"Enough Is Enough": David Tepper Slams Whirlpool For Value Destruction In "Scathing" Letter

David Tepper, the billionaire behind Appaloosa Management, blasted Whirlpool’s board in a sharply critical letter, accusing the appliance maker of eroding shareholder value and demanding a strategic reset, according to CNBC, who viewed the letter.

Tepper said he watched with “a certain astonishment” as Whirlpool moved ahead with what he described as a sizable and avoidable equity issuance that diluted investors. He argued the capital raise carried a cost of more than 10% — far above the company’s tax-adjusted borrowing costs of under 5% in public markets — despite management’s stated aim of cutting leverage.

“Over the years this management team has destroyed hundreds of millions of dollars of shareholder value. Enough is enough. There can be no more excuses,” Tepper wrote in the letter, first reported by CNBC’s Andrew Ross Sorkin.

The share sale triggered a sharp market reaction. Whirlpool stock fell 14% Tuesday after announcing plans to raise about $454.9 million through a common stock offering and $508.1 million via depositary shares.

The company also placed 435,000 shares with Guangdong Whirlpool Electrical Appliances at a discounted $69 apiece in a private deal. Whirlpool was Appaloosa’s eighth-largest position at the end of the fourth quarter, valued at $282 million, according to Verity data.

CNBC noted that shares later rebounded nearly 1%, though they remain down roughly 36% from a 52-week high reached in July.

Tepper also criticized Whirlpool for not fully leveraging tariffs imposed during the Trump administration, suggesting it consider alliances or mergers with foreign competitors disadvantaged by trade policy to improve its footing.

“We encourage the Board to (i) remember their fiduciary responsibilities and not accept management acting purely in its own self-interest, and (ii) invite domestic entities or foreign corporations who want to create American jobs and increase shareholder value to take an interest in Whirlpool,” the letter said.

Tepper, who founded Appaloosa in 1993, is known for aggressive, event-driven investing and outspoken activism.

He previously ran a successful distressed-debt strategy, bought the NFL’s Carolina Panthers in 2018, and has built a reputation as one of Wall Street’s most influential hedge fund managers.

Tyler Durden Wed, 02/25/2026 - 09:45

The US Dollar: From Exceptional To Average?

Authored by Eva Sun-Wai via BondVigilantes.com,

The dollar’s slide last year looks less like a sudden break and more like the culmination of pressures that have been gathering for a while. The fading of US exceptionalism has sat quietly in the background, and once the narrative started to normalise, the cracks became clearer: softer growth expectations, slower capital inflows, and valuations that had been leaning heavily on the idea that the US could keep outperforming indefinitely. The currency came into the year heavily owned and reliant on that growth premium, and when it began to erode, the dollar suddenly felt far more exposed to shifts in sentiment and positioning than it had for some time.

At the same time, the policy backdrop has turned more awkward for the currency. Markets expect the Fed to continue cutting, and the prospect of a more politically influenced leadership has introduced a small but noticeable risk premium around credibility. That is happening just as fiscal policy remains unanchored, with deficits showing little sign of narrowing and spending likely to rise into the election cycle. The steepening we’ve seen in the curve has not offered the dollar much support. Even when nominal yields tick higher, the lack of a credible fiscal path blunts the rate‑differential argument the currency would otherwise be able to lean on.

Trade policy hasn’t helped clarify matters either. Ordinarily, higher tariffs would tighten the inflation narrative and lend support to the dollar, but the market seems to be treating recent announcements with a degree of caution. The reversals, the unpredictability, and the simple fact that these things take time to feed through the system have meant the FX impact has been surprisingly muted. Rather than helping the dollar, tariff headlines have added to the broader sense of uncertainty.

Source: M&G, Bloomberg intelligence.

All of this has fed into the gentler tone around inflation expectations. Long‑dated breakevens suggest a market that is comfortable (perhaps too much so) with the idea that inflation pressures will remain contained. For the dollar, that matters: when inflation is assumed to stay under control, rate differentials compress, and one of the currency’s key supports weakens. A shift in those expectations, whether driven by tariffs or other factors, could prompt a repricing. The more challenging scenario would be one where inflation starts to firm again, yet the Fed continues to ease. That combination would weigh heavily on real yields and raise questions about policy direction and central‑bank independence at a moment when confidence is already fragile.

Against this backdrop it’s no surprise that traditional valuation anchors feel less dependable. Too many competing forces such as policy, flows, and politics, are pulling at once. If the Fed keeps cutting and differentials narrow, a softer dollar is the natural outcome unless other central banks ease more aggressively and/or for longer than expected. And while this doesn’t yet resemble a structural rotation away from the dollar, the combination of drivers could support a gradual diversification at the margins. Reserve managers are still operating within clear limits with USD markets remaining the core of the system, but increased accumulation of alternatives, particularly gold, fits with the broader theme.

Taken together, this episode looks both political and structural. Politics has accelerated the move, but the foundations were already in place: the normalisation of US exceptionalism, the awkward policy mix, and the evolving inflation and reserve‑management dynamics. How long those forces persist will shape the dollar’s path into the next decade.

It doesn’t yet feel like a dramatic turning point, but nor does it look like an interruption that will snap back quickly.

The more plausible path is a slower, uneven adjustment as the market works out what the right premium for the US actually is.

Tyler Durden Wed, 02/25/2026 - 09:25

Contaminated Meat From Brazil Hits The EU, As Mercosur Opponents Are Proven Right

Via Remix News,

Opponents of Brussels’ deal with Latin American countries to import agricultural products are being proven right, unfortunately. Meat containing a banned growth hormone has shown up in the EU, a Dutch authority has reported, leading Polish authorities to order urgent inspections by the relevant inspectorates.

EU farmers and multiple groups warned that the lack of safety regulations in use across the Mercosur countries would lead to such outcomes.

The Dutch Food and Consumer Product Safety Authority announced that it had detected Brazilian beef contaminated with estradiol, a growth hormone used to stimulate estrus in cattle that is banned in the European Union, writes Do Rzezcy.

Four contaminated shipments, containing a total of 62,781 kilograms of meat, were imported by two European companies.

A significant portion of the meat was distributed to several buyers and introduced into the EU market.

Two remaining shipments of beef from Brazil (each containing approximately 25 tons of frozen meat) were blocked by Dutch authorities from being released for distribution, the Farmer.pl website reported on Monday.

The website stressed that the detection of contaminated beef imports could become another argument for opponents of the EU trade agreement with Mercosur, a bloc of South American countries.

According to the RMF FM radio station, EU member states, including Poland, were informed by the European Commission about the distribution of contaminated meat from Brazil as early as November 11 of last year. The European Commission detected the irregularities during an audit at the end of October 2025. By Jan. 21, contaminated beef had been detected in approximately 10 countries, including the Czech Republic, Germany, and Italy.

And yet, that same day, on Jan. 21, despite the European Parliament voting to have the ECJ review the legality of the Mercosur deal, leaders in Brussels were urging for the deal to be formalized, including the German president of the European Commission, Ursula von der Leyen, and German Chancellor Friedrich Merz as well.

“We are convinced of the agreement’s legality. No more delays. The agreement must now be applied provisionally,” Merz posted on X at the time.

The Polish Ministry of Agriculture and Rural Development has ordered inspections of beef imported from Brazil.

“Due to reports of estradiol (a growth hormone) being detected in batches of Brazilian beef imported to the EU, we have ordered urgent inspections by the relevant authorities. We are monitoring the inflow of products into Poland and verifying all signals."

“At this time, there is no information that the indicated batches have reached the Polish market. We are taking preventive measures to ensure full food safety,” Deputy Minister Małgorzata Gromadzka announced on X.

Read more here...

Tyler Durden Wed, 02/25/2026 - 08:45

Futures Rise Ahead Of Critical Nvidia Earnings

US equity futures are higher into NVDA earnings release after the close, and the risk-on tone in the US yesterday has spread globally with tech giant's earnings a catalyst for maintaining the rally aided by Tech. As of 8:00am ET, S&P 500 futures were up 0.3% as with Nasdaq 100 contracts +0.4%; NVDA is up 0.6% in premarket trading and while blowout results from the company later today may soothe nerves about the AI trade, “even if they have tremendous numbers, we know the markets are really fickle,” said Mahoney Asset Management’s Ken Mahoney. Other Mag7s are also higher ex-AAPL and TSLA with Cyclicals bid, led by Fins/Industrials/Materials while Defensives mostly lower pre-mkt, ex-Healthcare, reflecting the risk-on tone. JPM says to keep an eye on Software if TMT gains positive momentum. European stocks rose 0.5%, hitting a record on a rebound in banks and miners. South Korea pushed past France in stock-market value.Bond yields are +1-3bp, the dollar slipped after President Donald Trump doubled down on his commitment to tariffs, before erasing the move, and commodities are bid led by Metals with precious outperforming base especially silver and platinum. Bitcoin rallied more than 2%. Gold and silver climbed. Today’s macro data releases are light (only Mortgage Applicatgions which rose 0.4%) ahead of tomorrow's  jobless claims and Friday’s PPI, but with multiple Fedspeakers. Yesterday we saw better weekly ADP data, weaker regional Fed data, and improving consumer sentiment.

In premarket trading, Magnificent Seven stocks are mostly higher, with Nvidia +0.8% ahead of its report (Alphabet +0.5%, Amazon +0.5%, Microsoft +0.3%, Meta Platforms +0.3%, Tesla +0.4%, Apple -0.2%). 

• Lithium stocks are rising after Zimbabwe suspended exports of lithium concentrates and raw minerals.
• AbCellera Biologics (ABCL) rises 8% after the drug developer reported total revenue for the fourth quarter that was ahead of the average analyst estimate. The firm also posted loss per share for the quarter that was narrower than Wall Street’s expectations.
• Aspen Aerogels (ASPN) falls 21% after the maker of thermal insulation used in electric vehicles reported loss per share for the fourth quarter that’s wider than expected. The company has initiated a strategic review.
• Axon (AXON) rises 15% after the Taser maker reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate.
• Camping World (CWH) slides 12% after the retailer of recreational vehicles reported a larger-than-expected adjusted Ebitda loss for the fourth quarter.
• Cava Group (CAVA) climbs 11% after the fast-casual chain’s restaurant comp sales forecast for 2026 came in above the average estimate from analysts.
• Circle Internet Group Inc. (CRCL) rises 16% as profit and revenue increased more than estimated while the amount of its USDC stablecoin in circulation jumped 72% to $75.3 billion in the fourth quarter.
• First Solar (FSLR) slides 16% after the maker of electricity-producing solar modules reported a 2026 net sales forecast which missed the average analyst estimate.
• HP Inc. (HPQ) falls 5% after providing a profit outlook for the current quarter that may fall short of estimates and said full-year earnings will likely hit the lower end of a previously forecast range as the company copes with tariffs and the rising price of memory chips.
• Lowe’s Cos. (LOW) slips 3% after forecasting sales guidance for the full year that fell short of expectations, a sign the housing market will remain lackluster in the near term due to high borrowing costs and economic volatility.
• Lucid (LCID) declines 2% after the electric-vehicle maker reported adjusted loss per share for the fourth quarter that missed the average analyst estimate.
• MercadoLibre (MELI) falls 5% after the online marketplace for Latin America reported its fourth-quarter results. While analysts are broadly positive on growth trends, they noted that elevated spending will pressure the company’s margins.
• Oddity Tech (ODD) slumps 34% after the direct-to-consumer beauty and wellness company said it expects its revenue for the first quarter of 2026 to decline 30% year-over-year.
• Workday (WDAY) declines 9% after giving a subscription revenue guidance that missed expectations, adding to investor concerns that a rise of AI automation tools is disrupting traditional software vendors.

In other corporate news, DoorDash is pulling out of four countries in Asia, a sign that fierce competition and thin margins are weighing on its overseas ambitions. Anthropic has loosened its central safety policy, coinciding with a growing dispute with the Defense Department. AMC plans to close more theaters in underperforming locations.

Expectations are high for Nvidia as customers have announced huge capex plans, but a positive stock reaction is key for the Nasdaq after recent underperformance, said Arnaud Girod, head of cross-asset strategy at Kepler Cheuvreux. “We’re in the thick of uncertainty about the disruption of AI with the market de-rating entire segments of the stock market.”

To reinvigorate its stock performance, Nvidia will at least need to beat its prior outlook and set new targets above current Wall Street estimates. While the company has done this repeatedly, concerns have grown that the AI spending wave isn’t sustainable. “Nvidia’s results are expected to be good given the massive capex announced by its clients, but it’s all about how the market will react,” said Arnaud Girod, head of cross-asset strategy at Kepler Cheuvreux. “The Nasdaq needs Nvidia if it is to limit its current underperformance.”

Another key earnings event on Wednesday is Salesforce, the cloud-based customer-relationship firm whose stock has plunged 30% this year after getting caught up in the selloff of software companies on fears that AI could render their services obsolete. Analysts, on average, project that the company will post its best quarterly revenue growth rate in three years. Still, highlighting the risks for software-as-a-service firms, Workday Inc. slid nearly 10% in early trading after subscription sales fell short of estimates.

Turning to Trump's State of the Union address, the President talked up the economy saying that the nation is back, bigger, better and stronger than before, while he added that we've seen nothing yet and this is the golden age of America.

• Trump said they have achieved a transformation like never before and a turnaround for the ages, as well as stated that low interest rates will solve the housing problem, and they want to protect home values and keep them up.
• He also commented that inflation is plummeting, salaries are rising, and the roaring economy is roaring like never before.
• Regarding tariffs, Trump said the Supreme Court decision on tariffs is very unfortunate, but added that tariffs will remain in place and nearly all countries want to keep the trade deals, while he also stated that congressional action won't be needed on tariffs.
• Trump also commented on Iran, which he claimed is working on missiles that could soon reach the US, and noted Iran wants to make a deal but hasn't yet said that it won't pursue nuclear weapons, while he reiterated that his preference is to resolve Iran's nuclear issue through diplomacy.

Out of the 450 S&P 500 companies that have reported so far in the earnings season, 74% have managed to beat analyst forecasts, while 21% have missed. TJX, Bank of Montreal and Lowe’s are among companies expected to report results before the market opens. Wall Street expects TJX’s fourth-quarter results to have received a boost from a strong holiday shopping season, with comparable sales estimate of +3.7% (Bloomberg Consensus). Earnings from Nvidia and Salesforce follow later with Wall Street eager to hear what it has to say about potential disruption to software makers from AI upstarts like Anthropic.

Rates on Japan’s longer-term bonds climbed further after Prime Minister Sanae Takaichi’s government nominated two new Bank of Japan policy board members who are seen as dovish. The yen fell 0.5%, the worst performance among major currencies.

European stocks are higher across the board with the FTSE 100 outpacing peers as post-earnings gains in HSBC send the index to a record high. Mining and banking shares are leading gains. Meanwhile, food and beverage as well as personal care stocks are the biggest laggards. Here are the biggest movers Wednesday:

• HSBC shares advanced as much as 6.1% in London to a fresh high after the lender reported strong earnings ahead of estimates and offered new guidance figures that analysts say are above expectations
• Relx shares rise as much as 5.3% after the professional publisher says it’s integrating an Anthropic automation tool into its legal research platform
• Anglo American rallied as much as 4.4% in London after DZ Bank upgraded the miner to buy from hold, saying that the merger with Teck Resources to become one of the world’s biggest copper producers is going as planned
• Lion Finance Group shares climb as much as 9.8% to the highest level on record, after the Georgian lender reported strong fourth-quarter results
• Temenos shares rise as much as 8.6%, the most since October, after the software firm raised its mid-term targets for annual recurring revenue, free cash flow and Ebit, while issuing fiscal 2026 guidance that met expectations
• St James’s Place shares climb as much as 7.3%, the most since July, after the British wealth manager reported underlying cash profit for the full year that beat the average analyst estimate
• Diageo shares fall as much as 7.1% after the maker of Guinness stout and Johnnie Walker whiskey cut its sales guidance due to further weakness in the key US market, and reduced its dividend
• Haleon shares drop as much as 5.6% after the consumer healthcare firm delivered weaker-than-expected organic growth in the final quarter of 2025 and issued guidance that was below its mid-term ambition
• Iberdrola shares slip as much as 1.5%, ceding earlier gains, after the Spanish power company’s fourth-quarter net income missed estimates, overshadowing a 12% rise in full-year 2025 results

Earlier in the session, Asian stocks rise for a third straight day, led by tech stocks, as investors pared concerns over potential disruption from artificial intelligence. The MSCI Asia Pacific Index gained 1.1% at the close to remain near record highs, with  chipmakers TSMC and Samsung continuing to drive advances. Benchmarks in Japan and Taiwan rose more than 2%, while Australian and Korean shares also gained over 1%. Asia’s equity markets have avoided some of the volatility sweeping Wall Street in recent weeks, as investors remain confident about the region’s role in supplying essential AI components to the US. On Wednesday, the region’s tech firms were further supported by comments from Anthropic PBC that it plans to build partnerships with existing businesses. 

“Today’s firmer Asia open, following the US rebound, looks like a reset from oversold levels,” said Ritesh Ganeriwal, head of investment at Syfe Pte in Singapore. “The bounce in US tech is providing near-term relief to sentiment.” “That said, we would characterize this as tactical stabilization rather than a full reset of positioning. Markets are still digesting valuation, earnings visibility, and AI monetization assumptions.”

In FX, the Bloomberg Dollar Spot index is now up a touch as yen weakness helped the greenback shrug off initial downside. The yen was sold and the JGB curve steepened after Japanese PM Takaichi nominated two dovish reflationist academics to join the BOJ board.

In rates, treasuries are slightly cheaper in early US trading as stock futures advance and investors set up for 5-year note auction at 1pm New York time.US yields are 1bp-3bp higher and curve spreads are within 1bp of Tuesday’s close. 10-year near 4.05% is 2bp cheaper, lagging German counterpart by around 1bp.$70 billion 5-year note auction follows solid results for Tuesday’s 2-year; WI 5-year yield near 3.618% is ~20.5bp richer than last month’s auction, which tailed by 0.3bp. Elsewhere in the rates space, US yields are up 1-2bps across the curve with modest upside also seen in German and UK borrowing costs.

While Treasuries showcased their haven status during Monday’s tech selloff, longer-term pressures including uncertainty over inflation, tariffs and fiscal questions remain, according to Laura Cooper, head of macro credit at Nuveen. “We are unlikely to see the resumption of rate cuts until we see greater signs of disinflationary pressures coming through, which to our mind is more of a second-half-of-2026 story,” Cooper told Bloomberg TV. “All of the factors suggest we are in a higher-for-longer yield backdrop.”

In commodities, WTI crude is up 0.3%, but down from highs. US President Donald Trump stated that Iran is working to reconstitute its nuclear program. Spot gold and silver are up 0.5% and 3.5% respectively. Bitcoin is up 2.1% after a recent run of losses. 

The US economic data calendar is blank, while Fed speaker slate includes Barkin (10:40am), Schmid (11am) and Musalem (1:20pm)

Market Snapshot

• S&P 500 mini +0.1%
• Nasdaq 100 mini +0.2%
• Russell 2000 mini +0.4%
• Stoxx Europe 600 +0.6%
• DAX +0.4%
• CAC 40 +0.4%
• 10-year Treasury yield +2 basis points at 4.05%
• VIX little changed at 19.51
• Bloomberg Dollar Index little changed at 1189.37
• euro +0.1% at $1.1786
• WTI crude +0.4% at $65.89/barrel

Top Overnight News

• Donald Trump accused Iran of reviving its nuclear program in his State of the Union address, adding to speculation of new US strikes. BBG
• Trump pledged a new retirement savings plan for workers without 401(k)s. It would be modeled after the federal Thrift Savings Plan, with a government match of up to $1,000 annually. BBG
• US House Speaker Johnson said codifying some of the tariffs would be difficult and will have discussions on tariffs in coming weeks, via Fox Business Interview.
• The Pentagon threatened to invoke a Cold War-era law against Anthropic unless it allows unrestricted military use of its technology by Friday, people familiar said. Anthropic said in a blog post that it’s loosening its hallmark safety pledge.
• Nvidia Corp. has yet to sell any of its H200 chips to China two months after President Donald Trump’s decision to allow shipments of the artificial intelligence processors to the world’s second-largest economy. BBG
• Two Federal Reserve officials on Tuesday signaled no near-term appetite to change the setting of central bank interest rate policy. Markets expect the Fed to lower rates again this year but officials, faced with a stabilizing job market and uncertainty over whether inflation pressures will moderate back to target, have not given much guidance about the prospect for more reductions in the cost of short-term borrowing. RTRS
• Japan must keep raising interest rates and tighten fiscal policy as the economy is already in "great shape," former central bank chief Haruhiko Kuroda said, warning that Premier Sanae Takaichi's big spending plan could stoke an inflationary upswing. RTRS
• Japan’s government has nominated candidates for two positions at the central bank, a move that could be viewed as a chance to influence monetary policy in a more dovish direction. WSJ
• The Aussie gained as January core inflation came in stronger than expected. The Bank of Thailand unexpectedly cut rates to 1%. BBG
• Consumers expecting a drop in prices after the U.S. Supreme Court struck down the White House's emergency tariffs are likely to be disappointed, as businesses plan to use any relief to offset elevated costs and gird themselves to chase refunds. RTRS

Trade/Tariffs

• China's Commerce Ministry, on USTR Greer comments, said that China has fulfilled obligations of China-US phase one agreement.
• China's Commerce Ministry announces that the country encourages imports of services related to chip research, development and design.
• Chinese Premier Li said in meeting with German Chancellor Merz that China is willing to bolster dialogue, communication and mutual trust.
• German Chancellor Merz on trade with China said, they welcome any further market opening and it is in their mutual interest.
• US President Trump said Supreme Court decision on tariffs is very unfortunate, but adds that tariffs will remain in place and nearly all countries want to keep the trade deals, also said congressional action won't be needed on tariffs.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded higher as the region took impetus from the rebound on Wall Street after Anthropic's presentation helped soothe some AI/software concerns, and with tech also bolstered by the USD 60bln Meta-AMD chip deal. ASX 200 advanced with gains led by notable outperformance in the tech, consumer staples and mining sectors, while participants continue to digest an overload of earnings and are unfazed by firmer-than-expected CPI data. Nikkei 225 rallied to a fresh record high as exporters benefitted from recent currency weakness after it was reported that Japanese PM Takaichi relayed to BoJ Governor Ueda her reservations about further rate hikes. Hang Seng and Shanghai Comp conformed to the broad upbeat risk sentiment, with attention in Hong Kong on the annual budget and with the mainland underpinned with the PBoC conducting a CNY 600bln MLF operation.

Top Asian News

• China aims to boost output of relatively advanced chips to 100,000 wafers in 1-2 years, according to Nikkei; China has set target of adding an additional 500,000 wafers of capacity by 2030.
• Shanghai City relaxes home buying rules for non-residents effective on Thursday and will exempt property tax for certain home buyers.
• Japanese PM Takaichi said closely watching FX moves with a high sense of urgency.
• Major Japanese brokerage warns that yen could test post-election low if BoJ appointments are dovish.
• Hong Kong Financial Secretary Chan said in Budget Address that 2025 GDP rose 3.5% and the domestic economic trend is to continue to be good in 2026. Sees 2026 GDP at 2.5%-3.5% and average growth of 3.0% per year in real terms for 2027-2030.
• Hong Kong budget is speculated to include funding for tech hub and aerospace sector incentives, according to SCMP.

European bourses (STOXX 600 +0.6%) are entirely in the green, with the FTSE MIB and FTSE 100 (+0.9%) gaining, helped by positive HSBC earnings. The SMI (+0.1%) is the slight laggard, weighed down by Alcon (-1.1%) after the Co. missed on Q4 revenue and core EPS. European sectors are broadly in the green. Banks (+1.8%) and Basic Resources (+2.2%) sit comfortably at the top of the table, while Food, Beverages and Tobacco (-0.7%) is soft as poor Diageo guidance hits the rest of the sector (Pernod Ricard -2.9%, Heineken -0.3%). HSBC shares (+5.5%) are higher today for three reasons: 1) beating market estimates for its top line metrics, 2) lifting its annual 2026-28 ROTE to 17% or greater, and 3) stating its USD 1.5bln cost-saving target will be hit ahead of schedule. This, alongside an update from Santander (+2.7%), in which they expect 2028 net income at EUR 20bln (exp. EUR 18.6bln), lifts the Banking sector.

Top European News

• UK Chancellor Reeves is facing renewed called to cut bank tax as UK competitiveness lags, according to City AM.
• German lawmakers are reportedly set to approve EUR 540mln order for attack drones, Bloomberg reported citing sources.

FX

• DXY trade flat intraday and off worst levels within a current 97.643-97.867 range after briefly dipping under yesterday's 97.695 low, with little reaction to US President Trump's State of the Union Address, where he defended his leadership and described the past year as a “turnaround for the ages”; he promoted tariffs as strengthening the US economy, and said they would “substantially replace” income taxes; he offered limited details on Iran, China and Ukraine. Aside from that, newsflow this morning has been on the lighter side. Focus ahead will be on Fed speak and then NVIDIA earnings.
• JPY underperforms with recent developments seeing PM Takaichi nominating academics Ayano Sato and Toichiro Asada to the BoJ policy board, replacing Asahi Noguchi and Junko Nakagawa; analysts said the picks are viewed as reflationist and dovish, and may reduce expectations of near-term rate hikes. Further, JPY weakness coincided with reports that Japan's FTC conducted an on-site inspection of Microsoft (MSFT) on suspicion of violating the Antimonopoly Act, Nikkei reported, potentially stoking some Big Tech-related bilateral tensions. USD/JPY resides in a 155.34-156.64 range after topping Tuesday's 156.28 high.
• AUD is the G10 outperformer following firmer-than-expected monthly CPI data from Australia. The upside in consumer inflation was driven by electricity and garments & footwear offset somewhat by a larger than expected fall in holiday travel and a smaller than expected rise in health. Analysts at Westpac note "Consistent with our preliminary review we see little risk to our current inflation profile." AUD/USD resides closer to the top end of a 0.7057-0.7117 range at the time of writing.
• GBP and EUR trade with mild gains despite a flat DXY, possibly more a function of JPY weakness as GBP/JPY hovers around 211.50 and EUR/JPY meanders around 184.50. Aside from that, specifics for GBP and EUR are light, with the latter eyeing EZ final inflation metrics.

Central Banks

• Former BoJ Governor Kuroda said Japan need to move toward tighter fiscal and monetary policy as the economy is already in great shape. Recent USD/JPY levels near 157 is somewhat too weak. BoJ can probably hike rates around twice a year in 2026 and 2027 to around 1.5-1.75%. PM Takaichi's administration spending and tax-cut plans could fuel inflation and push up bond yields.
• Japan nominates professors Toichiro Asada and Ayano Sato to replace outgoing BoJ board members Noguchi and Nakagawa.
• Japanese Deputy Chief Cabinet Secretary said aware of report that PM Takaichi voiced apprehension to additional BoJ rate hikes, adds Takaichi did not have a specific request and there is 'nothing more or less than that'.
• RBA Governor Bullock said patience is required in assessing policy.
• China may see lower rates from Q2, according to experts cited by China Securities Journal.
• Thai Central Bank unexpectedly cuts its rate by 25bps to 1.00% (exp. a hold at 1.25%); 4-2 voted in favour of the cut; said downside risks to headline inflation are expected to increase relative to previous assessment.

Fixed Income

• Global benchmarks are broadly lower this morning. Pressure which also comes alongside JGB selling, which are currently lower by around 50 ticks. The situation is Japan appears to be shifting from optimism surrounding political stability, after PM Takaichi’s landslide victory, to one where traders are questioning “reflationist” policy; this refers to government’s ability to boost spending whilst also allowing inflation to run higher. Fears which were sparked by reports on Tuesday, that PM Takaichi expressed her apprehension to further BoJ hikes. Moreover, overnight it was reported that the government had recommended two academics, who have been described as “staunch reflationists”, by Chief Fixed Income strategist SBI Securities.
• USTs are lower by a handful of ticks and currently hold within a 113-05+ to 113-10+ range, with price action ultimately sideways for much of the morning. Pressure this morning in tandem with easing AI disruption related fears, after Anthropic announced a slew of new partnerships. Overnight, markets tuned into President Trump’s State of the Union Address, in which he largely talked up the US economy; on trade, he suggested that tariffs will remain in place and nearly all countries want to keep the trade deals. On the Iran situation, he suggested that Iran wants to make a deal, and reiterated his own preference to solve the situation through diplomacy. Overall, his comments did not spur a reaction in US paper.
• Bunds initially held around the unchanged mark early doors, before slipping slightly into the red; currently off by around 10 ticks, to hold within a 129.50-129.71 range. Earlier, Final German GDP (Q4) figures were unrevised, whilst the GfK Consumer Confidence metrics deteriorated from the prior vs expectations of a slight improvement. Little move to the release of Final EZ HICP metrics.
• Gilts follow peers lower, and currently lower by 10 ticks within a 92.94-92.84 range. Focus on Tuesday was on the BoE, where several MPC members appeared at the TSC hearing. Governor Bailey noted that would go into coming meetings asking if a cut is justified, adding that a rate cut at the next meeting is a genuinely open question. Market pricing was little moved following the hearing and are still yet to definitively determine if the next cut will be in March or April. Elsewhere, CityAM reported that UK Chancellor Reeves is facing renewed calls to cut the bank tax as UK competitiveness lags.

Commodities

• Crude benchmarks remain underpinned, with WTI and Brent trading within the ranges of USD 65.45-66.60/bbl and USD 70.45-71.60/bbl, respectively. Ongoing geopolitical tension between the US and Iran will likely keep oil prices volatile in the near term. At the time of writing, the latest update includes US Senator Cruz suggesting that they are likely to see limited strikes on Iran in a matter of days. Meanwhile, Iranian Foreign Minister Araghchi said Tehran will resume talks with the US in Geneva tomorrow. In Russia and Ukraine, Washington warned Ukraine not to strike targets within Russia that could hit US economic interests, according to the FT.
• In the precious metal space, XAU and XAG continue to surge, trading at the upper range of USD 5128.3-5310.7/oz and USD 86.22-87.10/oz, respectively. The yellow metal has been underpinned by recent dollar softness as well as continuous haven demand over geopolitical uncertainty between the US and Iran.
• Copper prices are slightly firmer this morning, tracking global risk sentiment from Wall Street and APAC, which finished higher, as well as the European session, which is trading mostly positive thus far this morning. At the time of writing, 3M LME copper is trading at the upper end of a USD 13.19-13.29k range.
• Russia and Iran are cutting its oil prices to China, Bloomberg reported citing traders; Russia's Urals grade is selling USD 12/bbl below ICE Brent (prev. USD 10/bbl below), Iranian Light selling USD 11/bbl below ICE Brent (prev. USD 8-9/bbl).

Geopolitics: Ukraine

• Ukraine President Zelensky's negotiators will meet with US counterparts on Thursday and is targeting a leaders summit in March.
• Washington warns Ukraine over striking US economic interests in Russia, FT reported. Kyiv’s ambassador to Washington said the Trump admin has formally warned Ukraine not to strike targets within Russia that could hit US economic interests.

Geopolitics: Middle East

• US President Trump said Iran is working on missiles that could soon reach the US, and noted Iran wants to make a deal but hasn't yet said that it won't pursue nuclear weapons, reiterates his preference is to resolve Iran nuclear issue via diplomacy.
• Iran's Parliamentary Speaker said, with relation to US-Iran talks, all options are on the table. Ready for dignified diplomacy, also ready for defence.

US Event Calendar

• 7:00 am: United States Feb 20 MBA Mortgage Applications, prior 2.8%
• 10:40 am: United States Fed’s Barkin Speaks on Panel
• 11:00 am: United States Fed’s Schmid Speaks on Monetary Policy and the Economy
• 1:20 pm: United States Fed’s Musalem Speaks on Role of Fed

DB's Jim Reid concludes the overnight wrap

Markets recovered their poise over the last 24 hours, with the S&P 500 (+0.77%) advancing thanks to positive US data and a rebound in software stocks. Clearly that mood could change with Nvidia’s results after tonight’s close, but the news led to a bit more confidence in the near-term outlook, and the financial stress at the start of the week eased across several asset classes. Moreover, inflation concerns also fell back after Brent crude oil prices (-1.01%) declined for a second day. So there was a much more positive tone relative to Monday’s selloff, and futures on the S&P 500 (+0.01%) are just about higher as well this morning.

In terms of the latest on the AI side, there wasn’t much in the way of fresh headlines to drive markets yesterday, but we did see software and other tech stocks pare back their Monday losses. For instance, the NASDAQ (+1.04%) and the Magnificent 7 (+1.14%) both put in a decent performance, and the S&P 500’s software component (+1.28%) picked up from its 10-month low on Monday. Meanwhile, AMD (+8.77%) was the second-best performer in the S&P 500 after it was announced that Meta would acquire AMD chips with a total capacity of 6 gigawatts. So it was a strong session for tech stocks, which also supported broader US equity gains. By the close, more than 70% of the S&P 500’s companies were higher on the day, with consumer discretionary (+1.58%) and industrials (+1.23%) sectors leading the way. However, there were more concerns in the credit space, with US IG and HY spreads both edging +1bps higher, reaching their widest levels since December.

Risk assets got further support from the latest US data, as the Conference Board’s consumer confidence reading picked back up to 91.2 in February (vs. 87.1 expected). Moreover, the expectations component also rebounded to 72.0, up from a 9-month low the previous month. There were also promising signs on the labour market, as the ADP’s weekly private payrolls series hit a 2-month high, showing 4-week average growth of +12.75k in the period to February 7. So at the margins, that leant positively against the recent talk of AI-driven unemployment.

Given the more positive data and the tech stock rebound, investors also priced in a slightly more hawkish path for the Fed over the year ahead. For instance, the probability of a rate cut by the June meeting fell to just 52%, the lowest so far this year. And looking further out, just 55bps of cuts are now priced in by the December meeting, which was down -3.9bps on the day. So in turn, that pushed up front-end Treasury yields, with the 2yr yield (+2.3bps) up to 3.46%, although the 10yr yield (-0.2bps) was basically flat at 4.03%. Comments from Fed officials also leaned against imminent rate cuts, with Chicago Fed President Goolsbee warning that 3% inflation “is not good enough” and that they needed to make more progress. And Boston Fed President Collins said rate were likely to stay unchanged “for some time” and that she was looking for more confidence that disinflation resumes. There were also discussions around AI-related job losses too, with Governor Cook saying that “our normal demand-side monetary policy may not be able to ameliorate an AI-caused unemployment spell without also increasing inflationary pressure”.

Another supportive factor yesterday was the latest dip in oil prices, which helped to ease concerns on the inflation side. In part, that was driven by growing hopes for some sort of deal between the US and Iran that would avoid a military escalation. Indeed, Trump himself had posted on Monday evening after the US close that “I would rather have a Deal than not”. So that took a bit of the geopolitical risk premium out, with Brent crude down -1.01% to $70.77/bbl, whilst gold prices fell -1.60% to $5,144/oz. Trump echoed that rhetoric on a deal in last night’s State of the Union address, saying that his “preference is to solve this problem through diplomacy”.

Over in Japan, the yen weakened yesterday after the Mainichi newspaper reported that PM Takaichi was apprehensive about more rate hikes in a meeting last week with BoJ Governor Ueda. So it was down -0.78% against the US Dollar yesterday, making it the weakest-performing G10 currency. Then this morning, Japanese equities have seen a strong outperformance after the government nominated two reflationists to join the Bank of Japan’s board, who were seen as favouring more stimulus. So the Nikkei is up +2.60% this morning, on course for another record high, and bringing its 2026 gains to +16.83% already.

That optimism has been clear elsewhere in Asia, building on the overnight gains seen on Wall Street. So in South Korea, the KOSPI (+1.79%) is up for a 5th consecutive session, and also on track to close at a record. Similarly in Australia, the S&P/ASX 200 (+1.17%) is on course for an all-time high as well, despite a stronger-than-expected CPI report this morning, with inflation remaining at +3.8% in January (vs. +3.7% expected). So that’s seen investors price in more RBA rate hikes at the next few meetings, and the Australian Dollar has strengthened against every other G10 currency this morning, up +0.73% against the US Dollar. Otherwise, there’s also been gains for the Hang Seng (+0.72%), the Shanghai Comp (+0.99%) and the CSI 300 (+0.86%).

Earlier in Europe, most assets had also put in a decent performance yesterday, with the STOXX 600 (+0.23%) paring back some of Monday’s losses as well. That came as longer-dated yields continued to fall across the continent, with yields on 10yr gilts (-0.9bps) and BTPs (-0.5bps) at their lowest since December 2024, whilst 10yr OAT yields (-0.8bps) reached their lowest since July. For 10yr bund yields (-0.4bps) there was a comparatively smaller fall, but yields still closed at their lowest since November.

Looking at the day ahead, one of the main highlights will be Nvidia’s earnings after the US close tonight. Otherwise, central bank speakers include the Fed’s Barkin, Schmid and Musalem, and the ECB’s Vujcic. There’s not much data, but we will get the final Euro Area CPI print for January, along with the final Q4 GDP release from Germany.

Tyler Durden Wed, 02/25/2026 - 08:33

"I Did Nothing Illicit": Bill Gates Begins Apology Tour Over His Epstein Ties

A week after Bill Gates abruptly pulled out as a keynote speaker at a high-profile global AI summit in India, the left-wing billionaire finally mustered enough nerve to "take responsibility for his actions" over his ties to late financier and sex offender Jeffrey Epstein during a town hall meeting with Gates Foundation employees.

The Wall Street Journal reports that Gates told employees at a town hall event for the foundation on Tuesday that he never spent time with Epstein's victims, and never visited Epstein's island.

He revealed that Epstein later learned about two affairs he had with Russian women, but said those relationships did not involve Epstein's victims. Gates said photos in the Epstein files show him with redacted women were taken by Epstein's assistants after meetings.

Did Gates fall into a Russian honeypot?

"I did nothing illicit. I saw nothing illicit," Gates emphasized, according to a recording reviewed by WSJ journalists.

Gates continued, "To be clear, I never spent any time with victims, the women around him."

"It was a huge mistake to spend time with Epstein" and bring Gates Foundation executives into meetings with the sex offender, Gates said, adding, "I apologize to other people who are drawn into this because of the mistake that I made."

Last week, the $86 billion philanthropic body's last-minute decision to yank Gates was a major embarrassment and came as the Epstein fallout worsened, with many high-profile people under fire.

Related:

• "Law Must Take Its Course": King Charles Responds To Arrest Of Former Prince Andrew

• Goldman Sacks Ruemmler As Epstein Scandal Claims Obama's Former Lawyer

• Watch: GOP Releases Full Les Wexner Epstein Deposition

"Knowing what I know now makes it, you know, a hundred times worse in terms of not only his crimes in the past, but now it's clear there was ongoing bad behavior," Gates said. He gave credit to his ex-wife, who "was always kind of skeptical about the Epstein thing."

Gates told staff he began meeting Epstein in 2011, despite the financier's 2008 guilty plea for soliciting a minor for prostitution. He said he was aware of the "18-month thing" that had restricted Epstein's travel, yet continued the relationship, even after his then-wife, Melinda French Gates, raised serious concerns in 2013.

He said the relationship continued through 2014 and that he flew on a private jet with Epstein and spent time with him in Germany, France, New York, and Washington. "I never stayed overnight," he said, or visited Epstein's island.

He said Epstein "talked about the kind of intimate relationship he had with a lot of billionaires, particularly Wall Street billionaires," and that he could help raise money for global health nonprofits.

"It definitely is the opposite of the values of the Foundation and the goals of the Foundation," he said. "And our work is very reputation-sensitive. I mean, people can choose to work with us or not work with us."

No matter what, the Gates Foundation has a dark cloud hanging over it because of Gates' involvement amid the deepening Epstein fallout.

Gates is worth billions, so why would he need Epstein to raise money for global health nonprofits? Something doesn't pass the sniff test in this damage-control town hall he held for his foundation's employees.

Tyler Durden Wed, 02/25/2026 - 08:05

Spacecraft Builder That Beats Big Defense Primes On Cost And Speed: Here's How To Profit

Provided continued AI disruption, indiscriminate software stock selling, and credit market risks do not trigger a broader risk-off market event in the coming weeks or months, a June SpaceX IPO could become the bedrock for the grand reopening of the IPO market. The second-order effects of a SpaceX IPO would be improved sentiment toward AI companies going public and potentially a serious investor appetite for the low-Earth-orbit space industry.

Continuing our ever-evolving "how to profit" space theme, a newly listed company on U.S. exchanges is York Space Systems.

YSS is a U.S. government-focused Space Prime that builds standardized satellite buses (spacecraft platforms) at scale, integrates customer payloads, and supports the rest of the mission, launch coordination, the ground segment, and in-orbit operations.

"Its vertically integrated design and manufacturing process means its SVs can be produced at 50% of the cost and 20% faster than defense primes," Goldman analyst Anthony Valentini wrote in a note on Monday.

Valentini told clients her markets team has begun to "initiate coverage of YSS at Neutral with a $29 price target."

YSS' ability to build spacecraft and offer aligned services at not just half the cost but in a quicker timeframe checks all the boxes that the U.S. military is searching for these days, especially with the DOGE unit at the Department of War resetting the procurement program away from big, bloated legacy primes to startups.

Valentini gives three reasons why her markets team favors YSS:

1. Growth: alignment to the growing space economy and shifting DoW purchasing preferences could lead to fast growth;

2. Business model: the business is capital light and structured to control cost, enabling lowest price solutions to customers;

3. Potential sticky high margin revenue: potential for recurring high margin software revenue as the installed fleet increases.

YSS was founded in 2012 and went public at the start of this year. Valentini described a little bit more of its operations:

The company bids as the Prime, under fixed-price contracting terms, manufactures satellite buses, and integrates the payload into its spacecraft for the customer. York serves the customer through the full mission life cycle; the company manufactures the satellite bus, integrates the payloads, organizes launch services, and provides mission operations post-launch.

How YSS benefits from the space industry:

• "Left of Launch": York bids on a contract as the prime, builds the satellite bus, integrates the payload, and delivers it to the launch provider so that the customer can then operate the satellite and receive data from the payload.

• "Right of Launch": York offers software services to operate the satellite for its customer. This is potentially a significant lever for the business because it is high-margin recurring revenue, but currently this offering forms less than 5% of the backlog.

The proliferation of space architecture provides a significant growth opportunity.

The space ecosystem has experienced significant growth in recent years as innovations in launch have reduced the cost to get to orbit, and militaries look to gain the high ground to ensure national security. The SDA has spent ~$14bn on SVs for the PWSA program, and the U.S. government funded ~$25bn for Golden Dome. The company expects that the intel community opportunity is 2x PWSA, and it can service $65bn of the potential $175bn for Golden Dome, leading to a TAM of $140bn.

YSS is one to track.  

Whether the catalyst is the incoming space boom or federal "Golden Dome" spending, YSS stands to benefit from both themes. Investors are already signaling bullish appetite for the space trade, as seen in the recent blast-off in a stock tied to a Korean broker that holds about $400 million in private shares of SpaceX and xAI.

Professional subscribers can read much more of the Goldman note here at our new Marketdesk.ai portal

Tyler Durden Wed, 02/25/2026 - 07:45

Diageo Shares Plunge Most In Two Years On Weaker Guidance, Dividend Cut

Shares of Diageo Plc fell the most in 2 years after the maker of Guinness beer and Johnnie Walker whiskey cut its guidance for the second time this fiscal year amid soft demand in the US and China markets. The move marks an early challenge for new CEO Dave Lewis.

The British distiller now expects organic net sales to decline by 2% to 3% this fiscal year, down from previous guidance of flat to slightly down, and said it would reduce its dividend.

First-half results were mixed. Organic net sales fell 2.8%, worse than expected, while North America's operating profit plunged 15%, missing analyst estimates tracked by Bloomberg Consensus. Europe was a bright spot, with operating profit rising 10% and beating forecasts. Adjusted EPS slightly beat, but overall sales and operating profit were much softer than anticipated by analysts.

Citi analyst Simon Hales said the cut to full-year organic sales growth guidance reflects a much weaker US environment and noted that it could prompt cuts to the 2027 outlook. He added that the dividend cut has "taken the shine off" what could otherwise have been seen as the "clearing event" for the stock to rally.

At Goldman, analyst Natasha de la Grense said the big story in the earnings report is the dividend cut. She noted investors are still waiting for a proper turnaround plan from the new CEO:

Main focus today is the dividend cut which is perhaps not a huge surprise (Mr Lewis did this when he arrived at Tesco) and arguably necessary but never welcome news on the day. They are targeting a 30-50% payout going forward with a minimum floor of 50c per annum (consensus FY26 100c). In terms of the H1, it's a miss on org sales (-2.8% vs cons -2%) driven by volumes (-0.9% vs cons -0.2%) which were particularly weak in North America (-4%). US spirits net sales fell -9.3%. Reported EBIT is more in line at $3,256m (consensus $3,213m) and org EBIT better (-2.8% vs cons -3.9%) driven by A&P efficiencies (16.3% of sales vs consensus 17.7%). They are cutting sales and EBIT guidance as expected, now looking for sales -2-3% (cons -1%) and EBIT flat to +LSD (cons flat). The org profit guidance implies an acceleration in H2 underpinned by higher savings which are coming through earlier than expected. Spot FX rates imply a +$100m FX impact on sales per management (consensus +$200m). FCF guidance is reiterated. Not tons from the new CEO on strategy which is to be expected given he only started 1 Jan - he sees opportunities to enhance competitiveness and to deliver higher growth. In H1, Diageo grew or held market share in just 30% of markets.

Shares of Diageo in London tumbled 7.5%, marking the largest intraday decline since November 10, 2023, when shares dropped by 12%.

From the 2021 peak, shares have been more than halved and currently trade around 2015 levels.

RBC analyst James Edwardes Jones and Wassachon Udomsilpa told clients that softer sales performance, a guidance downgrade, and a dividend cut are a "non-event" due to the CEO's new strategy, set to kick in later this year.

"We are going to have to wait for 'later in the summer' (hopefully not too much later) to get into the meat of Sir Dave's plans for Diageo," the analyst wrote.

The only problem for analysts hoping for a turnaround at Diageo is the mounting headwinds facing the industry, as younger generations are giving up alcohol for health reasons or perhaps simply lack the discretionary spending power.

Tyler Durden Wed, 02/25/2026 - 07:20

Market Bets Soar That Fed Will Cut Rates To 2% In 2027

Concerns about rising inflation, and the Fed hiking rates to contain it, have reversed rather dramatically. 

As Bloomberg's Edward Bolingbroke observes, after months of consensus trades that the Fed's easing cycle will end in 2026, traders in US futures and options markets are suddenly piling on bets that the Fed will continue cutting rates well into next year instead of raising them.  

As shown below, the key spread linked to the SOFR (the Secured Overnight Financing Rate) which track expected Fed policy, have becoming deeply inverted in the past week, a sign that traders are starting to price a more prolonged easing cycle. The 12-month December 2026 to 2027 SOFR spread dropped into negative on Friday with the inversion deepening on Tuesday to minus 8 basis points, in a sign that investors have flipped from pricing hikes in 2027 to pricing cuts.

In the SOFR options market a similar dovish theme is observed for trades that are hedging (or encouraging, depending on how one views the role of options) the prospect of multiple rate cuts this year. Those trades picked-up again on Tuesday with one position that’s looking to hedge for the policy rate falling to as low as 2% by the end of the year growing in size.

Open interest in the December 98.00 calls ballooned to more than 400,000 this week. A record amount of just over 150,000 calls traded in the 12-month spread over Monday’s session, while the total open interest of SOFR Dec26 98.00 calls soared above 400,000 amid the trading frenzy. For context, the swaps market is currently pricing a Fed rate of around 3.1% - or just over two 25-basis point cuts - by year-end, some 110 basis points above the options strike price. 

Until mid-February, traders were betting that the central bank would resume hiking rates in 2027 after two quarter-point reductions by the end of this year. However, the ongoing wipeout of Software stocks and the growing debate around the impact of artificial intelligence on the labor market is leading them to reassess this outlook. On Tuesday, Fed Governor Lisa Cook warned that the central bank may not be able to counter rising unemployment driven by the adoption of AI.

Which, of course, leaves fiscal policy as the only recourse to provide a safety net for the millions of soon-to-be-unemployed white collar workers displaced by chatbots. And, fiscal policy needs to be funded by brrrr, which means sooner or later the Fed will have to print again, just as we said back in 2024 in a 22-word tweet which effectively previewed and summarized that 7000 word Citrini essay far more eloquently.

Market pricing so much AI success, it will need to leave about 100 million people without a job.

Bring on the UBI

— zerohedge (@zerohedge) January 24, 2024

But we'll cross that money printer when we get to it: for now, what's important is that the flattening move in SOFR spreads accelerated sharply since the end of last week, just as AI disruption fears took a toll on a swath of stocks, setting off a rally in long-dated Treasuries and raising recession odds among multiple brokers..

Gennadiy Goldberg, head of US rates strategy at TD Securities, told Bloomberg that “there has certainly been a bit of repricing for lower yields after the Fed hits terminal, with the market penciling in a more gradual drift higher in yields."

“That could be driven by uncertainty regarding the impact of AI on the labor market, but fluctuations in longer-dated Fed expectations tend to be quite significant, making it difficult to read into them,” he added.

And indeed, “the question is how is AI going to be inflationary and maybe the long end of the curve is sniffing all of this out,” said Jack McIntyre, portfolio manager at Brandywine Global Investment Management. “The only inflationary aspect of AI is the building out of data centers and the associated energy needs, and that is known."

Market positioning for prolonged rate cuts is also becoming evident in treasury curve metrics: the 2- to 5-year spread reached the flattest levels since the start of December on Monday, while the richening of the 2s5s30s butterfly was the biggest one day move seen in six months, driven by outperformance in the belly of the curve.

While many herd-following investors will be caught offside by this latest twist in Fed pricing, one fund manager who has called it correctly so far is David Einhorn: two weeks ago, the co-founder of Greenlight Capital said he has bought Secured Overnight Financing Rate (SOFR) futures on expectations of a rally if the Fed lowers borrowing costs more aggressively. 

“I think one of the best trades out there right now is betting on more cuts this year than expected,” Einhorn said on CNBC On Feb 11 . “I think by the time we get to the end of the year, it’s going to be substantially more than two cuts.”

And not only this year, but next year too. 

He made the comments after a better-than-expected jobs report prompted traders to pare back their bets for Fed cuts this year, to just about two quarter-point moves.

Einhorn said Warsh, whom President Donald Trump has picked to succeed current Fed Chair Jerome Powell, is likely to deliver what the president wants: Lower borrowing costs. Trump has relentlessly pushed Powell to lower rates, a move that would help reduce interest costs on US government debt.

Einhorn said Warsh, a former Fed governor, could convince his colleagues to adopt his view that rising productivity will create room for easier monetary policy - even if the economy is strong. Since then, the term "rising productivity" has rapidly become synonymous with mass future layoffs and so here we are. 

“He’s not being brought on to hold the rates at a steady rate,” Einhorn said. “He’s going to argue we can cut even if the economy is running hot.” Suddenly, the market agrees with him. 
 

Tyler Durden Wed, 02/25/2026 - 06:55

The AI Boom Is Powering A Nuclear Renaissance

Authored by Robert Rapier via OilPrice.com,

• Hyperscale AI data centers require city-scale electricity loads, making dependable baseload power a strategic necessity.

• Microsoft and Amazon are forming direct nuclear partnerships and pursuing advanced reactor technologies to secure long-term energy supply.

• Energy infrastructure, particularly nuclear generation and uranium supply, is emerging as a structural beneficiary of AI-driven demand growth.

For years, Silicon Valley took electricity for granted. The cloud sounded intangible, almost detached from the physical world. But now, artificial intelligence is ending that illusion. Behind every large language model and AI assistant sits a growing fleet of data centers that require enormous and continuous amounts of power.

Industry analysts estimate that a single hyperscale AI data center can demand 300 to 500 megawatts of electricity, comparable to the consumption of a mid-sized city. Multiply that across dozens of facilities under construction, and energy supply becomes less of an operating expense and more of a strategic constraint.

Microsoft and Amazon are responding with moves that signal a fundamental shift. Instead of relying solely on renewable energy contracts or traditional grid access, which alienates communities by driving up utility bills, both companies are securing direct relationships with nuclear power generation. In practical terms, they are beginning to operate like long-term energy planners rather than pure technology companies.

AI Turns Electricity into a Strategic Advantage

Modern AI systems run continuously. Training models, serving queries, and maintaining uptime require stable, round-the-clock power. Intermittent resources such as wind and solar remain essential parts of the energy mix, but they cannot guarantee the steady output required by massive computing clusters without additional firm generation or storage.

For years, technology companies relied on renewable energy credits to balance their emissions claims. That accounting approach becomes harder to maintain when the scale of electricity demand rises dramatically. If an AI facility must operate regardless of weather conditions or time of day, dependable baseload power becomes indispensable.

Electricity is shifting from a background cost to a defining competitive factor.

Microsoft’s Nuclear Strategy Moves from Theory to Reality

Microsoft’s involvement in restarting the former Three Mile Island Unit 1 reactor, now known as the Crane Clean Energy Center, represents one of the clearest signals of this transition. Constellation Energy secured a $1 billion Department of Energy loan in late 2025 to accelerate the restart, with commercial operation targeted around 2027.

Restarting an existing reactor offers a faster path to reliable carbon-free generation than building new infrastructure from scratch. For Microsoft, the project provides long-term power certainty while helping stabilize the surrounding grid.

The company is also pursuing longer-term energy innovation. Microsoft signed a power purchase agreement tied to a planned fusion facility developed by Helion Energy, reflecting a willingness to invest in future technologies that could provide high-density energy at scale. Fusion remains an ambitious goal, but the partnership underscores how seriously Microsoft views future electricity constraints.

Taken together, these steps show a company moving beyond buying power toward influencing how it is produced.

Amazon’s Approach: Control, Location, and Vertical Integration

Amazon’s strategy emphasizes control over energy supply. Its acquisition of the Cumulus Data Center campus from Talen Energy provides direct access to electricity generated by the Susquehanna nuclear facility. This “behind-the-meter” model allows the company to avoid some transmission bottlenecks and grid congestion challenges that increasingly delay new data center development.

Co-locating computing infrastructure with firm generation can shorten timelines and reduce uncertainty. As utilities struggle to expand transmission networks fast enough to meet demand, proximity to power becomes a competitive advantage.

Amazon is also investing in advanced nuclear development. Partnerships involving Energy Northwest and X-energy aim to deploy small modular reactors capable of delivering nearly a gigawatt of reliable capacity tailored to industrial-scale electricity needs.

Rather than treating energy procurement as a secondary function, Amazon appears to be integrating it directly into its long-term infrastructure strategy.

Why Nuclear Energy Is Returning to the Conversation

Renewable energy continues to grow rapidly, but the requirements of AI highlight the need for complementary sources of firm generation. High-performance computing environments cannot tolerate frequent power variability.

Nuclear energy aligns with several critical requirements:

• Capacity factors typically exceeding 90 percent

• Continuous output suited for constant workloads

• Minimal direct carbon emissions

• Operational lifetimes measured in decades

These attributes make nuclear power an increasingly attractive partner for large-scale AI infrastructure.

Implications for Investors

The convergence of artificial intelligence and energy infrastructure is reshaping how markets evaluate certain sectors. Nuclear operators and energy infrastructure companies are increasingly viewed as strategic enablers of technological growth rather than slow-moving defensive assets.

Companies such as Constellation Energy and Vistra benefit from existing generation fleets aligned with rising data center demand. Meanwhile, renewed interest in nuclear capacity could strengthen the uranium supply chain, supporting companies like uranium producer Cameco.

Electricity supply is emerging as a structural driver of technology investment decisions.

The Real Constraint Behind the AI Boom

Technology companies spent years trying to abstract away the physical world. Artificial intelligence is forcing a return to fundamentals. Computing power ultimately depends on energy density, infrastructure, and reliability.

Microsoft and Amazon are not abandoning renewable energy goals. They are acknowledging that scaling AI requires firm power that operates continuously. In that sense, the next phase of technological competition may hinge less on software breakthroughs and more on access to dependable electricity.

The companies that secure reliable energy first may hold the strongest advantage in the race to scale artificial intelligence.

Tyler Durden Wed, 02/25/2026 - 06:30

Trump's Cuba Pressure Campaign Could Spark Cohiba Cigar Price Spikes

Cuba is buckling under a severe economic crisis. Years of economic mismanagement, turbocharged by hyperinflation and population decline, have left the nearly seven-decade-old communist government weaker than at any point in years. Now, the Trump administration has promised maximum pressure, with President Trump openly vowing to bring the regime to its knees.

We've focused on Trump's blockade of oil deliveries to Cuba, the worsening power grid blackouts, and even the tourism collapse, as flight disruptions have erupted in recent weeks amid a fuel crisis. But one area that remains off the radar for many is that the current crisis has likely spread into the Caribbean nation's agricultural sector.

Cuba's annual cigar festival in Havana, hosted by Habanos S.A., the state-run entity that holds a monopoly on global Cuban cigar sales, has been "postponed."  

Habanos posted a message on its website last week detailing the postponement of the cigar festival, explaining, "The priority of the Habano Festival is to offer its participants a comprehensive experience at the height of the relevance and prestige that this event represents internationally. The postponement of its celebration is a measure aimed at protecting this experience and guaranteeing its excellence."

The festival features 1,000 guests from around the world, participating in auctions for Cuban premium cigars, conferences, tastings and pairings, as well as factory and plantation visits.

"Agriculture is not spared by the current oil situation, which is very serious," Hector Luis Prieto, a producer from the western Vuelta Abajo region, told AFP.

International sales of Cuban cigars remain the Caribbean island's flagship export, but near-term availability could tighten as the Trump administration ramps up its maximum pressure campaign.

The key question for all those cigar aficionados is whether supply will dwindle in the months ahead, particularly after the annual festival was canceled. This could disrupt distribution lines and send prices for Cohiba, Montecristo, Partagás, and Romeo y Julieta even higher.

One cigar aficionado by the name of Matt Delovino on YouTube asked the simple question, "Is the era of the "everyday" Cuban cigar officially over?"

"Before we dive into the market data, I want to acknowledge that the situation in Cuba right now is incredibly complex. However, for the purpose of this video, I am speaking strictly from a cigar industry and consumer perspective," Delovino wrote in the description of the video.

Representatives from Colombian cigar retailer La Cava del Puro, which specializes in selling Habanos, Colombian cigars, and other premium tobacco products and has been in business for 25 years, told us in recent days that a looming Cuban cigar supply crunch will likely push prices higher.

They said supplies are set to dwindle in the coming months.

Is a Cuban cigar supply crunch imminent? If so, the U.S. Customs and Border Protection website has a "Knowledge Article" that explains the maximum number of cigars you can bring into the U.S. before you must declare them.

Tyler Durden Wed, 02/25/2026 - 05:45

Trump Admin To Launch New Free-Speech Site To Combat Censorship Abroad

Authored by Kevin Stocklin via The Epoch Times (emphasis ours),

In response to what the Trump administration says is a rising tide of censorship in Europe, the State Department is launching a new app that will give users worldwide access to content that has been censored in other countries.

European Commissioner Thierry Breton speaks during a news conference at the European Union office in San Francisco on June 22, 2023. Josh Edelson /AFP via Getty Images

This includes not only Europe but also China and Iran. The platform, called Freedom.gov, will go live over the next several weeks, according to the State Department, and will be operable on iOS and Android devices.

“Freedom.gov is the latest in a long line of efforts by the State Department to protect and promote fundamental freedoms, both online and offline,” the State Department stated in an email to The Epoch Times. “The project will be global in its scope, but distinctly American in its mission: commemorating our commitment to free expression as we approach our 250th birthday.”

Lauding the move, Jeremy Tedesco, senior counsel at the Alliance Defending Freedom, a civil rights legal group that has been critical of recent EU speech laws, stated on X that “for 250 years, this is what America does,” citing examples such as Radio Free Europe, which broadcast into communist countries during the Cold War.

“If Europe’s bureaucrats don’t want you to see it, that tells you everything,” Tedesco stated. “Because even if your government fears freedom—ours doesn’t.”

The First Amendment, which prohibits the U.S. government from “abridging the freedom of speech,” has provided a legal restraint against government censorship that most other countries lack. 

Recent European speech laws, most notably the Digital Services Act (DSA), were ostensibly written to combat what lawmakers deemed “hate speech,” “harmful speech,” and “misinformation,” as well as pornography and abusive AI deep fakes. But critics of European speech codes say they are becoming increasingly draconian.  

In 2025, Virginie Joron, a French member of the European Parliament, called the DSA a “Trojan horse for surveillance and control.”

In Finland, Paivi Rasanen, a member of parliament, was charged for quoting Bible verses online in 2019, criticizing her church’s participation in a gay pride event. 

“I never imagined that quoting the Bible in a Twitter post would lead to years of criminal charges, yet this is now the reality in Europe,” she told The Epoch Times.

In Germany, illegal online speech could include insulting government officials. German police conducted early morning raids in June 2025 as part of Germany’s 12th annual “day of action against hate-posts,” and arrested 140 residents in the process.

In the UK, people praying silently in the vicinity of abortion clinics were arrested in 2023 and 2025. Left-wing ruling parties in Canada are likewise working to remove religious exemptions from their “hate speech” laws. 

Increasingly, U.S. companies are facing extensive fines for allowing online posts that are illegal in Europe. In December, social media company X was fined $140 million for violating EU speech laws.

Such fines on U.S. tech companies, both for speech code violations and for what the EU deems to be anti-competitive behavior, could become a trade issue for the Trump administration.

In January, President Donald Trump posted on Truth Social that the “EU makes more from fines on US tech, than tax from ALL of public European tech,” noting that in 2024, the EU fined American tech companies a total of 3.8 billion euros. 

In addition, legal experts have warned that Europe’s online censorship laws could also silence Americans if U.S. tech companies are forced, on a global basis, to take down content that violates EU speech codes. 

A House of Representatives report released on Feb. 3 and titled “The Foreign Censorship Threat” stated that “The European Commission, in a comprehensive decade-long effort, has successfully pressured social media platforms to change their global content moderation rules, thereby directly infringing on Americans’ online speech in the United States.”

According to the Digital Services Act, illegal online speech could include anything that is prohibited in any EU member country. And in one of the more explicit efforts to regulate speech globally, European Commissioner Thierry Breton warned X owner Elon Musk during the 2024 U.S. presidential campaign that his company could face penalties for posting an interview with Trump.

In a 2025 interview with The Epoch Times, Andrew Puzder, U.S. ambassador to the European Union, stated: “When a company like Facebook or Twitter or X has to change its algorithm, and that algorithm might impact the free speech rights of Americans, that’s something that we really can’t tolerate. I know President Trump is not going to allow a foreign government to restrict the free speech rights of American citizens in ways that even our own government couldn’t restrict them.”

Tyler Durden Wed, 02/25/2026 - 05:00

Report Details Russia's Shadowy Digital Pipeline Concealing $90BN In Crude Exports

Global sanctions meet the digital age in a recent interesting bit of FT analysis, which concluded that a single email server may have exposed what amounts to a $90 billion shadow pipeline for Russian crude.

While Western media and officials would consider this an 'illicit' sprawling sanctions-evasion machine hiding in plain sight, Moscow sees US-EU efforts to stamp out its international energy trade as an unjust tactic to impose total economic isolation related to the Putin's 'special military operation' in Ukraine.

The Financial Times report alleges that "48 seemingly independent companies working from different physical addresses" in reality appear to be "operating together to disguise the origin of Russian oil, particularly from Kremlin-controlled Rosneft."

Source: Shutterstock

Discovery of a common backend infrastructure reportedly exposes the scheme, as on the surface it looked like a fragmented web of independent traders - while digitally, it was one ecosystem.

For example, the FT identified 442 web domains all routed through the same private server - "mx.phoenixtrading.ltd" - with 19 of those domains reportedly tied to Russian businesses, spanning energy and real estate ventures, and curiously several are linked to Azeri nationals.

Among the heavy hitters identified are Dubai-based Foxton FZCO, listed in Russian export records as purchasing $5.6 billion worth of oil - and Advan Alliance appears in Indian customs data as having sold $1.5 billion in Russian crude into India.

Investigators further found the companies had remarkably short lifespans, suggesting fraud, and in some cases customs records revealed the average entity operated for just six months.

The report alleges additionally that once sanctioned a firm would often vanish, only to be replaced by a fresh corporate shell - leaving oversight authorities and enforcement lagging far behind.

The report further highlights in the wake of Trump sanctioning export giants Rosneft and Lukoil back in October 2025:

Since those sanctions were imposed, an otherwise unknown company in the network, “Redwood Global Supply”, has become the single largest exporter of Russian crude. The companies are linked to a group of Azeri businessmen with strong ties to Rosneft.

Ukraine and EU officials are calling for greater efforts to bust up such deceptive digital networks in order to starve the Russian war machine financially.

"The frequent changes of names of ships, managers and oil marketing companies... are long-standing deceptive shipping practices designed to obfuscate the destination, origin and ownership of cargoes and their logistics," Michelle Wiese Bockmann of maritime intelligence firm Windward told the FT.

Tyler Durden Wed, 02/25/2026 - 04:15

Another Migrant Sex Offender Granted Asylum In Britain Despite Skipping Bail In Europe

Authored by Thomas Brooke via Remix News,

An Afghan man accused of rape in Austria jumped bail and fled to Britain, where he was granted asylum and lived freely for over six years.

It is the second such case to be exposed this month after a similar incident involving a Syrian convicted of sexually assaulting a teenager in Germany, who failed to attend his probation hearings and illegally entered the U.K.

As revealed by The Sun newspaper, Omar Ali Noori, 31, arrived illegally in Britain in 2019 after fleeing Austria. He had been arrested in connection with the rape of a woman in Linz in 2018, but absconded while on bail before proceedings concluded.

Despite this, he was granted indefinite leave to remain for five years by the Home Office in 2023. His 23-year-old wife joined him in Britain last year.

Court records cited during an extradition hearing revealed that Noori had used four identities and five different dates of birth on official documents.

At Westminster Magistrates’ Court, Judge Neeta Minhas ordered that Noori, currently held at Wandsworth Prison in south-west London, be returned to Austria to serve a three-year prison sentence for absconding, in addition to facing the rape charge.

Judge Minhas said, “Noori was directly asked if he had committed or been accused of an offence in any country or whether he had been detained in any country. His response to both questions was in the negative. This was clearly not accurate. I find that Noori is a fugitive.”

Noori is now appealing his extradition back to Austria.

An almost mirror case was reported earlier this month after it emerged that Syrian national Azizadeen Alsheikh Suliman, 34, was convicted in Germany of sexually assaulting a 15-year-old girl in Osnabrück in 2022.

According to German media reports, he approached the victim in the city center, under the pretext of asking for a cigarette, before attempting to kiss her and later sexually assaulting her in a nearby courtyard. He was also convicted of supplying drugs to a minor.

German courts handed Suliman a two-year suspended custodial sentence, conditional on probation, and ordered him to pay €3,000 in compensation to the victim. He later breached the terms of his probation and left Germany, prompting the issuance of a European arrest warrant.

Suliman subsequently travelled to Britain via a small boat across the English Channel. He applied for asylum using a different spelling of his name, enabling him to avoid detection for several years. He was housed in taxpayer-funded accommodation in the Greater Manchester area, where he lived with his wife and child before being identified by authorities.

An extradition request was upheld earlier this month, but has been appealed by Suliman. His legal team argues that he faces a risk to his life if returned to Germany because of a feud originating in Syria involving his cousin, and that extradition would breach Article 8 of the European Convention on Human Rights by separating him from his wife and child.

It is likely that Noori’s appeal will also focus on human rights legislation.

Read more here...

Tyler Durden Wed, 02/25/2026 - 03:30

Saudi Arabia Records Largest Budget Deficit Since 2020

Via The Cradle

Saudi Arabia recorded its widest quarterly budget deficit in five years in the final three months of 2025, as lower crude oil prices weigh down the kingdom's finances, Bloomberg is reporting.

Data released by the Saudi Ministry of Finance  shows the government posted a deficit of 94.9 billion riyals ($25.3 billion) in the fourth quarter, which brought the total shortfall for 2025 to nearly 276.6 billion riyals ($73.73 billion), more than double the previous year's 115.6 billion riyals ($30.82 billion) deficit in 2024. 

via Bookings Inst

The full-year deficit amounted to roughly 5.5 percent of gross domestic product.

Non-oil revenue reached about 122.6 billion riyals ($32.68 billion) in the fourth quarter of 2025, while oil revenue fell to around 154.2 billion riyals ($41.10 billion), down from 170.8 billion riyals ($45.53 billion) in the same period a year earlier, according to Finance Ministry data.

Saudi Arabia has been running budget deficits since late 2022, with Bloomberg Economics noting that the kingdom would need oil prices to average about $97 per barrel in 2025 to balance its budget.

That figure rises to roughly $114 per barrel when domestic spending by the sovereign wealth fund is included. Meanwhile, Brent crude, the global benchmark for oil prices, is currently trading at around $71.

This gap has prompted heavier borrowing on international bond markets, as well as major delays and downscaling of the Kingdom's large-scale megaprojects tied to the Saudi Vision 2030 program, championed by Crown Prince Mohammed bin Salman (MbS).

Bloomberg reported in late January that Saudi authorities had begun pressing some of the kingdom's wealthiest families to inject additional capital into domestic ventures, as Vision 2030 megaprojects face scaling back or suspension. 

In the same month, Reuters reported that the construction of the Mukaab, the towering cube-shaped centerpiece of Riyadh’s New Murabba development, was suspended beyond initial groundwork, as the Public Investment Fund (PIF) reassessed financing and feasibility. 

The Financial Times had also reported that Saudi Arabia’s $1.5 trillion NEOM development is set to be significantly "downscaled and redesigned," with its flagship component, The Line, being "radically scaled back."

These scale-backs and delays come as capital is redirected toward priority projects tied to Expo 2030 and the 2034 World Cup, as well as sectors expected to deliver quicker returns, including logistics, mining, and AI.

Saudi officials expect the fiscal deficit this year to narrow to 3.3 percent of GDP; however, analysts at Goldman Sachs Group Inc. and Bank of America Corp. project a higher figure in the range of five to six percent.

Tyler Durden Wed, 02/25/2026 - 02:45

Russia Faces Five Geostrategic Challenges As The Special Operation Enters Its Fifth Year

Authored by Andrew Korybko,

As it’s always done, Russia is expected to ensure its sovereignty, security, and thus its survival through the creative interplay between its political, military, intelligence, diplomatic, expert, and civil society communities.

Russia’s special operation against NATO-backed Ukraine just entered its fifth year.

The last three anniversaries were reflected upon here, here, and here, and keeping with tradition, the present piece will review what happened over the past year and forecast what might be come in the next one.

Generally speaking, Russia now faces five geostrategic challenges that are expected to shape its approach towards the US-mediated peace talks with Ukraine and its grand strategy overall, namely:

* NATO Influence Is Poised To Expand Along Russia’s Entire Southern Periphery

Last August’s “Trump Route for International Peace and Prosperity” (TRIPP) along Armenia’s southern Syunik Province has the dual function of a NATO military-logistics corridor through the South Caucasus to Central Asia. Spearheaded by member state Turkiye with allied Azerbaijan serving as the launchpad across the Caspian, TRIPP threatens to revolutionize Russia’s regional security situation for the worse if these threats aren’t contained, especially if it emboldens Kazakhstan to follow in Ukraine’s footsteps.

* The US Supports The Revival Of Poland’s Long-Lost Great Power Status

“September 2025 Was The Most Eventful Month For Poland Since The End Of Communism” for the 18 reasons enumerated in the preceding hyperlinked analysis, which set Poland up to play a central role in the US’ National Security Strategy for containing Russia after the Ukrainian Conflict ends. It already has the EU’s largest army, is located in the middle of pivotal military-logistics corridors, and is very eager to revive its long-lost Great Power status and attendant historical rivalry with Russia at Moscow’s expense.

* The EU Is Unprecedentedly Militarizing And Upgrading Its Military-Logistics

De facto EU leader “Germany Is Competing With Poland To Lead Russia’s Containment” in no small part through the nearly $100 billion in defense procurement projects that it approved last year alone. The EU as a whole is also militarizing too with the help of the €800 billion “ReArm Europe Plan”. To make matters even more concerning for Russia, the “military Schengen” for optimizing the dispatch of troops and equipment towards its borders continues apace, with the Baltic States newly committing to join this too.

* India Seems To Be Undergoing A US-Friendly Grand Strategic Recalibration

India began aligning with some of the US’ interests after their trade deal as explained here, which could eliminate tens of billions of dollars’ worth of Russian budgetary revenue if India does indeed reduce its import of Russian oil like the US claimed that it agreed to. The same goes for India possibly eschewing new big-ticket military-technical purposes from Russia too. This US-friendly grand strategic recalibration might also put more pressure on Russia’s top Chinese partner and therefore reshape Asian geopolitics.

* Poland Now Wants Nukes & Turkiye Might Soon Declare The Same Intent

The US’ decision to let the New START lapse risks a global nuclear arms race. Poland was emboldened to declare its nuclear intentions while RT published a detailed report about how Turkiye might go down this route too. Both are historical Russian rivals, and seeing as how Poland envisages carving out a sphere of influence in Central & Eastern Europe and Turkiye envisages one in Central Asia as was noted above, them obtaining nukes would pose a huge threat to Russia and raise the likelihood of its containment.

The five geostrategic challenges confronting Russia in the fifth year of its special operation are formidable but not insurmountable.

As it’s always done, Russia is expected to ensure its sovereignty, security, and thus its survival through the creative interplay between its political, military, intelligence, diplomatic, expert, and civil society communities.

They might opt to cut a deal with the US over Ukraine so as to focus more on tackling these challenges, but not at any cost, ergo why that hasn’t yet happened.

Tyler Durden Wed, 02/25/2026 - 02:00

Chinese Defense Labs Exploit Nearly $1 Billion In US Research Funds, Report Says

Authored by Dorothy Li via The Epoch Times (emphasis ours),

Nearly $1 billion in U.S. federal research funds have been funneled into projects involving the Chinese regime’s defense laboratories that pose “critical risks” to America’s national security, according to a new study.

Chinese missile launchers are seen during a military parade marking the 80th anniversary of the end of World War II, in Tiananmen Square in Beijing on Sept. 3, 2025. Kevin Frayer/Getty Images

Nearly $1 billion in U.S. federal research funds have been funneled into projects involving the Chinese regime’s defense laboratories that pose “critical risks” to America’s national security, according to a new study.

The report, released by the Center for Research Security and Integrity (CRSI) on Feb. 19, identifies nearly 1,800 research papers published between January 2019 and July 2025 that involve U.S. collaborations with Chinese defense laboratories.

About one-third of the articles specifically credited U.S. federal funding for the research. The topics of these projects ranged from directed energy systems and energetic materials to radar and sensing, artificial intelligence, flexible electronics, and high-performance computational physics.

“These are critical technology fields that can fundamentally change future military and warfighting capabilities, yet PRC defense laboratories are directly benefiting from this research,” analysts wrote in the report, using the acronym of the Chinese communist regime’s official name, the People’s Republic of China.

The report estimates the total value of these research projects at approximately $943.5 million, noting that the figure could be much higher due to ambiguities in certain research grants and facility contracts.

Jeffrey Stoff, founder of the Virginia-based nonprofit CRSI and co-author of the report, said the U.S. government and academia “lack the will, resources, or priorities” to effectively safeguard its research and innovation.

“This is largely because there are very few regulations that restrict such collaborations. In other words, research-performing organizations, including government laboratories, are not concerned with protecting national interests, even when the research is funded by taxpayers,” Stoff told The Epoch Times via email.

The report was released following multiple congressional investigations into projects involving researchers funded by the Pentagon or the Department of Energy collaborating with Chinese institutions that advance China’s military.

Stoff, a former China adviser for the U.S. government, said the latest study was “intentionally limited to collaborations with a subset of PRC entities that unambiguously pose critical risks to US national security: official PRC defense laboratories.”

‘Unacceptable Risk’

The study identifies 45 Chinese laboratories, acknowledged by Beijing itself as key state-level defense laboratories, that have collaborated with U.S. entities.

Almost all of these laboratories removed the terms “defense” or “national defense” from their official English titles, the report notes, saying that this lack of transparency could complicate U.S. institutions’ due diligence and risk assessment efforts.

Among the most active collaborators with American researchers is the State Key Laboratory of Powder Metallurgy at Central South University in Changsha, China. Over the past five years, its personnel co-authored 285 articles with American researchers from public and private universities and federal laboratories. Of these publications, 80 credited U.S. government funding.

Even though the metallurgy lab omits the term “defense” from its official Chinese name, the report notes that its core mission is to support the Chinese armed forces, particularly in the defense aerospace sector.

Established in 1989 by Huang Peiyuan—a key scientist involved in China’s first atomic weapons and missile development programs—the lab is currently led by Zhou Kechao, who has worked on projects funded by the People’s Liberation Army’s (PLA) Equipment Development Department.

A security guard stands beside a screen showing a video about China's atomic and hydrogen bomb research during an exhibition on the Chinese regime's rejuvenation at the Military Museum of the Chinese People's Revolution in Beijing on Oct. 17, 2007. China Photos/Getty Images

About 70 U.S. institutions have published research papers with the Chinese metallurgy laboratory since 2019, with the University of Tennessee being the most frequent partner. The Knoxville-based university didn’t respond to a request for comment by publication time.

The report also gives case studies of three other Chinese laboratories that frequently collaborate with U.S. institutions and scholars, including a national welding laboratory operated by China’s primary missile designer and producer, the China Academy of Launch Vehicle Technology. The lab is located within the Harbin Institute of Technology in northern China, a top-ranked member of the “Seven Sons of National Defense,” a club of Chinese universities with deep ties to the PLA.

“US institutions and federal research facilities’ critical-risk collaborations with entities supporting China’s defense [research and development] are significant and continue unabated,” the report reads.

“This raises a fundamental question: if collaborating with PRC defense laboratories is not considered an unacceptable risk that should be restricted, then what is?”

US Funders

The National Science Foundation (NSF) stands out as the largest sponsor of U.S. institutions partnering with these Chinese laboratories, accounting for more than 71 percent of federal funds identified in the report. While the NSF grants largely support theoretical and early-stage fundamental research, the report said, the collaborating Chinese laboratories clearly seek to apply the research in defense and even weaponry.

Other federal funders of such collaborations include the Pentagon and the Department of Energy (DOE).

The report found that 10 federally funded research centers affiliated with the DOE have had researchers working with Chinese defense laboratories. For instance, at the DOE-sponsored Argonne National Laboratory, researchers have co-authored 19 articles with identified Chinese laboratories since 2019, in which they credited U.S. government funds.

An undated aerial photo shows the Argonne National Laboratory in Illinois. Argonne National Laboratory/Getty Images

The report offers several recommendations to policymakers, including creating a government-run research center to oversee all research security and due diligence functions for federal agencies that allocate fundamental research funding.

In response to the study, Emil Michael, under secretary of war for research and engineering, told The Epoch Times that the Pentagon is “intensifying its efforts to safeguard taxpayer-funded research and is upholding the integrity of America’s scientific community.”

The DOE, NSF, and Argonne didn’t respond to a request for comment by publication time.

Tyler Durden Tue, 02/24/2026 - 23:25

Iran To Buy Chinese Supersonic Anti-Ship Missiles As US Carriers Near

As US carriers and warships mass in the Gulf and as the next round of Geneva talks are expected by week's end, Tehran appears to be quietly upgrading its ability to threaten maritime chokepoints.

According to Reuters, Iran is in advanced negotiations with Beijing to purchase Chinese-made CM-302 anti-ship cruise missiles - which are supersonic weapons (projectiles which go faster than the speed of sound) designed to skim low over the water and evade naval defenses.

via state media: CM-301/YJ-12

"The deal for the Chinese-made CM-302 missiles is near completion. No delivery date has been agreed," informed sources told the outlet.

"Iran has military and security agreements with its allies, and now is an appropriate time to make use of these agreements," an Iranian Foreign Ministry official said separately, at a moment additional deals with Russia are being reported, including a half-billion Euro agreement for Moscow to send thousands of its advanced shoulder-fired missiles to Tehran.

As for the Chinese CM-302, it has a listed range of roughly 290 kilometers (or 180 miles) and is engineered specifically to penetrate layered ship defenses - which the Iranians would seek as they want to complicate US naval operations in the Persian Gulf and beyond, in the event of a hot conflict.

Talks to acquire the weapons have reportedly been in the works for some two years, but were accelerated in the wake of Israel's US-backed 12-day war against Iran last June.

Danny Citrinowicz, a former Israeli intelligence officer now with the Institute for National Security Studies, has been cited in international reports describing that the acquisition would be "a complete game-changer if Iran has supersonic capability to attack ships in the area."

"These missiles are very difficult to intercept," he added. "China does not want to see a pro-Western regime in Iran. That would be a threat to their interests. They are hoping that this regime will stay."

While neither China nor Russia would likely come to Iran's direct military aid in the event of attack, the pattern on display would likely be along the lines of these expedited weapons deals. 

Washington will be none to happy about this, and could move to expand sanctions and punitive measures on China's defense and 'dual use' industrial sectors.

Tyler Durden Tue, 02/24/2026 - 23:00

California Allocates $35 Million To Aid Illegal Immigrants

Authored by Kimberly Hayek via The Epoch Times,

California Gov. Gavin Newsom’s administration has boosted support for illegal immigrants in response to the federal government’s escalated law enforcement and deportation operations under President Donald Trump.

The new support includes $35 million in existing humanitarian funding for basic needs and legal aid. The money is in addition to $125 million already allocated for “free” immigration-related legal services, the governor’s office said in a statement.

“While the federal government targets hardworking families, California stands with them—uniting partners and funding local communities to help support their neighbors,” Newsom said in a statement.

“The urgent need grows as the Trump Administration accelerates mass detention, tramples due process, and funds authoritarian enforcement with over $170 billion. As the Trump Administration chooses cruelty and chaos, California chooses community.”

The funding will not be cash payouts but instead will go to philanthropic and nonprofit organizations that will help connect illegal immigrants facing deportation to legal services, food assistance, and other aid.

The White House and the Department of Homeland Security (DHS) did not immediately return a request for comment.

Assemblymember Carl DeMaio, a Republican serving communities in east San Diego County, criticized the new funding.

“If you were audited by the IRS and found to owe money and back taxes, as a citizen, you couldn’t say, ‘Well, I want a free lawyer to fight the federal government,’” DeMaio told CalMatters.

State Sen. Lena Gonzalez, a Democrat from Long Beach who chairs the California Latino Legislative Caucus, described the move as protecting families.

“We continue to stand in solidarity with our immigrant families. The federal government is waging a war on our communities—and we won’t stand for it,” she said.

“We are putting money behind an effort to stop the fear, stop the separation of our families, and stop violating our basic rights.”

The funding expands access to U.S. support regardless of immigration status. Such measures reflect California’s longstanding commitment to immigrant integration, even as the state grapples with budget deficits and federal pushback.

Disputes Over Sanctuary Policies

Meanwhile, Trump administration immigration law enforcement efforts, including detention and removals, will cost $170 billion over four years, Newsom’s office said.

Department of Homeland Security data indicates that more than 675,000 illegal immigrants have been deported since Trump returned to office for a second term in January 2025. An estimated 2.2 million have self-deported for a total of approximately 3 million departures. Each deportee was paid between $1,000 and $3,000 and had their airfare paid by the U.S. taxpayer.

“In the last year, fentanyl trafficking at the southern border has also been cut by more than half compared to the same period in 2024,” DHS Secretary Kristi Noem said in a statement. “The U.S. Coast Guard alone seized enough cocaine to kill more than 177 million Americans.”

Noem added that the efforts have saved taxpayers more than $13.2 billion, partly because forced removals cost a lot more than incentivized self-deportations.

“Countless lives have been saved, communities have been strengthened, and the American people have been put first again,” she said.

California is a sanctuary state, meaning it limits cooperation with federal immigration authorities in enforcing federal immigration law, save for those who have already been found guilty of serious or violent felonies. However, California’s sanctuary laws—SB 54 and TRUTH Act—do not require state compliance with ICE detainers for those not yet convicted of serious or violent felonies, so arrests and charges alone don’t secure state cooperation.

Immigration and Customs Enforcement (ICE) in February asked Newsom not to release 33,179 noncitizens with ICE arrest detainers from state custody. ICE said they include people previously convicted of murder, sex offenses, or drug trafficking.

“Governor Newsom and his fellow California sanctuary politicians are releasing murderers, pedophiles, and drug traffickers back into our neighborhoods and putting American lives at risk,” DHS Assistant Secretary Tricia McLaughlin said.

The federal government has withheld more than $160 million in transportation funds from California over issues such as foreign truck-driver licenses and freezing billions in other aid to Democratic-led states.

An appeals court prevented federal restrictions on commercial driver’s licenses for certain immigrants from going into effect—a reprieve for temporary workers. Los Angeles County has spent more than $1 billion on welfare for illegal immigrants over two years.

DHS on Feb. 23 criticized Newsom for pardoning a convicted attempted murderer facing deportation, saying the governor is putting American lives at risk.

Trump also hosted “Angel families,” who have become victims of crimes by criminal illegal immigrants, at the White House for a remembrance ceremony on Feb. 23.

Jody Jones, the brother of Rocky Jones, who was fatally shot by an illegal alien in California, said:

“I’m sick and tired of hearing these Democratic politicians stand up on these podiums and say how sorry they are for seeing these criminal illegal aliens being ripped apart from their families.

“What about us? What about the American family? What about us? We mean something, too.”

Earlier, the president signed a proclamation declaring Feb. 22—the anniversary of Laken Riley’s murder by Venezuelan illegal immigrant Jose Ibarra—as National Angel Family Day, honoring 62 victims and two survivors of such crimes.

Tyler Durden Tue, 02/24/2026 - 22:35

Man Accidentally Hacks Himself A 7,000-Robot Army

A software engineer in Spain had the surprise of his life when he found himself in control of thousands of robots in what was supposed to be a pet project. Sammy Azdoufal set out to customize his new Chinese-made DJI Romo robot vacuum, a high-end autonomous cleaner that comes with a price tag of $2,000 that maps homes, mops floors, and navigates obstacles with onboard sensors, according to Popular Science.

Dissatisfied with the manufacturer's app, Azdoufal aimed to steer the device using a PlayStation 5 controller (like any intelligent man would) and that’s when things got weird.

Using an AI-powered coding assistant, Azdoufal reverse-engineered the vacuum's communication protocol with DJI's cloud servers and unwittingly uncovered a critical backend vulnerability. The authentication token for his single device granted access to live camera feeds, microphone audio, detailed floor maps, and operational status from nearly 7,000 other Romo units deployed across 24 countries.

Azdoufal leads AI strategy at a vacation rental home company; when he told me he reverse engineered DJI’s protocols using Claude Code, I had to wonder whether AI was hallucinating these robots. So I asked my colleague Thomas Ricker, who just finished reviewing the DJI Romo, to pass us its serial number.

With nothing more than that 14-digit number, Azdoufal could not only pull up our robot, he could correctly see it was cleaning the living room and had 80 percent battery life remaining. Within minutes, I watched the robot generate and transmit an accurate floor plan of my colleague’s house, with the correct shape and size of each room, just by typing some digits into a laptop located in a different country.

...

Separately, Azdoufal pulled up his own DJI Romo’s live video feed, completely bypassing its security PIN, then walked into his living room and waved to the camera while I watched. He also says he shared a limited read-only version of his app with Gonzague Dambricourt, CTO at an IT consulting firm in France; Dambricourt tells me the app let him remotely watch his own DJI Romo’s camera feed before he even paired it. -The Verge

In malicious hands, attackers could have monitored private spaces, eavesdropped on conversations, or even remotely maneuvered the devices without owners' knowledge. IP addresses provided approximate locations, compounding the privacy breach.

Azdoufal says he could remote-control robovacs and view live video over the internet.

The Verge alerted DJI, which acted swiftly. The company identified the issue during an internal review in late January 2026, deployed an initial patch on February 8, and completed a follow-up update by February 10.

The recent security lapse in the robot vacuum will likely fuel U.S. regulators' scrutiny of the Chinese company. Just two months after the Federal Communications Commission added foreign-made drones and critical components, including those from DJI, to its Covered List in December 2025—effectively blocking approvals for new models—DJI filed a petition last week challenging the decision in the U.S. Court of Appeals for the Ninth Circuit. The company argues the FCC acted without sufficient evidence of national-security threats, procedural flaws, and violations of due process.

"It carelessly restricts ⁠DJI’s business in the U.S. and summarily denies U.S. customers access to ⁠its latest technology," the Chinese dronemaker said in a statement obtained by Reuters.

The ⁠Federal Communications Commission decision in December meant that DJI, Autel and other foreign drone companies will not be able to obtain the necessary FCC approval to sell ⁠new models of drones or critical components in the U.S but it can continue to sell existing versions, Reuters said.

Last March, FCC Chairman Brendan Carr announced the launch of a broad investigation into whether companies aligned with the Chinese Communist Party continue to conduct business in the U.S., despite their equipment and services having been designated as posing unacceptable risks to national security.

The probe, the first major effort by the agency's newly established Council on National Security, targets entities previously added to the FCC's Covered List under the Secure and Trusted Communications Networks Act. Placement on the list prohibits new FCC equipment authorizations for those companies' products, effectively barring their importation, marketing and sale of new models in the U.S., and restricts their use in networks supported by federal funds.

“The FCC has taken concrete actions to address the threats posed by Huawei, ZTE, China Telecom, and many other entities that pose an unacceptable risk to America’s national security, including by doing Communist China’s bidding,” Carr said in a statement at the time.

“We have reason to believe that, despite those actions, some or all of these Covered List entities are trying to make an end run around those FCC prohibitions by continuing to do business in America on a private or ‘unregulated’ basis. We are not going to just look the other way,” he added.

Tyler Durden Tue, 02/24/2026 - 22:10

Your Gut Microbiome Could Affect Colon Cancer - What You Can Do

Authored by Zena le Roux via The Epoch Times (emphasis ours),

“Supporting the gut microbiome can help reduce colorectal cancer risk and may even enhance prevention and treatment,” Sachin Aryal, gut microbiome researcher at the University of Toledo, told The Epoch Times.

Rost9/Shutterstock

The microbiome has been linked to many aspects of health and has been shown to also play a key role in colorectal cancer.

The good news is that the microbiome is not fixed and that it can be influenced by everyday habits and choices.

How Gut Bacteria Influence Colorectal Cancer

“We’re learning that the bacteria in the gut matter more than we used to think,” Dr. Cedrek McFadden, colorectal surgeon and medical advisor to the Colorectal Cancer Alliance, told The Epoch Times.

Gut bacteria are not just sitting there as bystanders. They interact directly with the lining of the colon, the immune system, and inflammatory processes over time. When the microbial balance is off—a condition called dysbiosis—some bacteria can create a low-level inflammatory state or produce substances that irritate the colon lining. Over many years, that kind of environment can contribute to cancer, McFadden said.

Because the colon is directly exposed to gut bacteria and their by-products, colorectal cancer appears to be more strongly influenced by the microbiome than many other types of tumors, although the microbiome can also affect other cancers indirectly.

“It’s not that one bacterium causes cancer,” McFadden said. “It’s more about the overall balance and what the colon is being exposed to day after day.”

When dysbiosis continues, it can further damage the gut barrier—a condition sometimes referred to as “leaky gut.” The tight connections between gut cells loosen, allowing bacteria and their by-products to move deeper into the gut wall. This keeps the immune system in a constant state of activation and inflammation, Raz Abdulqadir, researcher in microbiome and colorectal cancer at Penn State College of Medicine, told The Epoch Times.

“As a result, inflammatory cells release molecules that increase oxidative stress and can damage DNA in colon cells, raising the risk of abnormal cell growth,” he said.

It’s now clear that gut bacteria influence not only inflammation linked to tumor formation, but also how well the immune system recognizes and attacks cancer cell. This explains why patients with different gut microbiomes can respond very differently to the same cancer treatments.

Bacterial Culprits Identified

Several microbes have been consistently associated with colorectal cancer, including Fusobacterium nucleatum, enterotoxigenic Bacteroides fragilis, Enterococcus faecalis, and certain strains of E. coli, Aryal said.

Fusobacterium nucleatum, for example, is found in much higher amounts in people with colorectal cancer compared to healthy people and is particularly abundant in tumor tissue. Higher levels of this bacterium are also linked to stronger inflammatory signals in the gut and can attach directly to the gut lining using a specialized protein, which helps kick-start cancer-related changes.

“However, we still need well-designed intervention studies to determine whether these microbial changes are true drivers of cancer or simply a consequence of the tumor environment,” Aryal said.

The microbiome’s impact is not only about which bacteria are present, but also what they are doing. Microbial by-products—substances produced by microorganisms such as bacteria as a result of breaking down—and toxins—such as chemicals made by bacteria that can irritate the gut or damage cells—either protect the colon or increase inflammation and DNA damage.

“This is why the microbiome is becoming an increasingly important part of conversations around early detection, prevention, and personalized cancer therapy,” Aryal said.

What You Can Do

Maintaining a healthy gut microbiome is a key factor in preventing colorectal cancer.

Dietary fiber, probiotics, prebiotics, synbiotics—products combining probiotics and prebiotics—and even fecal microbiota transplantation can help rebuild microbial balance and regulate immune and inflammatory pathways, Abdulqadir said.

Focus on Fiber and Whole Foods

From a dietary perspective, the most important step is to consistently follow an eating pattern that supports microbial diversity, especially one rich in dietary fiber. A high-fiber diet that includes fruits, vegetables, fermented foods, and prebiotic or probiotic sources helps maintain a healthier microbial balance and creates a gut environment less supportive of tumor development, Aryal said.

“Incorporating Mediterranean-style eating patterns is especially helpful because they emphasize whole grains, legumes, vegetables, and healthy fats that support microbial diversity,” he added.

Consider Targeted Supplements

Probiotics may help lower the risk of colorectal cancer. One well-studied strain, Faecalibacterium, has been shown in animal research to reduce gut inflammation and protect against colitis.

Other probiotics, including certain Lactobacillus and Bifidobacterium strains, help strengthen the gut lining and support healthy cell growth—especially in people with a history of polyps—small growths on the lining of the bowel that can sometimes turn into cancer.

“When probiotics and prebiotics are used together as synbiotics, they help reduce inflammatory mediators and create a gut environment less favorable for tumor development,” Aryal said.

Doses and specific types can vary, so it’s best to talk to a doctor before trying them.

Stay Active

Regular physical activity also plays an important role in optimizing the gut microbiome and lowering colorectal cancer risk, Aryal said.

“Exercise increases microbial diversity, enhances short-chain fatty acid production, and reduces inflammation, all of which help keep the colon healthy.”

Keep It Simple

Gut health doesn’t need to be complicated, McFadden said. His top advice is not to overthink it.

“Eat real food more often. Get fiber in your diet. Cut back on heavily processed foods when you can and don’t chase supplements or trends,” he said.

In his own life, McFadden keeps things simple. He tries to eat balanced meals, stay active, and get decent sleep. He pays attention to stress because of his awareness of its effects on the body, including the gut.

“I’m not perfect, and I don’t expect my patients to be either. I just try to be consistent most of the time.”

Tyler Durden Tue, 02/24/2026 - 21:45