“A disgrace to our nation.” “They’re very unpatriotic and disloyal to our constitution.” “Swayed by foreign interests.” “Ashamed of certain members.” Decision by Justices Gorsuch and Barrett was “an embarrassment to their families.”
The President’s unique strain of vitriol, having moved through myriad district and appeals courts, advanced Friday to the Supreme Court of our land. Undermining the trust of such a fundamental and defining institution of American government is yet another disturbing development.
JD Vance: “This is lawlessness from the Court, plain and simple.”
Treasury Secretary Scott Bessent: “Despite the misplaced gloating from Democrats, ill-informed media outlets, and the very people who gutted our industrial base, the court did not rule against President Trump’s tariffs. Six Justices simply ruled that IEEPA authorities cannot be used to raise even one dollar of revenue.”
President Trump: “We really are at a very important point. I’ve been waiting for this decision so long. They could have made this decision a long time ago… They should have released this a long time ago. We’ve waited months, and that gave uncertainty. Now we have certainty. I think you’re going to see the country get much stronger because of it.”
“We’ve taken the uncertainty of tariffs out. Because we had uncertainty. We got sued by sleaze bags, I know them well that are very outside country, China-centric, but outside country centric… The bottom line is that the word ‘certainty’ is now in the equation. Every single thing I said today is guaranteed certainty. It’s been tested, as Jamieson (US Trade Representative Greer) said a thousand times… and won in all of the courts. And we’re just going back to that… So, we are going to keep it going just as before, probably more so, but you’re no longer going to be asking – every time I got up you’d ask – ‘well, what happens if you can’t charge tariffs.’ Now we can. And, by the way, in their decision they specifically said we can do these – we have alternatives.”
The President’s comments notwithstanding, it was a week where extraordinary uncertainty turned only more acute. The administration’s tariff policies are now in disarray, with the status of tariff applications and rates, trade agreements and refunds virtually unanalyzable. Meanwhile, minutes from the Fed’s January 28th meeting revealed that several committee members raised the possibility of future rate hikes. This week also saw further troubling Credit market developments.
February 18 – Financial Times (Antoine Gara and Eric Platt): “Private credit group Blue Owl will permanently restrict investors from withdrawing their cash from its inaugural private retail debt fund, backtracking from an earlier plan to reopen to redemptions this quarter. The… investment group… said investors in Blue Owl Capital Corp II would no longer be able to redeem their investments in quarterly intervals but that the company would instead return investors’ capital in episodic payments as it sells down assets in coming quarters and years. The decision underlines the risks facing retail investors, who have ploughed hundreds of billions of dollars into funds with limited liquidity rights. The company said the fund ‘intends to prioritise delivering liquidity ratably to all shareholders through quarterly return of capital distributions, which are intended to replace future quarterly tender offers and may be funded by earnings, repayments, other asset sale opportunities or strategic transactions’.”
Blue Owl sank another 12.1% this week, boosting y-t-d (less than 8 weeks) losses to 27.6%. Ares Management dropped 8.0% (down 23.8% y-t-d), KKR 0.5% (down 20.6%), Apollo 4.1% (down 16.9%), and Blackstone 6.1% (down 21.3%).
Leveraged loan prices declined six cents Friday to 95.37, matching the low back to April 22nd.
Subprime lending presents inherent liquidity challenges. While masked during periods of risk embracement and liquidity abundance, high-risk borrowers are risky for a reason: their liquidity profiles are susceptible to the whims of the marketplace. During boom times – notably over recent years – perceptions take hold that even marginal companies will retain access to new borrowings. This creates the misperception that subprime loan liquidity is normal and sustainable. An enterprising Wall Street will run with such a fanciful notion, placing such loans in myriad products, where unsuspecting buyers assume their holdings will remain liquid.
“Terminal phases” are self-destructive. Loose conditions and risk embracement ensure self-reinforcing risky lending, speculation and leveraging. Systemic risk expands exponentially, until developments force the recognition that the cycle got out of hand. First Brands, Tricolor and other blowups revealed major late-cycle Credit deficiencies. Speculative flows into leveraged lending and private Credit have shifted. Developments at Blue Owl and elsewhere have revealed liquidity issues, which will accelerate the shift from risk embracement to risk aversion. And while Blue Owl officials trumpet that they sold loan portfolios at near par this week, savvy analysts recognize it will not take much of a market turn to have buyers completely back away from high-risk Credits.
Like subprime in 2007, market participants readily dismiss developments. Markets and the economy appear robust. Superficially, liquidity abundance persists. But in important sections of the Credit market, liquidity concerns and risk aversion are taking hold. This equates to a problematic tightening of Credit conditions for high-risk borrowers and mounting Credit problems.
February 20 – Wall Street Journal (Matt Wirz): “Wall Street has been eagerly selling private-credit as a hot opportunity for individual investors. That sales pitch just got tougher. Blue Owl Capital, a poster child for the industry, said it is liquidating $1.4 billion in assets to raise money to pay out individuals who bought into some of its funds in their heyday but now want to get out. The firm hoped the sale would shore up wobbling investor confidence. Instead, the opposite happened. Stocks across the private-fund industry slid as the deal raised questions about how much fund managers can count on individuals to stay invested in hard-to-sell assets for the long term. Blue Owl's stock dropped 10% at one point Thursday and closing down nearly 6%. Shares of other private-credit titans also sank, with Apollo Global Management and Blackstone both falling about 5%.”
February 19 – Bloomberg (Olivia Fishlow, Ellen DiMauro, and Silas Brown): “For years, private credit funds trumpeted a key distinction from other corners of finance: insulation from liquidity mismatches. Because investors typically commit capital for long, fixed periods, and the funds deploy that money into loans with similarly lengthy maturities, the risk of being forced to sell assets at cut-price rates to meet demands for liquidity is minimized. At least, that’s the theory. But recent strains within Blue Owl Capital Inc.’s business development companies suggest the industry may not be entirely shielded from that longstanding vulnerability. The… private credit giant has faced increasing withdrawal requests from investors in recent months, fueled in part by concerns about its exposure to software companies amid the rapid rise of artificial intelligence.”
Mohamed El-Erian offered a timely tweet Thursday morning on Twitter: “Is this a ‘canary-in-the-coalmine’ moment, similar to August 2007?” Reuters: “Economist Mohamed El-Erian said the changes echo the early days of the 2008 financial crisis, although nowhere near the same magnitude.” Well, it appears Blue Owl and private Credit deterioration this week reached the point where it can no longer be ignored. The reality is that ongoing liquidity abundance masks financial, market, economic, social, and geopolitical fault lines so much deeper and precarious than pre-GFC.
But there will be no throwing in the towel. The stakes of high-risk lending have inflated to an unprecedented level. Trillions of leveraged loans, private Credit and vulnerable companies today hang in the balance. And with Trillions of AI and related arms race lending to be done, Wall Street investment bankers, lenders, securitizers, derivative operators, and fund managers will go down swinging.
February 17 – CNBC (Annie Palmer): “Amazon shares closed up more than 1% on Tuesday, snapping a nine-day slide that shaved billions off of its market cap. The stock shed roughly 18% of its value between Feb. 2 and Friday, marking the worst losing streak since 2006 and axing more than $450 billion in market valuation as investors question the merits of its artificial intelligence spending plans. The selling frenzy around Amazon is tied to the company’s fourth-quarter earnings report released earlier this month. Amazon said it expects to spend $200 billion in capital expenditures this year, a nearly 60% increase from last year and more than $50 billion above Wall Street’s forecast.”
As the money spigot is turned down for many companies, the AI bullish narrative focuses more on the fortress balance sheets of the hyperscalers. True enough, Microsoft, Alphabet, Meta, Amazon, and Oracle together enjoy enormous cash-flow and cash holdings. But devoting massive cash hoards, while taking on debt, in frantic AI arms race pursuits, significantly alters these companies’ risk profiles. Having come to operate as dependable market and economy ballast, big tech and AI dreams today place much in jeopardy. What’s more, their unparalleled capacity for massive stock buybacks has been integral to the perception of powerful market liquidity backstops.
On the subject of market liquidity backstops…
February 18 – New York Times (Colby Smith): “Officials at the Federal Reserve signaled no rush to restart interest rate cuts after pausing reductions last month, according to minutes from January’s meeting. In fact, several policymakers even went so far as to raise the possibility of rate increases if inflation stayed stubbornly high. The record of the latest gathering… underscored the sharp divisions that have plagued the central bank as it contends with a mixed economic picture after a series of rate reductions last year. Several policymakers indicated that there was still a path to lower rates this year if inflation declined as expected, while a larger group signaled support to hold rates steady until there was ‘clear indication that the progress of disinflation was firmly back on track.’ The minutes showed that several policymakers wanted the Fed to convey ‘the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels’.”
February 18 – Bloomberg (Enda Curran): “Federal Reserve officials appeared surprisingly wary of cutting interest rates when they met last month, with several even suggesting the central bank may need to raise rates if inflation remains stubbornly high. While the minutes of the central bank’s Jan. 27-28 policy meeting… fell far short of suggesting most officials were contemplating the possibility of rate increases, they made clear the Fed is shifting further away from agreeing on another cut. That could put it on a collision course with President Donald Trump and complicate the task of Trump’s nominee for Fed chair, Kevin Warsh.”
Reading through the meeting minutes, I couldn’t help but sense a deeply divided committee with a growing contingent of officials determined to dig in their heels. “The possibility that upward adjustments to the target range for the federal funds rate could be appropriate…” At least “several” members appear eager to push back against President Trump and Chair Warsh. I’ll assume the DOJ Chair Powell indictment was an unacceptable attack on Federal Reserve independence that crossed red lines.
February 18 – Financial Times (Myles McCormick): “A top White House official has said Federal Reserve economists should be ‘disciplined’ for publishing a report showing US businesses and consumers were shouldering the bulk of the costs from Donald Trump’s tariffs. Kevin Hassett, director of the National Economic Council, described the recent study from the New York Fed as ‘an embarrassment’ and said it failed to capture the full effect of the president’s levies. ‘It’s I think the worst paper I’ve ever seen in the history of the Federal Reserve system,’ Hassett told CNBC... ‘The people associated with this paper should presumably be disciplined.’ He added: ‘What they’ve done is they’ve put out a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first semester econ[omics] class’.”
February 19 – Financial Times (Myles McCormick): “A top Federal Reserve official has accused the White House of escalating its attack on the central bank after the Trump administration lashed out at a study that suggested tariffs were hurting Americans. Kevin Hassett… said… New York Fed economists should be ‘disciplined’ over what he said was a ‘partisan’ paper showing US businesses and consumers were shouldering most of the cost of President Donald Trump’s levies. Minneapolis Fed president Neel Kashkari hit back…, describing Hassett’s remarks as ‘just another step to try to compromise the Fed’s independence’. ‘Over the last year we’ve seen multiple attempts to try to compromise the Fed’s independence including… when the Department of Justice served a subpoena to the board of governors over some building expenses. It’s really about monetary policy,’ Kashkari said…”
I’ve never been a Kevin Hassett fan. “Discipline” Fed economists for research the White House doesn’t like? Not only was it a completely inappropriate comment, but it was also a knucklehead thing to say. The institution is already under siege. And while Hassett apologized for his “emotional” comment, it was blatantly consistent with the administration’s strategy of leaning on threats and coercion. Committee members, at least a group of them, are ready to circle the wagons to safeguard Federal Reserve independence. The administration is only making Kevin Warsh’s leadership challenges more difficult.
This entire backdrop raises serious concerns regarding the “Fed put.” General instability, festering Credit issues, and a vulnerable AI/tech Bubble raise the odds of risk aversion escalating into a serious deleveraging dynamic. Might the administration’s attack on Fed independence impact the timeliness and scope of a Fed response to market liquidity issues? Will the markets view the Fed’s liquidity backstop under Warsh as more uncertain?
February 18 – Axios (Barak Ravid): “The Trump administration is closer to a major war in the Middle East than most Americans realize. It could begin very soon. A U.S. military operation in Iran would likely be a massive, weeks-long campaign that would look more like full-fledged war than last month's pinpoint operation in Venezuela, sources say. The sources noted it would likely be a joint U.S.-Israeli campaign that’s much broader in scope — and more existential for the regime — than the Israeli-led 12-day war last June… Such a war would have a dramatic influence on the entire region and major implications for the remaining three years of the Trump presidency. With the attention of Congress and the public otherwise occupied, there is little public debate about what could be the most consequential U.S. military intervention in the Middle East in at least a decade.”
Crude oil surged 5.7% this week to an eight-month high, while Gold jumped $65 and silver rallied 9.3%. Those markets appear to take war risk more seriously than stocks and bonds.
Watching a clearly outraged President rail against our Supreme Court Justices, I couldn’t help but ponder the impact his demeanor might have on Iran war plans. President Trump will clearly not tolerate Iran’s typical negotiation stall tactics. Experts on Iranian affairs question whether the Ayatollah is willing to abandon enrichment. There is a view that war with the U.S. is inevitable, and that they can withstand an air assault. Analysts suggest the U.S. might be a couple weeks from having military assets in place.
February 18 – Wall Street Journal (Lara Seligman, Michael R. Gordon, Alexander Ward and Shelby Holliday): “The U.S. is sending significant numbers of jet fighters and support aircraft to the Middle East, assembling the greatest amount of air power in the region since the 2003 invasion of Iraq. The U.S. is ready to take action against Iran, but President Trump hasn’t decided whether to order strikes or—if he does order them—whether the aim would be to halt Iran’s already-battered nuclear program, wipe out its missile force or try to topple the regime. Over the past few days, the U.S. has continued to move cutting-edge F-35 and F-22 jet fighters toward the Middle East… A second aircraft carrier loaded with attack and electronic-warfare planes is on the way. Command-and-control aircraft, which are vital for orchestrating large air campaigns, are inbound. And critical air defenses have been deployed to the region in recent weeks. The firepower will give the U.S. the option of carrying out a sustained, weekslong air war against Iran instead of the one-and-done ‘Midnight Hammer’ strike the U.S. carried out in June against three Iranian nuclear sites, U.S. officials said.”
How this plays out is highly uncertain. There are scenarios where this blows up into a major and consequential war. The Iranian Republican Guard has significant military assets and regional proxies with depleted yet problematic firepower. Adding another layer of complexity in the event of war, Iran is close allies with Russia and China.
President Trump’s previous military operations have been targeted and of notably short duration. His demeanor as a war-time president is an open issue. I see a president who has suffered a string of setbacks, including the Epstein files, Minneapolis, Greenland, and now with the Supreme Court. TACO. His power seems much depleted from a year ago. The President’s threats and coercion are a lot less intimidating. Fear of pushing back has dissipated, even within the Republican party. The President’s physical and mental health can’t be taken for granted.
When it comes to today’s extreme uncertainty, high on the list is the President’s propensity for scorched earth. The assumption is he’ll behave well enough to make it to the midterms. But the extreme vitriol unleashed on the Supreme Court is concerning. Having two of his own appointees, Justices Amy Coney Barrett and Neil Gorsuch, oppose him is a psychological blow. Counting on the Supreme Court to champion his presidential power grab, betrayal is intolerable. How dare they attempt to check presidential power?
Trump the Lame Duck is a big worry. And suddenly, it feels as if it’s here already – a mere 13 months in. His days pushing folks around – playing bully – are running short. And that’s at home and abroad. The usual threats and coercion will now be met with staunch resistance and resolve. The President and his inner circle, envisaging world dominance, never contemplated such a breakneck loss of power. And considering the administration’s previous assaults on our nation’s most important institutions, it was discouraging to see the President so recklessly undermine the legitimacy of the Supreme Court.
I imagine he’s increasingly disoriented. Fearing a midterms debacle, it will increasingly be every Republican for him or herself. And, for many, that means keeping more than a safe distance from our unpopular President. And I don’t expect DJT to respond rationally to disloyalty and abandonment. When I ponder how angry and frustrated he might become, I recall the Oval Office debacle with President Zelenskyy. There was a deeply disturbing irrationality and loss of control. In short, he “lost it” when Ukraine’s President stood his ground.
I question whether President Trump can maintain composure as the world pushes back and calls his bluffs. The Supreme Court subdues his main coercion tariff weapon, and he swings back immediately with a Section 122 10% global tariff on foreign goods. Sign of things to come. The President will fight back hard - likely erratically and unpredictably. We can hope an agreement with the Iranians comes quickly. Safer to take frustrations out at home, against the Democrats and recalcitrants in his own party.
For the Week:
The S&P500 rallied 1.1% (up 0.9% y-t-d), and the Dow added 0.3% (up 3.3%). The Utilities slipped 0.6% (up 8.0%). The Banks recovered 1.7% (up 3.0%), and the Broker/Dealers gained 1.6% (up 2.3%). The Transports rallied 2.6% (up 14.3%). The S&P 400 Midcaps gained 1.2% (up 9.1%), and the small cap Russell 2000 increased 0.6% (up 7.3%). The Nasdaq100 gained 1.1% (down 0.9%). The Semiconductors advanced 1.5% (up 16.6%). The Biotechs increased 0.2% (up 1.3%). With bullion rising $57, the HUI gold index gained 2.5% (up 27.3%).
Three-month Treasury bill rates ended the week at 3.5925%. Two-year government yields rose seven bps to 3.48% (up 1 bp y-t-d). Five-year T-note yields gained four bps to 3.65% (down 8bps). Ten-year Treasury yields increased three bps to 4.08% (down 8bps). Long bond yields added three bps to 4.73% (down 12bps). Benchmark Fannie Mae MBS yields increased two bps to 4.89% (down 16bps).
Italian 10-year yields slipped two bps to 3.34% (down 21bps y-t-d). Greek 10-year yields dipped two bps to 3.33% (down 11bps). Spain's 10-year yields increased two bps to 3.15% (down 14bps). German bund yields dipped two bps to 2.74% (down 12bps). French yields fell four bps to 3.30% (down 26bps). The French to German 10-year bond spread narrowed two to 56 bps. U.K. 10-year gilt yields dropped six bps to 4.35% (down 13bps). U.K.’s FTSE equities index rose 2.3% (up 7.5% y-t-d).
Japan’s Nikkei 225 Equities Index slipped 0.2% (up 12.9% y-t-d). Japan’s 10-year “JGB” yields dropped 11 bps to 2.12% (up 6bps y-t-d). France’s CAC40 jumped 2.5% (up 4.5%). The German DAX equities index gained 1.4% (up 3.1%). Spain’s IBEX 35 equities index rose 2.9% (up 5.1%). Italy’s FTSE MIB index gained 2.3% (up 3.4%). EM equities were mixed. Brazil’s Bovespa index added 2.2% (up 18.3%), while Mexico’s Bolsa index was little changed (up 11.0%). South Korea’s Kospi surged another 5.5% (up 37.8%). India’s Sensex equities index increased 0.2% (down 2.8%). China’s Shanghai Exchange Index was closed for holiday (up 2.9%). Turkey’s Borsa Istanbul National 100 index fell 1.7% (up 23.7%).
Federal Reserve Credit increased $7.8 billion last week to $6.576 TN, with a 10-week rise of $86.2 billion. Fed Credit was down $2.313 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.850 TN, or 76%. Fed Credit inflated $3.766 TN, or 134%, since November 7, 2012 (693 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt rose $6.6 billion last week to $3.102 TN. “Custody holdings” were down $200 billion y-o-y, or 6.1%.
Total money market fund assets (MMFA) gained $17.1 billion to $7.791 TN - with a 31-week surge of $768 billion, or 18.4% annualized. MMFA were up $877 billion, or 12.7%, y-o-y - having ballooned a historic $3.207 TN, or 70%, since October 26, 2022.
Total Commercial Paper dropped $26.3 billion to $1.404 TN. CP expanded $123 billion, or 9.6%, y-o-y.
Freddie Mac 30-year fixed mortgage rates dropped eight bps to 6.01% (down 84bps y-o-y) - the low since September 2022. Fifteen-year rates fell nine bps to 5.35% (down 69bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates unchanged at 6.33% (down 61bps).
Currency Watch:
February 13 – Financial Times (Katie Martin): “The US dollar is morphing into an increasingly political animal. In general, and in very broad terms, the world’s most important reserve currency ebbs and flows based on good, old-fashioned economic fundamentals — the pace of growth, shifts in expectations for interest rates and so on. But there are signs of this normal order breaking down. Instead, what really moves the dollar is the wild soap opera that is US politics. Wall Street analysts are largely dancing around this issue, often for fear of irritating the president. But when they publish achingly dry studies on the ‘more limited role of rate differentials’, what they mean, and often say in private, is: ‘It’s the politics, stupid’.”
February 17 – Financial Times (Rachel Rees and Emily Herbert): “A majority of big investors expect Kevin Warsh’s appointment to lead the Federal Reserve will cause the dollar to weaken further, in a sign of lingering concerns over the independence of the US central bank. Nearly 60% of fund managers said that Donald Trump’s nomination of Warsh as Fed chair would hurt the US currency, according to a… survey of fund managers by Bank of America. Just a quarter said a stronger dollar was part of the ‘Kevin Warsh trade’.”
For the week, the U.S. Dollar Index rallied 0.9% to 97.796 (down 0.5% y-t-d). On the upside, the Brazilian real increased 0.9%, the Mexican peso 0.2%, and the Australian dollar 0.1%. On the downside, the Japanese yen declined 1.5%, the Swedish krona 1.5%, the British pound 1.3%, the New Zealand dollar 1.0%, the Swiss franc 1.0%, the euro 0.7%, the South African rand 0.6%, the Canadian dollar 0.5%, the Singapore dollar 0.4%, the Norwegian krone 0.2%, and the South Korean won 0.2%. China's (offshore) renminbi increased 0.05% versus the dollar (up 1.20% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index recovered 2.2% (up 9.1% y-t-d). Spot Gold rose 1.3% to $5,107 (up 18.2%). Silver rallied 9.3% to $84.647 (up 18.1%). WTI Crude surged $3.59, or 5.7%, to $66.48 (up 16%). Gasoline jumped 4.5% (up 17%), while Natural Gas dropped 6.0% to $3.047 (down 17%). Copper recovered 1.7% (up 4%). Wheat jumped 4.5% (up 13%), while Corn declined 1.0% (down 3%). Bitcoin fell $1,050, or 1.5%, to $67,830 (down 22.6%).
Market Instability Watch:
February 17 – Axios (Madison Mills): “AI is concentrating stocks, bonds, private credit — and even the broader economy — around a single bet. Tech companies are projected to issue over $1 trillion in debt to fund their AI goals this year. Yet there’s little evidence the technology can be monetized at a scale that justifies the bet. Hyperscalers… could spend up to $700 billion from their balance sheets on AI this year, while issuing eye-popping debt to access even more capital, according to UBS. The eight largest companies, all tech firms with AI ambitions, make up nearly half of the S&P 500. More than half of invested venture-capital dollars went to AI firms in 2025, per PitchBook. Private credit could supply half of the $1.5 trillion needed for data-center buildouts, according to Morgan Stanley. That will further concentrate AI into the alternatives market. Between the lines: AI is sucking up all the oxygen, and dollars, making it harder to hedge exposure to the trade.”
February 18 – New York Times (River Akira Davis): “For two decades, few corners of global finance were lonelier than the market for Japanese government bonds. Under the Bank of Japan’s longstanding regime of keeping borrowing costs pinned at zero, yields on the securities, known as J.G.B.s, largely flatlined. Over the years, the few contrarian investors willing to bet that yields might eventually rise were burned so badly that the trade was named the ‘widow-maker.’ In the world’s second-largest government bond market, entire days would pass without a single benchmark bond changing hands. Those days are gone. Last month, Prime Minister Sanae Takaichi’s vow to cut taxes sparked anxiety over Tokyo’s ability to service its staggering $9 trillion debt. Yields on the 30-year government bond surged more than a quarter percentage point in a single session…”
U.S. and Global Credit Excess Watch:
February 17 – Axios (Emily Peck): “Big Tech is on a bond binge to fund its AI bets, and investors seem happy to oblige. Even as worries swirl around these companies going on AI spending sprees, bond investors… are so far telling a calmer story. Tech companies need enormous amounts of cash to buy AI infrastructure, mainly energy-hungry data centers that can generate enough compute to take our jobs. Spending by the hyperscalers is expected to reach over $600 billion this year. Morgan Stanley researchers estimated last summer that these firms face a $1.5 trillion ‘financing gap’ to meet their capital expenditure needs. Even the most profitable tech companies… are turning to the credit markets for spending help. Only less than two months into the new year, the big five hyperscalers— Alphabet, Amazon, Meta, Microsoft and Oracle — have issued $45 billion in bonds in the U.S., nearly half as much as they did for all of 2025… That’s more than they have done in any other full year since 2011. Overseas investors are hungry for tech debt, too. Alphabet raised $32 billion in debt denominated by British pounds and Swiss francs…”
February 16 – Bloomberg (Sujata Rao and Caleb Mutua): “Debt investors are worried that the biggest tech companies will keep borrowing until it hurts in the battle to develop the most powerful artificial intelligence. That fear is breathing new life into the market for credit derivatives, where banks, investors and others can protect themselves against borrowers larding on too much debt and becoming less able to pay their obligations. Credit derivatives tied to single companies didn’t exist on many high-grade Big Tech issuers a year ago, and are now some of the most actively traded US contracts in the market outside of the financial sector, according to Depository Trust & Clearing Corp.”
February 17 – Bloomberg (Rose Henderson): “A record number of investors say companies are spending far too much, according to Bank of America Corp.’s latest fund manager survey. While investors participating in the survey are the most bullish they’ve been since June 2021, about 35% warned that corporations are overinvesting, the highest proportion seen in data going back two decades, strategist Michael Hartnett wrote in a note. They’re also cutting their exposure to tech stocks.”
February 18 – Bloomberg (Claire Ruckin): “Debt bankers are finally getting what they’ve been waiting years for: the return of M&A and the lucrative financing that comes with it. Bankers are working on $100 billion of debt tied to leveraged buyouts… Around three-quarters of that was underwritten in recent months and is in the process of being sold to investors. The rest is for potential acquisitions in what’s proving to be a strong start to a year forecast to be a record for dealmaking. This debt includes jumbo cross-border financing for the likes of Carlyle Inc.’s acquisition of a stake in BASF SE’s coatings business, and puts 2026 on course to rival the bellwether year of 2021.”
February 17 – Bloomberg (Esteban Duarte): “A lack of data on loans used by investors to buy up synthetic risk transfers is making it hard for global financial regulators to assess how exposed banks are to the booming market. In a report…, the Basel Committee on Banking Supervision called for regulators to work more closely together to remove blind spots surrounding lending for synthetic risk transfer (SRT) deals, a fast-growing market for US and European banks. ‘Some jurisdictions and market participants are of the view that blind spots related to disclosure and SRT financing activities remain,’ the committee said... ‘While reliable data on SRT financing are scarce, there is anecdotal evidence that supervisory scrutiny of SRT financing may have discouraged some banks from proactively offering financing to SRT investors.’ Banks use SRTs to offload risks in their loan portfolios to investors.”
February 17 – Financial Times (Martin Arnold and Ortenca Aliaj): “Barclays and Raiffeisen Bank International are among the European lenders making the most aggressive use of a fast-growing technique to transfer credit risk and cut capital requirements, global regulators said. Banks’ increasing issuance of risk-transfer transactions, in which they shift some of their credit exposure to external investors, is creating new risks for the financial system, the Basel Committee on Banking Supervision said… The committee, which sets standards for global banking regulation, said banks in the US, Canada, UK and the Eurozone had used so-called synthetic risk transfers (SRTs) to offload risk on about €750bn of loan portfolios — equal to about 1.1% of their total assets.”
U.S. Credit Trouble Watch:
February 19 – Reuters (Tatiana Bautzer): “Robust demand from subprime customers spurred growth in U.S. unsecured loans last year with their combined balances surging 10% to a new high of $276 billion, according to TransUnion... Some 26.4 million consumers carried those loans as of end-December, up from 24.5 million a year earlier. ‘As interest rates began to fall, many consumers are consolidating their credit card balances into unsecured loans,’ said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion.”
February 19 – Financial Times (Laith Al-Khalaf): “Klarna shares slumped by more than a quarter on Thursday after the buy now, pay later group reported a $273mn net loss for 2025 and increased its provisions for loans it expects customers will be unable to repay. The stock had already halved since the Swedish group secured a $15bn valuation in a New York listing in September. Thursday’s 27% decline to $13.85 brought the post-IPO slide to almost 68% and cut its market value to $5.3bn. The company said that it had set aside $250mn for credit losses in the fourth quarter — up almost 60% on the same period in 2024.”
Trump Administration Watch:
February 13 – Reuters (Phil Stewart and Idrees Ali): “The U.S. military is preparing for the possibility of sustained, weeks-long operations against Iran if President Donald Trump orders an attack, two U.S. officials told Reuters, in what could become a far more serious conflict than previously seen between the countries. The disclosure by the officials… raises the stakes for the diplomacy underway between the United States and Iran.”
February 17 – Wall Street Journal (Laurence Norman and Benoit Faucon): “Vice President JD Vance said Iran had failed to acknowledge core U.S. demands in talks here Tuesday, after which Washington said it had agreed to give Tehran two weeks to close the gaps between the sides. Ahead of the negotiations, Tehran had indicated it was willing to compromise around the edges of its nuclear program, including moving its near weapons-grade uranium offshore, people familiar with the matter said. But speaking Tuesday evening, Vance said it was clear from his briefing from the talks that they hadn’t yielded any breakthrough, adding that military action remained an option. The U.S. has demanded Iran end its enrichment of uranium... ‘One thing I will say about the negotiation this morning: In some ways, it went well—they agreed to meet afterwards. But in other ways, it was very clear that the president has set some red lines that the Iranians are not yet willing to actually acknowledge and work through,’ Vance told Fox News…”
February 16 – Axios (Barak Ravid): “President Trump said he is going to be ‘involved indirectly’ in the second round of nuclear talks between the U.S. and Iran that will take place in Geneva… The meeting tomorrow between Trump's envoys Jared Kushner and Steve Witkoff and Iranian Foreign Minister Abbas Araghchi could be a make or break moment that will signal whether the two countries are moving towards an new nuclear deal or towards a war. U.S. officials said they expect Iran to come to the talks on Tuesday with tangible concessions regarding its nuclear program. The talks ‘will be very important,’ Trump told reporters… ‘The Iranians are tough negotiators… I hope they are going to be more reasonable,’ he added. ‘They want to make a deal. I don’t think they want the consequences of not making a deal’.”
The S&P500 rallied 1.1% (up 0.9% y-t-d), and the Dow added 0.3% (up 3.3%). The Utilities slipped 0.6% (up 8.0%). The Banks recovered 1.7% (up 3.0%), and the Broker/Dealers gained 1.6% (up 2.3%). The Transports rallied 2.6% (up 14.3%). The S&P 400 Midcaps gained 1.2% (up 9.1%), and the small cap Russell 2000 increased 0.6% (up 7.3%). The Nasdaq100 gained 1.1% (down 0.9%). The Semiconductors advanced 1.5% (up 16.6%). The Biotechs increased 0.2% (up 1.3%). With bullion rising $57, the HUI gold index gained 2.5% (up 27.3%).
Three-month Treasury bill rates ended the week at 3.5925%. Two-year government yields rose seven bps to 3.48% (up 1 bp y-t-d). Five-year T-note yields gained four bps to 3.65% (down 8bps). Ten-year Treasury yields increased three bps to 4.08% (down 8bps). Long bond yields added three bps to 4.73% (down 12bps). Benchmark Fannie Mae MBS yields increased two bps to 4.89% (down 16bps).
Italian 10-year yields slipped two bps to 3.34% (down 21bps y-t-d). Greek 10-year yields dipped two bps to 3.33% (down 11bps). Spain's 10-year yields increased two bps to 3.15% (down 14bps). German bund yields dipped two bps to 2.74% (down 12bps). French yields fell four bps to 3.30% (down 26bps). The French to German 10-year bond spread narrowed two to 56 bps. U.K. 10-year gilt yields dropped six bps to 4.35% (down 13bps). U.K.’s FTSE equities index rose 2.3% (up 7.5% y-t-d).
Japan’s Nikkei 225 Equities Index slipped 0.2% (up 12.9% y-t-d). Japan’s 10-year “JGB” yields dropped 11 bps to 2.12% (up 6bps y-t-d). France’s CAC40 jumped 2.5% (up 4.5%). The German DAX equities index gained 1.4% (up 3.1%). Spain’s IBEX 35 equities index rose 2.9% (up 5.1%). Italy’s FTSE MIB index gained 2.3% (up 3.4%). EM equities were mixed. Brazil’s Bovespa index added 2.2% (up 18.3%), while Mexico’s Bolsa index was little changed (up 11.0%). South Korea’s Kospi surged another 5.5% (up 37.8%). India’s Sensex equities index increased 0.2% (down 2.8%). China’s Shanghai Exchange Index was closed for holiday (up 2.9%). Turkey’s Borsa Istanbul National 100 index fell 1.7% (up 23.7%).
Federal Reserve Credit increased $7.8 billion last week to $6.576 TN, with a 10-week rise of $86.2 billion. Fed Credit was down $2.313 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.850 TN, or 76%. Fed Credit inflated $3.766 TN, or 134%, since November 7, 2012 (693 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt rose $6.6 billion last week to $3.102 TN. “Custody holdings” were down $200 billion y-o-y, or 6.1%.
Total money market fund assets (MMFA) gained $17.1 billion to $7.791 TN - with a 31-week surge of $768 billion, or 18.4% annualized. MMFA were up $877 billion, or 12.7%, y-o-y - having ballooned a historic $3.207 TN, or 70%, since October 26, 2022.
Total Commercial Paper dropped $26.3 billion to $1.404 TN. CP expanded $123 billion, or 9.6%, y-o-y.
Freddie Mac 30-year fixed mortgage rates dropped eight bps to 6.01% (down 84bps y-o-y) - the low since September 2022. Fifteen-year rates fell nine bps to 5.35% (down 69bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates unchanged at 6.33% (down 61bps).
Currency Watch:
February 13 – Financial Times (Katie Martin): “The US dollar is morphing into an increasingly political animal. In general, and in very broad terms, the world’s most important reserve currency ebbs and flows based on good, old-fashioned economic fundamentals — the pace of growth, shifts in expectations for interest rates and so on. But there are signs of this normal order breaking down. Instead, what really moves the dollar is the wild soap opera that is US politics. Wall Street analysts are largely dancing around this issue, often for fear of irritating the president. But when they publish achingly dry studies on the ‘more limited role of rate differentials’, what they mean, and often say in private, is: ‘It’s the politics, stupid’.”
February 17 – Financial Times (Rachel Rees and Emily Herbert): “A majority of big investors expect Kevin Warsh’s appointment to lead the Federal Reserve will cause the dollar to weaken further, in a sign of lingering concerns over the independence of the US central bank. Nearly 60% of fund managers said that Donald Trump’s nomination of Warsh as Fed chair would hurt the US currency, according to a… survey of fund managers by Bank of America. Just a quarter said a stronger dollar was part of the ‘Kevin Warsh trade’.”
For the week, the U.S. Dollar Index rallied 0.9% to 97.796 (down 0.5% y-t-d). On the upside, the Brazilian real increased 0.9%, the Mexican peso 0.2%, and the Australian dollar 0.1%. On the downside, the Japanese yen declined 1.5%, the Swedish krona 1.5%, the British pound 1.3%, the New Zealand dollar 1.0%, the Swiss franc 1.0%, the euro 0.7%, the South African rand 0.6%, the Canadian dollar 0.5%, the Singapore dollar 0.4%, the Norwegian krone 0.2%, and the South Korean won 0.2%. China's (offshore) renminbi increased 0.05% versus the dollar (up 1.20% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index recovered 2.2% (up 9.1% y-t-d). Spot Gold rose 1.3% to $5,107 (up 18.2%). Silver rallied 9.3% to $84.647 (up 18.1%). WTI Crude surged $3.59, or 5.7%, to $66.48 (up 16%). Gasoline jumped 4.5% (up 17%), while Natural Gas dropped 6.0% to $3.047 (down 17%). Copper recovered 1.7% (up 4%). Wheat jumped 4.5% (up 13%), while Corn declined 1.0% (down 3%). Bitcoin fell $1,050, or 1.5%, to $67,830 (down 22.6%).
Market Instability Watch:
February 17 – Axios (Madison Mills): “AI is concentrating stocks, bonds, private credit — and even the broader economy — around a single bet. Tech companies are projected to issue over $1 trillion in debt to fund their AI goals this year. Yet there’s little evidence the technology can be monetized at a scale that justifies the bet. Hyperscalers… could spend up to $700 billion from their balance sheets on AI this year, while issuing eye-popping debt to access even more capital, according to UBS. The eight largest companies, all tech firms with AI ambitions, make up nearly half of the S&P 500. More than half of invested venture-capital dollars went to AI firms in 2025, per PitchBook. Private credit could supply half of the $1.5 trillion needed for data-center buildouts, according to Morgan Stanley. That will further concentrate AI into the alternatives market. Between the lines: AI is sucking up all the oxygen, and dollars, making it harder to hedge exposure to the trade.”
February 18 – New York Times (River Akira Davis): “For two decades, few corners of global finance were lonelier than the market for Japanese government bonds. Under the Bank of Japan’s longstanding regime of keeping borrowing costs pinned at zero, yields on the securities, known as J.G.B.s, largely flatlined. Over the years, the few contrarian investors willing to bet that yields might eventually rise were burned so badly that the trade was named the ‘widow-maker.’ In the world’s second-largest government bond market, entire days would pass without a single benchmark bond changing hands. Those days are gone. Last month, Prime Minister Sanae Takaichi’s vow to cut taxes sparked anxiety over Tokyo’s ability to service its staggering $9 trillion debt. Yields on the 30-year government bond surged more than a quarter percentage point in a single session…”
U.S. and Global Credit Excess Watch:
February 17 – Axios (Emily Peck): “Big Tech is on a bond binge to fund its AI bets, and investors seem happy to oblige. Even as worries swirl around these companies going on AI spending sprees, bond investors… are so far telling a calmer story. Tech companies need enormous amounts of cash to buy AI infrastructure, mainly energy-hungry data centers that can generate enough compute to take our jobs. Spending by the hyperscalers is expected to reach over $600 billion this year. Morgan Stanley researchers estimated last summer that these firms face a $1.5 trillion ‘financing gap’ to meet their capital expenditure needs. Even the most profitable tech companies… are turning to the credit markets for spending help. Only less than two months into the new year, the big five hyperscalers— Alphabet, Amazon, Meta, Microsoft and Oracle — have issued $45 billion in bonds in the U.S., nearly half as much as they did for all of 2025… That’s more than they have done in any other full year since 2011. Overseas investors are hungry for tech debt, too. Alphabet raised $32 billion in debt denominated by British pounds and Swiss francs…”
February 16 – Bloomberg (Sujata Rao and Caleb Mutua): “Debt investors are worried that the biggest tech companies will keep borrowing until it hurts in the battle to develop the most powerful artificial intelligence. That fear is breathing new life into the market for credit derivatives, where banks, investors and others can protect themselves against borrowers larding on too much debt and becoming less able to pay their obligations. Credit derivatives tied to single companies didn’t exist on many high-grade Big Tech issuers a year ago, and are now some of the most actively traded US contracts in the market outside of the financial sector, according to Depository Trust & Clearing Corp.”
February 17 – Bloomberg (Rose Henderson): “A record number of investors say companies are spending far too much, according to Bank of America Corp.’s latest fund manager survey. While investors participating in the survey are the most bullish they’ve been since June 2021, about 35% warned that corporations are overinvesting, the highest proportion seen in data going back two decades, strategist Michael Hartnett wrote in a note. They’re also cutting their exposure to tech stocks.”
February 18 – Bloomberg (Claire Ruckin): “Debt bankers are finally getting what they’ve been waiting years for: the return of M&A and the lucrative financing that comes with it. Bankers are working on $100 billion of debt tied to leveraged buyouts… Around three-quarters of that was underwritten in recent months and is in the process of being sold to investors. The rest is for potential acquisitions in what’s proving to be a strong start to a year forecast to be a record for dealmaking. This debt includes jumbo cross-border financing for the likes of Carlyle Inc.’s acquisition of a stake in BASF SE’s coatings business, and puts 2026 on course to rival the bellwether year of 2021.”
February 17 – Bloomberg (Esteban Duarte): “A lack of data on loans used by investors to buy up synthetic risk transfers is making it hard for global financial regulators to assess how exposed banks are to the booming market. In a report…, the Basel Committee on Banking Supervision called for regulators to work more closely together to remove blind spots surrounding lending for synthetic risk transfer (SRT) deals, a fast-growing market for US and European banks. ‘Some jurisdictions and market participants are of the view that blind spots related to disclosure and SRT financing activities remain,’ the committee said... ‘While reliable data on SRT financing are scarce, there is anecdotal evidence that supervisory scrutiny of SRT financing may have discouraged some banks from proactively offering financing to SRT investors.’ Banks use SRTs to offload risks in their loan portfolios to investors.”
February 17 – Financial Times (Martin Arnold and Ortenca Aliaj): “Barclays and Raiffeisen Bank International are among the European lenders making the most aggressive use of a fast-growing technique to transfer credit risk and cut capital requirements, global regulators said. Banks’ increasing issuance of risk-transfer transactions, in which they shift some of their credit exposure to external investors, is creating new risks for the financial system, the Basel Committee on Banking Supervision said… The committee, which sets standards for global banking regulation, said banks in the US, Canada, UK and the Eurozone had used so-called synthetic risk transfers (SRTs) to offload risk on about €750bn of loan portfolios — equal to about 1.1% of their total assets.”
U.S. Credit Trouble Watch:
February 19 – Reuters (Tatiana Bautzer): “Robust demand from subprime customers spurred growth in U.S. unsecured loans last year with their combined balances surging 10% to a new high of $276 billion, according to TransUnion... Some 26.4 million consumers carried those loans as of end-December, up from 24.5 million a year earlier. ‘As interest rates began to fall, many consumers are consolidating their credit card balances into unsecured loans,’ said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion.”
February 19 – Financial Times (Laith Al-Khalaf): “Klarna shares slumped by more than a quarter on Thursday after the buy now, pay later group reported a $273mn net loss for 2025 and increased its provisions for loans it expects customers will be unable to repay. The stock had already halved since the Swedish group secured a $15bn valuation in a New York listing in September. Thursday’s 27% decline to $13.85 brought the post-IPO slide to almost 68% and cut its market value to $5.3bn. The company said that it had set aside $250mn for credit losses in the fourth quarter — up almost 60% on the same period in 2024.”
Trump Administration Watch:
February 13 – Reuters (Phil Stewart and Idrees Ali): “The U.S. military is preparing for the possibility of sustained, weeks-long operations against Iran if President Donald Trump orders an attack, two U.S. officials told Reuters, in what could become a far more serious conflict than previously seen between the countries. The disclosure by the officials… raises the stakes for the diplomacy underway between the United States and Iran.”
February 17 – Wall Street Journal (Laurence Norman and Benoit Faucon): “Vice President JD Vance said Iran had failed to acknowledge core U.S. demands in talks here Tuesday, after which Washington said it had agreed to give Tehran two weeks to close the gaps between the sides. Ahead of the negotiations, Tehran had indicated it was willing to compromise around the edges of its nuclear program, including moving its near weapons-grade uranium offshore, people familiar with the matter said. But speaking Tuesday evening, Vance said it was clear from his briefing from the talks that they hadn’t yielded any breakthrough, adding that military action remained an option. The U.S. has demanded Iran end its enrichment of uranium... ‘One thing I will say about the negotiation this morning: In some ways, it went well—they agreed to meet afterwards. But in other ways, it was very clear that the president has set some red lines that the Iranians are not yet willing to actually acknowledge and work through,’ Vance told Fox News…”
February 16 – Axios (Barak Ravid): “President Trump said he is going to be ‘involved indirectly’ in the second round of nuclear talks between the U.S. and Iran that will take place in Geneva… The meeting tomorrow between Trump's envoys Jared Kushner and Steve Witkoff and Iranian Foreign Minister Abbas Araghchi could be a make or break moment that will signal whether the two countries are moving towards an new nuclear deal or towards a war. U.S. officials said they expect Iran to come to the talks on Tuesday with tangible concessions regarding its nuclear program. The talks ‘will be very important,’ Trump told reporters… ‘The Iranians are tough negotiators… I hope they are going to be more reasonable,’ he added. ‘They want to make a deal. I don’t think they want the consequences of not making a deal’.”
February 14 – Reuters (Steve Holland, Phil Stewart, Idrees Ali and Bo Erickson): “U.S. President Donald Trump… embraced potential regime change in Iran and declared that ‘tremendous power’ will soon be in the Middle East, as the Pentagon sent a second aircraft carrier to the region… Asked if he wanted regime change in Iran, Trump responded that it ‘seems like that would be the best thing that could happen.’ He declined to share who he wanted to take over Iran, but said ‘there are people.’ ‘For 47 years, they’ve been talking and talking and talking,’ Trump said… ‘In the meantime, we’ve lost a lot of lives while they talk. Legs blown off, arms blown off, faces blown off. We've been going on for a long time’.”
February 18 – Bloomberg (Julian Lee): “Iran’s government has said it will ‘defend itself and respond like never before’ should US President Donald Trump follow through on threats to attack the country if it doesn’t agree to a deal to curb its nuclear program. One option for retaliation would be to try to block or effectively close the Strait of Hormuz. This narrow waterway at the mouth of the Persian Gulf handles about a quarter of the world’s seaborne oil trade. If Iran were to deny access to the giant tankers that ferry oil and gas from the Middle East to China, Europe, the US and other major energy consumers, the disruption would trigger a spike in oil prices and potentially destabilize the global economy.”
February 16 – Financial Times (Marton Dunai and Henry Foy): “Marco Rubio has praised Viktor Orbán’s leadership as ‘essential’ to US interests, saying Donald Trump is ‘deeply committed’ to the Hungarian premier’s success ahead of critical parliamentary elections. The US secretary of state hailed a ‘golden era of relations’ between the US and Hungary as he stood beside Orbán, the EU’s most pro-Russian leader and an avowed follower of Trump’s Maga outlook. Orbán faces a tight race to retain power in the April vote… ‘I can say to you with confidence that President Trump is deeply committed to your success,’ Rubio told Orbán…”
February 16 – Axios (Dave Lawler, Maria Curi and Mike Allen): “Defense Secretary Pete Hegseth is ‘close’ to cutting business ties with Anthropic and designating the AI company a ‘supply chain risk’ — meaning anyone who wants to do business with the U.S. military has to cut ties with the company, a senior Pentagon official told Axios. The senior official said: ‘It will be an enormous pain in the ass to disentangle, and we are going to make sure they pay a price for forcing our hand like this.’ That kind of penalty is usually reserved for foreign adversaries.”
Budget Watch:
February 16 – Wall Street Journal (Editorial Board): “Sorry to interrupt the Jeffrey Epstein circus on Capitol Hill, but the Congressional Budget Office last week released its latest 10-year budget baseline forecast. The real outrage is that Members of both parties seem less interested in fixing America’s entitlements than in performative politics… CBO forecasts that deficits will total $24.4 trillion through 2036, largely because of entitlements on autopilot. Spending will increase to $11.4 trillion in 2036 from $7 trillion, while revenue grows more modestly to $8.3 trillion from $5.2 trillion. Medicaid is expected to grow 47%, Social Security 74% and Medicare 105% over the next decade. Defense spending is expected to increase 23%, and domestic discretionary spending 17%.”
Trade War Watch:
February 12 – Politico (Graham Lanktree, Zi-Ann Lum and Jon Stone): “Two of the world’s biggest trading blocs are cautiously eyeing closer ties to short-circuit Donald Trump’s tariffs. The European Union and a 12-nation Indo-Pacific bloc are opening talks to explore proposals to form one of the largest global economic alliances, multiple people with knowledge of the talks told POLITICO. Canada is spearheading the discussions after Prime Minister Mark Carney called on middle powers to buck trade war coercion last month, days after Trump threatened to raise tariffs on Denmark’s European allies if it didn’t cede Greenland.”
February 17 – Financial Times (Leo Lewis, David Keohane and Harry Dempsey): “The US and Japan have unveiled the first three industrial projects in America to receive financing under a $550bn deal struck last year that protected Japanese companies from the worst of President Donald Trump’s tariffs. The plans, worth a combined $36bn, followed months of negotiations and marked the first step in Japan’s commitment to act as chief financier for projects in critical sectors of the US economy. The biggest of the projects is a $33bn, 9.2 gigawatt natural gas power plant in Ohio, led by Japan’s SoftBank…”
New World Order Watch:
February 16 – Financial Times (Gideon Rachman): “Marco Rubio’s speech to the Munich Security Conference… was met with a standing ovation by some in his audience. So have European leaders decided that all is forgiven and they now love the Trump administration? Not at all. For the moment, it is in the interests of both Europe and the US to avoid fresh crises. That largely explains the emollient tone of the US secretary of state’s speech and its warm reception inside the hall. But the speeches made by European leaders in Munich — and conversations with their aides — make it clear that Rubio has not healed the transatlantic rift. That rift is now set to widen and deepen — as European countries take steps to ready their defences against the Trump administration, in preparation for the crises to come. A single speech cannot repair the damage done over the past year.”
February 15 – Financial Times (Eswar Prasad): “Is China winning the geopolitical game? The US appears isolated as President Donald Trump attacks not just rivals but long-standing allies. Trump’s boorish behaviour towards other countries allows Chinese leaders to act as the responsible adults in the room. China clearly wants to assume the mantle of being the defender of multilateralism and free trade, and the linchpin of a stable world order. The reality is more complex… In two important respects, though, China is winning the geopolitical game. First, Trump is steering America away from the ideals and principles it once championed. Second, with China, at least other countries know exactly where they stand, in contrast to the whiplash from unpredictable shifts in the whims of the US president.”
February 15 – Financial Times (Sam Jones): “Recruiters and propagandists who previously worked for Russia’s Wagner Group have emerged as a main conduit for Kremlin-organised sabotage attacks in Europe, according to western intelligence officials. The fighter group’s status has been uncertain since a failed rebellion against the top brass of the Russian army in June 2023 prompted a clampdown and the death of its founder, Yevgeny Prigozhin. But Wagner recruiters who specialised in persuading young men from Russia’s hinterland to fight in Ukraine have been given a new task — recruiting economically vulnerable Europeans to carry out violence on Nato soil, the officials said.”
February 16 – Reuters (Guy Faulconbridge): “Russia could deploy its navy to prevent European powers from seizing its vessels and may retaliate against European shipping if Russian ships are taken, Nikolai Patrushev, one of Russia’s leading hardliners, was quoted as saying… Western states have sought to cripple Russia’s economy with sanctions and in recent months have tried to block oil tankers suspected of involvement in Russian oil shipments. In January, the United States seized a Russian-flagged oil tanker as part of efforts to curb Venezuelan oil exports.”
February 17 – Politico (Eva Hartog): “Sweden has named Russia as its greatest threat and warns that Moscow’s increasingly risky behavior could trigger a dangerous escalation. An annual report… by the country’s Military Intelligence and Security Service flagged airspace violations, sabotage and cyber operations as examples of Russia’s belligerent actions in Sweden’s neighborhood, including the Baltic Sea. ‘Russia is the primary military threat to Sweden and NATO,’ the report stated, adding this threat was ‘serious and concrete’ and describing Moscow’s conduct as ‘opportunistic and aggressive’.”
February 14 – Bloomberg (Colum Murphy): “Chinese Foreign Minister Wang Yi invoked Japan’s World War II history of aggression and warned Prime Minister Sanae Takaichi against a return to militarism as he blasted her support for Taiwan as ‘a very dangerous development’ for Asia. Wang’s comments at the Munich Security Conference… rebuffed overtures for dialogue made a day earlier by Japan’s defense minister, and suggested no retreat from the deepening standoff. ‘If Japan doesn’t repent on its wrongdoing, history will only repeat itself,’ he said. ‘If you go back down the old road, it will be a dead end. If you try gambling again, the loss will be faster and more devastating’.”
Iran Watch:
February 17 – Associated Press (Jamey Keaten and Stephanie Liechtenstein): “Iran announced the temporary closure of the Strait of Hormuz on Tuesday for live fire drills in a rare show of force as its negotiators held another round of indirect talks with the United States over the Islamic Republic’s disputed nuclear program. It was the first time Iran has announced the closure of the key international waterway, through which 20% of the world’s oil passes, since the U.S. began threatening Iran and rushing military assets to the region. It was not immediately clear if the strait had been closed, but such a rare and perhaps unprecedented move could further escalate tensions that threaten to ignite another war in the Middle East.”
Ukraine Watch:
February 18 – Reuters (Ron Popeski): “Ukrainian President Volodymyr Zelenskiy said U.S. President Donald Trump was exerting undue pressure on him in trying to secure a resolution to the nearly four-year-old war pitting Kyiv against Moscow. Zelenskiy… also said any plan requiring Ukraine to give up territory that Russia had not captured in the eastern Donbas region would be rejected by Ukrainians if put to a referendum. Axios quoted Zelenskiy as saying it was ‘not fair’ that Trump kept publicly calling on Ukraine, not Russia, to make concessions… ‘I hope it is just his tactics and not the decision,’ Axios quoted Zelenskiy as saying… Trump has twice in recent days suggested it was up to Ukraine and Zelenskiy to take steps to ensure the talks proved successful. ‘Ukraine better come to the table fast. That’s all I'm telling you,’ Trump told reporters…”
February 17 – Associated Press (Jamey Keaten and Illia Novikov): “The latest U.S.-brokered talks between envoys from Moscow and Kyiv over Russia’s all-out invasion of Ukraine ended Wednesday with no sign of a breakthrough and with both sides saying the talks were ‘difficult,’ negotiations in Switzerland were the third round of direct talks organized by the U.S., after meetings earlier this year in Abu Dhabi that officials described as constructive but which also made no major headway.”
February 18 – Reuters (Tom Balmforth, Gram Slattery and Jonathan Landay): “European intelligence chiefs are pessimistic about the chances of an agreement being reached this year to end Russia’s war in Ukraine, despite Donald Trump’s assertions that U.S.-brokered talks have brought the prospect of a deal ‘reasonably close’. The heads of five European spy agencies… said Russia did not want to end the war quickly. Four of them said Moscow was using the talks with the U.S. to push for sanctions relief and business deals.”
Trade War Watch:
February 20 – Bloomberg (Kate Sullivan): “President Donald Trump rushed to salvage his signature tariffs after the Supreme Court struck down his global duties, pledging he would use different tools to work around the ruling and preserve import taxes he has cast as essential to his economic and foreign policy. The president said… he planned to impose a flat 10% levy on foreign goods in the coming days, and that he would order a raft of trade investigations that should allow him to enact more permanent tariffs. In a defiant and angry White House press conference hours after the decision, Trump vowed to forge ahead with his approach despite complaints from opponents who say it has undercut longtime trade partnerships and increased costs for Americans. The president has credited his tariff regime for driving substantial investments in the US and preventing foreign conflicts.”
Taiwan Watch:
February 16 – Bloomberg (Skylar Woodhouse): “President Donald Trump said that he’s discussing future weapons sales to Taiwan with Chinese President Xi Jinping and teased that he would soon make a decision about future defense support for the self-governing island. ‘I’m talking to him about it. We had a good conversation, and we’ll make a determination pretty soon,’ Trump told reporters… The US’s military support for Taiwan has become one of the key points of contention between Washington and Beijing before the countries’ leaders are slated to meet in April in China.”
February 14 – Reuters (Ben Blanchard): “China is the real threat to security and is hypocritically claiming to uphold U.N. principles of peace, Taiwan Foreign Minister Lin Chia-lung said… in a rebuff to comments by China’s top diplomat at the Munich Security Conference… Chinese Foreign Minister Wang Yi, addressing the annual security conference…, warned that some countries were ‘trying to split Taiwan from China’, blamed Japan for tensions over the island and underscored the importance of upholding the United Nations Charter… Taiwan’s Lin said… that whether viewed from historical facts, objective reality or under international law, Taiwan’s sovereignty has never belonged to the People’s Republic of China.”
U.S./Russia/China/Europe/Iran Watch:
February 15 – Politico (Victor Jack): “Europe must emerge as a geopolitical power that speaks in a ‘direct and clear’ way to the U.S. as it moves to reset transatlantic ties, Latvian Prime Minister Evika Siliņa told POLITICO. In the wake of U.S. President Donald Trump’s threats to annex Greenland, ‘I don’t think we will be doing business as usual,’ Siliņa said… ‘When we showed our unanimity in supporting Greenland and Denmark, I think [the relationship] shifted a little bit,’ she added. ‘We have to be taken seriously as collective European countries’.”
February 18 – Reuters: “Russian Foreign Minister Sergei Lavrov… said that any new U.S. strike on Iran would have serious consequences and called for restraint to find a solution to enable Iran to pursue a peaceful nuclear programme… ‘The consequences are not good. There have already been strikes on Iran on nuclear sites under the control of the International Atomic Energy Agency. From what we can judge there were real risks of a nuclear incident,’ Lavrov said… ‘I am carefully watching reactions in the region from Arab countries, Gulf monarchies. No one wants an increase in tension. Everyone understands this is playing with fire’.”
February 18 – Wall Street Journal (Editorial Board): “The April summit between President Trump and his Chinese counterpart, Xi Jinping, is turning out to be a high stakes affair long before they meet. The Chinese President is trying to bully Mr. Trump into walking back planned sales of arms to Taiwan. U.S. officials are leaking that Mr. Xi was adamant in a recent phone call that Mr. Trump block further arms sales to the democratic island of some 23 million people. The U.S. announced an $11.1 billion arms sale in December and another is in the works.”
February 17 – Wall Street Journal (Gabriele Steinhauser): “The U.S. plans to deploy more advanced missile systems and other weapons in the Philippines to deter Chinese aggression in the South China Sea, the State Department said…, affirming a policy that has angered Beijing. Senior officials from the U.S. and the Philippines met in Manila this week for annual talks on their alliance, which rests on a mutual-defense treaty signed in 1951. Their strongly worded statement—which condemned what it said were Beijing’s illegal and deceptive activities in the South China Sea—comes when the Trump administration has increased pressure on… other longstanding defense alliances, especially in Europe. More than any other Southeast Asian nation, the Philippines has openly challenged China’s claims to much of the South China Sea…”
February 19 – CNBC (Sam Meredith): “Russian President Vladimir Putin has sharply criticized the Trump administration’s fuel blockade on Cuba, saying Moscow considers the latest restrictions unacceptable. His comments come as the island nation grapples with a worsening economic crisis, one that has been compared to its biggest test since the collapse of the Soviet Union. ‘This is a special period, with new sanctions. You know how we feel about this. We do not accept anything like this,’ Putin said… during a meeting with Cuban Foreign Minister Bruno Rodríguez Parrilla…”
February 16 – Associated Press (Jill Lawless): “Russian opposition leader Alexei Navalny was poisoned by the Kremlin with a rare and lethal toxin found in the skin of poison dart frogs, five European countries said… The foreign ministries of the U.K., France, Germany, Sweden and the Netherlands said analysis in European labs of samples taken from Navalny’s body ‘conclusively confirmed the presence of epibatidine.’ The neurotoxin secreted by dart frogs in South America is not found naturally in Russia, they said.”
AI Bubble/Arms Race Watch:
February 15 – Bloomberg (Debby Wu, Takashi Mochizuki, and Yoolim Lee): “A growing procession of tech industry leaders including Elon Musk and Tim Cook are warning about a global crisis in the making: A shortage of memory chips is beginning to hammer profits, derail corporate plans and inflate price tags on everything from laptops and smartphones to automobiles and data centers — and the crunch is only going to get worse. Since the start of 2026, Tesla Inc., Apple Inc. and a dozen other major corporations have signaled that the shortage of DRAM, or dynamic random access memory… will constrain production. Cook warned it will compress iPhone margins. Micron Technology Inc. called the bottleneck ‘unprecedented.’ Musk got to the intractable nature of the problem when he declared Tesla is going to have to build its own memory fabrication plant. ‘We’ve got two choices: hit the chip wall or make a fab,’ he said…”
February 16 – Wall Street Journal (Robbie Whelan): “Micron Technology is the largest American maker of memory chips… Micron is rushing to add manufacturing capacity to avert the biggest supply crunch the memory industry has seen in more than 40 years. In Boise, where the company is based, Micron is spending $50 billion to more than double the size of its 450-acre campus, including the construction of two new chip factories, or fabs… Near Syracuse, Micron just broke ground on a $100 billion fab complex that represents the state of New York’s largest-ever private investment. Late last year, Micron announced a $9.6 billion fab investment in Hiroshima, Japan, while competitor SK Hynix announced in January that it would build a $13 billion fab in South Korea…”
February 16 – CNBC (Sawdah Bhaimiya): “China’s rapid advancement in AI is threatening to shake up U.S. dominance in the market, with one analyst warning of a tech shock that is just getting started. Rory Green, TS Lombard’s chief China economist and head of Asia research, told CNBC… America’s ‘perceived monopoly’ on tech and AI has been broken by China. ‘I think the China tech shock is just getting started. It’s not just AI, DeepSeek, and electric vehicles. China is moving up the value chain very rapidly... It’s the first time in history that an emerging market economy is at the forefront of science and technology,’ Green said… China is pairing dominant-market level tech with emerging-market production costs, backed by its massive supply chain, Green said.”
February 18 – Axios (Emily Peck): “The stock market has surged on AI news for the last few years. Now the dynamic is changing. There’s growing unease around the AI boom, and it’s showing up in the stock market, investor surveys and among regular Americans. A record share of investors — 35% — say companies are spending too much on AI, per a new Bank of America global fund manager survey... Meanwhile, 54% of Americans surveyed over the past week think that companies are investing too much in AI, per YouGov/The Economist. A majority also don't trust AI and believe it will eliminate jobs.”
February 15 – CNBC (Garrett Downs): “President Donald Trump’s trade and manufacturing adviser, Peter Navarro, said… the White House may force data center builders to absorb their costs as voters continue to sour on the economy and utility prices soar. ‘All of these data center builders, Meta on down, need to pay for all, all of the costs,’ Navarro said on Fox News… ‘They need to pay, not only pay for the electricity that they’re using on the grid, but they have to pay for the resiliency that they’re affecting as well. They need to pay for the water. So there’s activity, action here going forward, where we force them to internalize the cost’.”
February 18 – Financial Times (June Yoon): “The price of using artificial intelligence is falling. In China, entry-level access to AI models has been marketed for about $3 a month by the country’s hottest AI group Zhipu. Widely seen as one of China’s closest local equivalents to OpenAI, it develops large language models to compete with US systems. In a market where paid plans from US peers are closer to $20 a month depending on tier, and enterprise contracts run into the millions annually, this move by Zhipu amounts to a price war.”
Bubble and Mania Watch:
February 15 – Wall Street Journal (Rachel Wolfe): “A generation of young people locked out of homeownership has found another way to build wealth: putting money into the stock market. The share of people 25 to 39 years old making annual transfers to investment accounts more than tripled between 2013 and 2023 to 14.4%, outpacing increases for those 40 and over, according to… the JPMorgan Chase Institute. The share of 26-year-olds who transferred funds to investment accounts since turning 22 shot up from 8% in 2015 to 40% as of May 2025. The numbers don’t include people investing in 401(k)s. ‘We’ve seen really strong, surprisingly strong growth in retail investing in recent years among people who may otherwise be first-time home buyers,’ said George Eckerd, the research director… at the institute.”
February 18 – Wall Street Journal (Sam Schechner): “Moves to bar younger teens from social media across Europe and Asia are going, well…viral. What started as an isolated regulatory gamble by Australia last fall has spread to more than a dozen capitals, where leaders are seizing on issues raised by childhood scrolling to appeal to parents across the political spectrum. It adds to a growing backlash against teenage smartphone use, which is being blamed by some critics for deteriorating mental health and an epidemic of screen addiction. From Paris to New Delhi, limits on children’s access to apps such as TikTok, Instagram and YouTube are now being debated or implemented, marking a tipping point in the conversation about regulating social media and a potential blockage in tech companies’ pipeline of users.”
February 18 – Bloomberg (Bailey Lipschultz): “The highly-anticipated IPO boom may take a little longer to materialize as the market for new issuances limped into a seasonal quiet period. Postponed listings from broker Clear Street Group Inc. and Blackstone Inc.-backed Liftoff Mobile Inc. and broader stock market volatility left a sour taste in growth investors’ mouths as the window for initial public offerings before annual audits came to an end last week. The jolt of delayed deals paired with choppy performances across the class of 2026 kept a lid on what’s been the busiest start to a year since the go-go days of 2021.”
February 15 – Wall Street Journal (Heather Gillers): “Private equity is on academic probation. Princeton University is lowering expectations for its endowment’s returns because its private-capital investments have disappointed. Yale trimmed its portfolio of leveraged buyouts for the first time in a decade. Harvard says cashing out of some private-market investments early is now part of a long-term strategy. Private equity has counted America’s wealthiest universities among its largest and most-loyal clients since the industry’s formative years. But the market for private-company investments has turned more crowded, and returns now struggle to match broader stock-market benchmarks such as the S&P 500.”
February 14 – Financial Times (Kana Inagaki and Harry Dempsey): “A reversal in electric vehicle ambitions has resulted in a hit of at least $65bn for the global car industry in the past year as executives warned of more pain ahead in resetting their strategies. Carmakers were forced to overhaul their EV product and investment plans following a radical reversal in climate policy in the US, with companies that had made the biggest pivot away from petrol hit the hardest. This month Stellantis took a $26bn charge to scrap some fully electric models and revive the popular 5.7-litre ‘Hemi’ V8 engine in the US.”
February 17 – Bloomberg (Isabelle Lee and Ye Xie): “Years after Cathie Wood became the face of pandemic-era investing euphoria, her flagship fund is marking a difficult milestone. The ARK Innovation ETF completed a 10-day losing streak earlier this month, its longest on record. Over the past half decade — a period that spans the latter part of the pandemic, the surge in interest rates and the market’s subsequent rebound — ARKK is down more than 50%, even as the Nasdaq 100 has seen gains of 80%.”
Crypto Watch:
February 18 – Bloomberg (Sidhartha Shukla): “Bitcoin’s Wall Street embrace was supposed to bring stability. Instead, it created a new vulnerability: dependence on American money that is now in retreat. Since Oct. 10, roughly $8.5 billion has flowed out of US-listed spot Bitcoin exchange-traded funds. Futures exposure on the Chicago Mercantile Exchange has fallen by about two-thirds from its late-2024 peak to roughly $8 billion. Prices on Coinbase… have persistently traded at a discount to offshore exchange Binance — a signal of sustained US selling. Bitcoin has fallen more than 40% even as stocks and precious metals have found buyers.”
February 17 – Financial Times (Costas Mourselas, Amelia Pollard and George Steer): “Brevan Howard’s crypto fund slumped 30% in 2025, as a downturn in digital assets stung one of the hedge fund industry’s highest-profile participants in the sector. The BH Digital Asset fund, which bets on digital currencies but also makes venture capital investments in the digital assets sector, fell 29.5% last year… Brevan Howard’s digital assets unit managed $2.4bn in assets at the start of 2025, most of which was in the fund.”
Inflation Watch:
February 19 – Associated Press (Josh Boak): “Tariffs paid by midsized U.S. businesses tripled over the course of last year, new research tied to one of America’s leading banks showed… — more evidence that President Donald Trump ‘s push to charge higher taxes on imports is causing economic disruption. The additional taxes have meant that companies that employ a combined 48 million people in the U.S…. have had to find ways to absorb the new expense, by passing it along to customers in the form of higher prices, employing fewer workers or accepting lower profits. ‘That’s a big change in their cost of doing business,’ said Chi Mac, business research director of the JPMorganChase Institute… ‘We also see some indications that they may be shifting away from transacting with China and maybe toward some other regions in Asia’.”
February 15 – Wall Street Journal (Ruth Simon): “Companies from Levi Strauss & Co. to McCormick & Co., among others, say they are raising prices early this year on items from bluejeans and spices to housewares and industrial products. After holding the line on prices for several months, companies—big and small—have begun a new round of increases, in some cases by high-single-digit percentage points. Companies had raised prices last year after tariffs hoisted costs. Yet starting in the fall, many firms held off on increases and sometimes offered discounts to capture holiday shoppers. The pricing break is over.”
February 19 – Axios (Eleanor Hawkins): “The pricing and affordability debate is heating up, and it’s likely to get even more politicized ahead of the 2026 midterms. Rising costs remain a vulnerability for the Trump administration and the Republican Party… The next most likely target: corporate America. 2026 has already brought higher-than-usual price increases for utilities, electronics, appliances and other household staples. Home electricity prices are up 6.3% and natural gas service 9.8% in the last year, while prices for ground beef have jumped 17.2% and coffee 18.3%... Companies can no longer absorb the costs imposed by Trump’s tariff policies, and brands like Stanley Black & Decker, McCormick & Company and Levi Strauss recently announced price increases. Businesses say higher wages and rising health insurance costs are also key drivers of price hikes, beyond the tariffs…”
February 19 – Wall Street Journal (Patrick Thomas): “High prices are the new normal in the U.S. beef market. A tight cattle supply and continued robust demand for the protein are expected to keep costs elevated for consumers and others throughout the supply chain over the next few years. Efforts to improve supply have been slow-moving. Ranchers are reluctant to erode their strongest profits in decades by increasing the size of their herds. As a result, the U.S. cattle herd is at its lowest level in 75 years… The Labor Department said last week that ground-beef prices in January were up 17% from a year earlier…”
February 18 – Wall Street Journal (Erin Mulvaney): “When Christopher Clark, a litigator at a boutique law firm, raised his hourly rate to the once-unthinkable level of $3,000, he said he didn’t receive pushback from clients. But he did get one notable comment. ‘Congratulations,’ the client said. ‘That is the highest rate we’ve seen.’ Just over a year ago, the going rate for a top lawyer was in the $2,500 an hour range. Now that looks downright quaint, as premium partners are raking in as much as Clark—and far more in some cases. Legal fees have risen much faster than inflation for years now…”
Federal Reserve Watch:
February 17 – Bloomberg (Catarina Saraiva): “Some Federal Reserve officials have begun suggesting in recent days that productivity growth from artificial intelligence could mean higher interest rates, a view that would put them at odds with the Trump administration and its nominee to lead the US central bank. ‘I expect that the AI boom is unlikely to be a reason for lowering policy rates,’ Fed Governor Michael Barr said… Barr’s comments followed remarks from Fed Vice Chair Philip Jefferson, who argued in a Feb. 6 speech that ‘all other things being equal, persistent increases in productivity growth are likely to result in an increase in the neutral rate, at least temporarily’.”
February 17 – Bloomberg (Jonnelle Marte and Augusta Saraiva): “Federal Reserve Governor Michael Barr said interest rates should remain steady until officials see more evidence that inflation is heading toward the central bank’s 2% target. ‘Based on current conditions and the data in hand, it will likely be appropriate to hold rates steady for some time as we assess incoming data, the evolving outlook and the balance of risks,’ Barr said… ‘I would like to see evidence that goods price inflation is sustainably retreating before considering reducing the policy rate further, provided labor market conditions remain stable,’ Barr said.”
February 17 – Bloomberg (Enda Curran): “Federal Reserve Bank of Chicago President Austan Goolsbee said… there is potential for more interest rate cuts this year, if inflation continues to return towards the central bank’s 2% target. Warning that services inflation remains elevated, Goolsbee said if price hikes linked to tariffs are a one-off, it could allow policymakers room to move. ‘I do think that if this proves to be transitory, and we can show that we’re on path back to 2% inflation, I still think there’s several more rate cuts that can happen in 2026, but we’ve got to see it,’ Goolsbee told CNBC…”
February 16 – Financial Times (Martin Arnold): “The Federal Reserve is preparing to ease US bank capital requirements in a drive to encourage lenders to provide more mortgages for American homebuyers, according to the central bank’s head of regulation. The move, which Fed vice-chair for supervision Michelle Bowman announced… Monday, comes after top officials in Donald Trump’s administration promised to remove restrictions they blame for pushing lending out of the banking system. Bowman said the Fed planned two changes to its rules that would ‘increase bank incentives to engage in mortgage origination and servicing’. The reforms would ‘potentially reverse the trend of migration of mortgage activity to non-banks over the past 15 years’, she said.”
U.S. Economic Bubble Watch:
February 20 – CNBC (Jeff Cox): “U.S. growth slowed more than expected near the end of 2025 as the government shutdown impacted spending and investment, while a key inflation metric showed high prices are still a factor for the economy… Gross domestic product rose at an annualized rate of just 1.4%, according to the Commerce Department, well below the Dow Jones estimate for a 2.5% gain. Consumer spending increased at a slower pace for the period while government spending tumbled sharply in a quarter marked by the record-length shutdown. The department estimated that the shutdown subtracted about 1 percentage point from growth, though it added that the exact impacts ‘cannot be quantified.’ For the full year in 2025, the U.S. economy grew at a 2.2% pace, down from the 2.8% increase in 2024.”
February 19 – Associated Press (Paul Wiseman): “The U.S. trade deficit slipped modestly in 2025, a year in which President Donald Trump upended global commerce by slapping double digit tariffs on imports from most countries. The gap the between the goods and services the U.S. sells other countries and what it buys from them narrowed to just over $901 billion from $904 billion in 2024… Exports rose 6% last year, and imports rose nearly 5%. The trade gap surged from January-March as U.S. companies tried to import foreign goods ahead of Trump’s taxes, then narrowed most of the rest of the year.”
February 19 – Associated Press (Matt Ott): “U.S. applications for unemployment benefits fell last week as layoffs remain at historically low levels. The number of Americans filing for jobless aid for the week ending Feb. 14 fell by 23,000 to 206,000 from the previous week... That’s significantly fewer than the 225,000 new applications… forecast… The total number of Americans filing for jobless benefits… increased to 1.87 million, up 17,000 from the previous week…”
February 16 – Financial Times (Michael Strain): “Markets, economists and Federal Reserve officials seem to believe that the US labour market spent most of last year weakening, that inflation is trending back to the Fed’s inflation target and that the central bank will continue cutting interest rates in 2026. On each of these three points, the conventional view is probably wrong. The holes in the consensus narrative were clear before last week’s jobs report, which surprised many analysts on the upside. In January, the economy added 130,000 net new jobs and the unemployment rate declined by 10 bps to 4.28%. But December’s 4.38% unemployment rate was already very low. And the jobless rate — which was 4.3% or higher for six months last year — had not been displaying a worrying upward trend. In addition, the rate at which employers are laying off workers has been flat since 2023.”
February 18 – Bloomberg (Mark Niquette): “US orders for business equipment increased in December by more than projected, suggesting solid capital investment at the end of last year as trade policy uncertainty gradually diminished. The value of core capital goods orders, a proxy for investment in equipment that excludes commercial aircraft and military hardware, increased 0.6% in December after a revised 0.8% gain a month earlier that was twice as much as previously estimated…”
February 18 – Bloomberg (Michael Sasso): “New residential construction in the US rose to a five-month high in December… Housing starts increased 6.2% to an annual pace of 1.4 million homes in December… That beat all estimates... The advance was broad-based, with both single-family home starts and apartment projects rising at year’s end. The number of one-family homes started was the highest since February.”
February 16 – Axios (Sami Sparber): “The average discount for U.S. homes that sold below their original asking price last year was nearly 8% — the largest such gap since 2012, according to… Redfin… Still-high mortgage rates and home prices have sidelined many shoppers. But those who remain in the market are scoring the biggest deals in years. Roughly 62% of homebuyers last year paid less than the listing price, the highest share since 2019… There were a record 47% more home sellers nationally than buyers in December, per Redfin, giving house hunters more options and negotiating power. Homes still fetch historically high prices. In 2025, the national median sale price for an existing single-family home was $419,300, up around 2% from 2024…”
February 17 – Bloomberg (Michael Sasso): “US homebuilders’ confidence slipped again this month... An index of market conditions from the National Association of Home Builders and Wells Fargo edged down in February to 36, the lowest level since September… ‘While the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines,” NAHB Chairman Buddy Hughes, a North Carolina builder, said… ‘Although demand for new construction has weakened, remodeling demand has remained solid given a lack of household mobility’.”
February 17 – Bloomberg (Mark Niquette): “New York state factory activity expanded in February for a second month and manufacturers grew more upbeat about future business. The Federal Reserve Bank of New York’s general business conditions index was little changed at 7.1… Readings above zero indicate expansion, and the figure topped the median estimate… The overall outlook gauge climbed to the second-highest level since 2022. A measure of expected bookings over the next six months rose to a more than one-year high, while the hiring outlook was the strongest since 2022.”
Japan Watch:
February 16 – Bloomberg (Toru Fujioka): “Bank of Japan Governor Kazuo Ueda said Prime Minister Sanae Takaichi made no specific requests during a regular meeting to discuss the economy and swap general ideas. ‘We discussed economic and financial conditions in general,’ Ueda said…, following his talks with Takaichi…”
February 15 – Associated Press (Yuri Kageyama): “Japan’s economy expanded at an anemic 0.2% annual pace in the last quarter…, with growth for all of 2025 at just 1.1%. Private consumption rose at a 0.4% annualized pace in October-December, but that was offset by a 1.1% drop in exports... Prime Minister Sanae Takaichi is expected to roll out policies to help revive the economy after a landslide victory in a general election earlier this month. Takaichi has promised to spend more and to suspend Japan’s sales tax on food, among other measures.”
February 17 – CNBC (Lim Hui Jie): “Japanese exports climbed 16.8% year on year in January, sharply beating market expectations and growing at their fastest rate since November 2022 as shipments to Asia and Western Europe surged… Growth was higher than December’s 5.1%, and beat… estimates of 12%. Value of exports to China, Japan’s largest trading partner, jumped 32%, after rising 5.6% in December… Shipments to the U.S. fell 5%, after declining 11.1% in December.”
February 18 – Reuters (Leika Kihara): “The International Monetary Fund urged Japan to keep raising interest rates and avoid loosening fiscal policy further, warning that trimming the consumption tax would erode its capacity to respond to future economic shocks. The recommendation came as dovish Prime Minister Sanae Takaichi’s landslide election win heightens market attention to whether she will push back against further rate hikes by the central bank. It also follows Takaichi’s pledge to suspend by two years an 8% consumption tax on food sales.”
EM Watch:
February 16 – Bloomberg (Siddhi Nayak, Ashutosh Joshi, and Saikat Das): “India’s move to tighten bank lending norms for firms engaged in proprietary trading of shares and commodities is set to push these companies toward alternative sources of capital. Industry watchers expect securities firms to lean more on shadow lenders and internal capital to fund their own books as well as client positions. They are also seen tapping debt markets as access to credit from banks narrows. The Reserve Bank of India said all credit facilities to securities firms will have to be backed by collateral. Lending for trading on their own account or investments by brokers will be prohibited…”
Social, Political, Environmental, Cybersecurity Instability Watch:
February 17 – Financial Times (Kenza Bryan): “Breathing in tiny air pollution particles is linked to a higher risk of developing Alzheimer’s, data on tens of millions of older Americans suggests. The study by a team of scientists at Emory University in the US state of Georgia shows that fine particulate matter released by the combustion of fossil fuels may damage brain health more directly than previously thought. ‘Overall, the study reinforces a simple idea: what we breathe over many years can shape how our brains age,’ said Mark Dallas, associate professor in cellular neuroscience at the University of Reading. The study… in the journal Plos Medicine draws on health and location data from 28mn over 65-year-olds in the US between 2000 and 2018. It shows that incidence of dementia increased in postcodes with a higher concentration of fine particles in the air.”
February 19 – Bloomberg (Ania Nussbaum and Kavita Mokha): “Emmanuel Macron is preparing for one more big moment on the world stage — and it looks like he wants to mark it with a fight with Donald Trump over social media and free speech. The French leader said… protecting children from the harms of social media and artificial intelligence will be a priority for his country’s Group of Seven presidency, in a direct challenge to the Trump administration, which has lined up with US tech firms and made free speech a cornerstone of its foreign policy.”
February 18 – Bloomberg (Julian Lee): “Iran’s government has said it will ‘defend itself and respond like never before’ should US President Donald Trump follow through on threats to attack the country if it doesn’t agree to a deal to curb its nuclear program. One option for retaliation would be to try to block or effectively close the Strait of Hormuz. This narrow waterway at the mouth of the Persian Gulf handles about a quarter of the world’s seaborne oil trade. If Iran were to deny access to the giant tankers that ferry oil and gas from the Middle East to China, Europe, the US and other major energy consumers, the disruption would trigger a spike in oil prices and potentially destabilize the global economy.”
February 16 – Financial Times (Marton Dunai and Henry Foy): “Marco Rubio has praised Viktor Orbán’s leadership as ‘essential’ to US interests, saying Donald Trump is ‘deeply committed’ to the Hungarian premier’s success ahead of critical parliamentary elections. The US secretary of state hailed a ‘golden era of relations’ between the US and Hungary as he stood beside Orbán, the EU’s most pro-Russian leader and an avowed follower of Trump’s Maga outlook. Orbán faces a tight race to retain power in the April vote… ‘I can say to you with confidence that President Trump is deeply committed to your success,’ Rubio told Orbán…”
February 16 – Axios (Dave Lawler, Maria Curi and Mike Allen): “Defense Secretary Pete Hegseth is ‘close’ to cutting business ties with Anthropic and designating the AI company a ‘supply chain risk’ — meaning anyone who wants to do business with the U.S. military has to cut ties with the company, a senior Pentagon official told Axios. The senior official said: ‘It will be an enormous pain in the ass to disentangle, and we are going to make sure they pay a price for forcing our hand like this.’ That kind of penalty is usually reserved for foreign adversaries.”
Budget Watch:
February 16 – Wall Street Journal (Editorial Board): “Sorry to interrupt the Jeffrey Epstein circus on Capitol Hill, but the Congressional Budget Office last week released its latest 10-year budget baseline forecast. The real outrage is that Members of both parties seem less interested in fixing America’s entitlements than in performative politics… CBO forecasts that deficits will total $24.4 trillion through 2036, largely because of entitlements on autopilot. Spending will increase to $11.4 trillion in 2036 from $7 trillion, while revenue grows more modestly to $8.3 trillion from $5.2 trillion. Medicaid is expected to grow 47%, Social Security 74% and Medicare 105% over the next decade. Defense spending is expected to increase 23%, and domestic discretionary spending 17%.”
Trade War Watch:
February 12 – Politico (Graham Lanktree, Zi-Ann Lum and Jon Stone): “Two of the world’s biggest trading blocs are cautiously eyeing closer ties to short-circuit Donald Trump’s tariffs. The European Union and a 12-nation Indo-Pacific bloc are opening talks to explore proposals to form one of the largest global economic alliances, multiple people with knowledge of the talks told POLITICO. Canada is spearheading the discussions after Prime Minister Mark Carney called on middle powers to buck trade war coercion last month, days after Trump threatened to raise tariffs on Denmark’s European allies if it didn’t cede Greenland.”
February 17 – Financial Times (Leo Lewis, David Keohane and Harry Dempsey): “The US and Japan have unveiled the first three industrial projects in America to receive financing under a $550bn deal struck last year that protected Japanese companies from the worst of President Donald Trump’s tariffs. The plans, worth a combined $36bn, followed months of negotiations and marked the first step in Japan’s commitment to act as chief financier for projects in critical sectors of the US economy. The biggest of the projects is a $33bn, 9.2 gigawatt natural gas power plant in Ohio, led by Japan’s SoftBank…”
New World Order Watch:
February 16 – Financial Times (Gideon Rachman): “Marco Rubio’s speech to the Munich Security Conference… was met with a standing ovation by some in his audience. So have European leaders decided that all is forgiven and they now love the Trump administration? Not at all. For the moment, it is in the interests of both Europe and the US to avoid fresh crises. That largely explains the emollient tone of the US secretary of state’s speech and its warm reception inside the hall. But the speeches made by European leaders in Munich — and conversations with their aides — make it clear that Rubio has not healed the transatlantic rift. That rift is now set to widen and deepen — as European countries take steps to ready their defences against the Trump administration, in preparation for the crises to come. A single speech cannot repair the damage done over the past year.”
February 15 – Financial Times (Eswar Prasad): “Is China winning the geopolitical game? The US appears isolated as President Donald Trump attacks not just rivals but long-standing allies. Trump’s boorish behaviour towards other countries allows Chinese leaders to act as the responsible adults in the room. China clearly wants to assume the mantle of being the defender of multilateralism and free trade, and the linchpin of a stable world order. The reality is more complex… In two important respects, though, China is winning the geopolitical game. First, Trump is steering America away from the ideals and principles it once championed. Second, with China, at least other countries know exactly where they stand, in contrast to the whiplash from unpredictable shifts in the whims of the US president.”
February 15 – Financial Times (Sam Jones): “Recruiters and propagandists who previously worked for Russia’s Wagner Group have emerged as a main conduit for Kremlin-organised sabotage attacks in Europe, according to western intelligence officials. The fighter group’s status has been uncertain since a failed rebellion against the top brass of the Russian army in June 2023 prompted a clampdown and the death of its founder, Yevgeny Prigozhin. But Wagner recruiters who specialised in persuading young men from Russia’s hinterland to fight in Ukraine have been given a new task — recruiting economically vulnerable Europeans to carry out violence on Nato soil, the officials said.”
February 16 – Reuters (Guy Faulconbridge): “Russia could deploy its navy to prevent European powers from seizing its vessels and may retaliate against European shipping if Russian ships are taken, Nikolai Patrushev, one of Russia’s leading hardliners, was quoted as saying… Western states have sought to cripple Russia’s economy with sanctions and in recent months have tried to block oil tankers suspected of involvement in Russian oil shipments. In January, the United States seized a Russian-flagged oil tanker as part of efforts to curb Venezuelan oil exports.”
February 17 – Politico (Eva Hartog): “Sweden has named Russia as its greatest threat and warns that Moscow’s increasingly risky behavior could trigger a dangerous escalation. An annual report… by the country’s Military Intelligence and Security Service flagged airspace violations, sabotage and cyber operations as examples of Russia’s belligerent actions in Sweden’s neighborhood, including the Baltic Sea. ‘Russia is the primary military threat to Sweden and NATO,’ the report stated, adding this threat was ‘serious and concrete’ and describing Moscow’s conduct as ‘opportunistic and aggressive’.”
February 14 – Bloomberg (Colum Murphy): “Chinese Foreign Minister Wang Yi invoked Japan’s World War II history of aggression and warned Prime Minister Sanae Takaichi against a return to militarism as he blasted her support for Taiwan as ‘a very dangerous development’ for Asia. Wang’s comments at the Munich Security Conference… rebuffed overtures for dialogue made a day earlier by Japan’s defense minister, and suggested no retreat from the deepening standoff. ‘If Japan doesn’t repent on its wrongdoing, history will only repeat itself,’ he said. ‘If you go back down the old road, it will be a dead end. If you try gambling again, the loss will be faster and more devastating’.”
Iran Watch:
February 17 – Associated Press (Jamey Keaten and Stephanie Liechtenstein): “Iran announced the temporary closure of the Strait of Hormuz on Tuesday for live fire drills in a rare show of force as its negotiators held another round of indirect talks with the United States over the Islamic Republic’s disputed nuclear program. It was the first time Iran has announced the closure of the key international waterway, through which 20% of the world’s oil passes, since the U.S. began threatening Iran and rushing military assets to the region. It was not immediately clear if the strait had been closed, but such a rare and perhaps unprecedented move could further escalate tensions that threaten to ignite another war in the Middle East.”
Ukraine Watch:
February 18 – Reuters (Ron Popeski): “Ukrainian President Volodymyr Zelenskiy said U.S. President Donald Trump was exerting undue pressure on him in trying to secure a resolution to the nearly four-year-old war pitting Kyiv against Moscow. Zelenskiy… also said any plan requiring Ukraine to give up territory that Russia had not captured in the eastern Donbas region would be rejected by Ukrainians if put to a referendum. Axios quoted Zelenskiy as saying it was ‘not fair’ that Trump kept publicly calling on Ukraine, not Russia, to make concessions… ‘I hope it is just his tactics and not the decision,’ Axios quoted Zelenskiy as saying… Trump has twice in recent days suggested it was up to Ukraine and Zelenskiy to take steps to ensure the talks proved successful. ‘Ukraine better come to the table fast. That’s all I'm telling you,’ Trump told reporters…”
February 17 – Associated Press (Jamey Keaten and Illia Novikov): “The latest U.S.-brokered talks between envoys from Moscow and Kyiv over Russia’s all-out invasion of Ukraine ended Wednesday with no sign of a breakthrough and with both sides saying the talks were ‘difficult,’ negotiations in Switzerland were the third round of direct talks organized by the U.S., after meetings earlier this year in Abu Dhabi that officials described as constructive but which also made no major headway.”
February 18 – Reuters (Tom Balmforth, Gram Slattery and Jonathan Landay): “European intelligence chiefs are pessimistic about the chances of an agreement being reached this year to end Russia’s war in Ukraine, despite Donald Trump’s assertions that U.S.-brokered talks have brought the prospect of a deal ‘reasonably close’. The heads of five European spy agencies… said Russia did not want to end the war quickly. Four of them said Moscow was using the talks with the U.S. to push for sanctions relief and business deals.”
Trade War Watch:
February 20 – Bloomberg (Kate Sullivan): “President Donald Trump rushed to salvage his signature tariffs after the Supreme Court struck down his global duties, pledging he would use different tools to work around the ruling and preserve import taxes he has cast as essential to his economic and foreign policy. The president said… he planned to impose a flat 10% levy on foreign goods in the coming days, and that he would order a raft of trade investigations that should allow him to enact more permanent tariffs. In a defiant and angry White House press conference hours after the decision, Trump vowed to forge ahead with his approach despite complaints from opponents who say it has undercut longtime trade partnerships and increased costs for Americans. The president has credited his tariff regime for driving substantial investments in the US and preventing foreign conflicts.”
Taiwan Watch:
February 16 – Bloomberg (Skylar Woodhouse): “President Donald Trump said that he’s discussing future weapons sales to Taiwan with Chinese President Xi Jinping and teased that he would soon make a decision about future defense support for the self-governing island. ‘I’m talking to him about it. We had a good conversation, and we’ll make a determination pretty soon,’ Trump told reporters… The US’s military support for Taiwan has become one of the key points of contention between Washington and Beijing before the countries’ leaders are slated to meet in April in China.”
February 14 – Reuters (Ben Blanchard): “China is the real threat to security and is hypocritically claiming to uphold U.N. principles of peace, Taiwan Foreign Minister Lin Chia-lung said… in a rebuff to comments by China’s top diplomat at the Munich Security Conference… Chinese Foreign Minister Wang Yi, addressing the annual security conference…, warned that some countries were ‘trying to split Taiwan from China’, blamed Japan for tensions over the island and underscored the importance of upholding the United Nations Charter… Taiwan’s Lin said… that whether viewed from historical facts, objective reality or under international law, Taiwan’s sovereignty has never belonged to the People’s Republic of China.”
U.S./Russia/China/Europe/Iran Watch:
February 15 – Politico (Victor Jack): “Europe must emerge as a geopolitical power that speaks in a ‘direct and clear’ way to the U.S. as it moves to reset transatlantic ties, Latvian Prime Minister Evika Siliņa told POLITICO. In the wake of U.S. President Donald Trump’s threats to annex Greenland, ‘I don’t think we will be doing business as usual,’ Siliņa said… ‘When we showed our unanimity in supporting Greenland and Denmark, I think [the relationship] shifted a little bit,’ she added. ‘We have to be taken seriously as collective European countries’.”
February 18 – Reuters: “Russian Foreign Minister Sergei Lavrov… said that any new U.S. strike on Iran would have serious consequences and called for restraint to find a solution to enable Iran to pursue a peaceful nuclear programme… ‘The consequences are not good. There have already been strikes on Iran on nuclear sites under the control of the International Atomic Energy Agency. From what we can judge there were real risks of a nuclear incident,’ Lavrov said… ‘I am carefully watching reactions in the region from Arab countries, Gulf monarchies. No one wants an increase in tension. Everyone understands this is playing with fire’.”
February 18 – Wall Street Journal (Editorial Board): “The April summit between President Trump and his Chinese counterpart, Xi Jinping, is turning out to be a high stakes affair long before they meet. The Chinese President is trying to bully Mr. Trump into walking back planned sales of arms to Taiwan. U.S. officials are leaking that Mr. Xi was adamant in a recent phone call that Mr. Trump block further arms sales to the democratic island of some 23 million people. The U.S. announced an $11.1 billion arms sale in December and another is in the works.”
February 17 – Wall Street Journal (Gabriele Steinhauser): “The U.S. plans to deploy more advanced missile systems and other weapons in the Philippines to deter Chinese aggression in the South China Sea, the State Department said…, affirming a policy that has angered Beijing. Senior officials from the U.S. and the Philippines met in Manila this week for annual talks on their alliance, which rests on a mutual-defense treaty signed in 1951. Their strongly worded statement—which condemned what it said were Beijing’s illegal and deceptive activities in the South China Sea—comes when the Trump administration has increased pressure on… other longstanding defense alliances, especially in Europe. More than any other Southeast Asian nation, the Philippines has openly challenged China’s claims to much of the South China Sea…”
February 19 – CNBC (Sam Meredith): “Russian President Vladimir Putin has sharply criticized the Trump administration’s fuel blockade on Cuba, saying Moscow considers the latest restrictions unacceptable. His comments come as the island nation grapples with a worsening economic crisis, one that has been compared to its biggest test since the collapse of the Soviet Union. ‘This is a special period, with new sanctions. You know how we feel about this. We do not accept anything like this,’ Putin said… during a meeting with Cuban Foreign Minister Bruno Rodríguez Parrilla…”
February 16 – Associated Press (Jill Lawless): “Russian opposition leader Alexei Navalny was poisoned by the Kremlin with a rare and lethal toxin found in the skin of poison dart frogs, five European countries said… The foreign ministries of the U.K., France, Germany, Sweden and the Netherlands said analysis in European labs of samples taken from Navalny’s body ‘conclusively confirmed the presence of epibatidine.’ The neurotoxin secreted by dart frogs in South America is not found naturally in Russia, they said.”
AI Bubble/Arms Race Watch:
February 15 – Bloomberg (Debby Wu, Takashi Mochizuki, and Yoolim Lee): “A growing procession of tech industry leaders including Elon Musk and Tim Cook are warning about a global crisis in the making: A shortage of memory chips is beginning to hammer profits, derail corporate plans and inflate price tags on everything from laptops and smartphones to automobiles and data centers — and the crunch is only going to get worse. Since the start of 2026, Tesla Inc., Apple Inc. and a dozen other major corporations have signaled that the shortage of DRAM, or dynamic random access memory… will constrain production. Cook warned it will compress iPhone margins. Micron Technology Inc. called the bottleneck ‘unprecedented.’ Musk got to the intractable nature of the problem when he declared Tesla is going to have to build its own memory fabrication plant. ‘We’ve got two choices: hit the chip wall or make a fab,’ he said…”
February 16 – Wall Street Journal (Robbie Whelan): “Micron Technology is the largest American maker of memory chips… Micron is rushing to add manufacturing capacity to avert the biggest supply crunch the memory industry has seen in more than 40 years. In Boise, where the company is based, Micron is spending $50 billion to more than double the size of its 450-acre campus, including the construction of two new chip factories, or fabs… Near Syracuse, Micron just broke ground on a $100 billion fab complex that represents the state of New York’s largest-ever private investment. Late last year, Micron announced a $9.6 billion fab investment in Hiroshima, Japan, while competitor SK Hynix announced in January that it would build a $13 billion fab in South Korea…”
February 16 – CNBC (Sawdah Bhaimiya): “China’s rapid advancement in AI is threatening to shake up U.S. dominance in the market, with one analyst warning of a tech shock that is just getting started. Rory Green, TS Lombard’s chief China economist and head of Asia research, told CNBC… America’s ‘perceived monopoly’ on tech and AI has been broken by China. ‘I think the China tech shock is just getting started. It’s not just AI, DeepSeek, and electric vehicles. China is moving up the value chain very rapidly... It’s the first time in history that an emerging market economy is at the forefront of science and technology,’ Green said… China is pairing dominant-market level tech with emerging-market production costs, backed by its massive supply chain, Green said.”
February 18 – Axios (Emily Peck): “The stock market has surged on AI news for the last few years. Now the dynamic is changing. There’s growing unease around the AI boom, and it’s showing up in the stock market, investor surveys and among regular Americans. A record share of investors — 35% — say companies are spending too much on AI, per a new Bank of America global fund manager survey... Meanwhile, 54% of Americans surveyed over the past week think that companies are investing too much in AI, per YouGov/The Economist. A majority also don't trust AI and believe it will eliminate jobs.”
February 15 – CNBC (Garrett Downs): “President Donald Trump’s trade and manufacturing adviser, Peter Navarro, said… the White House may force data center builders to absorb their costs as voters continue to sour on the economy and utility prices soar. ‘All of these data center builders, Meta on down, need to pay for all, all of the costs,’ Navarro said on Fox News… ‘They need to pay, not only pay for the electricity that they’re using on the grid, but they have to pay for the resiliency that they’re affecting as well. They need to pay for the water. So there’s activity, action here going forward, where we force them to internalize the cost’.”
February 18 – Financial Times (June Yoon): “The price of using artificial intelligence is falling. In China, entry-level access to AI models has been marketed for about $3 a month by the country’s hottest AI group Zhipu. Widely seen as one of China’s closest local equivalents to OpenAI, it develops large language models to compete with US systems. In a market where paid plans from US peers are closer to $20 a month depending on tier, and enterprise contracts run into the millions annually, this move by Zhipu amounts to a price war.”
Bubble and Mania Watch:
February 15 – Wall Street Journal (Rachel Wolfe): “A generation of young people locked out of homeownership has found another way to build wealth: putting money into the stock market. The share of people 25 to 39 years old making annual transfers to investment accounts more than tripled between 2013 and 2023 to 14.4%, outpacing increases for those 40 and over, according to… the JPMorgan Chase Institute. The share of 26-year-olds who transferred funds to investment accounts since turning 22 shot up from 8% in 2015 to 40% as of May 2025. The numbers don’t include people investing in 401(k)s. ‘We’ve seen really strong, surprisingly strong growth in retail investing in recent years among people who may otherwise be first-time home buyers,’ said George Eckerd, the research director… at the institute.”
February 18 – Wall Street Journal (Sam Schechner): “Moves to bar younger teens from social media across Europe and Asia are going, well…viral. What started as an isolated regulatory gamble by Australia last fall has spread to more than a dozen capitals, where leaders are seizing on issues raised by childhood scrolling to appeal to parents across the political spectrum. It adds to a growing backlash against teenage smartphone use, which is being blamed by some critics for deteriorating mental health and an epidemic of screen addiction. From Paris to New Delhi, limits on children’s access to apps such as TikTok, Instagram and YouTube are now being debated or implemented, marking a tipping point in the conversation about regulating social media and a potential blockage in tech companies’ pipeline of users.”
February 18 – Bloomberg (Bailey Lipschultz): “The highly-anticipated IPO boom may take a little longer to materialize as the market for new issuances limped into a seasonal quiet period. Postponed listings from broker Clear Street Group Inc. and Blackstone Inc.-backed Liftoff Mobile Inc. and broader stock market volatility left a sour taste in growth investors’ mouths as the window for initial public offerings before annual audits came to an end last week. The jolt of delayed deals paired with choppy performances across the class of 2026 kept a lid on what’s been the busiest start to a year since the go-go days of 2021.”
February 15 – Wall Street Journal (Heather Gillers): “Private equity is on academic probation. Princeton University is lowering expectations for its endowment’s returns because its private-capital investments have disappointed. Yale trimmed its portfolio of leveraged buyouts for the first time in a decade. Harvard says cashing out of some private-market investments early is now part of a long-term strategy. Private equity has counted America’s wealthiest universities among its largest and most-loyal clients since the industry’s formative years. But the market for private-company investments has turned more crowded, and returns now struggle to match broader stock-market benchmarks such as the S&P 500.”
February 14 – Financial Times (Kana Inagaki and Harry Dempsey): “A reversal in electric vehicle ambitions has resulted in a hit of at least $65bn for the global car industry in the past year as executives warned of more pain ahead in resetting their strategies. Carmakers were forced to overhaul their EV product and investment plans following a radical reversal in climate policy in the US, with companies that had made the biggest pivot away from petrol hit the hardest. This month Stellantis took a $26bn charge to scrap some fully electric models and revive the popular 5.7-litre ‘Hemi’ V8 engine in the US.”
February 17 – Bloomberg (Isabelle Lee and Ye Xie): “Years after Cathie Wood became the face of pandemic-era investing euphoria, her flagship fund is marking a difficult milestone. The ARK Innovation ETF completed a 10-day losing streak earlier this month, its longest on record. Over the past half decade — a period that spans the latter part of the pandemic, the surge in interest rates and the market’s subsequent rebound — ARKK is down more than 50%, even as the Nasdaq 100 has seen gains of 80%.”
Crypto Watch:
February 18 – Bloomberg (Sidhartha Shukla): “Bitcoin’s Wall Street embrace was supposed to bring stability. Instead, it created a new vulnerability: dependence on American money that is now in retreat. Since Oct. 10, roughly $8.5 billion has flowed out of US-listed spot Bitcoin exchange-traded funds. Futures exposure on the Chicago Mercantile Exchange has fallen by about two-thirds from its late-2024 peak to roughly $8 billion. Prices on Coinbase… have persistently traded at a discount to offshore exchange Binance — a signal of sustained US selling. Bitcoin has fallen more than 40% even as stocks and precious metals have found buyers.”
February 17 – Financial Times (Costas Mourselas, Amelia Pollard and George Steer): “Brevan Howard’s crypto fund slumped 30% in 2025, as a downturn in digital assets stung one of the hedge fund industry’s highest-profile participants in the sector. The BH Digital Asset fund, which bets on digital currencies but also makes venture capital investments in the digital assets sector, fell 29.5% last year… Brevan Howard’s digital assets unit managed $2.4bn in assets at the start of 2025, most of which was in the fund.”
Inflation Watch:
February 19 – Associated Press (Josh Boak): “Tariffs paid by midsized U.S. businesses tripled over the course of last year, new research tied to one of America’s leading banks showed… — more evidence that President Donald Trump ‘s push to charge higher taxes on imports is causing economic disruption. The additional taxes have meant that companies that employ a combined 48 million people in the U.S…. have had to find ways to absorb the new expense, by passing it along to customers in the form of higher prices, employing fewer workers or accepting lower profits. ‘That’s a big change in their cost of doing business,’ said Chi Mac, business research director of the JPMorganChase Institute… ‘We also see some indications that they may be shifting away from transacting with China and maybe toward some other regions in Asia’.”
February 15 – Wall Street Journal (Ruth Simon): “Companies from Levi Strauss & Co. to McCormick & Co., among others, say they are raising prices early this year on items from bluejeans and spices to housewares and industrial products. After holding the line on prices for several months, companies—big and small—have begun a new round of increases, in some cases by high-single-digit percentage points. Companies had raised prices last year after tariffs hoisted costs. Yet starting in the fall, many firms held off on increases and sometimes offered discounts to capture holiday shoppers. The pricing break is over.”
February 19 – Axios (Eleanor Hawkins): “The pricing and affordability debate is heating up, and it’s likely to get even more politicized ahead of the 2026 midterms. Rising costs remain a vulnerability for the Trump administration and the Republican Party… The next most likely target: corporate America. 2026 has already brought higher-than-usual price increases for utilities, electronics, appliances and other household staples. Home electricity prices are up 6.3% and natural gas service 9.8% in the last year, while prices for ground beef have jumped 17.2% and coffee 18.3%... Companies can no longer absorb the costs imposed by Trump’s tariff policies, and brands like Stanley Black & Decker, McCormick & Company and Levi Strauss recently announced price increases. Businesses say higher wages and rising health insurance costs are also key drivers of price hikes, beyond the tariffs…”
February 19 – Wall Street Journal (Patrick Thomas): “High prices are the new normal in the U.S. beef market. A tight cattle supply and continued robust demand for the protein are expected to keep costs elevated for consumers and others throughout the supply chain over the next few years. Efforts to improve supply have been slow-moving. Ranchers are reluctant to erode their strongest profits in decades by increasing the size of their herds. As a result, the U.S. cattle herd is at its lowest level in 75 years… The Labor Department said last week that ground-beef prices in January were up 17% from a year earlier…”
February 18 – Wall Street Journal (Erin Mulvaney): “When Christopher Clark, a litigator at a boutique law firm, raised his hourly rate to the once-unthinkable level of $3,000, he said he didn’t receive pushback from clients. But he did get one notable comment. ‘Congratulations,’ the client said. ‘That is the highest rate we’ve seen.’ Just over a year ago, the going rate for a top lawyer was in the $2,500 an hour range. Now that looks downright quaint, as premium partners are raking in as much as Clark—and far more in some cases. Legal fees have risen much faster than inflation for years now…”
Federal Reserve Watch:
February 17 – Bloomberg (Catarina Saraiva): “Some Federal Reserve officials have begun suggesting in recent days that productivity growth from artificial intelligence could mean higher interest rates, a view that would put them at odds with the Trump administration and its nominee to lead the US central bank. ‘I expect that the AI boom is unlikely to be a reason for lowering policy rates,’ Fed Governor Michael Barr said… Barr’s comments followed remarks from Fed Vice Chair Philip Jefferson, who argued in a Feb. 6 speech that ‘all other things being equal, persistent increases in productivity growth are likely to result in an increase in the neutral rate, at least temporarily’.”
February 17 – Bloomberg (Jonnelle Marte and Augusta Saraiva): “Federal Reserve Governor Michael Barr said interest rates should remain steady until officials see more evidence that inflation is heading toward the central bank’s 2% target. ‘Based on current conditions and the data in hand, it will likely be appropriate to hold rates steady for some time as we assess incoming data, the evolving outlook and the balance of risks,’ Barr said… ‘I would like to see evidence that goods price inflation is sustainably retreating before considering reducing the policy rate further, provided labor market conditions remain stable,’ Barr said.”
February 17 – Bloomberg (Enda Curran): “Federal Reserve Bank of Chicago President Austan Goolsbee said… there is potential for more interest rate cuts this year, if inflation continues to return towards the central bank’s 2% target. Warning that services inflation remains elevated, Goolsbee said if price hikes linked to tariffs are a one-off, it could allow policymakers room to move. ‘I do think that if this proves to be transitory, and we can show that we’re on path back to 2% inflation, I still think there’s several more rate cuts that can happen in 2026, but we’ve got to see it,’ Goolsbee told CNBC…”
February 16 – Financial Times (Martin Arnold): “The Federal Reserve is preparing to ease US bank capital requirements in a drive to encourage lenders to provide more mortgages for American homebuyers, according to the central bank’s head of regulation. The move, which Fed vice-chair for supervision Michelle Bowman announced… Monday, comes after top officials in Donald Trump’s administration promised to remove restrictions they blame for pushing lending out of the banking system. Bowman said the Fed planned two changes to its rules that would ‘increase bank incentives to engage in mortgage origination and servicing’. The reforms would ‘potentially reverse the trend of migration of mortgage activity to non-banks over the past 15 years’, she said.”
U.S. Economic Bubble Watch:
February 20 – CNBC (Jeff Cox): “U.S. growth slowed more than expected near the end of 2025 as the government shutdown impacted spending and investment, while a key inflation metric showed high prices are still a factor for the economy… Gross domestic product rose at an annualized rate of just 1.4%, according to the Commerce Department, well below the Dow Jones estimate for a 2.5% gain. Consumer spending increased at a slower pace for the period while government spending tumbled sharply in a quarter marked by the record-length shutdown. The department estimated that the shutdown subtracted about 1 percentage point from growth, though it added that the exact impacts ‘cannot be quantified.’ For the full year in 2025, the U.S. economy grew at a 2.2% pace, down from the 2.8% increase in 2024.”
February 19 – Associated Press (Paul Wiseman): “The U.S. trade deficit slipped modestly in 2025, a year in which President Donald Trump upended global commerce by slapping double digit tariffs on imports from most countries. The gap the between the goods and services the U.S. sells other countries and what it buys from them narrowed to just over $901 billion from $904 billion in 2024… Exports rose 6% last year, and imports rose nearly 5%. The trade gap surged from January-March as U.S. companies tried to import foreign goods ahead of Trump’s taxes, then narrowed most of the rest of the year.”
February 19 – Associated Press (Matt Ott): “U.S. applications for unemployment benefits fell last week as layoffs remain at historically low levels. The number of Americans filing for jobless aid for the week ending Feb. 14 fell by 23,000 to 206,000 from the previous week... That’s significantly fewer than the 225,000 new applications… forecast… The total number of Americans filing for jobless benefits… increased to 1.87 million, up 17,000 from the previous week…”
February 16 – Financial Times (Michael Strain): “Markets, economists and Federal Reserve officials seem to believe that the US labour market spent most of last year weakening, that inflation is trending back to the Fed’s inflation target and that the central bank will continue cutting interest rates in 2026. On each of these three points, the conventional view is probably wrong. The holes in the consensus narrative were clear before last week’s jobs report, which surprised many analysts on the upside. In January, the economy added 130,000 net new jobs and the unemployment rate declined by 10 bps to 4.28%. But December’s 4.38% unemployment rate was already very low. And the jobless rate — which was 4.3% or higher for six months last year — had not been displaying a worrying upward trend. In addition, the rate at which employers are laying off workers has been flat since 2023.”
February 18 – Bloomberg (Mark Niquette): “US orders for business equipment increased in December by more than projected, suggesting solid capital investment at the end of last year as trade policy uncertainty gradually diminished. The value of core capital goods orders, a proxy for investment in equipment that excludes commercial aircraft and military hardware, increased 0.6% in December after a revised 0.8% gain a month earlier that was twice as much as previously estimated…”
February 18 – Bloomberg (Michael Sasso): “New residential construction in the US rose to a five-month high in December… Housing starts increased 6.2% to an annual pace of 1.4 million homes in December… That beat all estimates... The advance was broad-based, with both single-family home starts and apartment projects rising at year’s end. The number of one-family homes started was the highest since February.”
February 16 – Axios (Sami Sparber): “The average discount for U.S. homes that sold below their original asking price last year was nearly 8% — the largest such gap since 2012, according to… Redfin… Still-high mortgage rates and home prices have sidelined many shoppers. But those who remain in the market are scoring the biggest deals in years. Roughly 62% of homebuyers last year paid less than the listing price, the highest share since 2019… There were a record 47% more home sellers nationally than buyers in December, per Redfin, giving house hunters more options and negotiating power. Homes still fetch historically high prices. In 2025, the national median sale price for an existing single-family home was $419,300, up around 2% from 2024…”
February 17 – Bloomberg (Michael Sasso): “US homebuilders’ confidence slipped again this month... An index of market conditions from the National Association of Home Builders and Wells Fargo edged down in February to 36, the lowest level since September… ‘While the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines,” NAHB Chairman Buddy Hughes, a North Carolina builder, said… ‘Although demand for new construction has weakened, remodeling demand has remained solid given a lack of household mobility’.”
February 17 – Bloomberg (Mark Niquette): “New York state factory activity expanded in February for a second month and manufacturers grew more upbeat about future business. The Federal Reserve Bank of New York’s general business conditions index was little changed at 7.1… Readings above zero indicate expansion, and the figure topped the median estimate… The overall outlook gauge climbed to the second-highest level since 2022. A measure of expected bookings over the next six months rose to a more than one-year high, while the hiring outlook was the strongest since 2022.”
Japan Watch:
February 16 – Bloomberg (Toru Fujioka): “Bank of Japan Governor Kazuo Ueda said Prime Minister Sanae Takaichi made no specific requests during a regular meeting to discuss the economy and swap general ideas. ‘We discussed economic and financial conditions in general,’ Ueda said…, following his talks with Takaichi…”
February 15 – Associated Press (Yuri Kageyama): “Japan’s economy expanded at an anemic 0.2% annual pace in the last quarter…, with growth for all of 2025 at just 1.1%. Private consumption rose at a 0.4% annualized pace in October-December, but that was offset by a 1.1% drop in exports... Prime Minister Sanae Takaichi is expected to roll out policies to help revive the economy after a landslide victory in a general election earlier this month. Takaichi has promised to spend more and to suspend Japan’s sales tax on food, among other measures.”
February 17 – CNBC (Lim Hui Jie): “Japanese exports climbed 16.8% year on year in January, sharply beating market expectations and growing at their fastest rate since November 2022 as shipments to Asia and Western Europe surged… Growth was higher than December’s 5.1%, and beat… estimates of 12%. Value of exports to China, Japan’s largest trading partner, jumped 32%, after rising 5.6% in December… Shipments to the U.S. fell 5%, after declining 11.1% in December.”
February 18 – Reuters (Leika Kihara): “The International Monetary Fund urged Japan to keep raising interest rates and avoid loosening fiscal policy further, warning that trimming the consumption tax would erode its capacity to respond to future economic shocks. The recommendation came as dovish Prime Minister Sanae Takaichi’s landslide election win heightens market attention to whether she will push back against further rate hikes by the central bank. It also follows Takaichi’s pledge to suspend by two years an 8% consumption tax on food sales.”
EM Watch:
February 16 – Bloomberg (Siddhi Nayak, Ashutosh Joshi, and Saikat Das): “India’s move to tighten bank lending norms for firms engaged in proprietary trading of shares and commodities is set to push these companies toward alternative sources of capital. Industry watchers expect securities firms to lean more on shadow lenders and internal capital to fund their own books as well as client positions. They are also seen tapping debt markets as access to credit from banks narrows. The Reserve Bank of India said all credit facilities to securities firms will have to be backed by collateral. Lending for trading on their own account or investments by brokers will be prohibited…”
Social, Political, Environmental, Cybersecurity Instability Watch:
February 17 – Financial Times (Kenza Bryan): “Breathing in tiny air pollution particles is linked to a higher risk of developing Alzheimer’s, data on tens of millions of older Americans suggests. The study by a team of scientists at Emory University in the US state of Georgia shows that fine particulate matter released by the combustion of fossil fuels may damage brain health more directly than previously thought. ‘Overall, the study reinforces a simple idea: what we breathe over many years can shape how our brains age,’ said Mark Dallas, associate professor in cellular neuroscience at the University of Reading. The study… in the journal Plos Medicine draws on health and location data from 28mn over 65-year-olds in the US between 2000 and 2018. It shows that incidence of dementia increased in postcodes with a higher concentration of fine particles in the air.”
February 19 – Bloomberg (Ania Nussbaum and Kavita Mokha): “Emmanuel Macron is preparing for one more big moment on the world stage — and it looks like he wants to mark it with a fight with Donald Trump over social media and free speech. The French leader said… protecting children from the harms of social media and artificial intelligence will be a priority for his country’s Group of Seven presidency, in a direct challenge to the Trump administration, which has lined up with US tech firms and made free speech a cornerstone of its foreign policy.”