Zero Rss

US Deploys Aircraft Carrier To Caribbean As Trump Admin Pressures Cuba Authored by Jack Phillips via The Epoch Times (emphasis ours),

The U.S. military command operating in the Western Hemisphere said on May 20 that an aircraft carrier strike group entered the Caribbean Sea, as the Trump administration heaps pressure on the Cuban communist regime.

In a post on X, U.S. Southern Command said that the USS Nimitz is now in the Caribbean and released video footage of the carrier group. Southern Command did not provide more details about why the carrier group traveled to the region.

The Nimitz, it said, "has proven its combat prowess across the globe, ensuring stability and defending democracy from the Taiwan Strait to the Arabian Gulf."

The Nimitz, commissioned in 1975, carried out joint naval exercises with the Brazilian Navy off the coast of Rio de Janeiro last week, the U.S. Embassy in Brazil said in a May 14 statement.

On May 20, the Department of Justice (DOJ) unsealed a criminal indictment against former Cuban leader Raul Castro, and U.S. Secretary of State Marco Rubio released a video in Spanish urging Cubans to reject the country's communist leadership.

According to the DOJ indictment, Castro was indicted in connection with the 1996 downing of civilian planes operated by Miami-based exiles. Castro, now 94, was Cuba's defense minister when the planes were shot down, killing four people.

The charges against Castro, the brother of former Cuban leader Fidel Castro, drew pushback from the country's current leader, Miguel Diaz-Canel, in a post on X.

"This is a political maneuver, devoid of any legal foundation, aimed solely at padding the fabricated dossier they use to justify the folly of a military aggression against Cuba," Diaz-Canel wrote.

This year, U.S. President Donald Trump has been ratcheting up talk of regime change in Cuba and said he would potentially initiate a "friendly takeover" of the country if its leadership did not open up its economy to American investment and kick out U.S. adversaries.

When asked what will happen next for the U.S. embargo on Cuba on Wednesday, Trump said, "We're going to see." He added that the U.S. government is ready to provide humanitarian assistance to what he described as a failing country.

Trump said that "there won't be escalation" between the United States and Cuba, adding, "I don't think there needs to be."

"Look, the place is falling apart. It's a mess," Trump added. "They've really lost control of Cuba."

In Cuba, there is no food, electricity, or energy, Trump said, adding that the U.S. government will have to act to assist the country.

Earlier this month, CIA Director John Ratcliffe traveled to Cuba to meet with the country's top officials, a visit that came as the country's energy minister said the island has completely run out of fuel and that its power grid is in a critical state.

In January, the U.S. military launched an operation in Venezuela that captured its president, Nicolas Maduro, an ally of the Cuban regime, and took him to the United States to face drug-trafficking charges.

Since September 2025, the U.S. military has been launching strikes against suspected drug-smuggling boats in the Caribbean and eastern Pacific Ocean in what the military calls Operation Southern Spear.

Nimitz-class aircraft carrier USS George H.W. Bush (CVN 77) sails in the Arabian Sea, on May 3, 2026. Courtesy of the U.S. Navy Tyler Durden Thu, 05/21/2026 - 17:00

DOJ Probe Widens: Minnesota Daycare Owner Charged, While Convicted Fraudster Gets Nearly 42 Years

A Minneapolis daycare owner has been charged with conspiracy to defraud the United States, adding another case to Minnesota's widening public-benefits fraud scandal.

Fahima Egeh Mahamud, 50, CEO of Future Leaders Early Learning Center, allegedly submitted more than 13,000 false claims to Minnesota's Child Care Assistance Program between 2022 and 2025, according to prosecutors. Thousands of those claims required families to make co-payments before the daycare could receive federal reimbursements.

BREAKING: Minneapolis daycare owner featured in Nick Shirley’s video Fahima Egeh Mahamud, CHARGED with wire fraud and conspiracy for allegedly stealing over $4.6 million through false claims to federal and state programs pic.twitter.com/OJ6plcQ7lq

— Libs of TikTok (@libsoftiktok) May 21, 2026

Prosecutors say Mahamud falsely certified that those family co-payments had been collected, allowing her daycare business to receive roughly $4.6 million in improper reimbursements.

The case is not Mahamud's first encounter with federal fraud investigators. She was separately charged in February with wire fraud over her alleged role in the Feeding Our Future meal-fraud scheme, the sprawling Minnesota case in which federal prosecutors say taxpayer money meant to feed children during the pandemic was diverted through sham meal sites, inflated meal counts, rosters, invoices, and kickback arrangements.

In that earlier case, prosecutors alleged that from December 2020 to July 2021, Mahamud claimed to serve tens of thousands of meals to children each month at the Future Leaders site, when the site allegedly served only a fraction of those meals.

An attorney for Mahamud could not be reached for comment. Mahamud and all other defendants are presumed innocent unless and until proven guilty in court.

A Wider Minnesota Fraud Crackdown

The daycare charge comes as Minnesota faces a widening federal crackdown on alleged fraud across multiple state-administered programs. AP reported that, after former Feeding Our Future leader Aimee Bock was sentenced to nearly 42 years in prison, federal authorities announced a new batch of charges against 15 people accused of stealing from social-service programs administered through Minnesota's state government.

AP said the new cases involve roughly $90 million across seven state-managed Medicaid programs. Those cases include Mahamud, whom AP identified as the former CEO of Future Leaders Early Learning Center. Prosecutors allege her organization was reimbursed about $4.6 million for services tied to people who did not make required co-payments.

🚨 HOLY CRAP! The Trump DOJ has just announced a MASSIVE $90M FRAUD BUST in Tim Walz's Minnesota, with criminal charges being slapped on 15 defendants

This involves 7 STATE-MANAGED MEDICAID PROGRAMS totally plundered by fraudsters — one program has $0 LEFT! 🤯

Tim Walz knew!… pic.twitter.com/KottcIOU2K

— Eric Daugherty (@EricLDaugh) May 21, 2026

The New York Post reported that Justice Department officials described the latest Minnesota charges as involving the two largest Medicaid fraud cases ever brought in the district, including what officials called the "largest autism fraud scheme ever." According to the Post's account of the DOJ announcement, prosecutors said the schemes involved fake diagnoses, billing for services that were not provided, and the exploitation of programs intended for vulnerable people.

Autism Program Targeted In Alleged $40 Million Scheme

One of the most explosive allegations involves Minnesota's Early Intensive Developmental and Behavioral Intervention program, known as EIDBI, a Medicaid-funded autism services program for children and young people.

FBI Director Kash Patel said in a post on X that one alleged scheme was worth more than $40 million and involved kickbacks to parents who fraudulently used autism centers to obtain autism diagnoses for children regardless of medical necessity, followed by billing for services that were not actually provided.

That's nice and all Kash, but...

Still in congress

Still free

Still has millions of hard earned TAXPAYERS money stolen from our children and grandchildren pic.twitter.com/vR26CqcW2n

— Roger Sunderlin (@RogerSunderlin) May 21, 2026

That allegation shifts the Minnesota story from ordinary benefits fraud into something much darker: children, disabled patients, and struggling families allegedly being treated as billing instruments inside programs that were supposed to help them.

The Justice Department had already been building toward this moment. In December, federal prosecutors announced additional charges in autism and housing fraud cases, including allegations that a Minnesota autism provider paid cash kickbacks to parents, submitted inflated Medicaid claims, billed for services not actually provided, and obtained millions of dollars from Minnesota's Department of Human Services and related payors.

Housing And Home-Care Programs Under Scrutiny

Federal prosecutors have also zeroed in on Minnesota's Housing Stabilization Services program, a Medicaid benefit designed to help people with disabilities, seniors, people with mental illness, and people with substance-use disorders find and maintain housing.

According to the Justice Department, the program had low barriers to entry and minimal records requirements, making it vulnerable to fraud. The program's costs exploded from an expected $2.6 million annually to more than $21 million in 2021, $42 million in 2022, $74 million in 2023, and $104 million in 2024.

In one housing case, two Pennsylvania men pleaded guilty to traveling repeatedly to Minneapolis to defraud the Housing Stabilization Services program, according to the DOJ. Prosecutors said they stole about $3.5 million for services they falsely claimed to have provided to roughly 230 Medicaid beneficiaries and even used ChatGPT to generate fake client notes when insurers asked for documentation.

Feeding Our Future Casts A Long Shadow

The overlap among these cases is what has made the Minnesota scandal so politically explosive. What began with Feeding Our Future has expanded into child care, housing services, autism therapy, home supports, and other Medicaid-funded programs.

According to AP, Bock's Feeding Our Future network involved phony distribution sites, fake lists of children supposedly being fed, kickbacks, and lavish spending on international travel, real estate, and luxury vehicles. Bock was convicted last year of conspiracy, fraud, and bribery and sentenced this week to nearly 42 years in prison.

Bock blames Minnesota officials for not catching the fraud, telling CBS: "We relied on the state," adding that local officials, including Rep. Ilhan Omar, would often visit the meal sites. "We told the state, this site is going to operate at this address, this time, and this number of children. The state would then tell us that's approved."

👂🏻👂🏻👂🏻👂🏻👂🏻👂🏻👂🏻👂🏻👂🏻👂🏻
WORTH A LISTEN
Aimee Bock from behind prison is naming names in the Minnesota fraud scandal… which she believes was no surprise to local Democratic leaders. pic.twitter.com/UfrKsvJNjV

— Andrew C ™️ (@Sheckyi) January 23, 2026

The Justice Department has described Feeding Our Future as the single largest COVID-19 fraud scheme in the country. Prosecutors said the scheme stole roughly $250 million from a federal child nutrition program that was supposed to feed children during the pandemic.

Future Leaders Early Learning Center was also one of the Minneapolis daycares referenced or featured in YouTuber Nick Shirley's viral December video examining possible fraud in the system. The video helped push the issue into national politics and drew attention from federal officials already scrutinizing Minnesota-administered benefits programs.

Washington Freezes Funding And Demands Answers

The fallout has reached Washington. The Department of Health and Human Services announced on Jan. 6 that it had frozen access to certain child care and family-assistance funds for California, Colorado, Illinois, Minnesota, and New York, citing concerns about widespread fraud and misuse of taxpayer dollars in state-administered programs.

According to the HHS announcement, the freeze applied to three programs: the Child Care and Development Fund, Temporary Assistance for Needy Families, and the Social Services Block Grant.

Minnesota has also faced specific Medicaid funding pressure. AP reported that the Trump administration notified the state it was deferring an additional $91 million in Medicaid funding because of concerns about fraud vulnerabilities in state-run but federally funded social-service programs. That came on top of hundreds of millions of dollars the administration had already withheld earlier this year.

CMS Administrator Dr. Mehmet Oz said the additional deferral was tied partly to high-risk service categories and partly to concerns about payments for ineligible recipients. Minnesota Gov. Tim Walz called the move political retaliation, while state officials said they have been taking aggressive action to stop fraud and recover improper payments.

The Oversight Question

The numbers explain why the issue is not going away. Minnesota receives about $185 million in child care funds each year from the Administration for Children and Families, according to HHS officials cited in earlier reporting. The latest cases raise basic questions about how federal money was monitored, how providers were verified, why warning signs were missed, and how alleged fraud was able to spread across so many programs before federal investigators stepped in.

The scandal now appears to be less about one daycare, one nonprofit, or one program than about a broader failure of oversight. Prosecutors are no longer describing isolated cases of paperwork abuse. They are alleging networks of providers, recruiters, shell companies, fake records, kickbacks, inflated claims, and programs designed for children, disabled people, and low-income families being turned into taxpayer-funded revenue streams.

For Minnesota, the political problem is obvious. For taxpayers, the question is simpler: how many more programs were treated this way, and how much money is gone?

Tyler Durden Thu, 05/21/2026 - 16:40

Exit Taxes Won't Save Failing States

Authored by Vance Ginn via TheDailyEconomy.org,

When a state starts floating an exit tax, it is telling you something more important than any campaign slogan: the people running the place know their model is not working. 

They may not say it that way. They will call it fairness, responsibility, or making the wealthy “pay what they owe.” But the meaning is the same. 

If families, entrepreneurs, and investors are leaving, the state can either ask why its policies are pushing them out, or it can try to tax them for escaping. An exit tax chooses punishment over reform. 

I understand why these proposals resonate with some people. If you are watching wealthy residents relocate while governments still face bills for schools, roads, pensions, and other commitments, it is easy to feel like the people with the most mobility are ducking the tab. 

That frustration is real. It deserves a serious answer. But an exit tax is not a serious answer. It is a confession that lawmakers would rather cling to a failing fiscal model than fix the spending, regulation, and tax policies that made people want to leave in the first place. 

That is why the current trend is so revealing.

In California, proposals have centered on taxing billionaire net worth, including wealth that often exists on paper rather than in cash. In New York, the push has extended to a new surcharge on high-value second homes in New York City.

In Washington, lawmakers have already enacted a “millionaires’ tax.” These policies differ in form, but not in spirit. They all send the same message: if government has made your state too expensive, too hostile, or too unpredictable, it may still try to claim part of your future anyway. 

The economics are worse than the politics. Supporters talk as if wealth is a pile of idle cash sitting in a vault, just waiting to be skimmed. It is not. Wealth is usually tied up in businesses, shares, property, and future earnings. 

Taxing net worth or unrealized gains means taxing value that often has not been sold, realized, or converted into cash. That can force asset sales, dilute business ownership, weaken investment, and change behavior long before the tax collector ever gets a check.

 A Hoover Institution analysis of California’s proposal found that once likely migration responses are considered, the measure could leave the state with a negative net present value of about $25 billion. That is the real lesson: politicians score the tax statically, but the economy does not sit still. 

And that is before you get to the broader evidence. The OECD has noted that recurring net wealth taxes have become much less common across advanced economies because they tend to raise less revenue than promised while creating large compliance costs, avoidance incentives, and economic distortions. Countries tried them. Many backed away. 

A recent NBER study on Scandinavian wealth taxation found that higher top wealth-tax rates reduced the number of wealthy taxpayers and that many of those taxpayers were business owners whose departure reduced investment, employment, and value-added. 

That is the part too often ignored in political talking points. When a state drives out a founder, investor, or employer, it is not just losing one tax return. It is losing future jobs, future capital formation, and future opportunity for everybody else too. 

Defenders of exit taxes still fall back on one argument that sounds morally satisfying: these taxpayers benefited from state infrastructure, legal protections, and markets while they lived there, so the state deserves one final cut

But that argument quietly rewrites the relationship between citizen and government. It turns moving into a taxable offense. It says the state retains a lingering claim on your success because you once lived under its jurisdiction. That is a dangerous principle in a federal system built on mobility and competition.

 Even in the international arena, exit taxes are controversial, complex, and tied to specific movements of assets or functions across borders. Importing that logic into state tax policy is not modernization. It is escalation. 

The problem is not just that these taxes are bad economics. It is that they usually do not stay narrow. Politicians sell them as a tool aimed only at billionaires or luxury homeowners — policy aimed at an applause line. But when the revenue falls short, the scope expands. 

One-time wealth taxes become annual property surcharges. “Billionaire” thresholds are expanded to target millionaires and eventually the middle class. “Temporary” taxes become permanent fiscal architecture. New York’s pied-à-terre proposal is a good example of how quickly the logic expands once the principle is accepted. 

Frédéric Bastiat warned us to look not just at what is seen, but at what is unseen. We see the tax revenues. That’s a small, visible victory compared to the investment that never happens, the entrepreneur who builds elsewhere, jobs that never arrive — the unseen costs compound. 

Exit taxes are built on ignoring all of that. 

Claiming an exit tax frames mobility as theft, when it is often a rational response to bad governance. They do not restore prosperity. They steal the opportunity to prosper by doubling down on the very policies that made growth harder in the first place. 

If lawmakers want to deter departures, the answer is not a fiscal trap door. It is better policy: lower taxes, lighter regulation, spending restraint, and a serious effort to make their states places where productive people want to stay.

Real economic renewal is more difficult than yet more taxation, but it is also the only approach that works. Exit taxes will not save failing states. They only confirm why people wanted to leave. 

Tyler Durden Thu, 05/21/2026 - 16:20

Trump Posts Article Laying Out: "Here's How To Crush Tehran In Three Moves"

President Trump on Thursday posted to Truth Social a New York Post article which was first published over two weeks ago, on May 1st, with the headline "Here's how to crush Tehran in three moves."

Trump's new social media post, issued without additional comment, comes just after news of Iranian Supreme Leader Mojtaba Khamenei having drawn a hard line in the sand, ordering that Iran's stockpile of uranium enriched to 60% remain strictly inside Iranian territory. So now the world awaits what's next at a moment the White House has renewed threats of massive military strikes if Iran doesn't quickly come to the table and conform.

The NY Post article had straight-faced and without a hint of intended irony proclaimed: "President Trump has the upper hand." That statement was issued on day 63 of Trump's Iran war. Today is day 83.

What did the interim look like as the world's most powerful military force has been unable to reopen the Strait of Hormuz, amid constant threats to take new, bigger military action - but which never actually materializes (at least not yet) no matter how many times the Iranians reject Washington's terms?

The below timeline and outline, stretching from last week into this one, basically illustrates the weekly Trump pattern that's been on display going back many weeks at this point: 

• Wed: Iran wants a deal. They called us 
• Thu: We are looking at proposals
• Fri: We might be close. Very close
• Sat: Iran knows what to do
• Sun: OBLITERATION. TOTAL. COMPLETE. They have 24 hrs. 
• Mon: The storm is coming 
• Tue: I'm giving it more time

This is what 'winning' looks like according to the NY Post, apparently. The publication also feels itself in a position to give 'advice' and guidance to the White House on executing a war. "His best path forward is to pursue three lines of effort in parallel," author Richard Goldberg (of Foundation for Defense of Democracies) wrote. It must be remembered that very recently a former senior official from FDD Action, the think tank's lobbying arm, joined Trump's Iran negotiating team - his name is Nick Stewart.

Here are the three:

1. Sustain the blockade and accompanying economic warfare to destabilize the regime’s hold on the state;
2. Remake the world in America's energy dominance image to mitigate long-term price impacts while undermining China's global ambition to defeat the United States;
3. Order the US military to forge a path through the Strait of Hormuz to restore freedom of navigation on our terms not Tehran’s.

...if only simply ordering a military "path through" was that easy!

NurPhoto via Getty Images

"You might call the latter Operation Epic Passage — a combined naval and air mission of self-defense that offers escort to tankers and restores freedom of navigation, all while making clear to Tehran the devastating consequences of breaking cease-fire," Goldberg, who openly boasts of his close ties to the Israeli government, also wrote. He further offered the mission name of "Blockade Plus".

After the opening days and weeks of Operation Epic Fury, when it became clear that the large-scale US and Israeli bombardment would not produced regime change in Iran, pundits widely questioned whether the Trump White House actually had a plan, or long-term strategic vision for the military mission. 

And now, after more than 80 days in, the public gets Trump posting a NY Post article by a hawkish FDD writer, which seems more focused merely on ways to mitigate the blowback and 'make the best' of a failed regime change operation, in the wake of the administration's constantly evolving stated goals.

Tyler Durden Thu, 05/21/2026 - 15:50

Rickards: Investing In A World In Turmoil

Authored by James Rickards via DailyReckoning.com,

To say that the world is in turmoil to an extent not seen since the 1960s is an understatement.

The war in Ukraine is now in its fifth year. The war in Iran continues with no end in sight, despite Trump’s optimistic talk. NATO may be nearing the break-up stage as Trump pulls U.S. troops out of Germany.

Energy prices are soaring, inflation has accelerated sharply again, consumer confidence has fallen sharply, debt is at an all-time high and supply chains are breaking down.

Yet the major U.S. stock indices are at or near all-time highs.

What accounts for record stock prices amid almost unprecedented turmoil?

There are a number of key factors supporting stocks. The most obvious is the AI frenzy. This has two aspects. The first is that AI applications can improve productivity. The second is that the build-out of data centers with the most advanced semiconductors has led to a $1 trillion capital investment tsunami as Microsoft, Amazon, Google, Meta, OpenAI, Anthropic and other AI providers build their server farms.

The next factor is related to the first and is often called the picks-and-shovels trade. The idea is that those who benefit in a gold rush are not the gold miners but the merchants who sell tools, clothes, supplies and other goods the miners need.

In the AI gold rush, the winners are electricity suppliers, builders, hardware manufacturers (semiconductors and servers) and small towns where the server farms are located. These suppliers will do well today whether AI lives up to its promise or not.

Passive Aggression

Another major factor is passive investing. An enormous amount of U.S. wealth is held in 401(k)s, IRAs and assets under management by wealth managers.

Relatively few of the account holders (or, for that matter, wealth managers) really understand active stock investing or risk management. Instead, they buy index funds, ETFs or other equity basket products that track the stock market itself or a specified segment.

When money is put into these index funds, the manager buys the stocks in the index. That buying pushes stock prices higher. That attracts more money, more buying and more gains in a positive feedback loop that drives stocks even higher. No Ph.D. is required. You just buy the index, sit back and enjoy the ride.

FOMO and TINA

Two other factors related to the passive investing feedback loop are fear of missing out (FOMO) and the idea that there is no alternative (TINA). It’s difficult to show up at a cocktail party or the country club when all of your friends are touting their stock gains and you’re not in the market.

It’s also difficult to put money in 4% cash equivalents or assets like gold when stocks seem set to deliver 10% returns as far as the eye can see.

FOMO and TINA have nothing to do with fundamental stock analysis. But they are real and powerful drivers of human behavior.

It’s not all fairy dust, however. There are actual fundamental drivers behind stock gains. Corporate profits are coming in strong (despite some high-profile missed estimates). U.S. energy self-sufficiency will keep the lights on in the U.S. and help prevent 1970s-style gas lines — even if we are not immune to the impact of higher prices.

That’s the argument for higher stock prices despite global problems. What could possibly go wrong?

Unrecognized Risks

The greatest threat to higher stock prices is that the market has not fully discounted the impact of the war in Iran and the unprecedented disruption in the supply of oil, liquid natural gas, nitrates for fertilizer, helium, sulphur, aluminum and other critical inputs.

The reality of these shortages has not hit home (with the exception of higher prices for gasoline and oil), but that does not mean the coast is clear.

An enormous amount of oil supply was already on vessels that left the Strait of Hormuz before the war began. That “floating supply chain” took weeks to be delivered to end users. That process has now been completed; the last deliveries have been made. There is nothing else on the way.

Major manufacturing nations like South Korea, Japan, Taiwan and China are now using up reserves. These may last another month or so. The critical point at which reserves are gone, no resupply is on the way and the Strait of Hormuz remains closed grows nearer by the day.

Even if the strait reopens tomorrow, the current shortages will raise prices, disrupt supply chains and possibly lead to a global recession. Markets seem to be ignoring this possibility in favor of a narrative that says the strait will reopen soon and all will be well.

Great Expectations (for AI)

Eventually, it may also occur to markets that AI is not producing any revenue. It’s consuming $1 trillion in capital and promising untold riches, but those riches have yet to materialize. AI is a powerful technology and it’s here to stay. But that does not mean it will be particularly profitable. It may even hurt growth if hundreds of thousands of skilled workers are laid off.

There are serious reasons to believe that AI will not be that productive at all. Output errors (called “slop”) not only cast doubt on the reliability of AI, but are also populating the internet, which AI itself uses as a training set for new applications.

More slop in the training set means even less reliable output than earlier versions. The dream of superintelligence (artificial general intelligence, AGI) is out of reach because of the inability of engineers to code abductive logic.

If the AI bubble bursts (which I expect), it will not only hurt the Mag 7 stocks but also the picks-and-shovels plays around it.

The Private Credit Canary

A separate trigger for a market meltdown is the crisis in private credit. Funds sponsored by top managers like Apollo, BlackRock, Blackstone, KKR, Morgan Stanley and others are severely limiting investor withdrawals.

Complicating matters further, if fund managers try to sell assets quickly, there may be very few buyers unless the seller agrees to slash the price dramatically — sometimes by half or more compared with the stated “book value.”

Supporters of private credit say that this private market is only worth about $4 trillion and that even 20% write-offs will not jeopardize the system. But this calculation ignores the impact of leverage and the effects of contagion. Losses in private credit can trigger runs on mid-tier banks, which then spread to funds that hold those mid-tier bank stocks and so on.

The Dark Side of Passive

But the greatest threat to the stock market may be the dominance of passive investing.

The same buying dynamic that drives stock prices higher can work in reverse. A market drawdown can cause investors to sell their index funds. This causes fund managers to sell the underlying stocks, which takes down the indices, causing more selling by investors and so on.

While passive investing can push markets higher gradually, it can also drive them lower with startling speed and violence.

What’s an investor to do? The positive story for stocks is real, but the downside potential is equally real. The solution is to hedge by diversifying your portfolio. Keep some stocks, but also maintain a slice of cash, a slice of gold and medium-term U.S. Treasury notes.

Gold is the everything hedge. Treasury notes are secure and will rally when the recession goes into high gear. Cash will give you the option to go shopping for bargains when everyone else is dumping stocks.

TINA and FOMO are not your friends. Diversification is.

Tyler Durden Thu, 05/21/2026 - 15:40

Rubio: Diplomacy Will Be Rendered 'Impossible' If Iran Enacts Hormuz Toll System

Iran has been seeking to significantly expand the area around the Strait of Hormuz over which it claims military control by this week advancing the newly-created government agency of the "Persian Gulf Strait Authority".

The agency quickly published a map proclaiming "Iranian armed forces oversight" across more than 22,000 sq km (8,800 sq miles) of the Hormuz waterway. Now, all transit through the strait "requires coordination with and authorization from the Persian Gulf Strait Authority" - the new entity announced.

Of course, Washington has made clear that international vessels must not comply with Iran's rules. Yet Tehran is Wednesday into Thursday claiming some 'victories' in this regard. 

The Iranians say they are in active discussions with Oman to establish a permanent toll system for maritime traffic passing through the strait, according to Iran’s ambassador to France, Mohammad Amin-Nejad.

"Iran and Oman must mobilize all their resources both to provide security services and to manage navigation in the most appropriate manner, prevent pollution, and simply strive to establish an order so that global trade is not subject to disruptions. This will entail costs, and it goes without saying that those who wish to benefit from this traffic must also pay their share," Amin-Nejad said, as cited in Bloomberg.

Amin-Nejad further asserted the potential costs would be "clear, transparent, reasonable, and logical" - though the system is not yet in place. An initial toll proposal, which some companies may have already paid in order to get their stranded vessels out, was reportedly up to $2 million per tanker.

Iran is also touting that China and and South Korea have been in direct communication to arrange passage of their ships:

Iran continues to control the flow of tankers through the Strait of Hormuz for political and propaganda gains as the war of words continues over the peace negotiations. The Islamic Revolutionary Guard Corps (IRGC) Navy is claiming to have increased the flow with Chinese tankers and the first South Korean tanker permitted to make the transit, while many other vessels continue to wait.

...The IRGC Navy released a statement claiming that in the past 24 hours, a total of 26 vessels safely transited the Strait of Hormuz. It said this included tankers as well as containerships and other vessels. It asserted, however, that they were all “under the coordination and security support” of the IRGC Navy. They said all the ships making the transit had obtained prior authorization and required close coordination with the IRGC. 

...South Korea’s Ministry of Foreign Affairs announced May 20 that its first tanker had been able to make the transit carrying about two million barrels of crude bound for Ulsan. It said there are 25 other South Korean-flagged vessels still caught in the Persian Gulf, but it was significant after Iran refused transit a month ago to another South Korean tanker that was reportedly bound for Pakistan.

If Tehran can attract each country to make separate deals for the passage of their ships, this will be hailed as a 'win' for Iran and its Hormuz protocols. 

But the US and its regional allies are not buying into Iran's narrative, with the UAE having described Iran's claims of control as "nothing but fragments of dreams."

And importantly, on Thursday US Secretary of State Marco Rubio stated that a tolling system in the Strait of Hormuz would render a diplomatic deal unfeasible and that the US remains "very upset with NATO" their response to the Iran crisis. He said: 

"A toll collection system in the Strait of Hormuz will make a diplomatic deal impossible."

"We are very disappointed with NATO allies, we will discuss the issue of troop deployment at the upcoming meeting."

Some vessels are paying Iranian authorities more than $150,000 for safe passage through the Strait of Hormuz, sources told Reuters. The US has warned that such payments might trigger American sanctions but some ship owners are paying anyway https://t.co/87HQZcBDcr pic.twitter.com/nuc7UXaFX9

— Reuters (@Reuters) May 21, 2026

But at this point, Tehran doesn't look to be in a rush to complete a deal. Trump could be ready to indefinitely withhold new military strikes, and Iran is busy rearming and regrouping. Also, as enough time passes with the stalemated situation in place, Tehran is likely to convince more countries that they have no choice but to deal with the Islamic Republic directly.

Tyler Durden Thu, 05/21/2026 - 15:20

Democrats Move To Block Trump's $1.776 Billion 'Anti-Weaponization' Fund

Via American Greatness,

Congressional Democrats are moving to shut down President Donald Trump’s proposed $1.776 billion Anti-Weaponization Fund, escalating a political fight over compensation for Americans who say they were targeted by politically motivated prosecutions and federal lawfare.

Rep. Jamie Raskin, the top Democrat on the House Judiciary Committee, is introducing legislation aimed at preventing any federal money from being used to create or distribute payments through the fund.

According to a copy of the bill shared with Axios, the legislation states that “no Federal funds may be used to create or make payments” tied to the Trump administration’s Anti-Weaponization Fund.

The fund emerged from a settlement between Trump and the Internal Revenue Service after the president sued the agency over the leaking of his confidential tax returns during his first term.

Under the settlement framework, individuals claiming they were victims of politically motivated prosecutions or government abuse would be able to seek compensation.

Potential applicants could include January 6 defendants and others who were unfairly targeted by federal authorities.

Raskin is reportedly considering using a discharge petition to force a House vote if Republican leadership blocks the measure from reaching the floor.

At the same time, some establishment Republicans are also voicing opposition to the fund. Rep. Brian Fitzpatrick told reporters Wednesday that he would “try to kill” the program.

“We’re going to write a letter to the [attorney general] to start, but we’re considering a legislative option,” Fitzpatrick said.

Supporters of the fund argue it represents a long-overdue effort to compensate Americans harmed by politically driven prosecutions and abuses of government power.

Critics, meanwhile, claim the program would improperly use taxpayer money to compensate individuals tied to controversial investigations, including those connected to the January 6 Capitol protest.

Two law enforcement officers who were present at the Capitol on Jan. 6 have already filed a lawsuit seeking to dissolve the fund entirely.

Tyler Durden Thu, 05/21/2026 - 15:00

Marcus Lemonis Fires Back On X Over Claims Camping World Spiraling Toward Bankruptcy

America's largest RV dealer and service chain, selling new and used motorhomes, travel trailers, and more for outdoor living, has been under pressure over the past several years as high interest rates have crushed RV demand.

An X user with the handle "Roger" laid out his thesis on why Camping World is next on the list to "file Chapter 11 bankruptcy with $3.5 billion of unpayable debt," adding, "West Marine (one of the largest boat suppliers in the US) just filed Chapter 11 bankruptcy today, holding over $1 billion in debt."

Camping World $CWH expected to file Chapter 11 bankruptcy with $3.5 billion of unpayable debt.

West Marine (one of largest boat suppliers in US) just filed Chapter 11 bankruptcy today holding over $1 billion in debt.

RV and Boat Bankruptcies. The signs are clear. pic.twitter.com/hBUvxQ5sWJ

— Roger (@rdd147) May 21, 2026

Camping World Revenues and Liabilities

Roger added, "RV and Boat Bankruptcies. The signs are clear."

Same boat as West Marine. Camping World is in Final stages of screwing the landlord to pay the debt holders. pic.twitter.com/25KTtPlZcq

— Roger (@rdd147) May 21, 2026

Shares of Camping World have been locked in a brutal bear market since peaking near $45 in late 2021, with the stock now down about 86% as of Thursday. The sell-off has pushed shares back toward Covid-era lows, as high interest rates continue to choke off RV demand and corporate America as a whole warns that consumers have significantly dialed back on big-ticket items (read here).

Responding on X to Roger's bear thesis on Camping World was none other than Marcus Lemonis, CEO of Bed Bath & Beyond, co-founder of Camping World, and TV personality.

Lemonis said Roger's view that Camping World was sliding toward bankruptcy was "totally false."

Totally false

— Marcus Lemonis (@marcuslemonis) May 21, 2026

Roger then responded to Lemonis: "Explain. Why are liabilities rising, in particular lease obligations? Paying debt holders and not rent is end-stage preparation. See West Marine. Couldn't pay its leases."

Explain. Why are liabilities rising, in particular lease obligations?

Paying debt holders and not rent is end stage preparation. See West Marine. Couldn’t pay its leases.

Honestly happy to hear an assessment pic.twitter.com/7uzCrIdtq2

— Roger (@rdd147) May 21, 2026

Roger ended with: "Honestly, happy to hear an assessment."

The CEO just entered the chat and bodied you. You shorting the company or?

— Brandox (@AngelsKill) May 21, 2026

Here is Wall Street's view on Camping World:

And the fact that Marcus Lemonis felt compelled to respond to a random X user raises its own set of questions.

False. Do your research

— Marcus Lemonis (@marcuslemonis) May 21, 2026

The stock is 21% short, equivalent to about 12.5 million shares, with 2.7 days to cover. 

Tyler Durden Thu, 05/21/2026 - 14:40

Getting An 'A' At Harvard Will Be Tougher Starting In 2027

Authored by Micaiah Bilger via The College Fix,

Two thirds of faculty vote to approve cap on A grades for undergrads...

Harvard University faculty gave an emphatic “yes” to capping A grades in a vote Wednesday amid concerns about grade inflation and academic rigor at the prestigious institution.

Approximately 70 percent voted to approve the 20-percent cap on As in undergraduate courses, The Crimson, Harvard’s student newspaper, reports. Nearly 700 professors participated in the vote. The measure will go into effect in the fall of 2027.

Harvard psychology Professor Steven Pinker praised the decision in an X post Wednesday, calling it “a big step in combatting the grade inflation that has been dumbing down our courses, conveying the wrong message to students, and making universities a national laughingstock.”

Another professor, political scientist Max Abrams at Northeastern University noted the impact of the decision on other higher education institutions. 

Harvard isn’t just some university. Many universities look to Harvard to inform their own decisions. I am strongly in favor of Harvard’s moves to reduce grade inflation. When everyone gets an A there is no signal. pic.twitter.com/Tpb4enuADA

— Max Abrahms (@MaxAbrahms) May 20, 2026

Other scholars called for their Ivy League institutions to follow Harvard’s lead.

Along with limiting As, the faculty also approved a measure by a large majority “to use average percentile rankings, rather than GPA, to determine internal awards and honors,” according to The Crimson.

A third measure within the proposal did not pass. It would have allowed professors “to petition to opt out of the A cap” if the grading for their course is on an “unsatisfactory, satisfactory, and satisfactory-plus basis,” the report states:

When the proposal was first introduced in February, its architects pitched the A cap and percentile-ranking system as paired reforms: the ranking system would prevent students from avoiding larger or more difficult courses in search of better grades under the cap.

After pushback, the subcommittee separated the measures into distinct votes, delayed implementation by a year to fall 2027, and added a “satisfactory-plus” designation for courses that chose to opt out of the system.

In the weeks before the vote, some faculty also pushed for a more complicated alternative to the“20 percent plus four” formula that would have tightened limits in smaller courses. But that amendment failed to make it onto the final ballot after faculty favored the original formula in a preliminary poll.

All three proposals came from a Harvard faculty committee in response to a report that found 60 percent of all undergraduate grades are now As – a 35 percent increase compared to 20 years ago.

In a statement after the vote Wednesday, the committee said the change will help restore integrity to the institution.

“This matters for our students above all,” they stated. “A Harvard A grade will now tell them, as well as employers and graduate schools, something real about what a student has achieved. An A will once again be what Harvard’s guidelines have long said it is: a mark of extraordinary distinction.”

Despite widespread concerns about grade inflation, Harvard students overwhelmingly opposed the cap, American Council of Trustees and Alumni fellow Steve McGuire pointed out on X. 

Now get rid of student course evaluations. pic.twitter.com/2xql1bW49U

— Steve McGuire (@sfmcguire79) May 20, 2026

One petition launched by a freshman claimed that the grading reforms would be “racially harmful,” The College Fix reported in April.

Concerns about grade inflation have arisen at other institutions as well, including Yale and Columbia universities and Swarthmore College in Pennsylvania. Additionally, some professors say they are under pressure not to fail students.

Tyler Durden Thu, 05/21/2026 - 13:40

The News-to-Death Ratio Strikes Again

Authored by Carl Henegan and Tom Jefferson via The Brownstone Institute,

There is a peculiar arithmetic that governs modern health reporting, one that has very little to do with actual risk. Hans Rosling captured it neatly during the 2009 swine flu episode, when he calculated a “news-to-death ratio” of 8,176-to-1. In other words, for every death attributed to swine flu, there were over eight thousand news stories. Tuberculosis, by contrast, received less than 0.1 news stories per death over the same period.

If that sounds absurd, it is, and yet very little has changed.

Take the current hantavirus scare. A cruise ship, the MV Hondius, sits off Cape Verde. There are 7 cases in total (2 confirmed, 5 suspected) and 3 deaths, including a Dutch couple and a German national. Passengers have been confined to their cabins while evacuations and disinfection efforts are organised. It is, undeniably, a dramatic story: a floating Petri dish, a whiff of quarantine, and a hint of the exotic.

In the past week alone, there have been at least 10 to 15 unique news stories, generating hundreds of articles. For a disease that, in normal times, struggles to attract even a single weekly mention, this represents a surge bordering on the hysterical.

And yet it is worth stepping back for a moment and asking, what are we actually looking at?

Hantavirus is a rare disease. In the United States, which diligently tracks such cases, there have been 890 laboratory-confirmed instances since 1993. In the UK, the situation is even less clear: from 2012 to early 2025, only 11 domestically acquired symptomatic cases have been recorded. Surprisingly, nine of these cases were not linked to cruise ships or exotic travel, but rather to a more mundane source—exposure to “pet fancy rats” or rodents bred as reptile feed.

This is not a pathogen ready to spread through the Home Counties. However, the rarity is not the issue; visibility is.

Diseases that afflict the poor, quietly and persistently, rarely command attention. Tuberculosis killed 1.23 million people globally in 2024. Over a million deaths every year, largely concentrated in less affluent parts of the world. It is one of the most lethal infectious diseases known to medicine, and yet it barely registers in the Western news cycle.

Why? Because TB is familiar, it is slow; It lacks narrative flair, and it does not trap well-heeled passengers in their cabins while helicopters circle overhead.

If you want coverage, you need something else entirely. You need novelty, uncertainty, and above all, proximity to affluence. A cruise ship outbreak ticks every box: a disease with a balcony suite.

This is the uncomfortable truth behind Rosling’s ratio: the media does not report risk, it reports drama. And drama requires context that audiences can imagine themselves in.

A rodent-borne virus in some remote rural setting barely registers. Put that very same virus aboard a cruise ship with buffet queues, balcony cabins, and a passenger list that looks uncomfortably like the readership, and suddenly it becomes headline news.

The result is a profound distortion of public perception. We are invited to worry about the improbable while ignoring the inevitable and reality. A handful of hantavirus cases generates dozens of headlines; a million tuberculosis deaths pass with barely a murmur.

If we were to apply Rosling’s lens to the present moment, the imbalance would be obvious. Three deaths linked to a suspected hantavirus cluster have produced hundreds of reports in a matter of days. Meanwhile, tuberculosis continues its relentless toll with scarcely a fraction of that attention.

The modern “news-to-death ratio” may not be precisely 8,176-to-1, but the underlying pattern remains intact.

The lesson here isn’t truly about hantavirus; instead, it’s about how we collectively determine what is significant.

Diseases associated with poverty—those that are endemic, predictable, and devastating—often fail to attract media attention because they don’t instill fear in the right audience or in the right way. No one is interested in the thousands of cholera deaths that are too remote, too ordinary, and lack the dramatic impact that draws interest. What commands attention are diseases that puncture our sense of safety, the kind that can slip past the gangway and make themselves at home on a cruise ship.

This post was written by two old geezers who live in a world where risk is misread, priorities are skewed, and the arithmetic of attention bears little resemblance to the arithmetic of death.

Republished from the authors’ Substack

Tyler Durden Thu, 05/21/2026 - 13:00

Jane Street Accused Of Using Terra Telegram Backchannel Before UST Crash

Authored by Zoltan Vardai via CoinTelegraph.com,

A newly unsealed court filing in the Terraform Labs bankruptcy case alleges Jane Street used a private Telegram channel with former Terraform intern Bryce Pratt to obtain nonpublic information before the collapse of TerraUSD. Pratt is currently a systems developer at Jane Street. 

The channel, called “Bryce’s Secret,” allegedly gave the quantitative trading firm a backchannel to Terraform insiders as Jane Street unwound exposure to TerraUSD (UST) shortly before the algorithmic stablecoin lost its dollar peg in May 2022, according to the filing. “Jane Street used Bryce’s Secret chat group and other backchannel sources of non-public information to front-run trading that hastened the collapse of Terraform,” the filing states.

The claims renew scrutiny of who profited from Terra’s $40 billion collapse, one of the crypto industry’s largest failures, and could test how traditional insider trading and market manipulation theories apply to decentralized finance markets.

On Feb. 23, Todd Snyder, Terraform’s court-appointed administrator, sued Jane Street, its co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang in Manhattan federal court, accusing them of “misappropriating confidential information and manipulating market prices.” 

Two months later, Jane Street filed a motion to dismiss the lawsuit, arguing that Terraform attempted to “extract cash from Jane Street to foot the bill for a fraud that Terraform itself perpetrated on the market,” Cointelegraph reported on April 23.

A spokesperson for Jane Street told Cointelegraph that the lawsuit was a transparent attempt to “extract money when it is well-established that the losses suffered by Terra and Luna holders were the result of a multi-billion dollar fraud perpetrated by the management of Terraform Labs.”

Terraform Labs court filing in the lawsuit against Jane Street. Source: cloudfront.net

Curve trade raises new UST concerns

The timing of a particular UST trade has raised more concerns, suggesting potential access to insider information by an unknown entity.

On May 7, 2022, Terraform quietly withdrew about $150 million in UST from the Curve 3pool liquidity pool.

Less than 10 minutes after Terraform’s withdrawal, Curve 3pool saw its largest single swap of $85 million, precipitating a steep sell-off in UST, which the filing said “ultimately led to the collapse of the Terra ecosystem.”

The heavily redacted filing does not identify the entity behind the swap.

Terraform Labs court filing in the lawsuit against Jane Street. Source: cloudfront.net

Snyder seeks to recover alleged wrongful gains from Jane Street, plus compensation for additional damages to distribute to Terraform creditors and investors who lost funds in the 2022 collapse.

Jane Street is the world’s leading quantitative trading firm by net trading revenue, with $39.6 billion generated in 2025, reported Reuters.

Cointelegraph reached out to Terraform’s court-appointed administrator for comment but had not received a response by publication.

Tyler Durden Thu, 05/21/2026 - 12:20

"Drills Are Intended To Send A Signal": Russia Holds Massive Nuclear Drills On Land, Sea And Air Alongside Belarus

Trucks carrying intercontinental ballistic missiles rumbled over forest roads, atomic-powered submarines set sail from Arctic and Pacific ports, and crews scrambled into warplanes as Russia and neighboring Belarus held the final stage of their joint nuclear drills Thursday.

Russian President Vladimir Putin discussed the maneuvers in a video call with his Belarusian counterpart Alexander Lukashenko. “The use of nuclear weapons is an extreme, exceptional measure for ensuring the national security of our states,” Putin said, according to AP.

Lukashenko earlier inspected Russian short-range nuclear-capable Iskander ballistic missiles at a military unit involved in the drills and declared: “I dreamed about this machine a long time ago.”

The three-day drills that began Tuesday come amid a surge in Ukrainian drone strikes. including on Moscow’s suburbs that killed three people and damaged several buildings and industrial facilities. The strikes made it harder for officials in the Kremlin to cast the conflict in Ukraine — now in its fifth year — as something so distant that it doesn’t affect the daily routines of Russian civilians.

Drills involve wide array of nuclear weapons

Russia’s Defense Ministry said the exercise involved 64,000 troops, over 200 missile launchers, more than 140 aircraft, 73 surface warships and 13 submarines, including eight armed with nuclear-tipped ICBMs. The drills focused on the “preparation and use of nuclear forces under the threat of aggression,” it said.

The maneuvers also practice cooperation with Belarus, an ally that hosts Russian nuclear weapons. Russian arsenals in Belarus include its latest intermediate range nuclear-capable Oreshnik missile system.

A Yars ICBM is seen during drills of Russia's nuclear forces in Belarus (Russian defense ministry).

Along with nuclear-tipped ground- and submarine-launched ICBMs, the maneuvers featured a broad assortment of short- and medium-range weapons.

Unlike the intercontinental missiles that can destroy entire cities, tactical nuclear weapons intended for use against troops on the battlefield are less powerful. They include aerial bombs and warheads for short- and medium-range missiles and artillery munitions.

The Defense Ministry said the Russian armed forces test-fired Yars and Sineva ICBMs, as well as medium-range sea-launched Zircon and air-launched Kinzhal missiles, noting that all missiles hit their designated practice targets. Belarusian troops test-fired a short-range Iskander ballistic missile inside Russia.

Putin has repeatedly reminded the world about Moscow’s nuclear arsenals since the war in Ukraine started in February 2022 to deter the West from ramping up support for Kyiv.

In 2024, the Kremlin adopted a revised nuclear doctrine, noting that any nation’s conventional attack on Russia that is supported by a nuclear power will be considered a joint attack on his country. That threat was clearly aimed at discouraging the West from allowing Ukraine to strike Russia with longer-range weapons and appears to significantly lower the threshold for the possible use of Moscow’s nuclear arsenal.

Russia's new Sarmat ICBM is being test launched at an unspecified location in Russia (Russian defense ministry).

The revised doctrine also placed Belarus under the Russian nuclear umbrella. Putin has said that Moscow will retain control of its nuclear weapons deployed in Belarus, which borders Ukraine and NATO members Latvia, Lithuania and Poland, but would allow its ally to select the targets in case of conflict.

Drills come as Ukrainian drones spotted in the Baltics

The maneuvers are held amid an increase in drone activity in the Baltic nations. On Tuesday, a NATO jet shot down a Ukrainian drone over southern Estonia. Ukraine apologized for that “unintended incident,” without specifying what had happened.

On Wednesday, an emergency announcement about a drone flying over Belarus prompted residents of the Lithuanian capital of Vilnius, including top officials and lawmakers, to take shelter and led to a brief closure of its airport.

Ukrainian drones targeting Russia’s Baltic ports and energy facilities have recently crossed or come down in NATO territory on several occasions. Amusingly, instead of blaming the source, Ukraine, Western officials blamed Russian electronic jamming of the drones.

Russia’s Foreign Intelligence Service said Tuesday that Ukraine is preparing drone attacks against Russia from the territory of the Baltic countries and warned of retaliation It alleged Ukrainian military personnel had been deployed to Latvia and warned that the country’s membership in NATO wouldn’t protect it from “just retribution.” Latvian authorities said the allegation was not true.

Last month, the Russian Defense Ministry published a list of factories in Europe that it said were involved in producing drones and their components for Ukraine. It warned that attacks on Russia involving drones manufactured in Europe are fraught with “unpredictable consequences.”

Some commentators interpreted the bellicose statements from Moscow and this week’s exercise featuring short- and medium-range nuclear weapons capable of reaching targets in Europe as part of Kremlin efforts to discourage Western allies from bolstering support for Ukraine.

Asked what message the nuclear exercise was intended to send, Kremlin spokesman Dmitry Peskov responded that “any drills are intended to send a signal,” but wouldn’t elaborate.

Tyler Durden Thu, 05/21/2026 - 12:00

US Targets Hamas Support Networks

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The Department of the Treasury's Office of Foreign Assets Control (OFAC) is sanctioning four individuals associated with a pro-Hamas flotilla that is trying to access Gaza in support of the terrorist group, the department said in a May 19 statement.

Hamas terrorists secure an area before handing over an Israeli American hostage to a Red Cross team in Gaza City on Feb. 1, 2025. Photo by SAEED JARAS/Middle East Images/AFP via Getty Images

The flotilla is organized by the Popular Conference for Palestinians Abroad (PCPA), which has been classified as a specially designated global terrorist by the United States.

"The PCPA was established with funding from Hamas's International Relations Bureau and Hamas directs its activity through the placement of Hamas officials throughout the organization, including its executive body, the General Secretariat," the Treasury said.

"So-called humanitarian flotillas that are organized by or supporting designated parties represent a significant compliance risk for financial institutions. Sanctioned terrorist groups continue to maintain significant influence over maritime flotillas to Gaza."

The four individuals sanctioned by the Treasury include a Spanish member of the PCPA's General Secretariat, who is a central figure of the flotilla; the acting secretary general and president of the PCPA, who is from Jordan; a Belgium-based European coordinator for the Samidoun organization; and a Samidoun coordinator from Spain.

Samidoun is a front organization for the Popular Front for the Liberation of Palestine, which the State Department has designated as a foreign terrorist organization. Both the PCPA and Samidoun act on behalf of sanctioned Palestinian terrorist organizations, the Treasury said.

In addition, OFAC sanctioned several members of Muslim Brotherhood networks who are aligned with Hamas.

All property and interests in property of the sanctioned individuals that are in the United States or in control of U.S. persons are effectively blocked and must be reported to OFAC. The sanctions prohibit U.S. persons from engaging in any transactions involving the property or interests in property of those who are sanctioned.

"The pro-terror flotilla attempting to reach Gaza is a ludicrous attempt to undermine President Trump's successful progress toward lasting peace in the region," Secretary of the Treasury Scott Bessent said. "Treasury will continue to sever Hamas' global financial support networks, no matter where in the world they are."

State Department spokesperson Thomas Pigott said in a May 19 statement that OFAC has targeted three enablers - the flotilla organizers, Muslim Brotherhood members, and Samidoun members - who he said are used by Hamas to sustain its position in Gaza, engage in terrorist violence, and finance its operations.

OFAC's action exposes how Hamas exploits purported civil society organizations, diaspora groups, and religious institutions "to advance its malign agenda while claiming humanitarian objectives," according to the spokesperson.

"Under President Trump, the United States remains committed to supporting efforts to achieve lasting peace in the Middle East," he added. "We will continue to use all available tools to counter those who support terrorism and obstruct the path to a peaceful resolution of the conflict."

Hamas-UN Ties

Meanwhile, U.S. lawmakers are aiming to eliminate a U.N. agency accused of employing Hamas terrorists, according to a May 19 statement from the office of Sen. Tom Cotton (R-Ark.). The agency being targeted is the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA).

In February 2025, President Donald Trump signed an executive order banning funding for UNRWA. According to the order, the agency has reportedly been infiltrated by members of foreign terrorist organizations, with employees from the organization being directly involved in the Oct. 7, 2023, Hamas attack on Israel.

UNRWA has dismissed these allegations. In a September 2025 fact sheet, the agency said that claims of some members of its staff in Gaza having links with Hamas or the Palestinian Islamic Jihad are false and that it has "not received any information, let alone any evidence, from the Israeli Authorities or any other Member State" about such accusations.

In a May 18 letter to Trump, Cotton and 24 colleagues asked that the administration take "decisive action to fully dismantle UNRWA and eliminate it from the UN budget."

"Any aid organization in Gaza or otherwise must be demonstrably free of ties to terrorism and committed to transparency, accountability, and peace," they said in the letter. "We must ensure this failed system doesn't continue reinforcing the conditions that have fueled terrorism for generations. The time to act is now."

Tyler Durden Thu, 05/21/2026 - 11:40

Turkey Liquidated Almost All Of Its US Treasuries In March To Defend Crashing Lira

Two months ago, at the end of March, we reported that Turkey was aggressively dumping its gold reserves in a panic scramble to obtain dollar funding, which Erdogan's regime was using to keep the Turkish lira from crashing, and to also pay for energy imports which had suddenly soared in price as a result of the Iran war.

The violent selling by Turkey (and other emerging markets) was behind the brutal plunge in gold prices, which tumbled by more than $1000 from near all-time highs at the start of the war to the low 4000s by the time Turkey had done selling much of its gold. 

Then earlier this week, we got another confirmation of Turkey's wild liquidation spree when the latest central bank data showed that Turkey’s foreign reserves had their biggest monthly decline on record in March, as the Iran war triggered global selloffs in emerging market assets and strained the lira.

According to balance-of-payments data, Turkey's official reserves cratered by $43.4 billion in March. Part of the decline reflected state intervention to offset portfolio outflows. The current-account deficit, meanwhile, widened to $9.7 billion in March from $7.3 billion in February as a result of soaring commodity prices.

A major energy importer, Turkey has been hit hard by higher oil and gas prices caused by the effective closing of the Strait of Hormuz and the resulting disruptions to world supplies of crude and refined products. Meanwhile, global banks have started changing their formerly favorable outlook on the lira, citing the exploding current-account deficit. Should inflation pressures persist, Turkey will have no choice but to pursue another accelerated devaluation of the Turkish lira. 

“As international institutions continue to raise their average oil price forecasts for 2026, disruptions in supply chains and ongoing regional tensions — and their potential negative impact on transportation and tourism revenues — keep upward risks alive in year-end projections” for Turkey, said Istanbul-based economist Haluk Burumcekci.

Turkish central bank Governor Fatih Karahan said last week that the ratio between the current-account deficit and gross domestic product would be “below historical averages” this year while acknowledging the upside risks.

Yet as we said in March, while selling gold is a step of clear desperation for Turkey which had put in much efforts in recent years to build up a substantial gold stock, it is understandable for a regime that suddenly finds itself in a dollar funding crisis, the bigger question is did Turkey do the same with its holdings of Treasuries which are far more liquid and thus far less likely to move the market even when facing a sizable liquidation. 

The answer, we learned today, is a resounding yes.

According to Bloomberg calculations based on US Treasury data, Turkey sold almost all of its US Treasuries in March as it stepped up efforts to support its currency during the first month of the Iran war. The amount of Treasuries held by Turkey crashed to just $1.8 billion by the end of March, down from $16 billion the previous month, the data showed. The figure includes securities held by the central bank and other Turkish entities, including corporates.

The decline coincided with a selloff in Turkish markets after the Middle East conflict erupted, sending oil prices sharply higher. The central bank moved immediately to prevent a crash in the lira by tightening funding conditions and selling off foreign exchange and gold assets. Its interventions also included swapping gold from reserves, although now that it has also dumped the bulk of its last ditch dollar reserves, those swaps will almost certainly end up forcing Turkey to hand over whatever gold was pledged. 

Turkey’s Treasury holdings were as high as $21 billion in February 2025 after the country spent a year rebuilding reserves. They had peaked about a decade ago at $80 billion, before steadily declining as relations with the US soured over a range of political and geopolitical disputes, and as Turkey consistently sold reserves to maintain a smooth devaluation of the lira. 

Despite the interventions, the lira has remained under pressure as the war drags on. Last week, the central bank raised its year-end inflation target to 24% from 16%, after data showed annual inflation accelerated to 32.4%. Turkish bonds have also suffered steep losses, with 10-year yields hitting record highs of 35.75%.

And now that Turkey has no more gold or Treasurys with which to defend the currency, expect a sharp and painful death in the currency which has gone from less than 10 against the dollar five years ago to a record 45.6 today..

Tyler Durden Thu, 05/21/2026 - 11:20

Is The Bond Market About To Break Washington

Submitted by QTR's Fringe Finance

The bond market is beginning to force reality onto Washington, and it may ultimately force an end to the Iran war long before politicians or diplomats are willing to admit it.

For months, investors have focused on missiles, retaliation headlines, oil chokepoints, and the possibility of a broader regional escalation from the Iran War. During the geopolitical noise, I urged readers not to overlook stress in financial markets that was happening before the war even started, namely in places like private credit and subprime auto lending. I called these “real crises” hiding behind record highs while “investors” chase gamma squeezes higher in an ongoing distortion feedback loop that is making things look far better than they are under the surface.

And now, beneath all the geopolitical noise, a much more serious, harder to ignore crisis is unfolding. As Cypher says in The Matrix:

"Fasten your seat belt Dorothy, 'cause Kansas is going bye-bye."

This crisis is in the Treasury market. Bond yields are moving sharply higher, and they are sending a message that policymakers can no longer afford to ignore: the financial system is becoming unstable under the weight of war spending, massive deficits, persistent inflation, and a debt load that was already unsustainable before this conflict began.

The bond market does not give a flying fuck about political narratives, gamma squeezes, meme stocks, retail investors or any other ticky tacky end-around style loopholes that continue to push stocks higher. It cares about math, fiscal policy and monetary policy. And the math is getting ugly very quickly.

The 10-year Treasury yield is arguably the single most important price in global finance because virtually every major asset class is built on top of it. Mortgage rates, commercial real estate valuations, private equity models, corporate borrowing costs, equity multiples, venture capital, and government financing itself all depend on stable Treasury markets. When yields rise too quickly, everything starts repricing at once. That is why this matters so much more than the daily moves in the stock market.

Washington understands this, even if it refuses to say it publicly.

The United States can survive political embarrassment overseas, but it simply cannot survive a disorderly Treasury market.

That is why I believe the bond market is eventually going to force a few things. First, a de-escalation of the Iran conflict. The priority now is no longer “victory” or even geopolitical strategy. The priority is restoring stability before bond yields spiral completely out of control. A prolonged war that keeps oil prices elevated while deficits explode higher is simply incompatible with a heavily indebted financial system already struggling under the burden of high interest rates.

The problem is that America entered this conflict from an extraordinarily weak fiscal position to begin with. This is not World War II, when the country had a young population, industrial dominance, low debt levels, and decades of economic expansion ahead of it. Today the US government is already running deficits approaching $2 trillion annually during what is supposedly a normal economic environment. Interest expense on the national debt has already become one of the largest items in the federal budget. Now add war spending, weakening foreign demand for Treasuries, rising commodity prices, and higher refinancing costs, and the entire situation starts looking dangerously unstable.

This is where the inflation problem becomes unavoidable.

War has always been inflationary, but not just because of oil shocks or supply chain disruptions. The deeper issue is debt creation itself. Wars are financed through borrowing, and borrowing at these levels increasingly requires central bank intervention one way or another. The process is actually very simple: war creates debt, debt pressures the financial system, and eventually the system responds through some combination of money creation, currency debasement, and financial repression.

That is exactly what the bond market is beginning to anticipate right now.

Ironically, as I’ve predicted the past week, before the Federal Reserve eventually steps in to suppress yields, we may actually see another round of rate hikes first. If oil prices remain elevated and inflation expectations continue rising alongside Treasury yields, the Fed may feel forced to tighten policy again simply to preserve credibility and prevent inflation psychology from becoming entrenched. If that doesn’t work, I’ve predicted that the Fed will simply start bullshitting its inflation numbers.

In other words, the system may briefly attempt to defend the dollar before ultimately surrendering to debt realities. That creates the possibility of a brutal stagflationary environment where growth slows, markets weaken, borrowing costs rise, and inflation remains stubbornly elevated at the same time.

And that…is a nightmare scenario for risk assets and a near-impossible job for incoming Fed chair Kevin Warsh.

For years, markets became addicted to near-zero rates and endless liquidity. Entire sectors of the economy were built on the assumption that capital would remain permanently cheap. But when Treasury yields rise meaningfully, everything changes. Leveraged speculation becomes harder to sustain. Corporate refinancing becomes more expensive. Housing affordability deteriorates further. Commercial real estate faces additional stress. Equity valuations compress. The “everything bubble” suddenly starts losing oxygen and all the shit I’ve written about that I think will blow up — including all 10 area of the market I highlighted here — will implode.

And once again, the people who get hurt the most will not be the financial elite, it will be ordinary Americans. You heard it from the former bartender turned Substack shit-talker first…read this slowly:

Mom and pop savers are about to get squeezed from every direction at once. Their wages will fail to keep up with inflation. Their borrowing costs will rise. Their credit card rates will stay elevated. Their insurance, food, energy, and housing costs will continue climbing. Their retirement portfolios will become more volatile. And eventually, after enduring all of that pain, they will likely watch policymakers step in to rescue the bond market and financial system through another round of monetary intervention that further destroys the purchasing power of their savings.

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Every cycle ends the same way. Wall Street and the financial system are treated as too important to fail, while ordinary citizens absorb the consequences through inflation and currency debasement. Policymakers will present future interventions as necessary for “financial stability,” but stability for whom? Stability for leveraged institutions, overextended governments, and asset markets dependent on artificially suppressed rates.

Meanwhile, the average family gets punished twice. First through inflation, then through the policies used to contain the damage caused by inflation.

And make no mistake, if yields continue climbing, the Fed and Treasury will eventually intervene in some form. Maybe they will not officially call it yield curve control at first. Maybe it arrives through stealth quantitative easing, emergency liquidity facilities, Treasury buyback programs, bank regulatory changes, or coordinated purchases through the financial system. But the end result will be the same: suppress long-term yields because the debt burden has become too large for markets to absorb naturally.

At current debt levels, genuinely free market interest rates are politically and financially impossible. The bond market is beginning to expose that reality.

That is also why I am becoming bullish again on gold, silver, and mining stocks after stepping away from them earlier this year following their enormous run in 2025. If the Fed ultimately chooses to suppress yields while inflation remains structurally elevated, precious metals become one of the clearest beneficiaries. Gold and silver perform best when confidence in fiat systems deteriorates and when governments prioritize debt sustainability over currency stability. I’ve long said I think they will have a sharp fall lower on the initial deleveraging, then probably double off their near term bottom in short order once the Fed’s liquidity starts hitting the market.

And that is exactly the direction this appears to be heading.

The Iran war may end sooner than many expect, not because global leaders suddenly become responsible, but because the bond market is forcing them into a corner. Financial instability is becoming the greater threat. Policymakers now face an impossible balancing act between inflation, debt servicing costs, economic slowdown, and geopolitical conflict.

Something will have to give. Historically, when governments reach this stage, they choose to protect the debt market and sacrifice the currency.

There is little reason to believe this time will be any different.

--

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This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

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Tyler Durden Thu, 05/21/2026 - 11:05

Trump EPA Targets Biden-Era Refrigerant Rules In Affordability Push

Watch Live 

President Trump Participates in an Announcement with the Administrator of the EPA https://t.co/lZJTv7m8HJ

— The White House (@WhiteHouse) May 21, 2026

* * * 

The Trump administration plans to delay compliance with Biden-era EPA regulations targeting hydrofluorocarbons later today. These regulations apply to refrigerants used in air conditioners, refrigerators, supermarket cooling systems, refrigerated trucks, cold storage, and some industrial applications.

Bloomberg reports that the EPA's 2023 Technology Transitions Rule, enacted under the American Innovation and Manufacturing Act, will be rolled back, with an estimated cost savings of more than $2.4 billion.

EPA Administrator Lee Zeldin said the Biden-era rules imposed costly and unrealistic requirements that exceeded the law.

Americans were right to be frustrated with the Biden-era refrigerant rules. They didn't protect human health or the environment and instead piled on costly, unattainable restrictions beyond what the law requires," Zeldin told the outlet in a statement.

Zeldin added, "Today, the Trump EPA is fulfilling President Trump's promise to lower costs and is fixing every problem we can under the authority Congress gave us."

President Trump and Zeldin are set to announce the rollback of Biden-era EPA regulations at a White House event later today. Zeldin's team is also preparing to propose additional rollbacks on hydrofluorocarbon regulations for refrigerated transport.

C-SPAN says Trump and Zeldin are set to announce the Oval Office at 11:00 ET.

The move here fits within Trump's broader deregulation agenda, which has focused on rolling back Biden-era environmental rules and lowering compliance costs for businesses to induce an economic boom.

Tyler Durden Thu, 05/21/2026 - 10:15

US PMIs Lead The World As Manufacturing Tops 4-Year Highs, Services Sink

Following Japan's ugly PMIs (Services lowest since March 2025) and Europe's disaster (weakest composite EU PMI since late 2023)...

...with prices surging...

All eyes are on the US 'soft' survey data for signs of divergence (or contagion).

With US 'hard' data improving notably, the preliminary soft survey data for May was mixed with improved performance in manufacturing was countered by a sluggish service sector.

• Flash US Services PMI Business Activity Index: 50.9 (April: 51.0). 2-month low.

• Flash US Manufacturing PMI: 55.3 (April: 54.5). 48-month high. 

Source: Bloomberg

“The damaging economic impact from the war in the Middle East is becoming increasingly evident in the business surveys," according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:

"The ‘flash’ PMI data for May recorded only modest growth of business activity as demand was again squeezed by a further spike in prices and jobs were cut as firms worried over rising costs and the economic outlook.

Coming on the heels of a subdued April reading, the May PMI indicates that the economy will struggle to manage annualized GDP growth of much more than 1% in the second quarter...

However, Williamson notes that even this subdued pace of growth may not last.

"On average, over the past three months order book growth has slowed to its weakest for two years, and a boost from precautionary stock building due to concerns over further price hikes and supply delays will not last forever.

Demand also looks set to cool further in response to rising prices.

"Firms’ costs have jumped higher at a pace not seen since the energy price shock of 2022 and are being passed on to customers in the form of sharply higher selling prices. The survey price gauges therefore indicate that inflation looks set to rise further just as the economy cools.”

Finally, while the composite numbers are not that encouraging, on a relative basis, US looks dominant...

Maybe trump was right about the impact of the war on everyone else? (Just don't tell anyone who drives!)

Tyler Durden Thu, 05/21/2026 - 09:54

Lilly's Next-Gen Weight-Loss Drug Clears Trial With Near-Bariatric Surgery Results

Eli Lilly reported positive Phase 3 results for its next-generation obesity drug, retatrutide, which delivered weight-loss results on par with those of bariatric surgery.

In the TRIUMPH-1 trial, overweight adults, but without diabetes, achieved meaningful weight loss across all tested doses after 80 weeks:

• 12 mg dose: average weight loss of 70.3 pounds, or 28.3% of body weight.

• 9 mg dose: average weight loss of 64.4 pounds, or 25.9%.

• 4 mg dose: average weight loss of 47.2 pounds, or 19%

Ahead of the results, RBC Capital Markets analyst Trung Huynh said the key success range would be 28% to 30% weight loss.

Lilly's 12 mg dose appears to have cleared the low end of Huynh's bar, with patients losing an average of 28.3% of their body weight over 80 weeks.

"We're in a zone that's historically been associated with bariatric surgery, and you're getting it with a medicine," Kenneth Custer, president of Lilly Cardiometabolic Health, told Bloomberg in an interview.

Custer added, "I think we can definitively check the box" based on the data that "retatrutide moves the goalpost on max efficacy."

Retatrutide is a first-in-class triple hormone receptor agonist targeting GIP, GLP-1, and glucagon, positioning it as potentially superior to current weight-loss drugs such as Lilly's Zepbound, Novo Nordisk's Wegovy, and copycat GLP-1s.

Lilly noted some downsides to taking the drug in the trial:

Events of dysesthesia and urinary tract infections were generally mild to moderate, the majority resolved during treatment, and most participants continued taking retatrutide

In markets, Lilly shares rose about 1% in premarket trading in New York, while shares of the Wegovy competitor, Novo Nordisk, traded in Copenhagen, fell slightly.

Latest in the GLP-1 space:

• HIMS Shares Plunge As Pivot To Branded GLP-1s Weighs On Outlook

The key question is whether bariatric surgery begins to lose favor among patients as next-generation obesity medications replicate, or come close to replicating, surgery-level weight loss without an invasive procedure.

Tyler Durden Thu, 05/21/2026 - 09:40

The Water Economics Of Data Centers Vs. Almond Farms & Golf Courses

A recent Gallup poll shows that nearly 70% of Americans oppose the construction of a data center in their communities, highlighting the rise of local resistance movements against hyperscaler buildouts. This resistance is driven by concerns over skyrocketing power bills, the destruction of farmland as it is transformed into industrial-scale AI infrastructure, and fears that data centers will drain local resources, particularly water.

It's no surprise that data center resistance is only gaining steam and will likely accelerate from here, as tech bros on the All-In podcast recently sounded the alarm. This resistance is emerging not just as power bills explode and water scarcity fears mount, but also as corporate America unleashes the "white-collar purge," with human labor swapped for GPUs. Meta was the latest to announce rising AI adoption alongside a new round of layoffs.

Water has become a flashpoint in data center debates, as some of these facilities can use 5 million gallons of water every day, as much as 16,000-plus average U.S. households, according to Environmental Protection Agency estimates.

There is also the extraordinary amount of power required to run the chip stacks, which consumes millions of additional gallons of water - more than the water used for cooling.

Hyperscalers are set to deploy $700 billion in capex this year to build out data centers and key AI infrastructure products, suggesting that local resistance nationwide will only continue to build as tech bros search for alternative options (low-Earth orbit and or residential backyards). Permitting denials and other issues may delay or block nearly half of data center projects this year.

However, on the subject of water, critics of data centers often fail to point out - especially in California - that agriculture also consumes a tremendous amount of water.

X user Smirkley compared the economics of a 5-gallon water-cooler jug, arguing that 5 gallons of water generates about $132 in economic output in data centers, but only about 2 cents in almonds.

Yet where is the outrage here?

Here is Smirkley's math:

• Data centers: $529.1 billion ÷ 20 billion gallons × 5 = $132.28 per 5 gallons
• California almonds: $5.66 billion ÷ 1.59 trillion gallons × 5 = 1.78 cents per 5 gallons

Smirkley's point is that AI infrastructure produces far more economic output per gallon than almonds.

Fine. Let me make it simple.

Almonds grown in the US use 80x more water than every American data center combined. This is the difference between an 8oz glass vs. a 5-gallon jug. pic.twitter.com/6NvR46klqJ

— Smirkley (@Smirkley) May 19, 2026

"Anti-data-center luddites may be worse than anti-nuclear activists. It is the same emotional panic, but even dumber somehow," the X user noted, adding, "Almonds grown in the U.S. use 80x more water than every American data center combined. This is the difference between an 8 oz. glass and a 5-gallon jug."

Honestly, fuck almonds pic.twitter.com/6PWXPKD8A7

— @jason (@Jason) May 14, 2026

"Data centers aren't stealing your water. Even if the total water draw of data centers triples by 2030, they'd require just 8% of the water consumed by American golf courses.@dodgeblake interviewed @AndyMasley, the man who's been debunking AI water doomerism," outlet Pirate Wires wrote on X. 

Data centers aren’t stealing your water.

Even if the total water draw of data centers triples by 2030, they’d require just 8% of the water consumed by American golf courses.@dodgeblake interviewed @AndyMasley, the man who’s been debunking AI water doomerism. Full story 👇 https://t.co/2paxx8rHeO pic.twitter.com/gDpDiwDOca

— Pirate Wires (@PirateWires) May 20, 2026

Where is the outrage for almonds and golf courses?

Tyler Durden Thu, 05/21/2026 - 09:15

Walmart Tumbles On Disappointing Guidance; Warns Low-Income Consumers Drowning, High Fuel Costs Will Hit Profit

Extending concerns about US consumer weakness - now that the bumper OBBBA tax refund period is over - after yesterday's earnings by Home Depot and Target, this morning Walmart reported Q1 earnings (the last big company to report, rounding out earnings season) and warned that fuel costs are squeezing the company’s bottom line and could lead to higher prices for shoppers. 

In the latest quarter, the world’s largest retailer said comparable sales in US stores rose 4.1%, excluding fuel, in the latest quarter, slightly better than the 4.0% Wall Street analysts were expecting. That was the good news; the bad news is that this was the slowest growth in comp store sales since 2024; Walmart also forecast adjusted profit for the second quarter that missed analysts’ expectations. That, together with several warnings on the state of the low-income consumer and that prices will rise unless input costs drop slammed shares.

The results show that the company continues to gain market share across income levels with its focus on low prices, fast delivery and wide assortment. But the emphasis on affordability is facing pressure as inflation accelerates and the conflict in Iran drives up fuel prices. Here is a snapshot of what WMT just reported, starting with the highlights:

• Revenue $177.75 billion, +7.3% y/y, beating estimates of $175.06 billion
  • Walmart-only US stores comparable sales ex-gas +4.1%, estimate +4%
  • Sam’s Club US comparable sales ex-gas +3.9%, estimate +3.59%
• Adjusted EPS 66c vs. 61c y/y, in line with exp. 66c
• Gross margin 24.3%, in line with exp. 24.3%

Walmart's comparable sales rose 4.1% from a year ago, just ahead of expectations, as the number of transactions was up 3% and the value of the average transaction increased 1.1%. That was down from a 4.6% rise in the previous quarter, and was the slowest year-over-year growth since the first quarter of 2024. Furthermore, with transactions at Walmart US rising 3%, and average ticket prices up only 1.1%, means that WMT is eating much of the input costs and making up for its with traffic. That however, will change very soon as the company revealed in its earnings call. 

Going down the line:

• Change in US E-Commerce sales +26%, estimate +18.6%
• Operating cash flow $4.74 billion, -12% y/y
• Adjusted operating income $7.67 billion, estimate $7.69 billion

US e-commerce sales grew 26% during the quarter, fueling growth in the company’s biggest market. Sales of grocery and general merchandise rose mid single-digits. General merchandise, which consists of apparel, electronics and other discretionary items, gained the most share in five years.

Walmart reported strong growth in grocery and general merchandise categories; partially offset by 100 bps headwind from maximum fair pricing legislation in pharmacy. Broad-based share gains across categories and income tiers led by upper-income households.

“The high-income consumer is spending with confidence in many categories, whereas the low-income consumer, we can tell, is more budget-conscious, trying to navigate certain financial distress,” Chief Financial Officer John David Rainey said in an interview with Bloomberg News. During the quarter, sales slowed somewhat in April after the Easter holiday. Higher tax refunds likely muted the impact of rising gas prices, though that’s abating, Rainey said. Prices rose 1.2% during the quarter and they could increase further if fuel prices stay where they are, he added, although that would surely lead to reduced traffic.

Translation: if it weren't for upper income consumers, who are forced to trade down to discounters such as Walmart, earnings would have been a disaster. 

And nowhere was this more obvious than in the company's guidance, because while Q1 earnings were solid, the reason the stock is selling off sharply in premarket trading is the company's disappointing forecast:

Second quarter forecast: 

• Sees adjusted EPS 72c to 74c, both below the median estimate of 75c 
• Sees net sales at constant currencies +4% to +5%
• Sees operating income at constant currencies up 7% to 10%

2027 full-year forecast

• Still sees adjusted EPS $2.75 to $2.85, below the median estimate $2.92
• Still sees net sales at constant currencies +3.5% to +4.5%

Walmart, which is viewed as an economic barometer due to its large size and footprint across the US and other markets, was the latest confirmation that the "lower half" of the K-shaped economy continues to sink, and it is only the upper half (that is increasingly shopping at WalMart) which is keeping the retailer afloat. 

While spending has largely held up in recent years, consumers have become increasingly selective with their purchases. Good deals and unique products can still attract buyers.

But the biggest wildcard is that the higher tax refunds this year have given families some extra cash, but this benefit is now fading fast as we explained a month ago. While most prices of general goods haven’t risen as operators move existing inventory, this could change as the war drags on.

There' more: fuel weighed on Walmart’s profit margin in the quarter, as the company absorbed “virtually the entirety” of the increases during the period, Rainey said. The company is prioritizing keeping prices low, with the number of discounts rising 20% from a year ago. That said, Reiney warned of potential higher retail price inflation in Q2 and H2 if the current elevated cost environment persists.

"It’s tough on very short notice to be able to navigate a cost headwind like that,” he said. While Walmart will be able to manage through it, he expects to see an equal or larger challenge related to fuel in the current quarter.

Rainey said that the number of gas gallons customers bought at Walmart stations fell below 10 for first time since 2022; he added that the decline in gas buying is sign of financial stress.

Walmart has consistently posted stronger results than many competitors, raising investors’ expectations and pushing the company's forward PE to an insane 45x, a multiple that will soon get a painful reminder of what happens to multiples during consumer recessions.

Walmart’s cautious narrative echoes commentary from big-box peers Target Corp. and Home Depot which both signaled this week that consumers are staying resilient although purchases are slowing. Kraft Heinz, McDonald’s and other companies have also struck a cautious tone recently. The past year has been a roller coaster for consumer-facing companies, first with President Trump’s expansive, on-off tariffs, that in some cases roiled operations, and now with the ongoing geopolitical conflicts threatening to dampen demand.

The Bentonville, Arkansas-based retailer has said it seeks to gain market share during challenging economic times by focusing on value and essentials like groceries. Delivery and other online services have expanded Walmart’s base of clients to include wealthier shoppers. Advertising and other businesses are also contributing to profit growth and giving the company more room to further invest in lowering prices and improving store operations.

In particular, fast deliveries have been a growth engine, and the company’s efforts to make inroads into the fashion market are gaining traction. Walmart has also expanded the selection of merchandise on its marketplace of third-party vendors.

The company’s shares tumbled more than 3% in premarket trading in New York. The stock has risen 17% so far this year as of Wednesday’s close. Shares of Walmart’s peers, including Target and Kroger Co., also fell in premarket trading on Thursday.

Full Q1 investor presentation below (pdf link)

q1 Fy27 Earnings Presentation by Zerohedge

Tyler Durden Thu, 05/21/2026 - 09:10