual."

But Sooknanan ruled that law didn't apply.

"Nothing in this provision permits the Federal Defendants to create a new system of records with complete disregard for the Privacy Act's protections," she ruled.

Clash of Courts

Last December, while the case before Sooknanan was still playing out, DHS entered into an agreement allowing Florida, Ohio, Idaho, and Indiana to use the new system.

On July 8, U.S. District Judge T. Kent Wetherell said the government needed to abide by that agreement.

"This Court is not bound by Judge Sooknanan's order, and with all due respect, the Court disagrees with the conclusions in that order," he ruled.

"The Court implicitly found that the modifications were not inconsistent with federal law when it approved the settlement agreement. The fact that another district judge subsequently concluded otherwise does not somehow undo that implicit determination."

In response, Sooknanan refused to pause her ruling. Instead, she ordered the government to use the system for those four states.

She also criticized DHS for not informing her of the Florida settlement and effectively using it as a workaround.

The government has appealed Sooknanan's order.

Proof of Citizenship

Chief District Judge Denise J. Casper ruled on June 24 that the president's order requiring proof of citizenship for voter registration didn't stand up under the law either.

Like Talwani, Casper said the Constitution didn't give the president control over elections.

Casper ruled the requirement might impose a "significant barrier for otherwise eligible voters, and that sections of the executive order are unconstitutional.

"On the other hand," she wrote, "there is no evidence in this record of widespread 'illegal voting, discrimination, fraud, and other forms of malfeasance and error' within American elections, which the Executive Order purports to safeguard against."

States Refuse to Hand Over Voter Rolls

The DOJ is also currently engaged in multiple legal battles to obtain unredacted voter lists from states. In April, it announced a suit against Idaho, the 30th state to face such legal action.

The DOJ had invoked Title III of Civil Rights Act to obtain the voter rolls, and inspect them for improperly registered voters.

That statute says state election officials have to hold onto any records that "come into" their possession for 22 months. Those records have to be turned over the U.S. Attorney General, and "made available for inspection," if the AG makes the demand in writing, and specifies "the basis and the purpose" of the request.

In a 2-1 decision, a panel of the Court of Appeals for the Sixth Circuit ruled that the statute didn't apply because Michigan Secretary of State Jocelyn Benson had compiled the voter rolls herself via her staff - they had not "come into" her possession.

The majority also found that the DOJ stated a "basis and purpose" for the request, but it did not state them in a single letter.

The DOJ requested an en banc rehearing, meaning before the entire Sixth Circuit, of the case.

Tyler Durden Tue, 07/14/2026 - 11:05

Here Is What America's Largest Banks Reported In Their Q2 Earnings Reports

In terms of perceived report quality relative to positioning, the ranking appears to be Goldman Sachs first, followed by Bank of America (pending guidance), then Wells Fargo, and finally JPMorgan. The broader theme across the group was fairly consistent: NII was generally underwhelming, fee income was strong as expected, capital markets results were very strong, and there was a clear halo effect from the strong deal calendar (SpaceX IPO most notably) that benefited equities trading. At the same time, expenses came in higher alongside the revenue beats, largely reflecting increased compensation costs tied to stronger activity levels.

* * * 

Goldman Sachs delivered a standout quarter, reporting EPS of $20.98 versus $14.10 consensus, with buy-side expectations largely in the $15–16 range. Net revenue came in at $20.3 billion compared with $16.4 billion consensus, driven by equity trading and to a lesser extend FICC and invesmtent banking. Expenses were elevated but not surprising given the magnitude of the revenue beat, with compensation driving most of the increase. Investment banking fees reached $3.4 bn versus $2.9 bn consensus, as stronger ECM and DCM results more than offset somewhat softer advisory revenue. Markets performance was exceptional, with equities revenue exceeding consensus by roughly $2.3 bn and edging out JPMorgan's impressive result. FICC also delivered a strong beat following a weaker prior quarter. Asset and Wealth Management revenue came in at $4.6 bn versus $4.2 bn consensus, while buybacks exceeded expectations at over $4 billion compared with the $3 billion consensus estimate. Net income printed at $7.42 billion for a quarter with record-breaking stock-trading results, driven by financing and taking profit in arranging bets.

Some more details from Bloomberg:

• The firm’s second-quarter results mark the third consecutive quarter in which the firm’s equities unit has set an all-time record for any bank. Its haul in just the past three months is larger than what it made in all four quarters of 2019 combined.
• The equities result jumped 72% from a year earlier, driven both by financing and taking profit in arranging bets, the bank said in a statement Tuesday. Rates traders also beat expectations after a disappointing first quarter, and its investment bankers posted their highest fees since 2021 from advising on mergers and underwriting.
• Goldman reported $4.59 billion in revenue in rates trading. Investment-banking fees totaled $3.4 billion, beating the consensus of analyst estimates compiled by Bloomberg.
• The bank’s fresh equities-trading record came as investors made bets on the growth of Asian technology companies driving artificial intelligence and the S&P 500 index posted its best return in six years. 
• The firm’s investment bankers, who led the record-setting initial public offering of SpaceX and Alphabet Inc.’s equity raise in the second quarter, are ahead of peers in league tables by a wide margin. Revenue in the bank’s equities underwriting business jumped 130% compared to the same period last year.
• The record represents a blowout quarter for Goldman, though JPMorgan Chase & Co.’s equities traders posted a bigger jump. Their traders posted an 86% gain to $6.03 billion earlier Tuesday.

* * * 

Bank of America reported EPS of $1.21 versus $1.12 consensus, with the upside driven primarily by fee income, which came in at $15.6 bn versus $14.5 bn consensus. NII was essentially in line, at $16.16 bn versus $16.2 bn consensus, and effectively within rounding distance on an FTE basis. Investment banking fees reached $2.14 bn versus $1.8 bn consensus, while the same equities trading halo effect seen elsewhere helped drive a markets beat, with equities revenue of $3.6 bn compared with $2.7 bn consensus. Expenses were slightly elevated at $18.6 bn versus UBS's $18.5 billion estimate and the $18.4 bn consensus figure. Investor focus now shifts to management's outlook for the second half, with many expecting an upward revision to NII guidance from the current 6–8% growth framework. Erika Najarian also highlights that deposit costs came in 3bp below consensus, a favorable contrast to the increase seen at Wells Fargo.

Some more details from Bloomberg

• Equity-trading revenue rose 70% to $3.6 billion, surpassing expectations, while fixed-income trading climbed nearly 9% to $3.5 billion, which beat a consensus of analyst estimates. That marks a record first half of the year for the sales and trading division, a business that the bank has sought to bolster in recent years.
• Investment bank posted revenue of $2.2 billion, beating the average estimate of $1.91 billion. Fees for advising on mergers and acquisitions jumped nearly 68% to $558 million.
• The trading and deal frenzy boosted overall profit, with diluted earnings per share reaching $1.21. That surpassed the $1.12 expected by analysts.
• Equity-capital markets business generated $535 million in revenue during the second quarter, while debt-underwriting revenue totaled $1.1 billion. Analysts had expected revenue of $411 million and $959 million, respectively.
• The lender detailed how it’s been using artificial intelligence, from customer-facing roles to broader efficiency gains. More than 300 AI and machine-learning use cases at the bank have been approved, with another 114 live generative AI-use cases that have been identified.
• The company’s results also offer a snapshot about how US consumers are weathering gas price shocks given the war in Iran and market volatility caused by concerns about artificial intelligence and private credit investments.

* * *

Wells Fargo exceeded expectations, with PPNR coming in roughly 12% above consensus on higher fees from wealth management and investment banking. The beat was driven primarily by fee income, and management reiterated its guidance. NIM performance remained within the previously discussed 3–4bp compression range. While average deposit costs rose 8bp q/q due to a shift toward investment banking deposits, the net impact—when combined with stronger markets-related activity—remained consistent with management's NIM outlook. Some investors may discount part of the fee beat because it included a 17-cent-per-share gain from equity investments. However, even excluding that benefit, EPS would have been approximately $1.79 versus the $1.73 consensus estimate. Given the stock's heavier short interest and lower expectations heading into the print, that level of outperformance may be sufficient to support the shares.

Some more details from Bloomberg

• Noninterest income rose 13% to $10.3 billion, topping the $9.44 billion average estimate of analysts in a Bloomberg survey. The results included $728 million of higher net gains from venture capital investments.
• Net interest income, what the bank earns after expenses from interest-bearing assets, totaled $12.3 billion, in line with what analysts expected. Wells Fargo stuck with its full-year NII forecast of roughly $50 billion, which included about $2 billion from the markets business. 
• Net income for the three months through June rose 17% to $6.4 billion, or $2 a share. Analysts in the Bloomberg survey expected adjusted earnings per share of $1.71. Revenue climbed 9% to $22.6 billion.
• Investment banking fees increased 35% to $939 million. Wells Fargo ranks sixth in Bloomberg’s M&A league tables, and has the highest average transaction value, underscoring its role in some of the market’s biggest deals this year.

* * * 

JPMorgan posted another major capital markets beat, but the market reaction may be more muted. While management raised its NII outlook, reported NII of $25.62 bn came in slightly below the $25.7 bn consensus estimate. In addition, the higher NII guidance was largely offset by an increase in expense guidance, making the net earnings impact less compelling. Results also benefited from a one-time $4.6 bn gain related to the Visa share sale, which investors are likely to adjust for when assessing underlying performance. (As a reminder, PNC also holds Visa shares and could benefit from a similar dynamic.)

Some more details from Bloomberg

• The biggest US bank reported another bumper quarter for stock-trading desks, which have been on a volatility-fueled hot streak since Trump won the 2024 election and the war in the Middle East roiled markets. 
• JPMorgan’s net income for the quarter was $21.2 billion, or $7.70 per share, as almost every business exceeded expectations. Still, Chief Executive Officer Jamie Dimon was cautious about prospects for the future.
• JPMorgan pulled in $3.28 billion in investment-banking fees in the second quarter, up 30% from a year earlier and ahead of analysts’ expectations. Equity and debt underwriters both surpassed estimates, with the latter notching a surprise gain. A 20% increase in fees for advising on mergers and acquisitions fell short of the 27% increase analysts
• JPMorgan updated its full-year cost guidance to about $107.5 billion, beyond the increase Dimon telegraphed at an industry conference in May. The firm said the increase is “primarily due to higher volume- and revenue-related expenses driven by the activity levels and associated revenue outperformance.” For the quarter, expenses were $27.3 billion, more than expected.
• The firm lifted its full-year forecast for net interest income to about $105.5 billion, up from the $103 billion executives expected in April. For the quarter, NII came in at $25.5 billion, up 10% from a year earlier. The bank also said it expects the full-year net charge-off rate in its credit-card business to come in at around 3.2%, lower than the 3.4% guidance it provided in April.

More available to pro subscribers.

Tyler Durden Tue, 07/14/2026 - 10:45

Big Blew It! IBM Crashes Most Since '60s Amid CapEx Woes; Goldman Warns Over 'Software Bear Case'

Summary:

• Wall Street Desks Stunned 
• IBM Shares Crash Most On Record, Exceeding Dot Com & 1987 Crashes 
• CEO Arvind Krishna Blamed Preliminary 2Q Results on "Shifting" Customer CapEx Spending

IBM's surprise second-quarter warning blindsided traders Tuesday morning, raising new concerns that enterprise technology budgets are being redirected toward AI infrastructure at the expense of traditional software and IT services.

Shares plunged 24% in the first 20 minutes of New York trading. Should those losses hold through the close, IBM would suffer its largest one-day crash on record, based on Bloomberg trading data going back to 1968.

Here's what Wall Street's top desks are saying in first takes:

UBS analyst Robert Ruple:

The big news this morning was a surprising negative preannouncement by IBM, down 22%, with Q2 sales of $17.2 bn versus $17.8 bn expected and EPS of $2.93 versus $3.02. Citing unanticipated capex reprioritization impacting client buying patterns with numerous large deals failing to close on time, cybersecurity distractions and some supply chain-related impact where they saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure (thanks to AI boom) ahead of expected price increases. This redirection of budgets towards AI has been a topic that Karl Keirstead/team have been articulating as potential risk for some time (particularly for incumbent SaaS suppliers and IT Services companies), which sounds like a harbinger of commentary that could be further accentuated by other software, IT services and hardware-related companies as Q2 reporting season progresses that is sure to weigh on sentiment incrementally.

David Vogt provides his initial thoughts on the IBM miss and these results suggest that enterprise IT spending pressures are hitting sooner than investors anticipated, leading to a revenue shortfall and non-GAAP EPS guidance of $2.93, below both expectations and consensus. The primary driver was weakness in IBM's zSeries mainframe cycle, which hurt its high-margin Transaction Processing (TP) business. While Red Hat delivered solid 11% constant-currency growth and recently acquired assets such as HashiCorp and Confluent performed well, these positives were overshadowed by a sharp decline in TP revenue, which appears to have fallen in the mid-teens year over year and represents nearly 30% of IBM's Software segment. As a result, investors are likely to reassess IBM's long-term software growth outlook, particularly for 2027 and beyond, as rising infrastructure costs and tightening IT budgets weigh on demand. These results reinforce concerns that stronger growth areas like Red Hat may not be sufficient to offset prolonged weakness in TP business, increasing pressure on IBM to pursue larger acquisitions or other growth initiatives to sustain its software growth trajectory remaining at neutral.

Goldman analysts:

IBM: Negatively preannounced Q2 results this morning, with Revenues coming in well below estimates on shortfall led by Software & Infrastructure performance. Stock -17% in pre. Prelim Q2 Revenue missed estimates ($17.2bn vs. cons $17.9bn).  Company said "did not anticipate magnitude of CapEx reprioritization."  Shortfall vs. consensus was led by "Software and Infrastructure performance shortfall." Mgmt commentary: "What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in Transaction Processing. In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns. While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization." BOTTOM LINE:  This should fully play into the Software bear case, and would imagine should drive fairly broad-based weakness across software + services layer today (most names down 3%+ early in pre).

Goldman analyst James Schneider:

What happened: We expect the stock to trade meaningfully lower following IBM's negative pre-announcement this morning, which was driven by a shortfall in Infrastructure and Software to a lesser extent. We believe the mainframe shortfall reflects client demand re-prioritization toward near-term server and other hardware purchases given surging memory and component prices, a dynamic consistent with what peers such as Dell and HP have cited. This reprioritization also drove a shortfall in Transaction Processing because of perpetual licenses tied to new mainframe purchases. In addition, we believe the company's Data & Automation software segment saw weaker demand due to company-specific execution issues. Red Hat results were in line with expectations at a growth of 11% in the quarter. We leave our estimates unchanged for now, pending further color from the company on next week's earnings call on updated 2026 guidance and potential remediation efforts.

BNP Paribas analyst Stefan Slowinski: 

IBM is trading -22% pre-market on a disappointing Q2 earnings pre-announcement, driven by the company's Infrastructure (hardware) and Software businesses, blamed on capex reprioritization (i.e. crowding out) and delays caused by cybersecurity uncertainty, with no indication of any improvements yet.

Barclays analyst Andrew Keches:

The news: IBM pre-released selected 2Q26 results alongside a letter to shareholders, with revenue below expectations amid shortfalls in Software and Infrastructure. Revenue came in at $17.2bn overall (vs. $17.9bn est.), while at the segment level, Software grew 5% y/y (vs. +11% est.), Infrastructure fell 7% (vs. -3% y/y est.), and Consulting was flat (vs. +2% y/y est.). The company attributed most of the underperformance to unexpected shifts in clients' late-quarter budget allocations toward securing supply-constrained infrastructure ahead of price increases. IBM also acknowledged an execution component, with numerous large deals failing to close on schedule.

The context: Today's update comes at a sensitive point for IBM's investment narrative. Software has become the company's primary growth engine, and management had increasingly framed AI as additive to the software stack rather than a source of disruption. Today's update complicates that framing as the shortfall was concentrated in Z and the associated Transaction Processing software stack, with clients redirecting spending toward supply-constrained servers, storage, and memory. The key debate, in our view, will be whether this represents a temporary shift in the timing of enterprise purchases, or evidence that rapid AI infrastructure investment is beginning to crowd out portions of traditional software spending.

Our take: Clearly the results are a disappointment and the equity move alone (-20% premkt as of writing) will be a drag on credit performance. Credit metrics would not be impacted in a meaningful way, but the development adds to already weak sentiment in the name. We are mindful of the pointed M&A comments made on the last call (valuations attractive, appetite could be higher than in normal years), and although this pre-release suggests nothing about the topic, weak results will add to the overhang. Moreover, IBM spreads have held in better than most A/BBB TMT curves in the recent TMT sell off, widening the differential to BBB telco and single-A software curves such as NOW. To be clear, we view this quarter as a one-off rather than a step function in mainframe and software demand and also acknowledge that IBM has the cash flow to absorb medium sized M&A, but the impetus to step in and defend the structure at these levels is not obvious to us.

Laterals: The clearest potential beneficiaries from IBM's commentary are hardware providers levered to the spending categories being prioritized, such as servers and storage at DELL and HPE, and memory at MU. Conversely, the update may reinforce concerns around software names broadly, as well as consulting and IT-services businesses such as ACN and KD, if AI infrastructure investment is crowding out other portions of enterprise technology budgets. That said, we are somewhat surprised by the breadth of the read-through across the group so far this morning. IBM explicitly acknowledged company-specific execution issues, including large deals that failed to close on schedule, and the decision to pre-release more than a week before its scheduled earnings call suggests that its shortfall may be more outlier than industry-wide. We understand that this is a "sell first, ask questions later" market, but we would be cautious about treating IBM's results as a 1:1 read-through to every software and services company.

Laterals: The clearest potential beneficiaries from IBM's commentary are hardware providers levered to the spending categories being prioritized, such as servers and storage at DELL and HPE, and memory at MU. Conversely, the update may reinforce concerns around software names broadly, as well as consulting and IT-services businesses such as ACN and KD, if AI infrastructure investment is crowding out other portions of enterprise technology budgets. That said, we are somewhat surprised by the breadth of the read-through across the group so far this morning. IBM explicitly acknowledged company-specific execution issues, including large deals that failed to close on schedule, and the decision to pre-release more than a week before its scheduled earnings call suggests that its shortfall may be more outlier than industry-wide. We understand that this is a "sell first, ask questions later" market, but we would be cautious about treating IBM's results as a 1:1 read-through to every software and services company.

Bloomberg tracked analysts have an average 12-month price target of $300 on IBM, highlighting how far Wall Street expectations had run ahead of the shock preliminary second-quarter results earlier. Of the 25 analysts covering the stock, 17 rate it a Buy, six are Neutral and just two recommend selling. 

SaaSpocalypse Is Back: IBM Crashes Most Since 1987 As Customers Abruptly "Shift CapEx Spending"

IBM shares plunged almost 20% in premarket trading, putting the stock on track for its worst intra-day collapse since the infamous Oct. 19, 1987.

Worse than the Dot Com crash...

The catalyst for the selloff was IBM CEO Arvind Krishna's letter to investors outlining preliminary second-quarter results.

Here is what's key:

• IBM CEO: DID NOT ANTICIPATE MAGNITUDE OF CAPEX REPRIORITIZATION

Traders were likely caught off guard by a 7% decline in infrastructure revenue, raising new concerns about demand across one of IBM's key business segments.

Here are the preliminary 2Q results:

• Revenue of $17.2 billion, up 1%

• Software revenue up 5%

• Consulting revenue flat, up 1% at constant currency

• Infrastructure revenue down 7%

Krishna detailed in the letter to investors that customers unexpectedly redirected their June technology budgets toward servers, storage and memory to secure scarce equipment before anticipated price increases.

In return, that left less money and management attention available for IBM's z17 mainframes and related transaction-processing software. Deals IBM expected to close during the quarter were delayed or pushed into later periods, rather than necessarily canceled outright.

Here are Bloomberg headlines:

• IBM CEO: SAW CLIENTS SHIFT QUARTERLY CAPEX SPEND IN JUNE

• IBM CEO: THIS DYNAMIC IMPACTED CLIENT BUYING PATTERNS

Signaling a return to the SaaSpocalypse (client spend shifting from commoditized software to constrained hardware), Krishna wrote:

When we discussed our expectations with you in April, we noted that we would be wrapping on the launch of z17 in the second quarter.

Given this was the strongest start to a mainframe program in our history, we expected Infrastructure revenue to decline low-single digits for the year, beginning this quarter.

What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in Transaction Processing.

In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases.

This dynamic impacted client buying patterns. While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization.

In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter.

Krishna also admitted: "We did not adapt and move quickly enough," with large deals failing to close on expected timelines.

The key question is whether IBM is emerging as an early warning sign that the AI boom is beginning to crack, with a potential "token revolt" taking shape as customers push back against surging AI costs.

Tyler Durden Tue, 07/14/2026 - 10:36

Watch: Smug NYT Podcaster Visibly Annoyed When Mick Jagger Defends Elon Musk

Authored by Steve Watson via Modernity News,

Mick Jagger just delivered a masterclass in cutting through media spin, leaving a leftist New York Times podcaster visibly rattled as he clarified that his "mad mogul" lyric about Elon Musk was actually a compliment.

The Rolling Stones legend refused to play along with the expected narrative during the interview, pushing back firmly when the host, David Marchese, presumed the line was a diss.

Instead, Jagger highlighted Musk's real-world achievements in space, crediting him with stepping up where government agencies have fallen short.

Watch the NYT podcaster's face when he realizes Mick Jagger likes and respects Elon Musk—after initially thinking a new Rolling Stones song lyric was a diss:

NYT: "But something's nagging at you, what is it?"

Jagger: "No, it's not nagging. It's just that people, they hear one... pic.twitter.com/UuuIgPSSyG

— Julia ?? (@Jules31415) July 14, 2026

In the exchange, Jagger explained the context behind the lyric from the new Rolling Stones album Foreign Tongues. He pointed to the rescue of the stranded NASA astronauts last year, noting that Musk's SpaceX provided the transportation NASA couldn't.

Jagger told the interviewer: "It's not nagging, but people hear one word and they don't really listen to the line. So it's like, 'Mick Jagger has a go at Elon Musk.' You're not listening to the line, you're only listening to 'Musk.' ... even though I do call him mad."

Marchese's expression totally changed from smiling to frowning in an instant when Jagger refused to confirm the interviewer's gleeful expectation that the singer would criticise Musk.

He continued: "When I wrote that, I was thinking that because of him, they were able to get those astronauts back that were stuck because he provided the transportation because NASA couldn't provide the transportation..."

"Who would you trust to get you into space?" Jagger continued, adding "Would you trust Boeing or would you trust NASA or would you trust mad mogul Mr. Musk? It's really a side-winding compliment because he was the one I remembered was able to do that when the others couldn't."

Jagger exposed how Marchese had completely misinterpreted the lyrics of the song, making him look foolish.

The podcaster pressed on, noting Musk was the only person named on the album, implying significance.

Jagger stood his ground, adding that "mogul doesn't always go down well, either," and the host again showed how one dimensional he is by suggesting "No one likes a mogul."

Jagger was clearly exhausted with the exchange as Marchese simply refused to understand what the singer was getting at.

In another recent NYT interview, Jagger contrasted his approach to performing live with Bruce Springsteen's rabid anti-Trump activism, emphasizing that his job is to give fans a great time, not sermonize.

Jagger's nuanced expression underscores a refreshing independence in an industry often dominated by predictable elite consensus, and his clarity cuts against the grain of performative outrage.

Moments like this expose the disconnect between coastal media bubbles and ground-level realities.

The Rolling Stones continue to prove their enduring relevance not by chasing trends, but by staying true to a no-nonsense ethos that prioritizes delivery over dogma. Jagger's unapologetic take serves as a subtle rebuke to those who weaponize art for division rather than unity through great music and honest reflection.

Jagger gets it - focus on what works, entertain the audience, and let results speak louder than spin. In a free society, that kind of straight talk is exactly what keeps culture vibrant against efforts to enforce conformity.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Tue, 07/14/2026 - 10:05

Warsh Tells Congress Fed Has "No Tolerance For Elevated Inflation": Watch His Testimony Live

Fed Chair Warsh (voter) will deliver his first semi-annual testimony as Fed Chair to the House. Warsh’ text was e released at 08:30EDT (link here) and he is scheduled to begin his testimony at 10:00EDT.

In his prepared remarks, Warsh said policymakers at the central bank have no tolerance for high inflation, reiterating a vow to tame price growth that has been elevated for five years. 

“The members of our committee have no tolerance for persistently elevated inflation,” Warsh said Tuesday in testimony he’s scheduled to deliver before lawmakers at 10 a.m. “And we share a resolute commitment to restoring price stability.”

The new Fed chairman has emphasized policymakers’ commitment to tackling inflation since he took office in May, and said the number one objective is to get monetary policy right: “If we get policy right — and we will — the inflation surge of the last five years will be a thing of the past,” Warsh said. 

As Bloombgerg notes, Warsh’s remarks before the panel come amid warnings from several other Fed policymakers that higher interest rates may be needed to curb inflation, especially in the context of soaring memory prices.

Warsh was upbeat on the overall economy, describing the labor market as broadly stable with few signs of layoffs and solid nominal wage growth. The Fed chief was more circumspect on the artificial intelligence boom, which he said is driving a surge in business investment but also posing uncertainties for the economy.

“We don’t know the extent to which the economy will benefit from the AI build-out. Yet it seems inevitable that what is now called "AI investment" will soon be called just "investment." Even so, new opportunities for the economy introduce new challenges for policymakers. We at the Fed are monitoring the implications for inflation and the labor market." Warsh said.

“New opportunities for the economy introduce new challenges for policymakers. We at the Fed are monitoring the implications for inflation and the labor market.”

Minutes of the Federal Open Market Committee’s June 16-17 meeting reflected growing concern among policymakers over inflation just as worries over the labor market slightly receded. New rate projections released alongside that decision showed nine officials foresaw at least one quarter-point hike this year, with six anticipating at least two. Another nine expected no move or a cut. Warsh, who has been critical of so-called forward guidance that offers clues on the path for rates, declined to submit a forecast.

The testimony was prepared prior to the Bureau of Labor Statistics’ release of fresh inflation data that showed consumer prices declined in June for the first time in six years and a key gauge of underlying inflation was little changed. As noted earlier, headline CPI fell 0.4% from May, mostly reflecting a slump in energy prices amid a pause in the US and Iran war. However, a resumption of hostilities has since sent oil prices surging again with Brent crude topping $87 a barrel for the first time in a month and threatens to push inflation sharply higher again. Core CPI, which excludes volatile food and energy components, was flat. On a year-over-year basis, core prices increased by a slower-than-expected 2.6%.

The Fed has kept rates between 3.50-3.75% for four straight meetings, and Warshʼs term begins amid a backdrop of sticky inflation, potential tariff pass-throughs, and energy supply shocks, which have stoked fears of further policy tightening. The Fedʼs June meeting minutes released this week showed that some officials support resuming hikes ahead; while traders will look to Warshʼs remarks for any explicit thresholds that could trigger a rate rise, Warsh has notoriously leaned against any forms of forward guidance.

Speaking last week, Warsh reiterated the Fed will not provide it, describing it as an obstacle to healthy FOMC debate; he added that rates should be the primary monetary policy tool, and expressed hope that new tech can improve economic understanding within a period of 9-12 months.

Watch his testimony live at 10am ET

Warsh's full prepared remarks are below:

Chairman Hill, Ranking Member Waters, and other members of the Committee—good morning.

It's a privilege to join you. At my first appearance before this panel, I am particularly honored to represent my superb colleagues throughout the Federal Reserve System.

In submitting the Board's Monetary Policy Report, I think of a long line of central bank chiefs who came before Congress in keeping with the Federal Reserve Act. I think also of earlier efforts, going back to the time of the Framers, to create a central bank that would endure and serve the nation's founding principles.

One of the large figures in the Federal Reserve's history is Alan Greenspan, who passed away last month after a century of life. By my count, my friend appeared before Congress more than two hundred times, displaying his agile mind and his distinctive way with words. We at the Fed recall the Chairman's strong and steady hand in a period of rapid economic change. And we honor his memory.

As a country, we just marked our 250th year. And when Americans count our blessings, we can include an economy predicated on the brilliance of our constitutional design and system of ordered liberty—an economy without equal in all it's done for human flourishing.

Some forms of Fed communications are discretionary, but not this one—and for good reason. It is a prudent and wisely conceived obligation, designed to keep the Fed accountable, responsible, and faithful to its congressional mandate of full employment and price stability. These obligations are of a piece with the Fed's rightful independence in the conduct of monetary policy.

Today we are at a hinge point in history. It's up to all of us to meet this moment. The task of this generation of policymakers—and of individuals throughout the private sector—is to ensure the American economy excels far into the future.

* * * *

The Fed's number one objective is to get monetary policy right—or as near to it as we possibly can. That is our clear and constant aim, the star we steer by. And if we get policy right—and we will—the inflation surge of the last five years will be a thing of the past.

A month ago, I chaired my first meeting of the Federal Open Market Committee. My colleagues and I recognize that high inflation has been an undue burden on American households and businesses. While monthly price fluctuations are inevitable—especially in an unsettled world—underlying inflation over longer time horizons is determined largely by monetary policy.

The members of our Committee have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability. This was the focus of our June meeting, at which we decided to hold the target range for the federal funds rate at 3-1/2 to 3-3/4 percent.

Naturally, our work at the Fed demands a proper reading on economic conditions. As you see in our Monetary Policy Report, economic activity is expanding at a solid pace, showing resilience in the face of recent developments. Household consumption growth is moderate. Manufacturing output has moved up steadily this year. The housing sector, however, gives a different picture and continues to lag.

The most striking feature of the economy right now is business investment. The rapid pace—which appears to be accelerating—reflects, in large part, the construction of data centers and the immense demand for the AI-related equipment and software that fill them. Investment in equipment overall increased about 8 percent for the year ending in the first quarter. Within that category, high-tech spending logged an especially impressive growth rate of nearly 25 percent on a four-quarter basis. We don't know the extent to which the economy will benefit from the AI buildout. Yet it seems inevitable that what is now called "AI investment" will soon be called just "investment." Even so, new opportunities for the economy introduce new challenges for policymakers. We at the Fed are monitoring the implications for inflation and the labor market.

That brings me to the supply side, where productivity growth has been strong, predating gains from AI adoption. America's labor market appears broadly stable. Job creation has kept pace with the workforce. The unemployment rate is low and has changed little over the past year. We're seeing relatively few layoffs, only slight variance in the rate of job vacancies, and solid growth in nominal wages.

* * * *

I came to my new position as a believer in the best traditions of the Federal Reserve. The performance of our nation's central bank depends on a commitment to excellence, professionalism, and integrity. Humility about what we know—and the courage to revisit our prior views—are also hallmarks of a great institution like ours. All of these standards define the culture of the Fed, and it's my responsibility to uphold them.

I am heartened by the welcome I've received and by the encouragement of my colleagues in considering how best to advance the conduct of policy. We have a duty to point the institution forward—to take a fresh look at current practices to make sure we are serving our objectives.

And we are going about it systematically. I have appointed a task force in each of five areas that are central to the broad conduct of monetary policy. We have engaged some of the very best minds, from inside and outside the economics profession. They are supported by specialists from the Fed's expert staff. The task forces have been given a straightforward charge: Start with first principles, ask hard questions, examine current practices, consider alternatives, and, ultimately, propose next steps for policymaker consideration. The purpose here is to equip the Fed to make better decisions in monetary policy and to put these years of high inflation behind us.

The first task force will assess the form and function of Fed communications. It will ask: What is the efficacy, and what are the risks, of how we currently deliberate and convey our policy choices?

The second task force will review the Fed's balance sheet policies, including the ample-reserves regime and the composition of asset holdings. It will ask: What are the advantages and disadvantages of that regime, and what are the alternatives?

The third task force will evaluate new data sources and consider methodological changes to improve the information upon which we rely. It will ask: How do we ensure that policymakers are receiving accurate, relevant, contemporaneous, actionable data on the state of our economy?

Our task force on productivity and jobs will survey the pace, reach, and impact of new general-purpose technologies. We've experienced technological advances all our lives. But given the scale of investment—and potential changes in the method and speed of innovation—we might be seeing changes of a different order. The task force will survey the landscape and ask: What do these changes mean for America's productive capacity and for American workers? And what are the implications for the Fed in pursuit of our employment and inflation mandates?

Finally, the task force on inflation frameworks will examine the drivers of inflation and weigh a range of ideas for delivering price stability. This group will ask: Do our models and our thinking provide an empirically robust view of prices and outputs in our dynamic economy? Can we do better?

We are starting a new chapter at the Federal Reserve at a consequential time for our nation. It's been a privilege to return to the Fed and to work again with so many talented and dedicated people I'm fortunate to call my colleagues.

I can report to you that we intend to be fit for purpose and focused on the future. We are the Federal Reserve, and we are as determined as ever to fulfill the mission that Congress has given us.

Thank you, and I welcome your questions.

Tyler Durden Tue, 07/14/2026 - 09:45

Warren Buffett Cuts Gates Foundation From Annual Stock Giving As Epstein Scandal Shadows Over Bill Gates

Warren Buffett excluded the Gates Foundation from his annual charitable stock gifts for the first time in two decades, as scrutiny over Bill Gates' connections with convicted sex offender Jeffrey Epstein continues to cast a dark shadow over Gates and the foundation.

CNBC reports that the 95-year-old chairman will donate 9 million Class B shares to the Susan Thompson Buffett Foundation, and 1 million shares each to the Sherwood Foundation, the Howard G. Buffett Foundation, and the Novo Foundation.

"My goal is to dispose of all of my Berkshire shares within about eight years," Buffett wrote in a statement announcing the gifts.

He added, "As I explained last year, my children are unfortunately growing older. I have every hope that the three of them are able to carry out the disposal of my shares by December 31, 2034."

Buffett's exclusion of the Gates Foundation breaks decades of giving; the foundation has received more than $47 billion in Berkshire stock from Buffett since 2006. This follows scrutiny of the foundation's ties to Epstein, and Buffett has recently said he has not spoken with Gates since the controversy erupted.

The Wall Street Journal recently reported that the Gates Foundation slashed 500 jobs, or about 20% of its staff, as the organization has come under fire for Gates' ties to Epstein. Back in February, Gates pulled out as a keynote speaker at a high-profile global AI summit in India.

The Gates Foundation CEO recently told employees during a town hall event that the Gates-Epstein relationship had deeply tarnished the nonprofit's reputation, according to a Financial Times report.

Bill Gates with an unidentified but manifestly well-proportioned brunette number, in a photo from the Epstein files (House Oversight Committee)

However, it is not just the Gates-Epstein ties that Buffett should be concerned about.

Late last year, the Gates Foundation had to publicly sever ties with far-left philanthropic adviser Arabella Advisors, which engineered a revolutionary network of nonprofit entities, including the New Venture Fund, Sixteen Thirty Fund, Hopewell Fund, and Windward Fund, that support the permanent protest industrial complex against President Trump.

Meanwhile, even left-wing outlets like Bloomberg are criticizing the Gates family.

How will Bill repair his image, or will he ever be able to?

Tyler Durden Tue, 07/14/2026 - 09:25

The post Social Security is a Problem of Income Distribution, Not Demographics appeared first on CEPR.

Rate-Hike Odds Slump As US Consumer Prices Plunge Most Since COVID In June

With oil prices having tumbled (before this latest resurgence) but semiconductor prices soaring still, expectations were for a small 0.1% MoM decline in CPI but in fact it printed dramatically cooler, dropping 0.4% MoM - the biggest monthly decline since COVID (April 2020), dragging the YoY CPI change down to +3.5% YoY...

Source: Bloomberg

Both Goods and Services costs saw YoY growth decline...

Energy dominated the decline while Core Services rose very modestly...

CPI breakdown:

• Headline CPI down 0.4% MoM in June after rising 0.5% in May. This decline in the all items index was the largest 1-month decrease since April 2020 when it fell 0.8% .

• Over the last 12 months, the all items index increased 3.5% YoY after rising 4.2% in May.

  • Core CPI rose 2.6% over the year, following a 2.9% increase in May.

  • The energy index increased 15.7% for the 12 months ending June. The food index increased 3.0% over the last year.

  • The shelter index increased 3.3% over the last year.

  • Other indexes with notable increases over the last year include airline fares (+26.5%, medical care (+2.0%), recreation (+2.8%), and household furnishings and operations (+2.5%).

Headline components:

• CPI energy fell 5.7% in June after rising 3.9% in May, 3.8% in April, and 10.9% in March. The energy index was the largest contributor to the monthly all items decrease, more than offsetting increases in other indexes including those for shelter and food.

• CPI for food increased 0.2% over the month, as did the index for food at home and the index for food away from home.

Energy's decline was the largest since Aug 2022...

Oil's tumble (as we predicted) helped a lot...

On a short-term annualized basis, inflation collapsed... from 8.2% to 2.8%...

Core CPI was unchanged (also below expectations), slowing the annual pace of inflation to +2.5% YoY...

Core components:

The index for all items less food and energy was unchanged in June (technically down 0.017). Indexes that decreased over the month include motor vehicle insurance, communication, apparel, medical care, and used cars and trucks. Conversely, the indexes for recreation, household furnishings and operations, and personal care were among the major indexes that increased in June.

• The shelter index increased 0.1 percent over the month, the smallest 1-month change reported for that index since January 2021.

  • The index for owners’ equivalent rent rose 0.2 percent in June, and the index for rent increased 0.1 percent.

  • The lodging away from home index fell 2.3 percent over the month.

  • Shelter index rose 3.28% YoY, down from 3.37% in May and first annual decline since March

  • Rent index rose 2.84% YoY, down from 2.92% in May and first annual decline since March

• The motor vehicle insurance index declined 2.0% in June after falling 1.7% in May.

• The index for new vehicles was unchanged in June after declining 0.3% in May

  • The used cars and trucks index fell 0.2% in June.

• The index for communication fell 1.5% over the month, and the index for apparel declined 0.6%.

• The medical care index decreased 0.1% in June after rising 0.3 percent in May.

• The index for physicians’ services decreased 0.2% over the month, and the index for prescription drugs declined 0.1%.

  • The hospital services index increased 0.1% in June.

• The index for recreation increased 0.5% over the month after rising 0.3% in May.

• The household furnishings and operations index rose 0.2% in June as did the personal care index.

Supercore CPI also saw it biggest MoM drop since COVID, down -0.2% MoM, led by Education & Communication, and Transportation services

"This is great news for Kevin Warsh and the Fed", said David Russell, Global Head of Market Strategy at TradeStation

"Everyone expected energy to drop, but there was also good news in car prices, shelter and apparel.

However, these trends might not last if renewed conflict in the Middle East lifts oil prices. Disinflation gets harder going forward if energy doesn’t keep falling.

If JPMorgan traders are right, this should mean a 1-1.5% gain in stocks...

Rate-hike odds plunged...

July hike odds collapsed top pre-Warsh levels...

2026 rate-change expectations tumbled to 35bps (1 hike prices in and a coin flip for a second)...

So will Fed Governor Waller walk back his hawkishly panicky remarks yesterday?

Tyler Durden Tue, 07/14/2026 - 09:10



 

 

The transcript from this week’s, MiB: McKeel Hagerty, CEO and Chairman of Hagerty , is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

~~~

Masters in Business: McKeel Hagerty, CEO & Chairman, Hagerty

Barry Ritholtz (00:00:08): This week on the podcast, another extra special guest. McKeel Hagerty is chairman and CEO of Hagerty specialty insurance. Fascinating company. They took a little niche wooden boat insurer and turned it into a publicly traded company by embracing the community around collector cars, trucks, boats, et cetera. I thought this conversation was really quite fascinating, not just as a car guy, but as a business guy. And I think you will also. With no further ado, my conversation with Hagerty’s McKeel Hagerty.

McKeel Hagerty, welcome to Bloomberg.

McKeel Hagerty (00:00:56): Thanks for having me.

Barry Ritholtz (00:00:58): So let’s start with your background. You get a BA in English and philosophy from Pepperdine, and then you get a master’s in theology at St. Vladimir’s Orthodox Theological Seminary. What was the plan — to become a priest?

McKeel Hagerty (00:01:14): I think about my academic career in a couple of phases. I was an entrepreneur from the time I was young — I had a bunch of businesses when I was very young — and thought I would go study business in college. And I ended up falling in love with philosophy and literature and all these things; I was a philosophy and English major. I was a good student and I thought I’d get my PhD, but I needed a little break to work on languages and some things. And I learned about St. Vladimir’s, which is just north of New York here — it’s up near Rye or Scarsdale. And it was this incredible experience, because I got to work on my languages. I learned a lot about leadership, actually, at the seminary, because there are some pretty extraordinary individuals there. And there is no doubt about it — you are there to study to become a priest. And while that was not my driving reason to go there, it’s a little bit like Michael Corleone — they kind of drag you in, and before you know it, you’re suddenly thinking about becoming a priest.

I didn’t become a priest, because then I moved on and started my doctoral work in philosophy up in Boston, and did not complete that because the family business called. I had worked in it during the summers up until then, with mom and dad and my two sisters. And all of a sudden I found myself no longer thinking about exams and a dissertation and all those things, and thinking about this really cool business.

Barry Ritholtz (00:02:44): So let’s talk about this business. The hagiography is: your parents, Frank and Louise, started Hagerty Insurance Agency in Traverse City, Michigan (Yes.) for what I never would have guessed was an actual business — collector wooden boats. (That’s right.) Are there enough collector wooden boats to sustain a full business?

McKeel Hagerty (00:03:07): There are enough wooden boats to insure to sustain a very small family business, with a few employees. It was kind of a retirement gig for my mom and dad. They had had a general insurance agency, and they sold that, and they wanted something else to do. But there were a couple of principles in the back of their mind: they wanted a national business instead of a local one. They wanted one that was in a niche, rather than sort of general purpose. And they wanted one that could have real sustainability over a long period of time. So wooden boats was an unoccupied business space — a literally unmet need. They matched the unmet need with an underlying interest in wooden boats and in cars — my dad was a wooden boat, vintage boat guy and also a car guy. And so this was just the fun of combining the business knowledge with a passion. And again, my sisters and I all kind of helped out when it was much smaller, and we kind of stumbled into the car insurance business, which was much, much larger than the wooden boat business.

Barry Ritholtz (00:04:10): Even the collector car business is orders of magnitude —

McKeel Hagerty (00:04:13): Oh, orders of magnitude larger. Millions of vehicles.

Barry Ritholtz (00:04:15): But let’s not jump quite that far ahead. You and your dad used to work on cars — rebuilding projects. You mentioned you had a couple of side hustles: lawn mowing, things like that.

McKeel Hagerty (00:04:29): Yeah, my apple orchard.

Barry Ritholtz (00:04:30): You spent 500 bucks buying a 1967 Porsche 911S when you were 13. (Yes.) I wouldn’t be allowed to buy a car at 13 — I was lucky I had a bike. And then you and your father rebuild this.

McKeel Hagerty (00:04:46): That’s right. I will also note it was the only really good car deal I’ve ever done in my life, so just for what it’s worth.

Barry Ritholtz (00:04:52): So I’m going to assume that was the spark that started your enthusiasm for cars.

McKeel Hagerty (00:04:58): Yeah, it was. And you know, my dad was a do-it-yourselfer, hobbyist, restorer guy in the garage. And both my sisters also restored cars with him — they were older than I was. And then I was the third along, and we convinced this older gentleman in our town to sell us this 911S for 500 bucks. And I had to mow an awful lot more lawns and sell a lot more apples out of my orchard to buy the parts to restore the car. But by the time I could drive, it was ready.

Barry Ritholtz (00:05:27): Good planning.

McKeel Hagerty (00:05:27): It was great planning. And I can tell you, there was nobody in my high school driving a Porsche, so I would sneak it into the teachers’ parking lot, because no one would believe that a student had a Porsche. (That’s hilarious.) But back then, in the eighties, cars like that were not expensive. They were not considered to be necessarily that valuable. They were just kind of cool older cars. And so we kind of approached it as a family — like, hey, you can get a lot of car for not a lot of money, and you can have something really fun to enjoy. And so that was just my life growing up.

Barry Ritholtz (00:05:59): I love that. The 300 SLs from the fifties were being sold at a depreciated price in the sixties and seventies. (Oh, of course.) It’s astonishing.

McKeel Hagerty (00:06:07): Well, the most valuable car today, people will tell you, is the Ferrari GTO — 1962. They’re worth tens and tens of millions of dollars. But in the 1970s, you could buy them for 15 grand. They were nothing. And now they’re 50 million, 60 million dollars.

Barry Ritholtz (00:06:22): Unbelievable. That 911S you restored — still have it?

McKeel Hagerty (00:06:27): Still have it.

Barry Ritholtz (00:06:27): Still drive it?

McKeel Hagerty (00:06:28): Of course. It’s my first car out every season and the last one I put away.

Barry Ritholtz (00:06:32): Wow, that’s amazing. We could spend a lot of time talking about what else you drive, and we’ll get to that later. I’m curious — when did you first realize Hagerty could become something a whole lot larger than a niche wooden boat insurer?

McKeel Hagerty (00:06:50): Oh, we had already started the car business in the early 1990s. I’ve had a couple of aha moments, and this one — I remember it like we were sitting here today. It was the fall of 1995. I was doing my doctoral work in Boston, and we were reading Plato’s Republic in Greek. So I’m up at Boston College, we’re working on Plato’s Republic in Greek — that’s a big slog, I can tell you. And I was trying to help out the family business kind of from a distance.

And the challenge with insurance — insurance is an incredible industry. It’s stable. There’s a lot more interesting stuff to it than people think. But it is just not very sexy to talk about. Nobody loves talking about insurance. And even with these big brands and stuff today, they still don’t want to talk about it very much. And so I was literally sitting in this Plato’s Republic class, and on the side of my notebook I wrote this thing: if we would just stop acting like an insurance business and start acting more like a club for car owners, it would just transform the conversation that you’re having with people — because then you’re acting more like a car person, instead of an insurance person trying to sell a car person something. And I literally wrote this idea of: turn Hagerty into a car club. I wrote it in my notebook, and I closed my notebook. I went home that night to my apartment, and I dropped out of my PhD program right then and there, and I went home the next week.

Barry Ritholtz (00:08:12): Well, let me validate that — not that you, as a public company, need my validation. Full disclosure: I have a few of my cars insured with Hagerty. I’m a member of the club. I get the Driver’s Club magazine. But it’s obvious in hindsight — oh, of course you’re going to focus on this niche that is kind of ignored (Yes.) by the major insurance companies. How challenging was it to convince the rest of the family — hey, this is the way to go; we are not an insurance company selling to car collectors, we’re car people checking a few of their boxes?

McKeel Hagerty (00:08:53): It took me a few years. You know, we were a very close family. It was really fun to work together with everybody in those early days. My dad retired in kind of that late nineties; my mom retired shortly thereafter. I was working with my sisters. So they gave me enough rope to go test it out — that if we just changed the dialogue and acted like we’re going to build an automotive branded business that happens to sell insurance, and we’re going to do it around this membership concept.

It wasn’t like no one had ever done something like that. If you think in the early days, AAA was kind of like that — the motor club (they’re very different than that now). Or if you were to even think of something like AARP, which is a different sort of segment — they sell a lot of insurance and they treat this group of people well. USAA, serving military families. It’s just, nobody had ever done it in a business like ours. And so it took a little while to convince them that that was the way to go to market, and that we could change the way we were thinking.

But you mentioned something — there was another piece in this, which was the next aha. And the next aha was that most of these cars were insured by the big insurance companies. So think State Farm, Allstate — today, Progressive, Geico, everybody. And we’re a little company. I mean, we had a tiny family business. How the heck are you going to compete against these monsters? And so after we got the club up and running, I realized — well, what if we just partnered with these companies rather than competing against them, and said: look, we are going to do one thing and one thing only. We’re going to be expert in these cars. We know the customers really well. We’re building a really big, rich bunch of data. What if we partnered with them? And so the first big partnership like this, we landed 22, 23 years ago, and that was with Allstate. And Allstate’s huge — again, huge company. I knew they insured hundreds of thousands of these cars.

Barry Ritholtz (00:10:50): Spun out from Sears so long ago.

McKeel Hagerty (00:10:51): Exactly. Lots of interesting things in that company. And I met the CEO at the time, through people who helped connect us. And I said, look, I think I can make you better at this one tiny little thing if you just give us a chance. And they’re still a partner today — that program still grows every year. And now we’ve just moved through the entire insurance industry. We’ve partnered with virtually all of the big insurance companies. And so today, if you insure your home and your auto and everything with one of them, but you have a vintage car, collector car, whatever you want to call it, that usually comes to us. And so the big scalability of the business was: one, show up like a club, this member organization; and two, partner rather than compete. Because if you’re small, it’s impossible to compete against a huge company. But if you partner with them, it changes the game.

Barry Ritholtz (00:11:45): Well, when you say it’s impossible to compete — one of the fascinating things about insuring an old ‘Vette or an old Porsche is, any of the big firms are going to charge you 1,500, 2,500 a year. Alright, so I have a ’67 ‘Vette, which is actually my least favorite car to drive.

McKeel Hagerty (00:12:08): I’ve got to ask — which motor?

Barry Ritholtz (00:12:10): The 327. Yeah, but with a stick. Nassau blue over white. (Very nice. Spectacular.) But it’s a pig to drive. But it doesn’t matter, because I think Progressive was like 2,200 — you guys were 500 and change. Because of the data: you guys know how often these are driven, know the value, know they’re really not going to get stolen. (That’s right.) As much as Gone in 60 Seconds made it look sexy, everybody knows these cars, their VINs, where they are — especially something rare and valuable, which the ‘Vette is not. It’s really fascinating that nobody else saw this until you guys did. How did the pricing model come along?

McKeel Hagerty (00:12:58): Well, you talked about how you drive your car, but you probably don’t drive it very much. You probably have daily drivers that you drive more, and you are less concerned about where you park them and that sort of thing. My late mother passed away just two years ago. I remember asking her every year — her memory wasn’t so great towards the end of her life — like, Mom, what made this business special? And she would just say: because people take good care of their toys. (Of course.) And that is the core emotional nugget of this business. People have a toy, they spent real money on it, and they take good care of it. And wherever there is care, there is better insurance risk. So you can charge less. You can build marketing around that. You can get a little bit of momentum.

Barry Ritholtz (00:13:41): But not just a little less. It’s not like you’re beating them by 10%. It’s a fraction of what you pay for regular insurance.

McKeel Hagerty (00:13:48): Well, right. And look, the typical ’67 Corvette owner probably drives that car a thousand, maybe 1,500 miles a year. Some years less.

Barry Ritholtz (00:13:56): Half the guys in my car group — and they’re almost all guys, but not exclusively — some of these guys have 10, 20, 30 cars.

McKeel Hagerty (00:14:07): Exactly.

Barry Ritholtz (00:14:07): So if they’re driving a car, it’s something different. Maybe they’re putting 500 miles a year on each car, at most.

McKeel Hagerty (00:14:16): So, one of the things you asked about — pricing. Not only is the pricing on the physical car less expensive with us; the liability is too. And it’s exactly to that point: you can only drive one car at a time. Liability follows the person, not the car. And so we had an ad very early on in the program — there was a now-late collector out in the Pacific Northwest with over 2,000 cars. We put his name and face on one of our ads, and it said: here’s Harold LeMay, our worst nightmare, because he has 2,000 cars, but we charge him only one time for liability.

Barry Ritholtz (00:14:50): So how do you — is that a fleet insurance? How do you do something —

McKeel Hagerty (00:14:52): Kind of like that, yeah.

Barry Ritholtz (00:14:53): If someone has more — and I think the line I heard about tattoos applies to cars: two tattoos is either too few or too many. And if you have half a dozen or a dozen cars, it’s probably too many to manage yourself, but too few to hire a full-time Jay Leno-like guy to run it. (That’s right.)

McKeel Hagerty (00:15:15): Most people are space limited. If they have enough money to be into it, they end up buying everything that they can afford and still store.

Barry Ritholtz (00:15:24): The storage is the problem. I’m waiting for permission to build a garage. (There you go.) A detached garage, as opposed to my built-in garage. And if that gets approved by the town, that’s going to be both dangerous and expensive.

McKeel Hagerty (00:15:39): Well, I’m going to love it though, because then I’ll have more to insure for you.

Barry Ritholtz (00:15:41): That’s six more cars’ storage for you guys. Yes. Really, really interesting.

Coming up, we continue our conversation with McKeel Hagerty, CEO of the specialty insurance firm, talking about how he built the company into a one-and-a-half-billion-dollar revenue driver. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.

Barry Ritholtz (00:16:10): I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio. My extra special guest this week is McKeel Hagerty. He is the chairman and CEO of Hagerty collector car insurance. The firm insures every collectible vehicle — and a handful of boats — for almost 3 million collectors. So: 2025 revenues of 1.5 billion. 1.3 billion in written premium — a record. 371,000 new members. Net income plus 91%. This is a real publicly traded company — HGTY. (Yes.) Wow.

McKeel Hagerty (00:16:49): I used to have hair when we started all of that. But, you know, things are going well.

Barry Ritholtz (00:16:53): So I guess if you’re not pulling your hair out of your head, you’re not public. Let’s talk about how you’ve driven this. One of the interesting insights that seems to have shaped your strategy was that collector cars aren’t just financial assets — they’re emotional assets. You described them as favorite toys. How did that shape how the firm developed?

McKeel Hagerty (00:17:20): Well, we started in the simplest possible way, which was as an insurance agency — you might have mentioned that in the first intro, and that’s true. That’s the easiest way to get into one of these things. As I mentioned, we started with kind of a specialty product, which was insuring special cars. The insurance policy forms were unique; our pricing — we had a unique approach. We had this Driver’s Club model that started really helping that compounding aspect of it. But one of the big pieces that I guess I dreamed of is that if we actually started taking real risk and became the insurance company itself — not just an agency selling policies for somebody else — it would be the same customer coming in, but we’d have so much more of a chance to really build revenue behind it.

So the other big piece — my first aha was the Driver’s Club; the second aha was really realizing we needed to partner rather than compete with the big insurance companies — was: how do we start taking risk? That’s been a multi-year, really decade-long journey that we started in 2017, got up and running, and it was really a big key piece of how we went public in 2021. Everybody knew we had a unique angle on this market, that our economics looked great in the business, but that we could realize even that much more. And so that’s really been the next big piece of all of this. And it all kind of compounds on itself, because if you insure a car, we use the club to kind of engage people. You mentioned reading the Hagerty Driver’s Club magazine — by the way, I don’t think the word insurance is mentioned in that magazine anywhere.

Barry Ritholtz (00:19:06): Not at all. It’s cars and roads, really.

McKeel Hagerty (00:19:07): Yes. And it is now the highest-circulation car magazine in the world. (No kidding.) It is. Yeah.

Barry Ritholtz (00:19:13): I did not know that. That’s really interesting. So the evolution from insurance to an automotive lifestyle brand goes beyond the club membership, goes beyond the magazine — events, auctions, valuation data. Walk us through how that all evolved.

McKeel Hagerty (00:19:33): Yeah — I was a big fan of car magazines, a big fan of automotive media. I mean, that’s how I read my way into understanding the car world, and going to events. And I always remember somebody told me once that if you’re going to go into a niche business that you’re really proud of, you kind of need to have the high ground on your side. And for me, the high ground was, if I could have a media property where we would kind of have that intellectual high ground, that would help.

The other piece is the data aspect of it. When I was growing the business and the team — you know, we have incredible teams — we’re out there trying to figure it out. Valuing these cars was so tricky, because there were a lot of opinions about what cars were worth, but not a lot of really good data. And so as we were investing in the media pieces — talking about cars and entertaining people — we built the data resources. We call it our Automotive Intelligence group. We have by far the richest sets of data about how to value these things, and it’s down to that VIN or serial number.

You mentioned — well, how does a big insurance company… why didn’t they do it? I remember this conversation years ago, in one of those partner discussions, where the CEO was a car guy, really wanted to kind of compete with us, wasn’t sure if he wanted to partner with us. And I said, well, do you know what a 1969 Camaro is? And he said, I sure do — he was pretty happy with himself. And I said, you may not know that in 1969, the Camaro came in 147 different variants. (Wow.) And that year, the least expensive one was worth about 11 grand, and the most valuable one was worth about 1.1 million. And you can’t tell the difference by looking at them from the outside. You have to understand what that serial number is. And I said: we built a patented serial number decoder for all cars pre-1981, so that we could understand our universe and start providing that data. And that’s why our partners like us.

But it’s a real asset to have that kind of data, and then build on it every year. You mentioned 371,000 new customers — we’ll do quite a bit more than that in 2026. Those are all — it’s not just insurance revenue, it’s also data coming our way. What are people buying? What are they insuring them for? What do they sell? When somebody sells a car, it’s also a data point. And so for us, that data piece — and it’s all a big… not just because I’m a car person — I view it as a flywheel. It all kind of spins, and insurance is a beautiful thing, but the rest of it speeds up the flywheel.

Barry Ritholtz (00:22:01): Yeah, to say the very least. So the valuation tools you have are really interesting. The Bull Market List you have has become very influential. I actually reference some of your valuation tools in a chapter of my book, on selection bias. Every time some car goes for a new record high, there’s always a bunch of media coverage, and they talk about — look at what a great investment this is. And it’s like, no, that’s all survivorship bias. Show me the other 10. Don’t show me what was the best car of the past 50 years — what car are you going to buy now to put away for the next 50 years? (Yes.) That’s a much harder question, because you don’t know the answer. But your valuation tools have been really helpful, that sort of stuff. How did you build that capability? Is it simply just — hey, every data point we come across from clients, we’re going to suck into a database and figure out?

McKeel Hagerty (00:22:57): That was exactly it. I mean, most media outlets that weren’t part of our world — if they were covering the space, they were using a lot of anecdotal information, kind of dealer-fed information, or just looking at public auctions. And I love public auctions too — you can learn a lot from watching what all the different auction companies do. And now, with so many good online places, it’s even more data. But what we realized, with our scale, is we just had way more data points than all of that. Because again — people buying cars, insuring them with us, adding, deleting — it was just this big flow. And yeah, it took a lot of people a lot smarter than I am to build not just the database stuff, but the analytics capability around it. And now, with AI, it’s even better. And then, as we started realizing we could get other data sources that help us validate even more — not just in the US, but outside of the US — it’s really been a fun part of the business. I’ll tell you what — it’s a smart team, and I love learning from them. They teach me stuff every day that I need to know.

Barry Ritholtz (00:24:00): You mentioned auctions and online auctions. In addition to Bring a Trailer and Cars & Bids and PCARMARKET, you guys are now going to get into online auctions for your clients’ cars? Or are you just partnering with someone?

McKeel Hagerty (00:24:16): Oh, no, no. We have our own — the Hagerty Marketplace platform, which is online auctions. And then also now —

Barry Ritholtz (00:24:24): You’ve had online classifieds for a long time. (Yes.) How rapidly is the auction side growing?

McKeel Hagerty (00:24:29): It’s growing rapidly now. We have such a supply — we have way more supply than you think. And if you think about some of those other great companies — Bring a Trailer has been such a darling in this space; Cars & Bids, the number two in the US — there’s a supply and demand balance that everybody has to strike. Because if you flood a digital marketplace with too much supply, then the bidders go away. And if the bidders go away, then nobody’s happy — people won’t put their cars on it. So it’s a fast build, but it’s steady.

The live auction side of the business — Broad Arrow, which was an acquisition we did after going public — that’s a remarkable business, because I had followed that industry for a long time around the world. But it’s all about getting the right team. And in my mind — because I’m very protective of our brand and our reputation — we had to have the kind of team that wasn’t just prepared to build the number one live auction business; they have to do it in a way that I’m proud of. Because things will go wrong. You have to make things right for customers. Sometimes cars that people bring to you to sell aren’t described exactly as they actually are, and you have to find that out and politely tell them — well, I’m not sure this is a million-dollar car; it’s a hundred-thousand-dollar car. And sorry — if you want us to sell it for a hundred thousand, we will, but we’re not selling it for a million. Because it’s our reputation too.

And so the way I think about it now is: most people come to us to insure a car. Then they buy the membership thing, and we engage them and do media and a lot of fun stuff, invite them to our events. And about every seven years, on average, somebody buys or sells a car. And that’s where I want to be there and present in their minds, so that we help them on that transactional side. Plus, you’ve probably been to auctions or watched them on television. (Sure.) They’re fun. Car auctions are super fun. It’s live, it’s vibrant, it’s interesting. Sometimes there are multimillion-dollar cars up there selling, where you can’t even believe anybody would pay multimillion dollars for this car. And we do that too — that’s why we have Broad Arrow. We connected it with some of our concours events — in many cases, around the world. We just had our Broad Arrow auction at the Villa d’Este concours, the Concorso d’Eleganza. And that was a really successful sale, and a super cool place to have an auction — right on Lake Como. (Yeah.) In Italy.

Barry Ritholtz (00:27:01): Looked beautiful. You’ve been a judge at Pebble Beach for a while, I know.

McKeel Hagerty (00:27:08): 25 years — I think this is my 25th year.

Barry Ritholtz (00:27:09): Wow. And I know there was an affiliation with one of the local concourses here. Maybe it’s Greenwich?

McKeel Hagerty (00:27:14): Greenwich, yeah. That is an event we own. So we produced that just recently.

Barry Ritholtz (00:27:19): That’s — it’s too close to a holiday weekend, otherwise I would be there.

McKeel Hagerty (00:27:24): Oh, you’ve got to come.

Barry Ritholtz (00:27:25): I’m usually out at the beach on Memorial Day weekend. But we’ll circle back to that. I’m also a big fan of your YouTube channel. I really like Jason Cammisa’s work. I’ve learned a lot about cars that I think I know — and then he does a deep dive into a particular model, and I’m like, I didn’t know that about the Toyota Supra. Who would’ve guessed? How did YouTube become such a major part of your brand?

McKeel Hagerty (00:27:54): Well, it’s really the de facto platform for people watching kind of introductory-level automotive content, and obviously lots of brands are putting stuff out there. But what we realized — if you think about the big arc of how people have learned about or consumed automotive media, where it’s shifted since the nineties: magazines were the main platform for a long time. Then you got the first dedicated cable networks — Speed, Speedvision, AutoWeek — you started seeing auctions on there. But then a lot of that content started migrating to YouTube. What I wanted to do was do it at the same high quality we were doing in the magazine. So hire total pros, shoot the stuff really well — great cameras, great locations, all of that.

Barry Ritholtz (00:28:48): It is obvious high production value. There are a lot of YouTube channels that are kind of interesting, cars or otherwise, but the appeal has always been: two iPhones, a wireless mic, and a GoPro — you could cobble something together. I’ve seen a bunch of channels that are using these. You guys really put a lot of thought and a lot of time, effort, and money into it.

McKeel Hagerty (00:29:19): Well, we do. And they’re not all just drag races — nothing wrong with drag races; I like them too. It’s a kind of data point about what makes a car cool. But I think Jason just takes it to a whole new level. We also have — by the way, we have a FAST channel on Samsung TV, on Amazon Prime; our content is available out there like a digital television show. Our Barn Find Hunter show, for years — you’ve probably seen it — which is this incredible talent, Tom Cotter, going around and finding great cars in barns and kind of doing the big reveal. Like an Antiques Roadshow kind of concept, but in the garage, rather than brought to some studio somewhere. And people like it. There’s some interesting fascination with the US television audience of finding the treasure in the garage — and don’t you wish it was you who found it? I find them fascinating.

You may have even seen one of the shows we produced for a long time — they’re kind of winding down — called Redline Rebuild. (Yep.) It was where we would do these time-lapse rebuildings of an engine, where you take a big dirty engine apart, and it would all kind of appear to assemble itself on an engine stand, and then it would start. It was just mesmerizing.

Barry Ritholtz (00:30:34): That’s the word I was about to say.

McKeel Hagerty (00:30:36): Just mesmerizing. Yes.

Barry Ritholtz (00:30:37): There’s another channel that does the same thing with old watches (Oh wow, interesting.) and rebuilds them. And it’s the same sort of — why is this so fascinating? It’s the exact same thing as Redline.

Coming up, we continue our conversation with McKeel Hagerty, CEO and chairman of Hagerty specialty insurance, discussing the collector car community today. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.

Barry Ritholtz (00:31:11): I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest today is McKeel Hagerty. He is the CEO and chairman of the namesake specialty insurance company specializing in collectible cars — automotive everything, from cars, trucks, military vehicles — including classic wooden boats. Are those all Chris-Crafts, or are there some other brands that make their way through that?

McKeel Hagerty (00:31:35): Well, Chris-Craft and Century were the two big manufacturers in the United States. There were sort of some more boutique brands, like Gar Wood and Hacker-Craft, which were really high end.

Barry Ritholtz (00:31:46): I’ve been in a Hacker-Craft. Those are big — they tend to be a little bigger.

McKeel Hagerty (00:31:49): Right, a little bit bigger — triple-cockpit kind of style boats. And for those who are really into the artisanal cheese of the boat world — the Canadian brands. There was a whole group of really fine boat builders up there: Minett-Shields, Ditchburn, Greavette — brands that most Americans would not know of. But if you ever get a chance to go up to the Muskoka Lakes, which is just north of Toronto, they’re just exquisite, beautifully built boats. They’re considered like national treasures up there. So you don’t see many of them in the US. But that was part of my upbringing. When my mom and dad were building the boat business and I was a teenager, it was like — huh, we’re going to a boat show, going to Canada, going to Lake Tahoe, going to the Finger Lakes of New York.

Barry Ritholtz (00:32:37): That’s so interesting. I took some friends to the boat show last year, and the new Chris-Crafts are shockingly beautiful. (Oh yes.) They have aged into modernity really well. It’s almost like a retro-mod, because it’s very contemporary and very modern, but clearly the design language from way back when.

McKeel Hagerty (00:33:02): I think it’s a little bit like that Hinckley crowd (Yes.), where they’re trying to find a retro-modern boat, but with kind of retro looks.

Barry Ritholtz (00:33:10): And I love it. So let’s keep this on cars, away from boats. There’s a quote of yours that I have to start with, because I really like it: “The best piece of advice is to buy the car you want to drive, and then buy the best example you can afford. This may sound obvious, but not all vintage cars drive the way people hope they would.” There’s nothing in that I disagree with. Discuss.

McKeel Hagerty (00:33:41): Yeah. I think there are so many people that envision — someday, when they have that little bit of extra resources — you know, that’s going to be my toy; I want to get into the car world. And if they weren’t a hundred percent in this their whole life, or their parents weren’t into it, or you didn’t have an uncle or somebody in your life who let you drive in these things, I often recommend people try to get a chance to drive what you think you want. Because the older cars do drive very differently. (Yes.) And even if you think of, say, muscle cars from the sixties — they were very fast. I mean, these are cars that are —

Barry Ritholtz (00:34:14): In a straight line.

McKeel Hagerty (00:34:15): In a straight line — a lot of power. They do not stop or turn as well as you think, and you just have to get used to that. I mean, I love cars of all generations. I love driving very early cars; I have some newer cars. And I always just have to kind of center myself when I get behind the wheel, to remember — okay, this is not my Porsche Taycan, which is this incredible piece of technology, an electric car. It’s a vintage internal-combustion car with funky brakes, and you have to be ready for it. So I always recommend people drive them. And recognize that maybe it had air conditioning, maybe the air conditioning doesn’t work — it doesn’t matter. Roll down the window and just enjoy yourself.

Barry Ritholtz (00:35:00): Manually —

McKeel Hagerty (00:35:01): Manually roll down the window.

Barry Ritholtz (00:35:02): I tell the story — the ‘Vette, the ’67: it’s a lap belt, not a three-point belt. They couldn’t be bothered to put a passenger-side mirror on, because, you know, what are you even going to see? And the steering is just beastly. But I also like the concept of buy the best example you can afford. And I find myself constantly saying to people: a cheap Aston Martin is the most expensive car you could possibly buy. (Yeah.) But people don’t really get that.

McKeel Hagerty (00:35:35): Yeah. And look — different areas of cars come with their own challenges sometimes. As we’re seeing this onslaught of new generations coming in and wanting to buy slightly newer cars — I mean, it’s 60-whatever percent of all of our new quotes and new cars coming into the space are all relatively newer cars: 1980s, nineties, two-thousands cars. Some of those cars, for example — it may not be a mechanical issue that can drive you a little crazy; it’s an electrical issue that’ll drive you a little crazy. If you think of some of the screens and the CD players and all the little control things that, back in 1990-whatever, were the biggest whiz-bang feature — well, it doesn’t work so well anymore. The car runs fine, but you’re not going to be able to use the antiquated nav system. I just tell people: relax, it’s fine. Enjoy the car, drive it. All my kids always ask — well, does the radio work in this thing? I’m like, I have no idea. It’s never been on. I’m there to drive. And it’s such a fun activity, as you know, to go and just enjoy driving a car for pleasure.

And the first thing I tell people who are sort of new to the space — they say, well, I want to take it out to dinner. And I’m like, make sure you take it out during the day first a few times, because sometimes cars leave you in the restaurant parking lot at night. So people always ask, why don’t you drive them at night? And I’m like — because I’m not sure I’m going to get home.

Barry Ritholtz (00:37:06): If you’re used to modern cars, you will be shocked at how terrible the headlights are — on, forget sixties, even eighties-era cars. Those were not really great headlights.

McKeel Hagerty (00:37:19): They weren’t great. They’re not dangerous or anything. You just have to be aware (Right.) that they don’t have all the modern technology.

Barry Ritholtz (00:37:24): When all the headlights were that way, you just said, this is what the lighting is, and you had to be aware of it. (That’s right.) It’s when you go backwards, you take a lot of things for granted — forget the blind-spot warnings and the backup cameras, just your expectation of field of vision (Yes.) is so different.

McKeel Hagerty (00:37:43): It’s a different kind of attention, driving a vintage car.

Barry Ritholtz (00:37:47): It’s much more focused.

McKeel Hagerty (00:37:48): It’s more focused. And I love it. And I encourage people — just try it out. It’s a great experience.

Barry Ritholtz (00:37:55): So what are some of the bigger trends you’re seeing in collecting? What’s changing these days?

McKeel Hagerty (00:38:02): Well, again, big story — contrary to data that we were reading a few years ago, the next generations are absolutely into cars. They like them. They’re just into different kinds of cars than our parents were, or we were.

Barry Ritholtz (00:38:13): Well, doesn’t every generation sort of lust after the cars from the high school parking lot?

McKeel Hagerty (00:38:19): I think that’s right. And they’re different. One of my little cottage industry things that I do: if I’m ever driving anywhere near a high school parking lot, I look to see where the young car people park their cars. And they usually park them in the back of the parking lot, not up near the school, and they all park next to each other, so they can go hang out afterwards. And what you’re going to see right now, with the 17- and 18-year-old car people in these high schools: you’re going to see BMWs, you’re going to see Audis, you’re going to see various performance Japanese cars. You’re not going to see anything fancy — they can’t afford them. But those are the cars they’re starting with.

Trucks are, of course, another big entry point, and it’s been another huge trend. So not just pickup trucks, but kind of vintage SUVs. So Jeeps are still, right now, one of the hottest brands — it’s huge. Broncos are one of the hottest things, of course, if they can afford them. A Land Rover, or International Scouts — these are the cars that people are interested in, because so many cars today are SUVs anyway, and the vintage versions of them are these kind of more off-road vehicles. And there’s a big industry of modifying them, making them work a little bit better. So that’s another big trend — next generation, trucks, I guess I would say.

And flying over the top of the whole industry, at the top end of the market — just to add on to the answer to your question — the ultra-luxury, kind of supercar manufacturers are making more cars than ever before. And so you think of those brands — like Ferrari or Lamborghini or Bentley, or even Porsche, my beloved 911s — those companies are just building a lot more cars and pumping them out into the market, at price points that are different than they used to be. When Ferrari or Lamborghini were building hundreds of cars a year — well, now Ferrari is a 14,000-unit-a-year manufacturer. Lamborghini, when you add their SUV in, is an eight or nine thousand vehicle manufacturer. I mean, when I was a kid, you never saw a Lamborghini unless you just happened to be in Beverly Hills or Palm Beach or something. And now they’re everywhere. I mean, even in my little town in northern Michigan, there are a couple of Lamborghinis driving around. I’m like, oh my goodness. That’s amazing.

Barry Ritholtz (00:40:34): What’s crazy is, where I live, I am 15 minutes from a Ferrari dealer, two Porsche dealers, the Bentley-Lamborghini dealer. And I take it for granted — I see these cars all the time. But as a kid, you hardly ever saw these around. A Porsche was an exciting thing.

McKeel Hagerty (00:40:54): It was. So they are building my next generation of customers. Every one of these manufacturers is like my best friend, because they’re building the cars that I will be insuring this year — and 25 years from now.

Barry Ritholtz (00:41:07): So your boy Jason Cammisa mentioned he’s only a manual driver. I embrace that — makes the car even that much more difficult to steal. But I’m curious — amongst the trends in collecting, I’ve been hearing about a move towards analog, towards manual, away from the big dominant screens. What does your data say?

McKeel Hagerty (00:41:33): Well, it’s true. And in fact, you think about some of those very same supercar manufacturers that signaled years ago — we’re getting rid of manuals; everything’s going to become this super electronic sort of driving experience —

Barry Ritholtz (00:41:46): Faster on a track. Faster on a track.

McKeel Hagerty (00:41:48): Yeah. And they are. And by the way, the one nice thing about the PDK — if you drive them in the winter… I happen to love driving Porsches in the winter. PDK is pretty nice in the snow, for what it’s worth. But setting that aside — I’m just totally impressed that many of these car companies are kind of going back on what they said they were going to be doing, and starting to — not reintroduce manuals, but they’re producing another extra model with the manual in it.

Barry Ritholtz (00:42:15): At a very high price. At a very high price. You look at the Porsche S/T, or all the GT3s, if you want a manual. My GTS was the last year it came with a manual, which was ’24. And the Turbo — I think 2013 was the last year with a manual, something like that. So it’s amazing — they took the supply away and said, all right, if you want a manual, we’ll give it to you, but it’s $300,000.

McKeel Hagerty (00:42:46): Yes, yes. And what they saw — they were looking at the auction data, from our auction companies and others, and suddenly the manual version of something: huge, absolute premium.

Barry Ritholtz (00:42:55): And now manual swaps are showing up in V12 Aston Martins and 430 Ferraris. I see these all the time.

McKeel Hagerty (00:43:08): Absolutely. So again, I think it’s the return of the analog — people more interested in driving. I mean, I think we’re all trying to absorb what COVID did. COVID was a boom —

Barry Ritholtz (00:43:20): I’m sure.

McKeel Hagerty (00:43:20): — time for these kinds of cars. But even afterwards, I think people were embracing slower hobbies, slower things: playing music, camping, hiking, outdoor pursuits. And in some of these things, cars sort of fit into that a little bit. Something to just go out and take a long, slow Sunday afternoon drive is not something from the rush-rush world of what mileage does it get and what’s the lease payment on it. It just comes from a different place, and there’s a bigger audience than people think who are willing to spend real money on it.

Barry Ritholtz (00:43:59): There’s a data point you guys have referenced that I want to ask you about. Quote: “We estimate that approximately 12 million enthusiast vehicles will transfer to a new generation in the United States over the next 15 years, either via estate plans or inheritances.” What is this generational handoff — from, I guess we could call them boomer collectors, to millennials and Gen Z — what does this mean for the car collecting community?

McKeel Hagerty (00:44:31): Well, I think we’ve all read that there’s this huge, gigantic wealth transfer, whatever the headline number is. I’ve heard —

Barry Ritholtz (00:44:37): 65 trillion.

McKeel Hagerty (00:44:38): I’ve heard a hundred trillion, 70. And our estimate, just on that number of 12, 13 million vehicles, is about $570 billion worth of car value right now. Most of those are held in the hands of the generation of baby boomers. I’m an older Gen Xer — Gen Xers are starting to come into their peak wealth years, past peak earnings, buying a lot of cars. But 15 years from now, about a third of that whole market will come loose. And again, we’re seeing this. Certainly the entry points are different than they were a generation ago — people are interested in sporty cars, trucks, younger kind of “youngtimer” cars, as they refer to them in Europe. We’re seeing the data. We want to position ourselves well to see that the transfers are kind of smooth, where you’re kind of helping the next generation get into these cars. We’re actually doing things like teaching manual driving classes — because it’s not just an anti-theft device, or some slow hobby like brewing beer or whatever it is. We need to teach the next generation how to drive manuals. And it’s not that hard to do it.

Barry Ritholtz (00:45:58): Not only is it not that hard, it’s just so much more engaging. And not to be a stick snob, but it really is a very different experience. And yeah, I know the GT3 in the PDK is faster than the stick — but how often am I taking my car on a track? If that’s once or twice a year, it’s a lot. What about the other 360 days a year?

McKeel Hagerty (00:46:24): Well, and even if you did — you and I, neither of us are good enough drivers to really make a difference.

Barry Ritholtz (00:46:30): Speak for yourself, McKeel!

McKeel Hagerty (00:46:31): Okay, one second — different than the laptop.

Barry Ritholtz (00:46:35): Whatever it is. It’s funny, because I’ve done all the high-performance driving classes, and the reality is, if you’re in a Roush Mustang up at Lime Rock, they said: put it into third, leave it there for the whole track. (Right, right.) So really, driving the stick isn’t that much different. But if you’re really doing a competitive course, of course not. First of all, the car doesn’t stop — the dual clutch is so fast, the engine is always engaged. (Yes.) So you’re not losing that tenth of a second when the clutch is down and you’re losing power. But it still just feels so much more engaging.

Related question to the analog and the manual: you do a Bull Market List every year — the 2025 Bull Market List. The average model year of featured cars used to be in the late eighties, early nineties. All of a sudden, it’s 2001. How did that happen? What’s driving that shift in bull market attractiveness? Is it that pre-screen, analog, manual feel — but not quite as old as the seventies, eighties cars?

McKeel Hagerty (00:47:52): I think so. But it’s also a combination of what’s driving demand. One, there’s absolutely a new cohort of people getting in, making a little bit of money, buying these things. At the top end of the market, though, it’s not just — oh, the new young tech guy who’s going to be in the OpenAI IPO and is going to make money and go buy a car. Older-generation collectors are also buying a lot of these new cars at auction. And it’s interesting — I’ve seen this twice in my career. In the big muscle car era, which was 2005, ’06, ’07, right before the great financial crisis, everybody said, oh, it’s a new generation of people buying all these American muscle cars and paying a lot of money for them. And that was true. But it was also the older generation of collectors, who liked earlier cars, saying — well, maybe those are cool and I want one too. And by the way, I have more money than you, so I’m going to outbid you at auction, and it’s mine.

Same thing right now in this, let’s say, supercar segment, where a lot of these cars from the nineties and two-thousands — we see these values going up. It is the newer money, newer collector. But it’s also an older generation of collectors saying, well, I don’t want to be left without a cool car. In fact, one guy told me recently — he bought a Bugatti Veyron and a couple of newer cars — he said, well, I want to have a car that my grandkids think is cool. And so I’m like — got it.

Barry Ritholtz (00:49:15): And that’s not the Bugatti Veyron?

McKeel Hagerty (00:49:18): Grandkids don’t like that? He says he loves it. He said, I’m taking my grandkids for rides in the Bugatti Veyron. And so they think it’s cool.

Barry Ritholtz (00:49:25): Yeah, I can imagine. Alright, last question before I get to my favorites, because I know (Yep.) we’re watching the time. So you guys crunch so many numbers, so much data. What do you think the casual observer of collector cars misses that your data is revealing?

McKeel Hagerty (00:49:44): Well, I think those big headline cars attract so much attention, and people just think it’s this crazy, very high-end market of very, very rarefied cars. And while that is true — those are the headline-grabbing numbers — the big story is that there’s just a much, much wider opportunity for people who want to play in this space. Every single price point, every little bit of reliability, and everything from pickup trucks — like I said, if you live in that part of the world and that’s something that’s interesting to you. It’s a very broad-based hobby.

It’s also — this was a hobby that for many, many years was very much male-oriented, male-driven. And I can see that in the data of who our insureds are and everything else. There’s a really rising cohort of young women — women who want to have these cars and have it be part of their lives too. I think that’s probably one of the most exciting trends. So: very broad-based.

Barry Ritholtz (00:50:43): I’ve noticed a lot more women YouTubers talking about cars.

McKeel Hagerty (00:50:47): And coming to cars and coffee with their cars, and that sort of thing. So there’s just a lot more to it. It’s much broader-based. And sure, it’s fun to see a multimillion-dollar whatever sell someplace, but that’s just not the average reality. The average is actually much broader-based and much more interesting.

Barry Ritholtz (00:51:04): So I want to get to our favorite questions, but I’ve got to throw some other stuff first. Let’s just do a quick speed round. Someone comes up to you and says: hey, I’m interested in a fun weekend car. I don’t have a lot of money, but I’d like a convertible, stick shift. What do you say?

McKeel Hagerty (00:51:19): Mustang.

Barry Ritholtz (00:51:22): Mustang, of course. Other than a Ferrari, you say “of course” — because I would’ve said Miata.

McKeel Hagerty (00:51:26): Oh yeah. Well, Mustang or Miata. And I always tell people — the oldest Miata is now 33 years old, something like that. And they made over a million of them for the US market. Super reliable. If you want to go track driving, they’re the great track cars. If you want to just cruise around on a weekend, they’re inexpensive — 10, 15 thousand dollars. (Right.) But same thing with the Mustang.

Barry Ritholtz (00:51:49): And a little more horsepower in the Mustang.

McKeel Hagerty (00:51:51): A little bit more horsepower. They made a lot of convertibles. They’re manuals — they’re automatics, if you don’t feel comfortable with that. And very, very affordable cars, and easy to get serviced. So those would be my two recommendations. Of course, the most collected car, though, still in the United States is the Corvette. They’ve been making them forever. There are lots of them. Easy to service.

Barry Ritholtz (00:52:13): And not that expensive — especially like a C6 or C7. Not for a semi-modern car.

McKeel Hagerty (00:52:19): They’re amazing. They’re amazing cars.

Barry Ritholtz (00:52:22): Someone says, I’m interested in something European, a little more interesting, sporty. Where do you send them?

McKeel Hagerty (00:52:29): Well, I’m a Porsche person, so I would say: great, you want a 911, but let’s start you in a Boxster — some more entry point there. And that younger generation that I talked about — the 3 Series BMWs: super fun cars, lots of them built, with a lot of quality, and they kind of have style. They look good. That’s where people go.

Barry Ritholtz (00:52:53): Yeah, those have aged beautifully — the design of the early BMWs. Someone who has a little more scratch, a little older, says: hey, I’m looking for something fun, but it’s going to retain its value, and I’m willing to spend more than my kid buying a Boxster.

McKeel Hagerty (00:53:12): Well then — again, my bias here — I’d still probably say 911, but you’re going to pick a year that was maybe slightly off. They’re going to hold their value well. I actually did a kind of market-cap comparison between every 911 ever built versus every Ferrari ever built. Because people talk about Ferrari GTOs and all this sort of thing, which are worth tens of millions, but I’m like —

Barry Ritholtz (00:53:36): 275s. Yeah. And they were just spectacular.

McKeel Hagerty (00:53:39): They are. I love them. But when you look at all the 911s that were built — they were really undervalued for a long time. I mean, people used to give me a hard time, because my ’67 911S — when I spent over a hundred thousand dollars having it professionally restored, not that many years ago — I mean, after my very amateurish high school restoration — I spent a hundred thousand, or a little bit more than that, and it was worth about 70. (Right.) Well, now it’s worth about 300. (No kidding.) Yes — 250, 300 for a ’67 S. And people say, what’s your 911 worth? I’m like, I don’t care. It’s my baby. I and my family will have that car forever.

Barry Ritholtz (00:54:22): I have a bias against garage queens, but I’m curious as to your thoughts — people who buy cars, put them in a garage, never drive them.

McKeel Hagerty (00:54:30): I think those are really sad cars.

Barry Ritholtz (00:54:32): Right? They’ve got to be great for business, because there’s zero risk.

McKeel Hagerty (00:54:35): Yeah, the claims are low. But they’re sad cars. And especially — by the way, there’s almost not a single generation of cars that fares well when it sits around for a long, long period of time. Tires age, belts and hoses age. And some of those nineties and two-thousands cars, they age particularly badly when they sit in the garage. Lots of maintenance required. So my view is — if you’ve got a car, unless it’s got six miles on it, or 15 miles, and you just think that’s what makes it cool (and there are a lot of customers that we have that like that), my view is: go drive it. We sold at our Amelia sale one of the two record-setting Ferrari Enzos. We sold it for $15 million. The car had, I think, 249 miles on it. A Ferrari Enzo. And everybody’s like, what do you think of that? I’m like — I would rather have the 20,000-mile Ferrari Enzo that I could go drive. I mean, that’s just personally myself. And I congratulated the buyer — wonderful buy, sir. But I would like the —

Barry Ritholtz (00:55:30): Please drive it. Please drive it. Doug DeMuro said something really interesting about his Carrera GT. When he was hunting for one, he found one with higher mileage, because he said: I won’t go through the process of “I’m not going to drive this because I’m depreciating it.” Starting out higher mileage, you’re more inclined to put miles on it.

McKeel Hagerty (00:55:50): I have one vintage car that has super low miles on it. It’s a Jaguar E-Type, 1966. (Lovely.) It had 13,000 miles on it when I bought it, and it has about 15,000 miles on it now. And it just bugs me, because I feel like it should be driven — and then I worry that I’m just putting a bunch of miles on it. So I don’t know — I have the same quandary. So I just like to drive cars.

Barry Ritholtz (00:56:11): So we are recording this right after Ferrari dropped their new Elettrica — electric appliance, I don’t even want to call it. My Ferrari buddies are not big fans of all the new versions that have been coming out. I still think the 458 is really handsome. I love the 812 GTS — if I ever get that garage built, one of those has my name on it. But the question for you is: when you see these new cars coming out, and they’re so technology-heavy and so screen-focused, how do you think these will fare as collectibles 20, 40, 60 years from now?

McKeel Hagerty (00:57:01): Well, I can tell you, I will never bet against Ferrari. Not ever once. Because it is just — forever, since the day the first one was built, there’s been something magical about that brand. I love the history — the fact that when Enzo Ferrari, back in the day, would show up with one, everybody knew: well, that’s the car to beat, period. And even though sometimes you beat them, sometimes you didn’t, they were just the car to beat. And I also remind people that companies like Ferrari have always had different lines of cars. Ferrari always had race cars, but they also always had their, like, businessman’s car — a front-engine, slightly less performance —

Barry Ritholtz (00:57:40): The 550s, 599s, 612s. Exactly. Even the 575.

McKeel Hagerty (00:57:44): Well, and the SUV — the Purosangue, right? People said they’ll never build an SUV. And I remember I was talking to Bob Lutz, and he just said: watch. I’m like, why do you think they will build an SUV, Bob? And he said: because they have to.

Barry Ritholtz (00:57:58): I was going to say — the Cayenne and the Macan saved Porsche.

McKeel Hagerty (00:58:02): They saved Porsche.

Barry Ritholtz (00:58:03): All right. (Yes.) Ferrari had to be watching that. They had to be seeing the Urus sales. (Yes.) Which is essentially a rebadged truck from Audi with a whole lot more horsepower. I mean, how do they not do that?

McKeel Hagerty (00:58:18): They had to. And I think — I get it. This particular electric car has not necessarily had the most favorable initial reviews. But my view is, I will never count Ferrari out. And I think they probably are seeing some things in their data, and with some certain customers who want this. And we’ll see.

Barry Ritholtz (00:58:34): We’ll certainly see. So let me jump to my favorite questions (You bet.) so I don’t make you late for your trip back to the Midwest. Who were your early mentors who helped shape your career?

McKeel Hagerty (00:58:48): My mentors went from kind of macro mentors to micro mentors. In the early days, of course, it was my parents. My parents had very different skill sets, and I was so blessed that I got to work with both of them. There were some teachers early on who were really extraordinary professors, who I think triggered my love of learning. One gentleman — his name was Gary Hart, still living; I kind of look after him in his old age — he just fundamentally taught me how to be a good student.

But what I found, though, is my mentors have become more micro mentors now. Less of — it’s my whole life, learning everything about something from this person. Now I find somebody who’s really good at one thing, and I learn from them. I become friends with them. My current lead director on our public company board, Bill Swanson — he was the chairman and CEO of Raytheon. Wonderful man, car collector, and just brilliant at board governance and how to think things through. And I’m just learning so much listening to him. And so he is a real mentor of mine. And so I think I’m very much of that tribe-of-mentors approach. I’ve had many, and I love mentoring myself.

Barry Ritholtz (00:59:58): Huh — really, really interesting answer. What are some of your favorite books? What are you reading right now?

McKeel Hagerty (01:00:02): So I’m an avid reader. I read 30 to 50 books a year, typically. (Wow.) And a lot of biographies. In the last four or five years, I was definitely on a music biographies stint — so, a lot of rock and roll biographies.

Barry Ritholtz (01:00:17): Give us a few names.

McKeel Hagerty (01:00:18): Oh, everything from the Keith Richards to Slash to — you name it. I read a lot of biographies: Springsteen, anybody. Then I did an interesting kind of parallel set, which was music producers. And that was fun. So everything from — there’s a famous book on Warner Brothers music called Sonic Boom, which was about all of the music producers that did that — to Clive Davis, to those types of folks.

For this year, though, my reading theme is all about the founding of America. So I’m reading a lot of kind of American founding stuff — I just figured it’s a good time to do that. (Sure.) So, biographies so far this year on George Washington, Benjamin Franklin; there were a bunch of other books around a lot of the founding fathers. I’m also wading through Wealth of Nations again, for the first time since college — because it was also published in 1776. I’d forgotten that.

Barry Ritholtz (01:01:13): That’s a little bit of a slog.

McKeel Hagerty (01:01:14): Yeah, that’s a beast. That’s a beast. But I would say one final piece — I was a sci-fi fan forever. (Oh really? Same.) And I decided, for the last two years, to start rereading a bunch of the great series that I read a long time ago. So I just read the entire Dune series for the third time in my life. (Wow.) And that was fun. The Foundation series, all of Clarke. I think what I had forgotten is that almost all of those sci-fi authors knew each other. (Yes.) They all kind of subscribed to some of the same magazines, and they’d get together for these little get-togethers, and they were all kind of envisioning a future together. And a lot of the same themes — and especially right now, the challenges with AI — are all embedded behind the Foundation series, and even in Dune. You kind of have to read into it, but it’s fascinating stuff.

Barry Ritholtz (01:02:08): Larry Niven, Philip K. Dick — any of those?

McKeel Hagerty (01:02:12): Yes. And of course, Hitchhiker’s Guide to the Galaxy — for a little bit of humor.

Barry Ritholtz (01:02:17): Classic. Yes. What are you streaming these days? Give us your favorites — either YouTube or Netflix, or even podcasts. What’s keeping you engaged?

McKeel Hagerty (01:02:25): Yeah — so my workout companion is a lot of podcasts. And they’ve kind of shifted, I guess, a little bit. During COVID, it was a lot of sort of habits-and-mindset stuff and that sort of thing. And then I discovered people like Scott Galloway — his very humorous way (Sure.) to think about business. Tyler Cowen, I think, is just absolutely brilliant — so, great podcast there. I’ve also been impressed with — Audible has a number of their own. Again, back to the musical biography thing — they have a lot of these short-format podcasts, kind of quasi-musical performances that are both kind of spoken word and music in one. It’s actually called the Words and Music series. And that’s been really fun to listen to some of those.

Barry Ritholtz (01:03:13): Words and Music. Yes — I’m going to have to check that out. All right, our final two questions. What sort of advice would you give a recent college grad interested in a career in either automobiles or insurance, or business?

McKeel Hagerty (01:03:27): I’ve just been to two different commencement ceremonies. One was my daughter’s, and another was some friends’. And all of the commencement speakers right now are so focused on AI, and trying to tell them it’s going to be okay. And not only do I think it’s going to be okay — as I always remind them, and people, of my own career: my core business is what some people would call a relatively boring industry, insurance. You don’t have to go into the cool stuff. I think there are so many opportunities in these industries that are established, they’re stable, and they need really smart people who want to work hard and remake what they are. So don’t overlook things that you consider boring today. Look at some of those, and think about the types of people that are going into them, where you can make a great career. I never imagined I’d be doing what I am today, and I think I have the coolest job you can have.

Barry Ritholtz (01:04:23): Huh. Really, really interesting. And our final question: what do you know about the world of automobiles or insurance today that might have been useful 30, 40 years ago when you were first ramping up?

McKeel Hagerty (01:04:36): I think the world has been predicting the demise of certain parts of the automobile industry for years. And we saw it very recently with this almost, like, holy war of how people view the difference between EVs and internal-combustion cars. And I’m very agnostic about all of that stuff. And it’s very easy to kind of get sucked into those arguments — like, well, what do you think of EVs? I’m like, I don’t know. There were EVs back in 1908. (That’s right.) There were steam cars in 1910. And now, you know, we’ve been on internal combustion for a long time. I think there will be more electric cars in the future, but I also think there are going to be great internal-combustion cars. So I think I would just continue playing the big long game, and don’t worry about some of the little petty arguments that people can have. It makes for good cocktail party talk, maybe, but I’d like to see the big picture.

Barry Ritholtz (01:05:29): McKeel, thank you for being so generous with your time. We have been speaking with McKeel Hagerty, chairman and CEO of Hagerty specialty insurance. If you enjoy this conversation, well, be sure and check out any of the 648 we’ve done previously. You can find those at YouTube, Apple, Spotify, Bloomberg — wherever you get your favorite podcasts.

I would be remiss if I didn’t thank the crack team that helps us put these conversations together each week. Alexis Noriega is my video producer. Sean Russo is my researcher. Anna Luke is my podcast producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

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The post Transcript: McKeel Hagerty, CEO and Chairman of Hagerty Insurance appeared first on The Big Picture.

Futures Mixed Ahead Of CPI And Warsh Testimony, As IBM Sinks, Bank Earnings Fizzle

US stocks are struggling for direction as traders waited to buy the dip on a busy day that kicked off with Wall Street earnings whichwith JPM, BofA, Goldman, Citi and Wells all reporting. Kevin Warsh’s testimony before Congress and CPI data are due later. As of 8:00am ET, S&P 500 futures fell 0.2% with Nasdaq 100 contracts up 0.6%, set for a rebound from the selloff in AI-linked names yesterday and defying declines elsewhere. In premarket trading, IBM crashed 20% - the most since 1987 - after unexpectedly preannouncing a big revenue miss; elsewhere, semiconductors are leading after Korea's Kospi staged a powerful rebound from session lows while SK Hynix saw a 10% swing in Korea trading; Mag7 is mixed, and the AI theme is bid.  WTI crude traded around $80/bbl and Brent above $86/bbl (both off session highs) as the ceasefire / MoU appear to be voided with both sides claiming control of the SoH.  Both Disc and Staples are lower, perhaps reflecting some consumer fears. Energy / Mats are bid on the Middle East, Fins are bid into earnings, Industrials are higher with the AI theme with HC mixed. Higher oil prices lifted odds of a July US rate hike in place, with swap markets signaling a nearly 40% chance of a hike when the Fed meets later this month. The yield on two-year UK gilts touched the highest level since May. Treasuries edged higher and the dollar fell. Traders will closely watch the CPI data, especially after the Fed’s Waller, a former dove, said Monday that a hike is on the table if inflation stays hot and as bond market volatility saw a double-digit jump. The recent fall in gasoline prices likely helped drag down the CPI print, which may notch its first monthly decline since the onset of the pandemic in 2020.  The macro focus is on CPI plus the consumer / GDP read-through from GSIBs. The data calendar includes weekly ADP employment change (8:15am), June CPI (8:30am) and May TIC flows (4pm), Fed calendar includes Warsh’s testimony on its Semi-Annual Monetary Policy Report before the House Financial Services at 10am. Also scheduled to speak are Governor Barr (12:40pm), Chicago Fed’s Goolsbee (1pm) and Governors Cook (1:30pm) and Bowman (2:55pm).

In premarket trading, Mag 7 stocks are mixed:  Apple is down 0.7% after being cut to underweight at KeyBanc, which expects weaker device demand and service revenue growth in the US (Nvidia +1.2%, Tesla +0.3%, Amazon -0.4%, Alphabet -0.5%, Microsoft -2.8%, Meta Platforms -1.1%).

• IBM (IBM) sinks 19% after reporting preliminary quarterly sales results that missed analysts estimates, with Chief Executive Officer Arvind Krishna saying customers were holding back spending.
• Software and IT/professional services stocks are broadly lower after IBM’s preliminary revenue for the second quarter fell short of the consensus estimate. Microsoft falls 2.8%, Intuit drops 5% and Adobe declines 4.8%
• CoStar Group (CSGP) falls 5% after the real estate analytics firm named Robin Rossmann as the company’s next CFO. Rossmann will succeed Christian Lown, who is stepping down to pursue an opportunity outside the company’s industry.
• Goldman Sachs Group (GS) climbs 1.3% after posting $7.42 billion for a quarter with record-breaking stock-trading results, driven by financing and taking profit in arranging bets.
• JPMorgan (JPM) falls 2% after the lender said it sees full year adjusted expenses at about $107.5 billion, previously seeing about $105 billion.
• O-I Glass (OI) slips 3% after BofA cut its rating to underperform from buy, saying relative upside for the shares may lag due to volume weakness in glass packaging.
• Trex (TREX) climbs 3% after the decking manufacturer’s second-quarter net sales forecast beat the average analyst estimate.

In other AI related developments Nvidia and Mitsubishi Heavy Industries are looking to tie up on AI data center technologies, Nikkei reported, and Samsung is said to be in early discussions for a potential US share sale. Memory and chip stocks remain the core equity theme after investors poured $21 billion into ETFs last week, according to JPMorgan. In other corporate news, Brown-Forman President/CEO Lawson Whiting is set to step down once a successor is named. BP said it expects to write down another $1 billion from energy transition assets in the second quarter, as the British major continues the painstaking work of re-orientating itself toward its core oil and gas business. Apple falls in premarket trading after being cut to underweight from sector weight at KeyBanc, which expects weaker device demand and service revenue growth in the US.

Today's event-filled calendar began with a mixed reaction to Goldman Sachs, JPMorgan, Bank of America, Wells Fargo and Citigroup, as the banks were already priced to perfection, and despite blowout earnings, their stocks mostly dipped in premarket trading. June CPI data is expected to show some relief after inflation accelerated rapidly from March through May. Federal Reserve Chair Warsh is scheduled to testify before House members hours later.

“Geopolitics on the margin is a negative, but the oil price has not spiked dramatically,” said Richard Flax, chief investment officer at Moneyfarm. “I expect Warsh will give a sort of data-driven speech rather than say too much about forward guidance. For us, it’s more about the inflation data.”

Warsh would probably prefer not to present this week’s Humphrey-Hawkins testimony, but “Congress isn’t inclined to let Warsh off the hook,” writes Bloomberg Senior US Economist Andrew Sacher, who outlines what to expect from Warsh’s appearances. 

In an escalation of the standoff between the US and Iran over the Strait of Hormuz, President Donald Trump reinstated the blockade of Iranian ships transiting the waterway and demanded a 20% reimbursement for all other cargo. US forces also completed another round of strikes against the Islamic Republic.

“We know the market can sustain far higher oil prices and US stocks keep rising,” said Alpesh Patel, managing partner at RootBridge Capital. “The only thing that matters is any indication rates are going to rise.”

Global investors buying stocks aggressively should consider reducing exposure with investor sentiment getting extremely bullish, according to the latest BofA Global Fund Manager Survey, with positioning on US equities now at its highest level since December 2024 at a net 24% overweight, cash levels “uber-low” at 3.6%, and BofA’s Bull & Bear Indicator now at the extreme bull reading of 9.

Overnight, China exports climbed 27% from a year earlier, exporting a record $412 billion worth of goods in June, blowing past all forecasts and turbocharged by a global investment supercycle in AI.

In a sign of confidence that the artificial-intelligence buildout will keep on fueling demand for chips, people familiar said Samsung Electronics is exploring a potential offering of ADR, similar to SK Hynix, in hopes of top ticking the memory bubble. Semiconductor stocks bounced in early US trading after Monday’s rout. “This suggests that the Nasdaq could break its short-term negative correlation with the oil price, and rise alongside energy prices if this continues,” wrote Kathleen Brooks, research director at XTB.

In Europe, the Stoxx 600 slid 0.4%, having dodged the weakness in tech stocks on Monday, is falling 0.6% with a drag from the media, travel and consumer sectors. Ericsson AB’s shares fell as much as 10% after warning that margins in its main networks business will come under pressure. Here are the biggest movers Tuesday:

• Mycronic shares gain as much as 14% to hit a record high as earnings from the Swedish electronics equipment group beat forecasts. DNB described the report as “impressive”
• BP shares surged as much as 3.3% to touch a one-month high as Jefferies noted that the oil major’s net debt estimates for the second quarter had undershot expectations
• Allegro climbs as much as 6.5% to highest since 2022 after the Polish e-commerce company reported strong preliminary 1H results and indicated it may raise its full-year outlook
• Salzgitter shares rise as much as 7.4% as Jefferies upgrades its rating on the steel producer to buy from hold, citing benefits from EU steel quotas
• Hapag-Lloyd shares rise as much as 8.2% in Frankfurt after the German container shipper boosted its Ebitda forecast for the year
• Genus shares rise as much as 14%, the most in about six months, after the animal genetics specialist said it now sees full-year profit ahead of market expectations
• Ericsson shares fall as much as 10% after the Swedish mobile networks and technology group said margins for its key Networks division will come under pressure in the second half of 2026, overshadowing otherwise in-line figures
• IntegraFin shares fall as much as 5.4%, the most in nearly two months, as the investment platform sees third-quarter flows come in slightly below some analysts’ expectations
• Norske Skog falls as much as 18%, the most since February 2025, after the Norwegian paper and forestry firm reported its latest earnings, which included misses on total operating income and Ebitda
• Norion Bank falls as much as 13%, the most since February, after the Swedish banking group reported weak second-quarter earnings. SB1 Markets points to an underlying miss in net interest income and higher costs

Asian stocks reversed earlier losses as South Korean memory chipmakers rebounded in late trading. The MSCI Asia Pacific Index gained 0.4% after falling as much as 1.6% earlier in the session. Samsung was the biggest boost to the index amid news the company was in early discussion for a potential share sale in the US. SK Hynix also erased an early plunge, helping to lift the Kospi gauge. The movements in Korea’s memory chip stocks underscore the extreme volatility gripping some of the world’s biggest beneficiaries of the artificial intelligence boom. Japan’s Topix rose as investors looked for opportunities in non-tech sectors that have lagged the broader market. Taiwan’s Taiex index dropped 1.4% to its lowest in more than two weeks.

The “recent volatility indicates you are starting to build two camps — one remains very optimistic, whereas you have a growing group that question the sustainability,” said Mattias Martinsson, chief investment officer at Tundra Fonder AB. “That creates a tug of war, from day to day, which has very little to do with geopolitical events. For today the optimists have the upper hand.”

In rates, treasuries are little changed after retreating from session highs reached as oil extended its climb, with investors awaiting testimony by Fed Chair Kevin Warsh and June CPI report. US 10-year yield near 4.62% outperforms bunds and gilts in the sector by 2bp and 4bp following retreat from 4.634%, highest since May 20; curve spreads are also little changed. 2- and 5-year tenors reached new YTD yield highs. Around 11bp of Fed tightening is priced in for the July policy meeting following Monday’s increase on hawkish comments from Fed Governor Christopher Waller.  Money markets see at least one Bank of England and one European Central Bank rate hike this year, while leaning strongly toward a second in December. IG dollar issuance slate empty so far. Monday saw a combined $6.7 billion priced as issuers paid about 2.7 basis points in new issue concessions on deals that were 5.5 times covered.

In FX, the Bloomberg Dollar Spot Index is down by 0.2% and moves across currency markets remain relatively muted.

In commodities, Brent extended its gain to $86/barrel on the new US blockade of Hormuz is driving more rate-hike bets from traders and rippling across the short-end of European bond markets.  WTI crude oil futures are up about 3%, off session highs reached as the truce between the US and Iran collapsed following fresh attacks on shipping in the Strait of Hormuz. Gold is gaining to move back above $4,000/oz. 

The US economic data calendar includes weekly ADP employment change (8:15am), June CPI (8:30am) and May TIC flows (4pm), Fed calendar includes Warsh’s testimony on its Semi-Annual Monetary Policy Report before the House Financial Services at 10am. Also scheduled to speak are Governor Barr (12:40pm), Chicago Fed’s Goolsbee (1pm) and Governors Cook (1:30pm) and Bowman (2:55pm)

Market Snapshot

Top Overnight News

• President Donald Trump formally notified lawmakers this weekend that the nation is once again at war with Iran, giving his administration another 60-day clock to use the military in the region without congressional approval. Politico
• Brent topped $86 as Donald Trump said he would reinstate a blockade of Iranian ships transiting the Strait of Hormuz at 4 p.m. ET today. BBG
• For decades, OPEC influenced the market by how much oil it produced. But China, the largest importer, is demonstrating its remarkable power over prices. Typically the world’s largest oil importer, China slashed purchases this spring, reducing demand so much that it prevented oil prices from soaring even higher earlier in the war. WSJ
• Trump plans to back a Russia sanctions bill championed by late Senator Lindsey Graham, a person familiar said. His support would be a major win for Ukraine’s push to punish buyers of Moscow oil and gas. BBG
• China's exports surged in June, buoyed by orders for chips to fuel the global AI boom and automobiles, deepening producers' reliance on overseas buyers as policymakers in the world's No. 2 economy continue to grapple with ‌how to boost demand at home. The stronger-than-expected trade performance keeps China on track to post a surplus topping $1 trillion for a second straight year, with factories sustaining sales despite slowing growth in major economies and trade frictions with Washington. RTRS
• Japanese policymakers on Tuesday flagged the possibility of changes to the asset allocation of the ‌nation's giant state pension funds, though they offered no clues on the timing or scale of any shift. RTRS
• Over the past year, the Trump administration has made deals to acquire equity stakes in more than two dozen firms, an unusual practice that extended the government’s influence over industries including semis, nuclear energy, minerals, and quantum computers and steel. AI execs are increasingly wondering if they will be next. NYT
• Gov. Kathy Hochul is banning large data-center construction for up to a year, making New York the latest state to confront the rollout of sites powering the artificial-intelligence boom. The move responds to concerns over power costs, water supplies and community impacts as states consider limits on AI infrastructure’s effects on electricity grids and utility bills. WSJ
• As Warsh prepares to face Congress, traders now see a US rate hike later this month as a coin toss. Money-market pricing suggests traders boosted their wagers for a July increase to almost 50% after yesterday’s strikes on Iran. BBG
• US House will vote today on merging the SAVE America Act with a national security and State Department funding bill: Fox 
• Trump said they're looking into whether Cuba is storing Iranian drones, while he added that they will take care of it if Cuba has Iranian drones.
• CPI Preview: Goldaman expects a 0.17% increase in June core CPI (vs. +0.3% consensus), corresponding to a year-over-year rate of +2.76% (vs. +2.9% consensus). The bank expects a 0.11% decline in headline CPI (vs. -0.1% consensus), reflecting lower energy prices. The forecast is consistent with a 0.24% increase in core PCE in June, reflecting another large increase in its financial services component. 

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly in the red following the weak lead from the US, where risk sentiment was weighed on by tech selling and geopolitical escalation, while US-Iran strikes persisted for the third consecutive night and Trump announced to reinstate the naval blockade on Iran, as well as touted a 20% Hormuz shipping fee. ASX 200 was dragged lower by weakness in tech, industrials, consumer staples and financials, but with the downside stemmed by resilience in energy and utilities, while there was also an improvement in Westpac Consumer Sentiment. Nikkei 225 initially dropped below the 67,000 level amid tech weakness and higher oil prices, but then gradually nursed its losses and returned to flat territory as domestic yields softened. Hang Seng and Shanghai Comp conformed to the tech-related weakness and ultimately failed to benefit from the better-than-expected Chinese trade data.

Top Asian News

• Japanese Finance Minister Katayama suggested it is time to consider including JGBs in NISAs, and stated that if the environment surrounding asset management changes sharply, a change to GPIF's portfolio could be examined, while she hopes to quickly establish details on steps to make Japanese government bonds more attractive.

European bourses (STOXX 600 -0.6%) are lower across the board after Monday's choppy trade. Escalating US-Iran tensions return as a headwind for Europe, with energy prices rising, weighing on many of the continent's biggest industries (airlines, luxury). European sectors highlight the negative bias. Basic Resources (+1.3%) and Energy (+1.2%) are printing decent gains, while Utilities (+0.3%) and Chemicals (+0.2%) also trade in the green. To the downside is Travel & Leisure (-2.1%), Media (-2.0%), and Consumer Products & Services (-1.9%).

Top European News

• EU Commission approved EUR 659mln German State aid for four new semiconductor facilities.
• German Wholesale Prices MoM (Jun) M/M -0.7% vs. Exp. 0.2% (Prev. -0.6%).
• UK BRC Retail Sales Monitor YoY (Jun) Y/Y 1.7% vs. Exp. 2.9% (Prev. 3.4%).

FX

• G10s are mostly firmer as markets are reluctant to buy Dollars into US CPI, after it gained on Monday. Kiwi is the clear outperformer; energy exporters CAD and NOK also perform well.
• Geopolitics remain constructive for USD with Brent over USD 85/bbl, in addition to this, hawkish Fed speak from Waller saw markets assign a 50% probability of a Fed hike this month. (“Fed would need to consider a rate hike in the near term if core inflation is hot this week”). Despite these factors, the Buck is negative on the day as it stabilises below Monday’s 101.32 peak ahead of a packed session which is slated to see US CPI, and Warsh’s testimony to the US house which potentially sees a text release at 13:30 BST. The level to watch if momentum continues today is the 21DMA @ 101.00, should CPI come in hot, Monday’s 101.32 peak will be in focus, thereafter is July 2nd’s 101.43 high.
• Kiwi is the best performer once again as markets add to RBNZ tightening bets, interest rate futures now implying 58bps by year-end - around 5bps added vs. the end of Monday’s London session. Upside which comes after hawkish remarks from RBNZ's Conway and a strong quarterly NZIER Business Confidence.

Fixed Income

• US and Iran continued to strike each other for a third night, after President Trump warned that they would hit Iran “very hard”. POTUS also announced a naval blockade on all Iranian ports, which is set to begin at 21:00 BST / 16:00 EDT.
• Crude benchmarks were firmer throughout the APAC session, though price action was more-or-less sideways. Into the European morning, the bias turned a bit more bullish after the UKMTO reported another incident on a tanker near Oman. This comes after two Emirati tankers were struck overnight. It is clear that the IRGC will not accept any transits through undesignated paths through the Strait of Hormuz; as such, traffic through the Hormuz is waning. Marine Traffic data has shown that only two tankers completed passages through the Hormuz in the 24 hours up to 07:25 BST today; this compares to c. 28 ships/day following the US-Iran MoU signing.
• As it becomes apparent that ships are no longer going through the Hormuz (and added risk of the blockade and/or nuclear attacks), the crude complex has moved higher. Brent Sep’26 (+3.7%) sits at the upper end of a USD 83.68-87.38/bbl range.
• Spot gold is a little firmer this morning, and trades within a narrow USD 3,983-4,034/oz range; currently holding just above the USD 4k/oz mark. The yellow metal appears to be taking a breather following a couple of sessions in the red, which was spurred by recent geopolitical escalations and a hawkish Fed speak via Waller. Elsewhere, base metals hold a positive bias following stronger-than-expected Chinese data overnight. In brief, Exports and Imports both rose from the prior, and by more than the consensus. 3M LME Copper holds within a USD 13,461-13,624/t range.
• Germany sells EUR 4.222bln vs exp. EUR 6.0bln 2.70% 2028 Schatz: b/c 1.13x, average yield 2.77%, retention 29.63%.
• Japan sells JPY 530.9bln 20-year JGBs; b/c 4.52x (prev. 2.97), average yield 3.626% (prev. 3.542%), Tail in price 0.00 (prev. 0.24).
• The Netherlands sells EUR 3.27bln vs exp. EUR 2.5-3.5bln 2.50% Jan 2031 DSL: Average yield 2.911% (prev. 2.795%).
• Australia sells AUD 400mln 5.00% June 2036 bonds b/c 4.1, avg yield 4.908%.

Commodities

• A bearish start for benchmarks as the complex reacts to the overnight energy move.
• Action that was sufficient to push Bunds below the 125.00 handle and to a 124.82 base, lower by just over 40 ticks on the day. Since, no real reaction to the morning’s updates, including a UKMTO tanker report in Oman, despite modest energy upside at the time.
• For Germany, June’s WPI was dictated by energy, with the Y/Y moderating from the prior but at an elevated level as mineral oil products were just under 22% higher vs June 2025. However, the same component was down 6.8% M/M, leading to a -0.7% headline M/M print (exp. 0.5%, prev. -0.6%). No move to the series.
• Gilts opened lower by a handful of ticks before extending below the 87.00 handle, and then moving sharply lower to an 86.42 base, catching up to the above and continuing the pattern of greater magnitudes of action vs peers on energy-related moves. Pressure may also be a function of pricing into the Burnham coronation on Friday, as he will become UK PM from the point Starmer formally hands over. On that, Rathbones has reduced its Gilts holding in order to protect against “fiscal irresponsibility” ahead of Burnham and the Chancellor decision. Note, likely outgoing Chancellor Reeves speaks at Mansion House this evening.
• USTs also lower, down to a 108-17 trough given the energy move, which has seen a modest extension on the pressure after Fed’s Waller on Monday evening said another hot core inflation read would mean the Fed needs to consider a near-term hike. CPI today is seen at -0.1% M/M (prev. 0.5%), while the now even more pertinent core is seen at 0.2% M/M (prev. 0.2%). Following Waller and the recent energy moves, pricing for July has moved in favour of a hike, with around a 60% chance of a 25bps move currently implied. We now look to testimony from Chair Warsh, which is scheduled for after CPI; note, a text release alongside CPI is possible.
• BP (BP/ LN) says upstream production is expected to be between 2,170-2,220mboepd (prev. 2,339mboepd Q/Q), due to seasonal maintenance predominantly in the Gulf of America and the effects of disruption in the Middle East.
• Pakistan LNG is reportedly seeking an additional LNG cargo for July as US-Iran hostilities in the Strait of Hormuz constrain supplies from Qatar, according to Bloomberg.
• Turkey’s energy minister said Iraq requested retaining oil export capacity of 750K BPD through the Kirkuk-Ceyhan pipeline for 12 months under an agreement.
• Iran’s Oil Minister Paknejad said Iran’s oil exports continue as usual despite the US removal of oil waivers.
• Freeport-McMoRan (FCX) Indonesia unit is targeting 2026 copper production of 0.8bln pounds.

Central Banks

• RBNZ Chief Economist Conway said the Middle East conflict complicates monetary policy like all supply shocks, while he added that understanding how firms respond to cost shocks is crucial in maintaining low and stable inflation. Furthermore, he said that despite easing prices, the effects of the shock are expected to continue impacting the economy for some time, and that a further reduction in monetary stimulus is likely to be required.
• BoE Governor Bailey said that the core banking system in the UK is resilient and that debt levels are not stretched. He stated that renewed hostilities in the Gulf underline continuing instability. The UK's position is supported by its fiscal framework as well as monetary policy.

Geopolitics: Iran

• US President Trump reiterated that Iran has no air force, no navy and no military, while he said they will hit Iran very hard on Monday night and on Tuesday. Trump said they had a deal yesterday and that Iran breaks deals, as well as commented that the MoU was built to test Iran and that Iran didn't honour it. Trump also stated that they will hit 'Pickaxe Mountain' pretty soon and have their eyes on the site all the time, which is a good potential target
• US Central Command announced that it conducted and completed a third consecutive night of strikes against Iran, with US strikes reported in Bushehr, Bandar Abbas and Bandar Kangan, while explosions were also reported in Iran's Qeshm Island and Kish Island. More recently, there have been reports of explosions have been heard near Bandar Abbas, Bushehr and Choghadak.
• Details of US President Trump’s proposed Strait of Hormuz toll plan are still being finalised, according to Semafor, saying Trump is 'very serious about the tolls.
• Iran's armed forces have begun targeting US naval vessels in the Strait of Hormuz with cruise missiles, Al Mayadeen reported.
• Iranian Army Spokesperson said the Strait of Hormuz will not be open with US aggressions and war, SNN reported.
• IRGC said it targeted weapons warehouses, satellite communications centres, and US forces' housing building at Bahrain's Juffair base. Iran's army also targeted US military facilities and equipment in Kuwait with drones, as well as targeted a 'hostile' US vessel with cruise missiles, while it was separately reported that a US military base in Jordan was hit by a missile attack and that a missile attack hit an Iranian Kurdish opposition group site east of Iraq's Erbil.
• UKMTO received a report that a tanker was hit by an unknown projectile 40NM northeast of Qalhat, Oman. UKMTO reports of an incident 13NM southeast of Lima, Oman, the tanker was reportedly hit by a missile transiting outbound on the southern route
• The UAE Defence Ministry reported that two national tankers were targeted by Iranian cruise missiles in the southern Strait of Hormuz, with the incident occurring in Omani territorial waters, although the fires on both tankers were brought under control, and it reserved the right to respond to the escalation.
• ADNOC confirmed tankers "Al Bahyah" and "Mombasa B" were hit in the Strait of Hormuz.
• Oman’s Foreign Minister said complex talks are under way to make a long-term arrangement to guarantee freedom of navigation through the Strait of Hormuz.

Geopolitics: Ukraine

• Russian ballistic missiles targeted Ukraine's capital of Kyiv, with sirens and explosions heard across the Ukrainian capital, according to FT.
• Russian forces conducted group strikes at night, damaging military industry and enterprises involved in missile production in Kyiv, while it damaged infrastructure facilities in Odessa, used to store Ukrainian armed forces' fuel and lubricants.
• Ukraine Navy spokesperson said Russia struck a civilian vessel near Ukraine’s Black Sea port of Odesa. Additionally, Ukraine said it struck two Russian oil refineries in the Bashkortostan and Krasnodar regions.

US Event Calendar

• 6:00 am: Jun NFIB Small Business Optimism, est. 95.7, prior 95.3
• 8:30 am: Jun CPI MoM, est. -0.11%, prior 0.5%
• 8:30 am: Jun Core CPI MoM, est. 0.2%, prior 0.2%
• 8:30 am: Jun CPI YoY, est. 3.8%, prior 4.2%
• 8:30 am: Jun Core CPI YoY, est. 2.8%, prior 2.9%
• 4:00 pm: May Total Net TIC Flows, prior 26.1b
• 4:00 pm: May Net Long-term TIC Flows, prior 103.1b

Central Bank Speakers

• 10:00 am: Fed Chair Warsh Testifies at House Financial Services Cmte.
• 12:40 pm: Fed’s Barr Speaks on Artificial Intelligence
• 1:00 pm: Fed’s Goolsbee in Fireside Chat
• 1:30 pm: Fed’s Cook Speaks at Conference on Financial Inclusion
• 2:55 pm: Fed’s Bowman Speaks at Conference on FInancial Inclusion

DB's Jim Reid concludes the overnight wrap

The most striking financial market takeaway is the extraordinary shift in Japan’s relative affordability over the past decade and a half. When we launched the series in 2012, Japan was one of the most expensive countries in the world, while the US sat towards the cheaper end of the spectrum. Today, that picture has completely reversed. Tokyo is now the cheapest city in the world in which to buy an iPhone, you can almost get two dates there for the price of one in London, enjoy three meals out for the cost of one in Zurich or New York, and buy property at a fraction of the prices seen in New York, Hong Kong and London. With Japan’s PPP-implied price level falling from 125 in 2012 to just 60 today, the report poses an intriguing question: if reading the 2012 edition would have encouraged you to buy America, should reading the 2026 edition make you take a fresh look at Japan? Tens of thousands of data points have been analysed to compare relative prices across 69 cities that matter to global financial markets. Click here to see where your city ranks on everything from everyday prices to overall quality of life and click now to get ahead of the 45,000 readers who might already be planning next year’s bargain holiday. Tokyo, perhaps?

Staying in Asia, markets are again weak this morning on the back of the escalating tensions in the Middle East and the softening sentiment towards the AI trade. Oil is up just under another couple of percentage points this morning having been up around 9% yesterday. More on that below. The KOSPI (-0.02%) has actually fought all the way back to flat after being down -5% an hour ago when I started work on this. It might still be an hour until you read this so you may want to check yourselves. Elsewhere, the Nikkei (-0.25%) has been much less volatile but has also been recovering while I type. The Hang Seng (-0.47%), the CSI 300 (-0.39%), and the Shanghai Composite (-0.66%) are also lower. S&P 500 (-0.09%) and NASDAQ 100 futures (flat) have also been recovering as the overnight session has progressed but with Stoxx (-0.6%) futures still lower. 

Today we have a huge day with US CPI, Warsh’s testimony to the House and the unofficial start of Q2 US earnings season with 5 big banks reporting.   

Ahead of this and all the overnight moves, the big story yesterday was the latest jump in oil prices, which revived fears around stagflation, and hit bonds and equities on both sides of the Atlantic. That followed further strikes between the US and Iran over the weekend, which meant Brent crude (+9.59%) saw its sharpest rise since March 2020, reaching a 4-week high of $83.30/bbl by the close. Moreover, yesterday saw a fresh escalation in the rhetoric, with Trump saying that “We’re taking over the Strait”, before announcing that the US was reinstating an “Iranian blockade”, which Trump said was “so named because it is only stopping Iran’s ships or customers from entering or leaving. All other countries will have fair and open use of the Strait.” He also said that the US would “be reimbursed, at the rate of 20% on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World.” I asked AI how much that could raise if you assumed pre-war volumes. It came back with a figure of around $400-500m a day based on $2-2.5bn of daily cargo passing through the Strait.

President Trump has a habit of starting with an extreme negotiating position so no doubt this would come down if it was ever implemented, but the very spectre of tolls will make markets and customers nervous. US Central Command said that it will resume the Iran blockade at 4pm NY time today, so that still leaves a bit of time for a possible climbdown. Yesterday’s mood out of the Middle East also wasn’t helped by escalation between Saudi Arabia and the Houthi rebels, with the latter targeting a Saudi airport after the Saudi-backed Yemen government carried out strikes against Sanaa airport.

The escalation over Hormuz saw inflation concerns creep back into play yesterday, with investors pricing in more rate hikes from central banks. For instance, pricing of a Fed hike in just a couple of weeks’ time jumped from 34% to 43% yesterday and the amount of hikes priced by the December meeting was up +5.4bps on the day to 43bps. The Fed repricing was also supported by some hawkish comments from Governor Waller, who kept the door open to an imminent hike, saying that “If we get another hot reading on core inflation this week, then the FOMC will need to consider tightening monetary policy in the near term”. Similarly for the ECB, the number of hikes priced by December was up +10.5bps on the day to 44bps, so it was clear that higher oil prices were shifting market pricing in a hawkish direction.

This backdrop also had a clear effect on sovereign bond yields, which continued to move higher on both sides of the Atlantic. So for US Treasuries, the 2yr yield (+7.6bps) closed at a 16-month high of 4.28%. And notably, the 2yr real yield (+2.2bps) closed at 2.23%, which was its highest closing level in almost two years. Meanwhile the 10yr yield (+6.3bps) was also up to 4.62%, marking its highest level in nearly two months, and the 10yr real yield (+3.6bps) closed at 2.34%, its highest since 2023. And over in Europe, yields on 10yr bunds (+4.3bps), OATs (+5.5bps) and BTPs (+7.0bps) all moved higher as well.

Looking forward, the question of Fed rate hikes will be in focus today, as we’ll get the US CPI print for June at 13:30 London time. This is a significant one, because market pricing for the next Fed meeting is still in the balance, so any surprises could easily push that in either direction. In terms of what to look out for, the recent decline in gas prices means our US economists expect headline CPI to come in negative for June, with a monthly price decline of -0.16%. So if realised, that would take the year-on-year rate down to +3.8%. But core CPI is expected to still be more resilient at a monthly +0.23%, with the year-on-year rate at +2.8%. 

Whilst the CPI print will be the initial focus, attention will then shortly turn over to Fed Chair Warsh, who’s testifying before the House Financial Services Committee at 15:00 London time. That’s part of the regular semi-annual testimony from the Fed Chair, with the Senate Banking Committee hearing taking place tomorrow as well. But our US economists expect him to remain reticent about providing guidance for any upcoming policy action and remember that Warsh was the one official who didn’t submit a dot in the most recent dot plot.

Whilst sovereign bonds were struggling, it was also a rough day for equities as the rise in oil prices coincided with a fresh slump for chip stocks.  The Philly semiconductor index (-4.78%) fell back sharply, with the NASDAQ (-1.55%) also pulling back. And in turn, that slump for tech stocks dragged on the S&P 500 (-0.79%), with the index posting a sizeable decline despite most of its constituents rising on the day. Meanwhile in Europe, equities put in a relatively better performance, given the region’s comparatively smaller concentration of chip stocks and as European markets closed before the full rise in oil prices, with the STOXX 600 only down -0.01%.

Finally, China’s latest trade data surprised to the upside overnight, with both exports and imports growing significantly faster than expected in June. Strong global demand for AI-related products and technology goods helped offset increasing geopolitical pressures. Exports rose 27.0% year-on-year, surpassing expectations of 19.0% and accelerating from May’s 19.4% growth. Imports increased 36.0%, well above the forecast of 26.1% and stronger than the previous month’s 27.4% rise. As a result, China’s trade surplus widened to $125.62 billion in June from $105.43 billion in May, exceeding market expectations of $120.10 billion.

Looking at the day ahead, and the main data highlight will be the US CPI print for June. Otherwise, Fed Chair Warsh will be speaking before the House Financial Services committee, and we’ll also hear from the Fed’s Barr, Goolsbee, Cook and Bowman, along with BoE Governor Bailey. Finally, today’s earnings releases include JPMorgan, Citigroup, Goldman Sachs, and Bank of America.

Tyler Durden Tue, 07/14/2026 - 08:24

Spotting Market Bubbles: Why History Says It's Nearly Impossible

Authored by Lance Roberts via RealInvestmentAdvice.com,

If you knew you were standing inside a stock market bubble, you wouldn’t be standing in it for long. You’d sell. So would I, and so would everyone reading this. And if spotting market bubbles was something everyone could do in real time, the bubble couldn’t form in the first place. That paradox is why spotting market bubbles is one of the hardest jobs in finance, and why bubbles look painfully obvious only after the fact.

Market bubbles are not a modern invention. They’ve been a recurring feature of financial life for almost 400 years, ever since the first organized stock exchange opened in Amsterdam in the early 1600s.

The Dutch Tulip Mania of 1636 to 1637 is the textbook case. Tulip bulb prices in the Netherlands soared roughly twentyfold in a few months, then collapsed by about 99% in May 1637. Less than a century later, the South Sea Bubble of 1720 took shares of the South Sea Company from £128 in January to £1,050 in June before collapsing back to near the starting price by year-end. Isaac Newton, often cited as the smartest man of his era, lost a fortune in that one. He’s reputed to have said: “I can calculate the motion of the heavenly bodies, but not the madness of crowds.”

The 20th century gave us bigger versions of the same story. The Roaring Twenties ended with the 1929 crash and a peak-to-trough Dow drawdown of nearly 89% by 1932. Japan’s late-1980s asset bubble carried the Nikkei 225 to 38,915 on December 29, 1989, and triggered a collapse that eventually took the index down more than 80%, with the post-bubble low not arriving until October 2008, nearly 19 years after the peak. Then came the dot-com bubble. Between January 1995 and March 10, 2000, the Nasdaq Composite rose roughly 572% to a peak of 5,048.62. It then fell 78% by October 2002, and didn’t recover its 2000 high until April 2015.

The 2008 housing-and-credit bubble ended differently. Instead of a single speculative asset, the bubble formed in mortgage credit and spread across the entire global banking system. The S&P 500 lost 57% from its peak to its trough. None of these episodes looked the same on the way up. Yet all of them look identical on the way down. This is why spotting market bubbles is always a function of hindsight.

Notice in the chart above. The drawdowns from the four largest equity bubbles ranged from 57% to 99%. None of them recovered quickly. The Nasdaq took 15 years. The Nikkei took 34 years to finally reclaim its 1989 peak, hitting it in February 2024, before pushing on to fresh all-time highs since. The damage from a real bubble isn’t measured in months. It’s often measured in lost decades.

Why Spotting Market Bubbles Is Mostly Hindsight

As stated above, spotting market bubbles in advance is often futile. Just because assets sport high prices, valuations, or any other metric you choose, those alone do not necessarily define a bubble. A good example of the futility of spotting market bubbles in advance was in 1996 when Alan Greenspan warned of “irrational exuberance.” Yes, prices were elevated, sentiment was extremely bullish, and the Nasdaq then tripled over the next three and a half years before peaking. Anyone who sold on that warning missed an enormous gain before the eventual crash. That’s the trap.

Owen Lamont, a portfolio manager at Acadian Asset Management who has spent years studying market extremes, put it bluntly. He once joked that a bubble is just “when I think the stock market is overpriced and then it doubles.” That’s not really a joke. It captures the practical impossibility of timing a top in real time. Stanley Druckenmiller, working alongside George Soros, identified the Japanese bubble in 1988 and shorted it. The Nikkei kept ripping higher into late 1989, and Druckenmiller eventually said his lesson was simple.” Valuation is not a catalyst.“

Bubbles also sustain themselves through narrative, not arithmetic. In 1999, the story was that the internet had repealed the rules of economic gravity. Cisco Systems, the world’s most valuable company at its peak, traded at a trailing P/E ratio above 100. In 1989, the story was that Japan Inc. was unstoppable. In 2007, the story was that housing prices would never fall nationally. Each story was wrong, but each story sounded reasonable at the time, especially because each story had real evidence supporting it. The internet did transform commerce. Japan was a manufacturing powerhouse. Housing prices had not, in fact, fallen nationally for decades. The bubble forms when investors take a real trend and extrapolate it past any reasonable mean reversion.

The Four Horsemen Investors Should Watch

So, with that said, if high prices or valuations alone don’t make a bubble, what does? Several decades of academic and practitioner research point to a consistent checklist. Lamont calls them the four horsemen, and they are essentially what you would expect.

1. High prices, measured by valuation multiples that significantly exceed long-term averages.
2. High volatility. Bubbles don’t drift higher quietly. They lurch up and down with bigger and bigger swings.
3. High trading volume, particularly among retail and speculative accounts that were previously inactive.
4. The spread of “bubble beliefs,” the idea that this time is different and traditional valuation rules no longer apply.

However, for me, I would include a fifth indicator that’s saved me more than once. It’s defensiveness. When the cheerleaders of an asset stop selling its merits and start attacking the people who question it, the bubble has gone parabolic. We saw it in late-1999 internet stocks. We saw it again at the 2021 SPAC mania and the Bitcoin peak. And we saw it most recently in the 2025 precious metals run.

When I published my critique of the commodity supercycle and dollar-debasement thesis last year, the response from precious metals advocates wasn’t a counterargument backed by data. It was dismissal and accusations of being on the wrong side of history. Silver then rallied roughly 135% on the year before suffering its biggest single-day drop since the 1980s in late January 2026. Gold knocked more than 10% off its peak in the same window. When debate stops, and tribal loyalty takes over, the top is usually close.

How the Current Setup Compares to 1999

Naturally, the question is whether we are currently “spotting a market bubble”? The honest answer is that some signals are flashing yellow. Others aren’t.

The yellow signals are real. The S&P 500’s cyclically adjusted P/E sits within striking distance of the all-time high set in December 1999. Concentration risk is severe. The top 10 stocks now make up a larger share of the S&P 500 than tech, media, and telecom did at the March 2000 peak. Performance for AI infrastructure leaders has gone parabolic. A normalization of multiples back toward the long-term average would, by itself, deliver a market drawdown of 30% or more even without a recession.

However, the differences from 1999 are real and matter. In March 2000, dozens of marquee Nasdaq names had no earnings, no cash flow, and business models built on burning venture capital to acquire eyeballs. Today’s leaders, meaning Nvidia, Microsoft, Alphabet, and Meta, throw off enormous free cash flow. Pets.com had 9 months of cash left when it went public. Nvidia generated tens of billions in operating profit last quarter. That isn’t a small distinction. A bubble built on hopes and venture capital pops differently than one built on real, but extrapolated, earnings power.

The table below puts the comparison on a single page. Some indicators are eerily similar. Some are actually worse today. And a few key fundamentals are meaningfully better.

Read the verdict column carefully. Out of 13 indicators, four flash similar or worse than 2000, six look genuinely better, and three sit on the watch list. That’s not a green light. It’s also not 1999 with a new ticker symbol. The honest read is that we have a stretched market with a single dominant narrative and severe concentration, but with profitability, monetary policy, and retail behavior in better shape than they were at the last comparable top.

The piece that worries me more than the headline P/E is concentration. When the S&P 500 owes most of its return to a handful of stocks, you don’t actually own a diversified U.S. equity portfolio. You own a thematic AI bet dressed as an index fund. That’s the exposure most readers should be measuring carefully right now.

How to Stay Invested Without Catching a Falling Knife

Bubbles, real or imagined, create a behavioral problem more than a portfolio problem. The behavioral problem is that investors flip from “all in” to “all out” based on the week’s headlines. Both of those positions are usually wrong. Stocks aren’t a light switch. The decision is rarely between fully invested and fully in cash.

What’s actually worked through every prior bubble cycle is straightforward.

1. Stay invested in a diversified mix you can defend in any tape.
2. Trim what’s run, add to what hasn’t.
3. Hold meaningful positions in assets that behave differently from the popular trade, including bonds, value stocks, and, most importantly, cash, which gives you an opportunity.
4. Above all, define in advance what would force you to reduce risk, and write it down.

I’ve been arguing for some time now that bonds remain the best portfolio stabilizer for most investors, even after the 2022 drawdown. In a real equity unwind, bonds historically offset stock losses through the duration trade as the Fed cuts in response. That’s the relationship that briefly broke down in 2022 because both stocks and bonds were repricing higher inflation at the same time. In a true bubble pop scenario, when growth and inflation expectations both collapse, the negative correlation tends to reassert itself.

The other rule is worth repeating. Rebalancing is not market timing. Selling some of your winners and buying some of your laggards forces you to do something contrarian on a calendar, not on a hunch. Investors who rebalanced annually from 2000 to 2002 still suffered, but suffered far less than those who rode the Nasdaq concentration into the abyss.

Free Resource: If you want the full framework we use to stress-test client portfolios for concentration risk, download our RIA Portfolio Risk Guide. It walks through the same checks our team runs every quarter.

The Signals That Mark the End

What actually triggers the unwind, in past bubbles, is rarely the thing analysts spend the most time worrying about. The Fed didn’t pop the Nasdaq with the warnings of 1996. The Fed popped it with the 1999 and 2000 rate hikes. The Bank of Japan popped its bubble by raising the discount rate from 2.5% to 4.25% in late 1989. In 2007, a small wave of subprime mortgage delinquencies sparked the contagion. The catalyst is usually a tightening of liquidity, not a change in the narrative.

Several signs tend to cluster near the top:

• First, a flood of new stock issuance. SPACs in 2021. Internet IPOs in 1999 and early 2000. When the supply of speculative paper finally meets demand, prices roll over. Lamont himself has flagged issuance as the single signal he’s watching most closely right now. With multiple AI-era giants reportedly preparing to go public, that signal is worth tracking week to week.
• Second, a shift from “buy the dip” to “buy the rip.” Healthy bull markets see investors add on weakness. Late-stage bubbles see investors pile in on strength because they’re afraid of being left behind. That FOMO behavior is the textbook performance-chasing pattern.
• Third, mainstream financial coverage that stops debating valuation entirely. When the question “are we in a bubble” disappears from major publications and gets replaced by exclusive feature stories on the personal lives of momentum traders, the top is usually close. We aren’t there yet, but we’re closer than we were a year ago.
• Fourth, a credit event. Bubbles don’t usually pop from inside the asset. They pop because something in the financing chain breaks. In 2000, it was margin calls and burning cash balances. Then, in 2008, it was subprime credit. In 2021, it was the SPAC unwind that started taking down low-quality issuers.

The next pop, whenever it comes, will likely be triggered by stress somewhere in private credit, leveraged loans, or AI infrastructure financing rather than in the equity market itself.

The bottom line is that you don’t need to know exactly when the music stops. You need to know what your portfolio looks like when it does. That’s the question to ask yourself this week, well before the question becomes urgent.

Tyler Durden Tue, 07/14/2026 - 08:05

The UK Government Lobbied For Putting Migrants And Trans People On Banknotes

Authored by Steve Watson via Modernity News,

The UK's own Cabinet Office pushed hard to overhaul banknotes by elevating LGBT+ and ethnic minority figures, claiming historic greats like Winston Churchill gave an "incomplete picture" of British identity. This push came just before the Bank of England decided to ditch those same towering historical figures for images of hedgehogs and foxes.

This latest revelation exposes the ideological machinery at work inside Whitehall. While the public recoiled at the idea of swapping national heroes for animals, government officials were actively lobbying for even more radical identity-driven changes.

In a letter to the Bank of England's chief cashier last summer, officials from the Office for Equality and Opportunity - part of the Cabinet Office and led by Bridget Phillipson - argued that current historical figures reflected "limited dimensions of British identity." They called for "greater representation of women, disabled people, ethnic minority communities and LGBT+ individuals" to "send a strong signal of progress and recognition."

Alan Mendoza and former Glasgow City Councilor Austin Sheridan react as the Cabinet Office urge the inclusion of LGBT and ethnic minority communities on banknotes. pic.twitter.com/IWvkZtuL3V

— GB News (@GBNEWS) July 12, 2026

The whole saga is particularly ridiculous because the core argument for axing Churchill and other giants was that they were supposedly too "ideologically divisive" for modern Britain.

Yet officials simultaneously pushed to install figures selected explicitly through the lens of identity politics and group representation - an approach guaranteed to be far more polarizing in practice.

It reveals the selective outrage: traditional British heroes are labeled divisive for their achievements, while injecting contemporary activism onto the currency is framed as unifying "progress."

'We have real pressing financial issues as a country. I find focus on stuff like this quite ridiculous!' @NanaAkua1 hits out at the Cabinet Office's suggestion that banknotes should feature prominent ethnic or LGBT figures from British history. pic.twitter.com/760hztl82u

— GB News (@GBNEWS) July 12, 2026

The intervention has sparked accusations that Labour elements conspired to sideline Britain's most celebrated figures.

Shadow minister Alex Burghart slammed the move: "Labour tried to deny any involvement in the cancellation of Winston Churchill and other British heroes. But government officials have been caught red-handed conspiring with the Bank of England to remove them from our banknotes."

He added that banknotes "should feature the greatest Britons - the historic figures that unite our country. They shouldn't be chosen on the basis of Labour's equality laws."

This diversity drive unfolded alongside the Bank of England's decision to replace Churchill on the £5 note, Jane Austen on the £10, J.M.W. Turner on the £20, and Alan Turing on the £50 with images of British animals, plants, and landscapes. The Bank cited a public consultation where a majority favored nature themes, partly for security reasons on new polymer notes.

Critics have pointed out the irony, noting Alan Turing - a gay war hero - was already featured, yet the push continued for broader "under-represented" groups. Suggestions reportedly included figures tied to events like the Empire Windrush.

This fits a longer pattern of institutional discomfort with Britain's historic icons. Our earlier coverage highlighted the absurdity of trading Churchill for hedgehogs and the broader erosion of national symbols.

A serious nation honors the leaders who defended its freedom and shaped its character - not because they tick modern demographic boxes, but because their achievements built the country whose currency circulates today.

Swapping out the likes of Churchill for foxes and badgers, while civil servants agitate for identity politics on money, signals a profound loss of confidence. Britain's history is not a problem to be diluted. It is the foundation worth preserving.

There are small steps within education and society to dissolve our history & culture.
I actually believe it will backfire, as there's always a rebellious streak in the British public, who will actively protect their culture.

— MaccGardenFest (@Maccgardenfest) July 12, 2026

The sick joke is that all the woke, DEI crap they try to shoehorn into our culture is what is truly "elitist and divisive".

— Pinpoint Inaccuracy (@pinpointinaccry) July 12, 2026

How about an underage girl being raped by a Muslim on the back of a Tenner. That's ethnic ?????

— Colin Kirby (@ColinKi54036475) July 12, 2026

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Tue, 07/14/2026 - 07:45

JPMorgan Drops Despite Highest Quarterly Profit In HIstory, As Traders Focus On Negatives

Q2 earnings season is officially off.

Moments ago, JPMorgan became the first mega bank to report Q2 earnings (technically Wells beat it by a few second but nobody really cares about that particular bank), firing the starting pistol on the second quarter earnings season. The Q2 results were solid (Net Interest Income and FICC miss but more than offset by blowout Equity Sales and Trading and Investment Banking revenue) , but as we note in out bank earnings preview last night, perfection (and beyond) was already largely priced into the stock which has become a true hedge fund hotel, and as a result the stock is modestly in premarket trading. 

Here is a snapshot of what the company reported for Q2:

• EPS $7.70, beating est. of $5.58, and up $2.46 YoY
• Revenue: 
  • Adjusted revenue $58.02 billion, smashing est $51.39 billion, and up $12.3 billion YoY
  • Managed net interest income $25.62 billion, missing est, $25.64 billion 
  • Total Commercial and Investment Bank revenue $24.85BN, up $5.32BN YoY
    • FICC sales & trading revenue $6.05 billion, missing est. $6.29 billion with weakness in commodities
    • Equities sales & trading revenue $6.03 billion, smashing est. $3.98 billion
    • Investment banking revenue $3.90 billion, smashing est. $3.06 billion
      • Advisory revenue $1.01 billion, missing est. $1.07 billion
      • Equity underwriting rev. $829 million, beating est. $621.3 million
      • Debt underwriting rev. $1.44 billion, beating est. $1.17 billion

Let's take a closer look at JPM's Q2 earnings. 

First, the good news: JPM reported its highest quarterly profit ever as stock traders blew past analysts’ estimates and a long-held Visa stake paid off to the tune of $4.6 billion. Indeed, a notable one-off item that contributed to the firm’s success this quarter was JPMorgan' $4.6 billion net gain related to the sale of Visa shares. The bank said this in its earnings supplement: "The net gain was “related to Visa Class C common stock held at fair value and received by the Firm in an exchange offer following the acceptance by Visa Inc. on May 11, 2026 of the Firm’s tender of its 18.6 million shares of Visa Class B-2 common stock.”

More good news: equity trading was stellar, with Q2 equities revenue rising 86% from a year earlier to $6.03 billion, anmd more than $2 billion higher than expected; In fact, it beat even the highest estimate among analysts surveyed by Bloomberg and brought total trading revenue to $12.1 billion, more than the previous all-time high set in the first three months of this year. 

There was bad news: FICC revenue of $6.05 billion missed estimates of $6.29 billion with weakness in commodities Additionally, while Investment Banking beat, advisory revenue of $1.01 billion missed estimates of $1.07 billion. And while managed net interest income increased by more than 9% from a year prior to $25.62 billion from $23.31 billion last year, it was a slight miss to the $25.64 billion estimate. 

There was some more bad news, this time on the expense side: Q2 expenses were $27.3 billion, more than expected. The firm also updated its full-year cost guidance to about $107.5 billion, beyond the increase Dimon telegraphed at an industry conference in May.

Investment banking was in focus in the wake of SpaceX’s record initial public offering in June. JPMorgan pulled in $3.28 billion in investment-banking fees in the second quarter, beating estimates and up 30% from a year earlier "driven by higher fees across all products, with particularly strong performance in equity underwriting fees."

The bank’s provision for credit losses – how much JPMorgan expects to lose from uncollectible loans – was $2.52 billion for the period, significantly less than the $3.09 billion that analysts had expected. Of this, net charge-offs were $2.37 billion, also below the estimate $2.62 billion. 

Even as almost every business exceeded expectations, CEO Jamie Dimon was cautious about prospects for the future.

“Several risks are shifting below the surface like tectonic plates, including geopolitical tensions and wars, sticky inflation, large global fiscal deficits and elevated asset prices,” Dimon said in the statement. “We cannot predict how these forces will ultimately play out. They may remain manageable, but they could also cause meaningful disruptions when they shift or collide.”

Jamie Dimon also pointed out that card annual fees jumped by more than 30%, “reflecting healthy retention levels after recent product refreshes as well as demand for our premium products.”

Looking ahead, the firm expects full-year net interest income to now be about $105.5 billion, after previously anticipating it would be around $103 billion. For the quarter, it came in at $25.5 billion. That, however, comes along with the increase in full year expenses to $107.5BN. In a presentation Tuesday, the firm said the increase is “primarily due to higher volume- and revenue-related expenses driven by the activity levels and associated revenue outperformance.” For the quarter, expenses were $27.3 billion, more than expected.

The bank also said it expects the full-year net charge-off rate in its credit-card business to come in at around 3.2%, lower than the 3.4% guidance it provided in April.

The report comes as Jamie Dimon is finally preparing his sucession: last month, the bank named Troy Rohrbaugh and Doug Petno co-presidents of the firm, the latest twist in the race to succeed Dimon, 70, when he eventually steps down. The bank said longtime executive Marianne Lake would retire as part of the changes, with Rohrbaugh replacing her atop the company’s sprawling consumer arm and Petno gaining sole control of the commercial and investment bank. 

Looking back, today’s report isn’t helping the priced to perfection stock, which has been a laggard year-to-date on a total-return basis -- up only about 5% including dividends through yesterday. Morgan Stanley, Goldman Sachs and Citigroup all delivered more than 20% including payouts, and Bank of America has returned more than 9% by that measure. Wells Fargo is the standout loser, down almost 5% this year even after counting dividends.

Shares of JPMorgan, up 3.8% this year through Monday, fell 2.6% in early New York trading.

Full Q2 invest presentation below (pdf link)

JPM Q2 2026 Results by Zerohedge

Tyler Durden Tue, 07/14/2026 - 07:36