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SPLC Leader Pleads Not Guilty To Charges Of Funneling Millions To Neo-Nazis

Authored by Steve Watson via Modernity.news,

The Southern Poverty Law Center’s leader entered a not guilty plea in federal court this week, desperately fighting charges that the organization defrauded its donors by secretly funneling more than $3 million to the very white supremacist and neo-Nazi groups it claimed to oppose.

The SPLC was forced to respond to an 11-count indictment from the Trump DOJ, including six counts of wire fraud, four counts of bank fraud and false statements, and one count of conspiracy to commit money laundering. 

Commentators are labelling the case one of the biggest scams ever to be exposed.

🚨 UPDATE: The Southern Poverty Law Center leader frantically pleads NOT GUILTY after they were exposed funding millions to white supremacists and neo-nazis

SHUT IT DOWN!

- 6 counts of wire fraud
- 4 counts of bank fraud and false statements
- 1 count of conspiracy to commit… pic.twitter.com/bfHORfLgTG

— Eric Daugherty (@EricLDaugh) May 9, 2026

The SPLC is accused of making payments amounting to over $1 million to a National Alliance affiliate, more than $300,000 to an Aryan Nations affiliate, $270,000 to a “Unite the Right” member, $140,000 to a former National Alliance chairman, $73,000 to former KKK members, and $19,000 to an American Front president and felon.

The court appearance comes just weeks after the Trump DOJ’s indictment exposed the scheme. 

The DOJ alleges the SPLC used a now-defunct informant program as cover. Donors were never told their money was going to actual extremists through shell companies, sham accounts, and prepaid cards between 2014 and 2023. 

Instead of dismantling hate groups, the organization allegedly propped them up—manufacturing the very threats it used to justify its existence and fundraising.

SPLC interim president and CEO Bryan Fair issued a statement after the arraignment: “The charges against the SPLC are provably wrong; they are based on inaccurate facts and a misapplication of law. Our informant program was successful in accomplishing its purposes: Threats and attacks were prevented, criminal activity was stopped, and information was gathered to dismantle the efforts of hate and extremist groups.”

The statement continued, “There is no question that the information the SPLC shared with law enforcement saved lives. The SPLC will continue to fight white supremacy and various forms of injustice in our mission to build a democracy where we can all live and thrive. We will continue that mission no matter what.”20

Fair’s team also filed court documents claiming the indictment “seeks to criminalize some of the very investigative tools and programs that the SPLC has used for decades.”

Yet the numbers don’t lie. Over $3 million allegedly flowed directly to leaders and organizers of the racist groups the SPLC publicly condemned. Trial is set to begin in October.

This plea comes as no surprise to those who have watched the SPLC’s pattern. Long accused of inflating “hate group” lists to smear mainstream conservatives, the organization now stands accused in federal court of the very extremism it claims to fight. The Trump administration’s Justice Department has made clear it will not tolerate the scam.

Acting Attorney General Todd Blanche previously stated at the indictment announcement: “The SPLC is manufacturing racism to justify its existence. Using donor money to allegedly profit off Klansmen cannot go unchecked. This Department of Justice will hold the SPLC and every other fraudulent organization operating with the same deceptive playbook accountable. No entity is above the law.”

FBI Director Kash Patel added: “The SPLC allegedly engaged in a massive fraud operation to deceive their donors, enrich themselves, and hide their deceptive operations from the public. They lied to their donors, vowing to dismantle violent extremist groups, and actually turned around and paid the leaders of these very extremist groups—even utilizing the funds to have these groups facilitate the commission of state and federal crimes. That is illegal—and this is an ongoing investigation against all individuals involved.”

GOP representative Andy Ogles has also declared the SPLC “absolutely culpable” in the assassination of Charlie Kirk, linking the group’s inflammatory labeling of conservatives to real-world violence:

The SPLC’s frantic not-guilty plea changes nothing. The evidence is in the indictment, the payment records, and now the courtroom itself. While the organization vows to fight on and continue its “mission,” Americans can see the truth: a so-called watchdog that funded the wolves it claimed to hunt.

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

Tyler Durden Sun, 05/10/2026 - 18:05

Kim Jong Un Creates Ultimate Deadman Switch: North Korea To Auto-Launch Nukes If Assassinated

North Korea just casually revised its constitution to automatically launch a nuclear strike if leader Kim Jong Un is assassinated, or if the country’s nuclear command-and-control system is placed in danger by hostile forces’ attacks. 

The change was adopted during the first session of the 15th Supreme People’s Assembly in Pyongyang on March 22 and was disclosed this week by South Korea’s National Intelligence Service, which briefed senior officials on the details.

The updated Article 3 of North Korea’s nuclear policy law states: “If the command-and-control system over the state’s nuclear forces is placed in danger by hostile forces’ attacks … a nuclear strike shall be launched automatically and immediately.”

South Korean intelligence officials said the revision codifies procedures for retaliatory nuclear attacks in the event that Kim is killed or incapacitated during an attack, Reuters reports.

The policy update comes months after the assassination of Iran’s Supreme Leader Ayatollah Ali Khamenei and other senior Iranian officials in U.S.-backed Israeli strikes in February 2026. Analysts have described those operations as a “wake-up call” for Pyongyang, highlighting the effectiveness of leadership-targeted strikes.

Professor Andrei Lankov of Kookmin University in Seoul told The Telegraph that the constitutional emphasis gives added weight to what may have been existing policy: “This may have been policy before, but it has added emphasis now it has been enshrined in the constitution. Iran was the wake-up call.”

The nuclear policy revision was adopted alongside broader changes to North Korea’s constitution, also passed in March and revealed earlier this week. Those amendments remove all references to unification with South Korea, add an explicit territorial clause defining the country’s borders (including with the Republic of Korea to the south), and formally state that command authority over nuclear forces rests with Kim Jong Un as chairman of the State Affairs Commission.

North Korea has not issued an official response to the reports. South Korea’s government has said it remains committed to its policy of peaceful coexistence on the Korean Peninsula and will review the implications of the changes.

The moves come as North Korea continues to expand its nuclear and missile capabilities, including plans to deploy new long-range artillery systems near the border with South Korea.

Tyler Durden Sun, 05/10/2026 - 17:30

How The American System Reshaped The World

Authored by J.B. Shurk via American Thinker,

Freedom exists in the absence of government control.  We are free when we are able to worship, speak, write, make a living, and protect our families and property without fear that government agents will punish us for our actions.  America’s Founding Fathers embraced an expansive view of personal liberty that recognizes the inherent right of each person to do as he sees fit, so long as that person refrains from infringing upon the liberties of another.

Right away, then, freedom comes with some restraint.  If we each lived alone on our own island, no-one’s liberty but our own would matter.  When we live within a society, our freedom comes with certain encumbrances - namely, an obligation not to poach the freedom of others.  There is, in other words, a moral consideration that necessarily accompanies the exercise of freedom.  Do my actions cause someone else harm?  Does the expression of my will unfairly restrict the expression of another?  Do my decisions unjustly deny someone else’s liberty?

Harm…fairness…justice - these are words essential to every person’s moral reasoning.  They are subjects that are dissected and analyzed throughout the Bible.  Because our common law has evolved from a Biblical worldview, our legal system is rooted in Judeo-Christian morality.  Therefore, an American who tries earnestly to be a good Christian is also likely acting within the boundaries of American law.  

Taken together, freedom, moral restraint, and legal punishment operate in concert within any society.  To the extent that a member of society can reasonably govern himself, State-implemented punishment becomes unnecessary.  When members of society abandon self-control and pursue personal liberty recklessly or in ways that threaten the liberty of others, State-implemented punishment steps in to provide legal constraints where moral restraint proved ineffective.

Thus, there is a natural relationship among personal freedom, moral conscience, and State force.  The more that people pursue their freedom in moral and just ways, the more irrelevant the State becomes.  A society whose people are individually capable of governing themselves has no need for the machinery of government.  The policing of a population’s legal obligations and the application of State-enforced punishments become not only redundant but also unjust infringements upon personal liberty.

It is no coincidence that free societies exist where there is a high degree of mutual trust among people.  If a shop owner trusts that customers will not steal, then businesses can thrive without a government police force monitoring private transactions.  If customers trust that manufacturers will refrain from making harmful products, then commerce can thrive without the need for government regulatory agencies.  If members of society recognize that the fruits of an individual’s labor belong to that person, then property rights are respected without the need for courts and lawsuits.  If public debate, dissent, and personal expression are highly valued, then there is no need for government agents to police words and ideas as “hate speech,” “harmful speech,” or “disinformation.”

High-trust societies are natural incubators of freedom.  Accordingly, fostering trust among members of society maximizes personal liberty.  How do societies cultivate trust?  In a word: culture.  

Culture is that collection of customs, mores, attitudes, traditions, beliefs, habits, language, and ways of life that bind a people together.  Culture is an unwritten code of conduct passed from one generation to the next.  Culture is the essential glue that allows common members of society to move in the same direction without any obvious director.  Societies with strong cultures do not need external police forces because members of society “police” themselves.  

When that culture includes a profound respect for personal freedom, private property, religious liberty, free expression, and self-defense, the mutual trust that exists among citizens naturally secures the blessings of liberty.  It is no accident that an American, Thomas Jefferson, wrote the Declaration of Independence two hundred and fifty years ago.  It is no accident that representatives from America’s original thirteen colonies devised together a Constitution that both greatly limits the powers of government and explicitly protects the inalienable rights of Americans.  It is no accident that Americans’ respect for private property transformed an unsettled continent into the wealthiest, most innovative, and most influential country in the world.  A moral people committed to personal freedom can build, do, and accomplish anything.  A moral people committed to self-government can remake the entire world.

It is not difficult to see why the New World’s values have always threatened the Old World’s grip on global power.  In a world where intelligence, hard work, and dedication matter more than titles of nobility and unearned inheritance, the common man is capable of generating wealth without a feudal lord’s permission.  In a world where free speech and freedom of assembly are cherished political virtues, the common man is capable of forming opinions without the help of so-called “elites.”  In a world where self-defense and private ownership of firearms go hand in glove with self-expression and private property, the common man is master of his castle and servant to none.  

Globalism’s “elites” have been pushing the idea of a “New World Order” for decades.  But it is important to remember that when Americans declared their independence from the British Empire, they established a “New World” order that has continued to the present day.  Two hundred and fifty years after the Declaration of Independence, the United States is the wealthiest, strongest, and most robust nation that has ever existed.  It has 4% of the world’s population but influences every part of the globe.  When Old Europe pushes for a “New World Order,” old aristocrats are desperate to return to the social conditions that existed prior to 1776.  Globalists want the “Old World Order” rebranded as something new.

Ask yourself how you might go about destroying America’s “New World” order, so that the Old World’s feudal system can return.  If you want to dismantle Americans’ economic and political freedoms, then you need to wreck Americans’ mutual trust.  If you want to turn Americans against each other, then you need to ruin the foundations of their shared culture.  In order to weaken the bonds of culture, you must first discourage self-restraint.  By discouraging self-restraint, you encourage demands for government control.  By empowering the State, you diminish the sphere of personal freedom.  When the people have been denied freedom for long enough, they forget what it means to be free.  Eventually, when the government offers “free” welfare in exchange for obedience, the descendants of free people accept their new chains.  They accept total government control.  They accept slavery.

Flooding Western countries with foreign immigrants has never been about compassion.  Globalists use mass migration to destroy any semblance of social trust.  “Multiculturalism” has nothing to do with fostering civic peace.  Globalists “divide and conquer” populations in order to more easily rule over the dismembered parts.  Anti-Christian programs do not exist to protect “diverse” points of view.  Globalists attack Christians because Christian virtue cultivates the moral restraint necessary for freedom to thrive.  

For globalists, freedom is the enemy.  Government control is their greatest friend.  You cannot destroy the former and promote the latter until the natural bonds of society are first broken.  Totalitarianism never arrives by decree.  It comes by request.  In the two hundred and fiftieth year of America’s “New World” order, remember this: Our freedom is always under attack.  Be vigilant and defend it.

Tyler Durden Sun, 05/10/2026 - 16:55

Vegetable-Oil Inflation Sends World Food Prices Higher

The benchmark for global food commodity prices rose for a third consecutive month in April, hitting its highest level since early 2023, as Middle East supply disruptions, elevated energy costs, and tightening supplies of certain agricultural products appear to be driving the next leg higher in global food prices.

This is a major risk we have warned about throughout the U.S.-Iran war, as energy and supply chain disruptions spread quickly through fertilizer, diesel, freight, biofuels, grains, and vegetable oils. We even treated readers to a special food debate late last week to examine how the conflict could produce a broader food-inflation shock later this year.

The United Nations' Food and Agriculture Organization's FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, averaged 130.7 in April, up 1.6% from its revised March level and 2% higher than a year ago. This places the global food index at its highest level since February 2023.

The largest move in the food index came from vegetable oils, where prices jumped 5.9% to the highest level since July 2022. Palm, soy, rapeseed, and sunflower oils all rose, supported by stronger biofuel demand, higher crude prices, and tight Black Sea supplies.

"Despite the disruptions linked to the crisis in the Strait of Hormuz, global agrifood systems continue to show resilience. Cereal prices have increased only moderately so far, supported by relatively strong stocks and adequate supplies from previous seasons. Vegetable oils, however, are experiencing stronger price increases, driven largely by higher oil prices, which are increasing demand for biofuels and putting additional pressure on vegetable oil markets," said FAO Chief Economist Máximo Torero.

Here is how the other subcomponents performed last month:

The FAO Cereal Price Index rose by 0.8 percent from March and was up 0.4 percent from a year ago, reflecting higher prices across major cereals, except sorghum and barley. World wheat prices increased by 0.8 percent, due to concerns over drought in parts of the United States of America and a higher likelihood of below-average rainfall in Australia. The increase was further reinforced by expectations of reduced wheat plantings in 2026, with farmers shifting to less fertilizer‑intensive crops amid high fertilizer prices – driven by elevated energy costs and disruptions associated with the effective closure of the Strait of Hormuz.

Global maize prices increased by 0.7 percent, underpinned by seasonally tighter supplies and weather-related concerns in Brazil, as well as dry conditions affecting sowing in parts of the United States of America. Additional upward pressure came from firm ethanol demand amid elevated crude oil prices and ongoing concerns over fertilizer affordability. By contrast, world sorghum prices dropped by 4.0 percent, largely due to weaker global import demand and improved supply prospects in key producing and exporting countries.

The FAO All Rice Price Index rose by 1.9 percent in April, driven by higher Indica and fragrant rice prices, reflecting increased production and marketing costs in most rice-exporting countries following the surge in the prices of crude oil and its derivatives.

The FAO Vegetable Oil Price Index increased by 5.9 percent from March, reaching its highest level since July 2022. The rise was driven by higher prices of palm, soy, sunflower and rapeseed oils. International palm oil prices rose for the fifth consecutive month in April, largely underpinned by prospective stronger demand from the biofuel sector, supported by policy incentives in several producing countries and higher crude oil prices. Additional upward pressure stemmed from concerns over lower production in Southeast Asia in the coming months.

The FAO Meat Price Index reached a new record high in April, rising by 1.2 percent from March and 6.4 percent from a year ago. World bovine meat prices climbed to a new peak, underpinned by higher export quotations in Brazil amid limited supplies of slaughter-ready cattle, reflecting ongoing herd rebuilding.  Pig meat prices also rose, driven by firmer quotations in the European Union amid rising seasonal demand, though partly offset by lower prices in Brazil due to ample supplies.

By contrast, the FAO Dairy Price Index declined by 1.1 percent from March, mainly reflecting lower international quotations for butter and cheese amid abundant milk supplies in the European Union and stronger-than-expected late-season output in Oceania.

The FAO Sugar Price Index also dropped, down 4.7 percent from March and as much as 21.2 percent from a year ago. The decrease was largely driven by expectations of ample global supplies in the current season, reinforced by improved prospects in key Asian producing countries, notably China and Thailand. The start of the new harvest in Brazil, the world’s largest sugar producer, further contributed to the downward pressure on sugar prices.

The question now is whether the latest rise in global food prices marks the early stage of a much larger move higher, as surging diesel and fertilizer costs begin to filter through the agricultural complex.

How Bad Will It Get? Watch the food debate here.

Tyler Durden Sun, 05/10/2026 - 16:20

"They'll Be Laughing No Longer": Trump Rejects Iran Peace Deal Response As "Totally Unacceptable" Summary

• Trump calls Iran's peace proposal response "totally unacceptable"

• Iran warns of 'decisive, immediate' response to British or French warships approaching Hormuz Strait.

• Iran responds Sunday to US peace proposal, finally submitting something official to Pakistan. Details not initially disclosed. Trump TS: Iran "playing games with the United States."

• IRGC new warning: will unleash "heavy attack" on US bases in region if more Hormuz aggression persists.

//--> //--> //--> US x Iran permanent peace deal by June 30, 2026?
Yes 52% · No 49%
View full market & trade on Polymarket

*  *  *

Trump Says Iran Response "Totally Unacceptable"

President Trump has just issued a statement on his TruthSocial feed rejecting 'unacceptable' Iranian proposal for ending war.

"I have just read the response from Iran’s so-called “Representatives.”

I don’t like it — TOTALLY UNACCEPTABLE!

Thank you for your attention to this matter."

Iran offered to transfer some of its stockpile of highly enriched uranium to a third country, but rejected the idea of dismantling its nuclear facilities, the Wall Street Journal reported.

Iran disputed the report, according to Iran’s semi-official news agency Tasnim.

And with the fragile ceasefire still holding for now, the odds of a peace deal by the end of May have plummeted.

Iran: We'll Immediately Strike French & British if they Approach Strait

Iran has newly warned of "a decisive and immediate response" to any deployment of European military vessels in the Strait of Hormuz, and has further declared that the Islamic Republic alone controls security in the strategic waterway. Deputy Foreign Minister Kazem Gharibabadi issued the warning Sunday in a post on X after France and Britain announced plans to deploy warships to the region.

"Whether in times of war or peace, only the Islamic Republic of Iran can establish security in this strait and will not allow any country to interfere in such matters," he said.

Gharibabadi said France plans to deploy its flagship aircraft carrier, the Charles de Gaulle, to the Red Sea and Gulf of Aden, while Britain plans to send a warship to the area under the stated goal of protecting freedom of navigation. Already these Western allied assets are moving through the Suez Canal as of days ago.

"Any deployment and stationing of extra-regional destroyers around the Strait of Hormuz, under the pretext of protecting shipping, is nothing but an escalation of the crisis, the militarization of a vital waterway, and an attempt to cover up the true root of insecurity in the region," he stated.

Iranian lawmaker Ebrahim Rezaei says Tehran’s “restraint is over” and any aggression against Iranian vessels will be met with a heavy and decisive Iranian response against American vessels and bases.

🔴LIVE updates: https://t.co/4wl9kYw8g4 pic.twitter.com/QckEP0allp

— Al Jazeera English (@AJEnglish) May 10, 2026

But France and Britain have previously sought to clarify that their warships will remain largely in a background support role when compared to the US naval blockade in the Gulf of Oman region. Their ships would only directly join Persian Gulf operations only once the war ended, according to reports. 

Trump: Iran is Playing Games With the United States

New Sunday Truth Social statement soon on the heels of Tehran submitting its response to the US peace proposal, via Pakistan:

Trump said Iran had been "playing games with the United States, and the rest of the world, for 47 years," adding that it had been "laughing at our new GREAT AGAIN country," but stressed that "they will be laughing no longer!"

Iran Finally Responds To US

After days of waiting, Iran has submitted its response to the latest US peace proposal to mediator Pakistan, despite the recent flare-up in renewed exchanges of fire in the contested Strait of Hormuz this past week.

"Iran has submitted its response to the latest US proposal to end 10 weeks of war, the state-run Islamic Republic News Agency reported on Sunday, without providing any further details," Bloomberg confirms in a fresh headline. "Tehran hasn't yet given any public indication it would accept President Donald Trump’s plan that stipulates Iran permits passage through the Strait of Hormuz and Washington ends its blockade on Iranian ports in the next month."

IRAN REPLY TO US PROPOSAL INCLUDES ENDING WAR ON ALL FRONTS: TV

This comes as Qatar's PM has warned Iran that using the Strait of Hormuz as a pressure card, to choke the global economy, "would only lead to deepening the crisis" - and amid reports there could still be sporadic attacks on Gulf countries like the UAE. According to more of the limited details:

Sources in both camps have told Reuters the latest peace efforts are aimed at a temporary memorandum of understanding to halt the war and allow traffic through the Strait of Hormuz while they discuss a fuller deal, which would have to address intractable disputes such as Iran’s nuclear program.

The latest from Iran's president:

President Trump told Fox News days ago, "They want to make a deal. We've had very good talks over the last 24 hours, and it's very possible that we'll make a deal." He had said if this happens "it'll be over quickly" and oil prices will plummet.

IRGC Fresh Warning on US Bases

Iran's Islamic Revolutionary Guard Corps (IRGC) has warned any attack on Iranian oil tankers and commercial ships will be met with assaults on US bases and "enemy ships" in the region, Al Jazeera reports.

"Warning! Any aggression against the oil tankers and commercial vessels of the Islamic Republic of Iran will be met with a heavy attack on one of the American centers in the region and the enemy’s ships," the IRGC Navy said in the statement.

“Iran will no longer allow passages that are harmful to its interests”

Brigadier General Akrami Nia, the spokesman of the Iranian army, says countries that comply with US sanctions against Iran will surely have problems crossing the Strait of Hormuz. pic.twitter.com/6EZ6NWsZse

— Press TV 🔻 (@PressTV) May 10, 2026

Tehran is accusing the US side of severely violating the ceasefire earlier this week, by firing on and disabling two Iranian-flagged tankers trying to reach Iranian ports. State media reviewed of these hostile incidents:

In a statement, the spokesman for Iran’s Khatam al-Anbiya Central Headquarters said the “aggressive, terrorist and marauding US military” had targeted an Iranian oil tanker sailing from Iran’s coastal waters near Jask toward the Strait of Hormuz, as well as another vessel entering the strategic waterway near the UAE port of Fujairah.

The spokesman also said civilian areas along the coasts of Bandar Khamir, Sirik and Qeshm Island came under aerial attacks carried out “with the cooperation of some regional countries.”

The IRGC further said it will respond "powerfully and without the slightest hesitation" to any aggression or attack. Indeed there are reports that during the past week's skirmishes Iran fired on three US warships seeking to exit waters of Iran's coast.

Ayatollah Meets With Military Commander

We reported earlier that in an official update Iran said that Supreme Leader Mojtaba Khamenei had been 'moderately injured' but is recovering, and he had met with the president of the Islamic Republic. On Sunday he also met with a top military commader, per state Mehr, which writes: "In a meeting with Leader of the Islamic Revolution Ayatollah Seyyed Mojtaba Khamenei, Commander of Khatam al-Anbiya Central Headquarters Major General Ali Abdollahi presented a comprehensive report on the preparedness of the powerful Armed Forces of the country to confront enemies' strategic mistake."

via Mehr

According to more of the state readout:

Abdollahi said “all fighters of Islam” possess high readiness in terms of morale, defensive and offensive preparedness, strategic plans, and the equipment and weaponry required to confront hostile actions by the “American-Zionist enemies.”

He warned that if the enemies commit any “strategic mistake, aggression, or invasion,” Iranian forces would respond “swiftly, intensely, and powerfully.”

The commander also assured the Leader that the armed forces would, “with full obedience” to his orders, defend “the ideals of the Islamic Revolution, our beloved land Iran, sovereignty, national interests, and the brave Iranian nation until the last breath and to the death.”

During the meeting, Ayatollah Khamenei praised the country’s armed forces and issued new directives for continuing action and confronting enemies decisively following the 40-day US-Israeli war against the country.

The Wall Street Journal wrote Saturday of the Ayatollah, "A government official claimed Khamenei, who hasn't been seen in public since that attack, is now in good health." However, there's still a lot of speculation on his role in national decision-making, and over whether he will ever make a public appearance.

Tyler Durden Sun, 05/10/2026 - 16:20

Traders Puzzled As Physical Oil Prices Tumble Amid Surging Chinese Crude Sales, Plunging Imports

Yesterday when discussing China's unexpected flip-flopping on its decision to order local banks to ignore the latest US sanctions on Chinese, followed days later by a demand that they pause loans to sanctions refiners, we highlighted something remarkable: in the aftermath of the Strait of Hormuz blockade, which throttled the transit of ~10% of global oil and sent physical prices soaring to record highs (especially for Dubai crude), resulting in a windfall for European refiners thanks to soaring gasoline premiums... 

... the reaction in China was a mirror image, as already razor-thin independent refiner (teapot) margins plunged to record negative.

The reason for the margin collapse was China’s domestic fuel policy: it has long been Beijing's policy to soften price hikes to help shield consumers and avoid social unrest; which while beneficial to end consumers is catastrophic to refiners and processors who are prohibited from passing on rising costs. In other words, Chna’s "energy security" was the dominant theme, and if it meant an entire industry has to suffer huge losses if it continues to purchase oil and process it into various product grades.

Ordered to process as much available inventory as possible, that's what the refiners have done, and refining rates in Shandong province, China's hub for smaller refineries known as teapots, ramped up over April to the highest level in almost two years, as processing margins cratered to record negative levels meaning refiners are losing record amounts on every barrel they process. 

“I would not be surprised if the teapots are prioritizing politics over economics with an eye to their long-term survival,” said Erica Downs, a senior research scholar at Columbia University’s Center on Global Energy Policy. “They may be calculating that if they do their part to help China weather the energy crisis, then maybe they will build up some goodwill in Beijing.”

While Downs is right, and teapots are prioritizing politics, they are also certainly keeping an eye on economics to the extent they can avoid Beijing's wrath, and predictably the logical consequence of this centrally-planned policy to force "independent" refiners (who are not really independent if they have to do whatever Beijing instructs them) to make fuel at record losses to ensure energy security, is for them to slash purchases of Iranian crude.

Sure enough, Chinese crude oil imports have plunged: according to Vortexa, China's April imports plunged to a multi-year low of just 8.2 million barrels a day, down by about a quarter from a prewar level of around 11.7 million. The 3.5-million barrels a day swing almost matches the total consumption of Japan and is double the amount supplied by the United Arab Emirates pipeline that circumvents Hormuz. 

As Bloomberg's Javier Blas writes overnight, "simply put, it’s huge, perhaps the second- or third-largest factor rebalancing the oil market today, behind only Saudi Arabia’s own pipeline bypassing the strait and the use of the strategic petroleum reserves of the US and Japan."

The import drop might make sense if Chinese commercial inventories were falling sharply, or if Beijing had tapped its strategic petroleum reserves. But neither appears to be happening. Instead, commercial stockpiles have continued to increase in recent weeks, according to satellite data (of course, China is well known to manipulate all data and with the bulk of its 1.4 billion in strategic oil reserves located underground, it is impossible to trace flows definitively)

Meanwhile, as imports have collapsed, inventories at sea have piled up: Kpler reports that there are now about 16 million barrels on ships anchored in the Yellow Sea off the Chinese coast, almost 40% higher than the level prior to a US blockade of Iran’s ports in mid-April as oil that was ordered previously remains unused. 

There has been another complication: after the Iran war broke out, Beijing banned exports of refined products, effectively allowing refineries to process less crude to meet domestic demand. But the policy has now been reversed, suggesting the country sees enough fuel availability.

In any case, in recent weeks, Blas writes that amid this collapse in Chinese imports, industry executives have noticed something odd: Chinese state-owned oil companies have been reselling some of their oil cargoes to European and Asian rivals. The behavior suggests surpluses, which is "odd" to say the least during a supply shortage. Where is this excess oil coming from (for the answer, see below).

The shift has not only capped benchmark oil prices, but also helped to trigger a collapse in the premia that traders pay above them to secure physical crude. The immediate outcome has been a very beneficial one: physical barrels that in early April went for $30 above benchmark prices are now changing hands at premiums as low as $1. Talk of discounts has even started to emerge.

Underscoring this point, North Sea oil traders don’t appear as desperate for crude for immediate delivery anymore, compared to the panic buying of late March and early April

While the collapse in refining margins is a clear clue to the plunging oil imports, other questions remain: chief among them how is China importing far less crude than before without running down stocks? In the past, the country clearly bought more oil than it needed, building a huge emergency stockpile. Today, China has nearly 1.4 billion barrels in its reserves according to media reports, well above the 400 million of the US and Japan’s 260 million. As we reported in late 2025, China probably bought one million barrels a day more than it needed last year. By simply stopping beefing up the reserve, China can cut imports a lot without affecting its underlying oil needs.

The shift can explain, perhaps, a third of the import cut. But the rest? Here’s where oil traders speculate with different theories. One argument says that Chinese economic activity is weaker than previously thought, and thus oil consumption growth is also lower. What’s the catalyst for that slowdown? Perhaps the impact of the war on several of China’s clients in the region, including the Philippines, Vietnam and Thailand (just don't look for validation in Chinese economic "data" - like everything else, it took is centrally planned and Beijing would never confirm its economy is being hit due to the Iran war as that would mean reduced political leverage).

Separately, the increase of electric vehicles, improved public transportation and the option of working from home have made Chinese households better able to cope with higher oil prices.

Unlike most other nations in the region, China hasn’t announced any emergency action to rein in demand, like adopting a four-day work week for government employees or promoting carpooling.

The IEA estimates that Chinese oil demand slipped into a modest year-on-year contraction in both March and April, down by about 110,000 barrels a day to about 17 million barrels. While the drop is impressive when compared with the exuberant growth of the country’s consumption in the past, it isn’t nearly enough to explain why imports have fallen so much.

It is certainly possible that Chinese oil demand has been contracting far more sharply than currently thought, The key, Blas reckons, is the inscrutable petrochemical industry - the sector that has contributed the majority of oil consumption growth over the last five years. In petrochemicals, China is unique. On top of its traditional industry that uses oil and natural gas as feedstock, it has parallel production that relies on coal.

Since the war started in late February, coal-to-chemicals profit margins have improved markedly. The industry had typically operated with plentiful spare capacity, so there’s room for a significant shift to coal from oil as a chemical feedstock. Hard data is scarce but, anecdotally, petrochemicals plants transforming coal into plastics like polyethylene, polypropylene and polyvinyl chloride have been running hard for the last 60 days, in turn reducing consumption of traditional feedstocks such as ethane and naphtha.

So perhaps China has managed to rely far more on coal-to-chemicals than previously thought. Another possible explanation is that it’s running down hard-to-track inventories of semi-finished plastics and other chemicals, making the recent drop in oil consumption in the petrochemical industry an unsustainable one-off unless there is a global recession which collapses end-demand for Chinese plastics exports. 

And then there are the more banal explanations. Although oil traders try to estimate Chinese inventory data with the use of satellite data, it is in fact possible that observers are missing locations and stocks are, in fact, falling. About two months ago, we hinted that Chinese drain of its SPR could more than offset a full Hormuz blockade for a long time. As we said on March 18, "China can avoid any Gulf imports for months and drain its SPR instead." 

One relevant question: what is China's pace of SPR drain if any. Recall for the past year Beijing was adding about 500-700K in daily SPR stockpiles; total is said to be ~1.4 billion barrels. China can avoid any Gulf imports for months and drain its SPR instead.

— zerohedge (@zerohedge) March 18, 2026

Sure enough, Blas writes that the oil market has been full of chatter about China quietly tapping its strategic reserves, starting by using underground caverns that no one can see using satellites. Maybe. Time lags may also be playing a role; Chinese domestic oil production has been increasing, too, perhaps helping to plug any gaps.

But, as Blas concludes, "make no mistake, China is rebalancing the oil market today." The bigger question is for tomorrow when the Strait is (eventually) unblocked: If China can reduce imports so drastically without having to take extreme measures, what does that say about the future of oil consumption there? Nothing positive for oil bulls, that's for sure. 

Tyler Durden Sun, 05/10/2026 - 15:55

Earnings Estimate Revisions Are Very Optimistic

Authored by Lance Roberts via RealInvestmentAdvice.com,

💰 Earnings Estimate Revisions Are Very Optimistic

Last week, we discussed the S&P earnings record and why such record earnings could be a warning for the market. I want to continue that discussion by focusing not only on what has happened but also on what is expected to happen in the future. While the Q1 2026 earnings results are spectacular, so far, the earnings estimate revisions behind them are the real story.

The first-quarter 2026 earnings season is delivering results that Wall Street rarely sees. With roughly two-thirds of the S&P 500 having reported, the blended growth rate has climbed to 27.1% year-over-year, more than double the 13.2% that consensus modeled at the end of the quarter on March 31. If that figure holds, it will be the strongest year-over-year print since the post-COVID rebound quarter of Q4 2021. 84% of companies have beaten EPS, 81% have beaten revenue, and the average earnings surprise sits at 20.7%, nearly three times the 5-year average of 7.3%.

That’s the surface story. The more interesting question, and the one investors should be asking, is why analysts were so wrong heading in, and what it means that they’re now revising earnings estimates higher with a velocity that has almost no historical parallel.

Look at Morgan Stanley’s chart of consensus 2026 earnings estimate revisions versus history. In any normal year, by the time Q1 earnings season rolls around, analysts have been quietly walking earnings estimates down for six months. The historical median revision pattern drifts from 1.00 in January to roughly 0.92 by year-end. Two years of cuts. That’s the analyst playbook. Start the year too optimistic, get reset by reality, and end the year right.

This year is doing the opposite. The 2026 earnings estimate index cratered to 0.96 last summer during the Iran shock, then turned vertical. By May, it’s broken above 1.06. We’re looking at a roughly 14-point swing in earnings estimates relative to the historical pattern. That is what Morgan Stanley calls “fairly unprecedented,” and that’s analyst-speak for something they don’t have a clean comparison for.

The Mag 7 alone moved from a 22.4% expected growth rate at the end of March to a 61% blended print today. Four of the top five contributors to S&P 500 earnings growth this quarter are Alphabet, NVIDIA, Amazon, and Meta. The same four names driving index returns are now driving the earnings estimate revisions. That’s not a coincidence, and there is more to this story as noted by Sage Road Research:

“The AI distortion goes beyond stock prices to profits. Total S&P 500 earnings are on track to rocket 27% higher in the first quarter, FactSet estimates. But profits for the Mag-7 alone will be up 61%; for the other 493, just 16%, a figure itself inflated by semiconductor companies like Micron. This is skewing the division of the economic pie between capital and labor. As profits gallop ahead, labor compensation (wages and benefits) grew just 3.1% annualized in the first quarter, and actually shrank 0.5% after inflation, the Labor Department reported Thursday. Labor’s share of total business-sector output fell to 54.1%, the lowest since records began in 1947.” – @TrevorNoren

So, if it isn’t consumers’ and subsequently economic growth, driving earnings estimate revisions, then what is?

What’s Actually Driving the Upside

Three things are happening at once, and we have to separate them.

First, the AI capex cycle is finally showing up in the income statement. Hyperscalers have spent the better part of two years building out compute. The revenue is now landing. Communication Services is reporting +53% earnings growth, Tech is at +50%, and Consumer Discretionary is at +39%. Those aren’t soft beats. They’re the result of capex that was already locked in before the quarter started.

Second, margins are at a record. The blended Q1 net profit margin came in at 14.7%, the highest reading in over 15 years. That’s the real engine behind the surprise factor. Revenues grew 11.1%, which is solid but not extraordinary. The gap between 11% revenue growth and 27% earnings growth is operating leverage. A company that cut 8% of its workforce in 2023 and held headcount flat through 2025 is now monetizing every dollar of incremental revenue at a much higher incremental margin.

Third, breadth in Q1 results is finally improving. The Deutsche Bank charts make this point clearly. Earnings growth for the median S&P 500 company is now in the double digits, the highest reading in four years. All eleven sectors are tracking positive growth for the first time since 2022. Margins for “the rest” of the index, the 493 names outside the Mag 7, are turning higher after a steady three-year decline. Operating cash flow for non-financial corporates is running near 20% year-over-year. Q1 results are genuinely broader than they have been in years, and that deserves credit. But there’s an important asterisk on this point that I’ll address in the next section.

The Asterisk on “Broadening”

Now we have to separate two things that get confused in the headlines. Q1 reported earnings broadened, but the forward-year earnings estimate revisions did not. Those are different statements about different time horizons, and the difference matters.

Goldman Sachs published a chart in early May that quantifies the gap. The bank tracks a basket of AI infrastructure stocks (S&P 500 constituents in their AI Semiconductors, AI Data Centers, and Power Up America baskets) and compares it to the broader index on cumulative 2026 EPS revisions since December 2024. The numbers are striking.

AI infrastructure stocks have seen 2026 earnings estimates revised higher by 55% since December 2024. The full S&P 500 is up 7%. The S&P 500 ex-AI infrastructure is down 1%. Read that last figure twice. Strip out chip designers, hyperscaler infrastructure, AI data centers, and the power and grid names that feed them, and the remaining 470-odd companies in the index have collectively had their 2026 earnings estimates revised lower over the past 17 months. Not flat. Lower.

This is the cleanest picture of concentration risk you’ll see this cycle. The narrow-market critique, which has been valid for 2 years, isn’t going away, even after Q1 results came in. It’s hiding inside the index math. Mega-cap AI names have absolute earnings dollars so dominant that even modest forward growth in their numbers swamps the rest of the 500. When analysts publish their 2026 earnings estimate consensus forecast for the index, they’re effectively publishing a forecast for roughly 30 companies. The other 470 are a rounding error to the headline.

“Strip AI infrastructure out of the index, and 2026 estimates are actually lower than they were 17 months ago.”

The implication for portfolio construction is direct. If you own a market-cap-weighted S&P 500 index fund, you don’t own the diversified earnings stream the marketing material implies. You own a concentrated AI infrastructure bet wrapped in a passive vehicle. The two largest holdings in the SPY are Nvidia and Microsoft. Apple, Amazon, Meta, Alphabet, and Broadcom round out the top eight. Seven of the top eight names are direct AI infrastructure plays. That’s not diversification. That’s a thematic fund with 490 other names attached for legal reasons.

None of this is bearish on AI itself. The capex cycle is real, the earnings growth is landing, and the demand picture remains durable. The point is more subtle. The index’s strength masks the weakness of its components. If AI infrastructure names hit a single quarter of disappointment, whether from capex digestion, an export control surprise, or simple revenue deceleration, there’s no second engine in the index to absorb the impact. Equal-weighted measures of breadth being healthy on Q1 results don’t fix the forward-revision concentration problem. They are two different problems.

Here is What Nobody Wants to Talk About

Here’s where I have to put the brakes on. When earnings estimates are revised this hard, this fast, you have to ask whether the market is pricing the beat or the trend. Because historically, vertical earnings estimate revisions are a late-cycle phenomenon, not an early one.

Notice the long-term S&P 500 earnings growth estimate chart. The current reading sits near 19%, the highest print since 2000. The chart’s prior peaks tell a story. The “New Economy” peak in 2000. The “Tax Cuts” peak in 2018. The “COVID” rebound peak in 2021. Every one of those readings was followed by a meaningful drawdown in equities and a sharp downward revision cycle in earnings within twelve to twenty-four months. Forecasts above the long-term trend channel have a poor history.

“When everybody is revising higher, the marginal trade is no longer to buy the beats. It’s to fade the next miss.”

The other tell is the divergence between hard data and earnings. ISM Manufacturing is sitting in the low 50s, barely above the contraction line. The S&P 500 is up roughly 19% year over year. That gap historically closes one of two ways. Either ISM rallies into the high 50s as the cycle accelerates, or earnings get marked down to meet the macro. The latter has happened more often than the former at this point in a cycle.

This Summer is Where Headwinds Rise

There’s a calendar problem stacking up behind these numbers. The Q1 print benefited from easy year-over-year comparisons. Q2 won’t have that tailwind. By the time July prints arrive, the comparison base resets to 2025’s stronger second-quarter results, which means the same level of underlying earnings translates into a much smaller growth rate. That mechanical effect alone could pull the headline growth rate from 27% back into the low double digits, even if absolute earnings keep climbing. Markets don’t always distinguish between “growth slowing” and “earnings missing.” They tend to react to the headline number first and sort it out later.

Then there’s the bond market setup. The 10-year is still trading near 4.4%, the front end is pricing barely two cuts for the rest of the year, and core inflation has been sticky in the high 2s for six months. If the AI capex cycle keeps running hot, that’s incremental demand for chips, electricity, and skilled labor, all of which feed into the inputs the Fed watches. The risk isn’t a recession scare. It’s a “no cuts, maybe a hike” repricing that historically chops 5% to 8% off equity valuations in short order.

Positioning is the other variable. Sentiment surveys are stretched. Equity allocations among retail and institutional investors are at multi-year highs. CTAs are max long. When everyone is on the same side of a trade, and the data starts to disappoint, price discovery is brutal because there are no marginal buyers left to absorb the unwind.

Institutions Are On Risk Watch

The most useful way to gauge the risk landscape is to look at what institutional trading desks are actually doing, not just what they’re saying. The substance of the conversations across the buy-side and the dealer community is converging on a single posture: stay long, but explicitly hedge. The same desks publishing constructive twelve-month equity targets are simultaneously paying for downside protection in size. That’s the tell.

Five points are worth laying out.

• First, positioning. The Nasdaq 100 just delivered its biggest monthly gain in over 23 years. A move of that magnitude has consequences for who is left to buy. Systematic strategies (CTAs, vol-target funds, risk parity) have completed their re-risking. The buy-the-dip retail bid has been engaged since the March lows. Discretionary trading desks are now running long exposure at around +6 on a -10 to +10 scale, up from -4 at the March lows. The marginal buyer in this tape has already shown up. From here, the question is who steps in if the data disappoints.

• Second, the fundamental catalyst stack is largely behind us. The fiscal pulse that supported corporate margins is fading. The Q1 EPS print of 27% will not repeat against tougher comparisons. The operating leverage that drove the surprise factor cannot keep expanding indefinitely. The combination means the next four quarters of earnings reports face a higher bar with less wind at their backs.

• Third, the Strait of Hormuz is still live. The tape has effectively forgotten last summer’s oil shock. That’s how markets work. We discount tail risk after the immediate catalyst passes, but the underlying geopolitical setup has not materially improved. A single headline can reprice oil 4% in a session, and equities are positioned for a benign energy backdrop that may not hold.

• Fourth, the Fed is constrained. Last week’s hawkish hold told us where the committee sits when core inflation prints closer to 3% than 2%. The base case for cuts in September and December assumes labor market softening that has not yet arrived. If those cuts get pushed, the equity multiple has to absorb the disappointment, and historically that costs the index 5% to 8% in short order.

• Fifth, narrow breadth is a real risk that history takes seriously. Most standard measures of S&P breadth are exceptionally thin right now. Nine of eleven sectors are positive on the year, which sounds healthy on the surface, but participation under the index headline is concentrated in a handful of mega-cap names. The strongest historical conclusion isn’t that narrow breadth is bearish (because, for two years, it hasn’t been), but that it raises the probability of a momentum rollover when the rotation eventually breaks. You don’t pick that fight. You do prepare for it.

Here’s the practical math that ties this back to portfolio action. One-month at-the-money puts on the S&P 500 are currently priced at less than 2% of the spot price. For investors carrying meaningful long exposure into a summer with the stack of risks described above, that’s compelling risk transfer. The same institutional desks publishing constructive twelve-month equity views are paying for that protection right now. They call it “the cost of a good night’s sleep.” That phrase belongs in every portfolio review this quarter.

🔑 Key Catalysts Next Week

After two weeks of Magnificent 7 earnings and payrolls data, the calendar pivots back to the macro gauntlet that will define the Fed’s June path. Tuesday’s April CPI, Wednesday’s April PPI, and Thursday’s April Retail Sales create a three-day inflation-consumer trifecta that will either confirm or break the “higher for longer” trade heading into the June 16 FOMC meeting. This week isn’t about individual stocks; it’s about the price level and the consumer’s willingness to pay it.

Tuesday’s April CPI is the week’s anchor. March ran hot with the headline at +0.4% MoM and the core reading rising +0.3%. That reflected the first full month of the Iranian oil shock and the broadened tariff regime. April is the second month of that regime, and the question is whether the acceleration was a one-month spike or the beginning of a new trend. Energy prices eased modestly in late April as Iran ceasefire talks gained traction, potentially providing a one-month offset. But core goods, where tariff passthrough lives, won’t have that benefit. Used car prices, which had been masking tariff pressure in prior months, are no longer declining. Shelter costs remain stubbornly elevated. If the headline comes in above +0.3% MoM or core reaccelerates, summer rate-cut expectations are dead.

Wednesday’s PPI doubles down. Producer prices feed directly into the PCE calculation that the Fed actually targets. March PPI printed a blistering +0.7%, the hottest monthly reading in over a year. April PPI tells us whether the upstream pipeline is still pressurized or whether oil’s modest pullback and easing supply chains provided relief. A PPI-to-CPI passthrough story is forming: if producers are absorbing cost increases now, margins will compress, and earnings will be revised down. If they’re passing them through, consumer inflation stays elevated, and the Fed stays on hold. Either outcome is negative for someone.

On the earnings side, this is the bridge week between Big Tech and the Nvidia event on May 20th. Cisco, on Wednesday after the close, is the enterprise IT capex bellwether. AI-driven switching demand, progress on Splunk integration, and the order backlog will tell us whether corporate technology spending is holding up or pulling back amid macro uncertainty. Alibaba Wednesday morning is the China read on cloud and AI revenue from the Qwen model, quick commerce investment, and tariff/trade war impact on cross-border commerce. Applied Materials on Thursday after the close is the semiconductor capital equipment signal ahead of Nvidia, its $5 billion EPIC platform bet, and wafer fab equipment orders are the leading indicator for chip manufacturing capacity expansion.

CPI will tell us where inflation is, while PPI tells us where it’s going. Retail Sales on Thursday will tell us whether the consumer breaks before the Fed blinks. Three data points, three days, one narrative. If all three run hot, the “higher for longer” trade hardens into “higher for the foreseeable future,” and risk assets may begin to reprice. This is why we continue to suggest maintaining portfolio management practices carefully.

What Should Investors Do Now

Q1 was a genuinely strong quarter. Margins are real. Cash flow is real. The broadening is real. None of that is in dispute. What’s worth disputing is the assumption baked into consensus. An 18.6% full-year forecast assumes the run rate from Q1 just delivered continues for three more quarters, with no margin compression, no demand weakness, and no AI capex digestion. That’s a stack of optimistic assumptions, and the historical record on stacks like that is unkind.

For investors, the playbook into summer is unchanged in direction but tighter in execution. Trim into strength rather than chase. Reduce concentration in the names that have done the most work, especially where position sizes have crept up from price appreciation rather than active accumulation. Add hedges, not insurance you’ll never use, but actual collars or put spreads on the largest exposures. Keep dry powder for the first material disappointment, because it always comes, and the names worth owning rarely go on sale during euphoria.

The setup that worries me isn’t that earnings are bad. It’s that they’re so good the bar has been raised to a level that historically marks a peak, not a launching pad. When everybody is revising higher, the marginal trade is no longer to buy the beats. It’s to fade the next miss. That moment usually arrives without warning, and the pattern has held in every prior cycle that produced a chart like the one in front of us today.

Stay long, but stay hedged. The asymmetry has shifted.

Tyler Durden Sun, 05/10/2026 - 15:45

Secret Israeli Base Hidden In Iraqi Desert Backed Operations Inside Iran

In a revelation sure to outrage Baghdad and broad swathes of the Iraqi public, Israel established a secret military base in Iraq's desert region to support air operations against Iran, related to the start of Trump's Operation Epic Fury, The Wall Street Journal reported Saturday.

Israeli forces even at one point launched airstrikes early in the conflict on Iraqi troops who approached the site and risked exposing it, per sources cited in the report. The outpost was reportedly erected under extreme secrecy shortly before the US and Israel launched the surprise, unprovoked aerial bombardment of Iran, and at a moment Tehran thought it was negotiating with Washington.

Illustrative: IDF image

The WSJ further said the secret base was placed there with US awareness and used it as a logistics hub for Israeli air force operations, further with Israeli special forces operating. 

According to details in the report, the site was to assist in any emergency special forces operations connected with the bombing raids on nearby Iran:

Search-and-rescue teams were positioned there in case Israeli pilots were downed. None have been. When a U.S. F-15 was shot down near Isfahan, Israel offered to help, but U.S. forces managed the rescue of two airmen themselves, one of the people said. Israel did carry out airstrikes to help protect the operation.

The Israeli base was almost discovered in early March. Iraqi state media said a local shepherd reported unusual military activity in the area, including helicopter flights, and the Iraqi military sent troops to investigate. Israel kept them at bay with airstrikes, one of the people familiar with the matter said.

In the end, no rescue missions became necessary, or at least as far as public awareness goes. There may be much that happened related to the outpost which remains classified, however.

The report further describes that after a US F-15 fighter jet was downed near Isfahan, Israel offered assistance, but US forces recovered the two crew members on their own. Strangely, the Pentagon has still issued nothing confirmable related to that operation, and not even the identities of the rescued pilots are as yet known.

The base almost was exposed in early March after Iraqi state media reported that a shepherd spotted suspicious military activity in the area, including helicopter movements, triggering an Iraqi military investigation.

Certainly if Iraqi forces had discovered it, the base would have been immediately attacked, especially by pro-Iran paramilitary forces.

The blue lines on the Israeli flag symbolize the Nile and Euphrates rivers – the borders of the biblical "Greater Israel"

In other news, Israel maintained a secret base inside Iraq and attacked Iraqi soldiers when they attempted to investigate it https://t.co/sHoetrHrOC

— Max Blumenthal (@MaxBlumenthal) May 9, 2026

As the WSJ story becomes more well-known inside Iraq this weekend, rising anger and outrage is expected, at a sensitive moment that a new future Iraqi prime minister has been tapped.

"This reckless operation was carried out without coordination or approval," Qais Al-Muhammadawi, deputy commander of Iraq's Joint Operations Command, told Iraqi state media following the March incident.

Tyler Durden Sun, 05/10/2026 - 15:10

Bahrain Intensifies Crackdown On Shia Communities, Arrests Dozens Over Alleged IRGC Links

Via The Cradle

Bahrain’s Interior Ministry announced on Saturday the arrest of 41 citizens, including multiple Shia religious leaders, over alleged ties to Iran's Islamic Revolutionary Guard Corps (IRGC).

The ministry said security services uncovered the alleged network through "investigations, security reports, and previous Public Prosecution cases related to espionage involving foreign entities." The detainees are accused of "espionage involving foreign entities and sympathy with blatant Iranian aggression."

AFP via Getty Images

Around 30 Shia Muslim clerics were among the 41 arrested, as the Gulf monarchy intensifies a campaign of raids and arrests predominantly targeting Shia religious figures and seminary teachers in Bahrain.

The arrests mark a new security escalation by Manama and form part of a continued policy of restrictions against clerics in the country. The Bahrain News Agency reported that legal proceedings are now underway against the 41 detainees.

Earlier this week, Bahrain stripped three lawmakers of their seats in parliament after they publicly criticized the monarchy’s crackdown on dissent over its support for the US–Israeli war on Iran:

In a vote in Manama on Thursday, the Bahraini House of Representatives revoked the memberships of Abdulnabi Salman, Mahdi al-Shuwaikh, and Mamdouh al-Saleh. The three lawmakers publicly opposed the monarchy’s move last week to revoke the citizenship of 69 Bahrainis and their families, accusing them of “sympathizing with Iran.”

Bahrain has a majority Shia population but is ruled by the Sunni Al-Khalifa royal family. The kingdom hosts the largest US naval base in the region, home to the US Fifth Fleet.

That decision came less than two weeks after Bahrain revoked the citizenship of 69 people over alleged support for Iranian retaliatory attacks on the country.

The Bahrain Institute for Rights and Democracy described the move as "dangerous" and a "blatant abuse of power," saying the individuals had not been publicly named and that their legal status remained unclear.

Since the launch of the US-Israeli war on Iran on February 28, Bahrain has escalated a sweeping domestic crackdown tied to alleged support for Tehran and opposition to the country’s western alignments.

#Bahrain’s regime has intensified a sweeping campaign of raids and arrests targeting Shiite religious scholars, including prominent cleric and seminary professor Sheikh Mahmoud Al-A’ali, amid the systematic crackdown tied to political expression and public positions regarding the… pic.twitter.com/aJ52unoTzb

— Alwefaq Society - English (@AlWefaqEnglish) May 9, 2026

Authorities have reportedly arrested hundreds of people since then, targeting Shia communities, banning public gatherings, detaining activists, and jailing dissidents.

In March, Bahraini authorities tortured Shia activist Mohammad al-Mousawi to death after accusing him of being an Iranian spy, with AP citing witnesses who described signs of beatings, cable whippings, and electrocution burns on his body.

Tyler Durden Sun, 05/10/2026 - 14:35

Hantavirus-Plagued Cruise Ship Begins Evacuations

Early Sunday morning, the Dutch-flagged cruise ship MV Hondius, anchored off Spain's Canary Islands, began evacuating passengers after a deadly hantavirus outbreak triggered a multinational public health response and put global health authorities on red alert.

"The docking took place at 6:30 a.m. and has been a success in spite of all the adversities," Health Minister Mónica García said in a statement quoted by Bloomberg News.

Health officials have found that "all passengers are asymptomatic," García added.

The U.S. government is evacuating American passengers from a cruise ship tied to a deadly hantavirus outbreak. A CDC team is currently in the Canary Islands assessing potential exposure and monitoring needs.

Passengers will be flown back to the U.S. on a medical repatriation… pic.twitter.com/CSrpbpMXLR

— Breaking911 (@Breaking911) May 10, 2026

Ship-tracking data show that the Hondius was anchored in Granadilla Port, Tenerife, and has since docked.

Last week, the World Health Organization identified eight hantavirus cases linked to the cruise ship: five suspected and three confirmed by laboratory testing. This includes three deaths. There were 149 passengers and crew members on the ship before the evacuation.

The outbreak appears to have started after a Dutch man and his wife traveled in South America, then boarded the Hondius in Argentina on April 1. Both died weeks later.

The New York Post identified patient zero as ornithologist Leo Schilperoord, who was on a multi-month birdwatching trip in South America with his wife, Mirjam Schilperoord. Both died.

Hantavirus is typically spread through rodent droppings or contaminated dust. People can inhale contaminated particles when rodent waste is disturbed. Symptoms may take weeks to appear, making containment and monitoring difficult.

On Friday, President Trump was questioned by reporters about the virus-plagued cruise ship. He said the situation is "very much under control."

Polymarket odds of a hantavirus pandemic have remained under 10% for the last several days.

//--> //--> Hantavirus pandemic in 2026?
Yes 7% · No 93%
View full market & trade on Polymarket

We questioned at the end of last week whether the vaccine stock trade was back, with Moderna conveniently announcing it was working on a vaccine.

The story count for "pandemic" in Bloomberg news stories remains well below the highs of the Covid-era mass hysteria driven by corporate media.

Will WHO create mass hysteria? That is the question.

Tyler Durden Sun, 05/10/2026 - 12:50

Housing Market's Crucial "Spring Selling Season" Is In Tatters

Authored by Wolf Richter via Wolf Street,

Late last year and early this year, the story was that dropping mortgage rates, powered by big rate cuts from the Fed, would unleash demand in the housing market in the spring – the key spring selling season – and that sales volume would take off and that Realtors’ commissions would rocket to the moon.

And so that didn’t happen. Inflation has been reheating for months before the war and before the energy price spike. The energy price spike in March and April then added to that resurgence of inflation. The Fed is now talking about a possibility of rate hikes as next move. And longer-term Treasury yields, such as the 10-year Treasury yield, rose in March and April in response to inflation fears. Mortgage rates, which track those Treasury yields but are higher, rose back to the 6.5% range. And the housing market remained in the same-old-same-old frozen pattern that it has been in for four years after the price explosion from mid-2020 through mid-2022. And it continued in the latest week.

Mortgage applications to purchase a home – a measure of demand that may become actual home sales in the future, so a forward-looking indicator of home sales – dipped in the current survey week and remained near rock-bottom levels, down by 34% from the same week in 2019, according to data by the Mortgage Bankers Association today. That level of mortgage applications is below even the collapse of mortgage applications during the lockdown in the spring of 2020.

The average weekly mortgage rate for conforming 30-year fixed mortgages rose to 6.45% in the latest reporting week, according to the Mortgage Bankers Association today.

For the past 7 weeks, this measure of mortgage rates has been back in the middle of the 6-7% range, the range it has been in since September 2022, except for some breakouts to the upside.

These mortgage rates are not high in a historical context; they’re only high in the context of the Fed’s QE which started in 2009 and took on mega-proportions during the pandemic.

Under its QE programs, the Fed bought trillions of dollars of securities, including mortgage-backed securities (MBS), which repressed mortgage rates below 3%. But this massive amount of reckless money printing was part of the toxic mix at the time that triggered the worst inflation in 40 years. With mortgage rates below 3% and inflation at 9% – negative “real” mortgage rates, better than free money – home prices exploded and are now too high. And that inflation has refused to go back into the bottle.

Pending home sales for March – deals that were signed in March but haven’t closed yet – also remained at rock bottom, down by 30% from March 2019. In January, they’d dropped to a record low in the data by the National Association of Realtors going back to mid-2010, and in February and March, they inched up from that record low.

And the much-hyped spring selling season has turned into the fourth dud in a row: 2023, 2024, 2025, and 2026.

Mortgage applications to refinance a home instantly react to even small changes in mortgage rates. A dip in mortgage rates unleashes homeowners like a coiled spring to refinance a mortgage at even a slightly lower rate. And when mortgage rates rise after that dip, demand re-fizzles. These dynamics have been repeated several times since mid-2024.

Refis do nothing for the housing market, though they’re crucial for the income of mortgage brokers and lenders. But they may have a positive impact on consumer spending when they lower the mortgage payments and leave borrowers more money to spend on other stuff; or when they’re cash-out refis, the proceeds of which might then be used to pay down more expensive debts, or might be used for spending projects.

The up-front fees to be paid by homeowners when they refinance a mortgage – typically 1% of the mortgage balance – are generally added to the loan amount where they’re largely out of sight but increase the payment, which reduces the advantage of lower mortgage rates.

Homeowners can do a breakeven analysis with online calculators or through brokers and mortgage lenders, to see if refinancing a mortgage is worth it. When mortgage rates briefly drop and the breakeven analysis tilts their way, they pull the trigger, thereby creating these curious spikes in refis.

But even these spikes in refis since mid-2024 were relatively low compared to the two-year refi boom from early 2020 through 2021 when the Fed’s QE repressed mortgage rates below 3%, and everyone and their dog refinanced into these low-rate mortgages.

And now they’re part of the “lock-in effect,” when these homeowners avoid buying a new home, and thereby selling their current home, because the new home’s much higher price would have to be financed at a much higher mortgage rate, and that math doesn’t work very well for many people. But life does happen. My analysis: Update on the “Lock-in Effect” in the Housing Market: Below-3% & 4% Mortgages Fade Very Slowly

This longer view demonstrates the inverse relationship between mortgage rates (blue) and applications to refinance a mortgage (red):

In case you missed it: New Single-Family Home Prices Drop Further amid Inventory Glut. But Lower Prices Beget Higher Sales

Tyler Durden Sun, 05/10/2026 - 12:15

Soaring Death Toll In Lebanon As Full-Fledged Israel, Hezbollah Fighting Returns

Full-fledged war has returned to Lebanon as the government has announced that at least 23 people have been killed by Israeli airstrikes on Saturday alone. 

Stretching back into Friday, this brings the total death count to at least 50 killed over the past 24 hours of Israeli bombings, also as Lebanon’s National News Agency (NNA) late on Saturday said rescue operations were still ongoing for bystanders missing underneath the rubble.

Illustrative prior image: Getty

Heavy bombing has not ceased in southern Lebanon, as the Israeli military says it's trying to root out and destroy Hezbollah, including raids on the districts of Nabatieh, Bint Jbeil and Sidon, among others. Several were also killed in Tyre on Friday.

But Israeli forces have also absorbed casualties, with The Times of Israel describing the following serious drone strikes launched from Lebanon:

On Saturday, the terror group launched several salvos of explosive-laden drones and rockets at Israeli forces. One drone struck Israeli territory, close to the border with Lebanon, seriously injuring a reservist soldier and moderately wounding a reservist officer and another reservist soldier.

The troops were taken to Galilee Medical Center, which said the seriously wounded soldier underwent surgery and was now stable in the intensive care unit. The moderately wounded troops were scheduled for surgery later.

In another incident, the military said an explosive drone struck an unmanned engineering vehicle in southern Lebanon, causing damage. No injuries were caused.

There are reports of the IDF issuing evacuation orders for various areas, only to attack the so-called safe zones. For example the below comes via Israeli sources:

"In light of the Hezbollah terror organization’s violations of the ceasefire agreement, the IDF is forced to act against it with force and does not intend to harm you," warned army spokesman Col. Avichay Adraee.

Meanwhile, Lebanese media reported that Israeli airstrikes on Saturday killed at least 12 people, including in areas where no evacuation orders were issued.

Starting in late April a 10-day ceasefire brokered by Washington took effect, even as Israeli forces remain deployed in a strip of Lebanese territory several miles deep along the border. That appears to be effectively collapsed, also as Israel has been upping its targeting of Beirut suburbs of late.

Israel calls the Lebanese strip of land now occupied by IDF troops a 'buffer zone' - but Lebanon sees it as a land grab. Lebanese Parliament Speaker Nabih Berri, a Hezbollah ally and leader of the Amal Movement - which is the other big Shia organization in Lebanon - has recently stated that if Israel "maintains its occupation, whether of areas, positions, or by drawing yellow lines, it will smell the scent of resistance every day." He added: "If they insist on remaining, they will face resistance, and our history bears witness to that."

Israeli airstrikes on vehicles south of Beirut killed 4 people, while strikes in southern Lebanon killed at least 13, state media and the Health Ministry said.

Iran war: https://t.co/GEBscM5Zz2 pic.twitter.com/6mHpjCkVis

— Sky News (@SkyNews) May 9, 2026

Lebanese officials have also charged Israel with trying to erase the Lebanese presence in southern Lebanon in a genocidal act, or 'cultural genocide'.

This after Israeli forces have carried out demolitions in southern villages, targeting what they describe as Hezbollah infrastructure embedded in civilian areas.

Tyler Durden Sun, 05/10/2026 - 11:40

Winning? Do We Need To Understand UBI

Submitted by Peter Tchir of Academy Securities

Winning? Do We Need To Understand UBI

Iran (and the potential for a deal) has continued to move markets. As the 30-year bond rose above 5% earlier this week, we got news that we have a new approach to resolving the conflict – a one-page MOU. Markets (ex-oil) rallied around various “deal” headlines all week.

Spider, Bret, and I spent some time discussing this on Friday’s Podcast – The U.S. Proposal to End the War (also available on Spotify and iTunes).

Information continues to leak out in dribs and drabs about how those negotiations are doing. There continue to be conflicting messages. In the back of my mind, I’m increasingly forced to remember what we mentioned at the start of the conflict – Iran has never won a war but has never lost a negotiation.

There was a time when that statement didn’t seem likely to be reflective of this conflict. From “unconditional surrender” to various other metrics (especially surrounding nuclear weapons capabilities) we seem to be drifting to – let’s open the Strait and figure out the rest later?

The U.S. has displayed exceptionalism on every military task that it has been asked to undertake during this conflict. While we have had a limited presence in the Strait, our maritime efforts have been successful in accomplishing the missions that have been defined. Yes, Project Freedom was short lived. Not so much because the U.S. couldn’t deal with the threat (we successfully defended ourselves against Iranian missiles, drones, and small boats), but because it became pretty clear that not many commercial vessels were ready, under current circumstances, to risk challenging Iran.

We did argue, earlier in the week, that the admin’s assertion that Iran only has a few weeks before its economy collapsed, was underestimating the Iranians. They in all likelihood have prepared for this economic pressure and likely have significant IOUs with countries like China (and possibly even crypto holdings) to survive months not weeks. A regime that will shoot 40,000 or more citizens in a week for protesting is not going to be overly concerned with “standard of living” issues. Finally, all the “hype” around the fact that Iran’s ability to store oil is running out and this is causing them to shut the pumps (resulting in long-lasting damages) seemed “optimistic” at best. Iran has been decreasing the pressure, reducing the flow, and giving more leeway to when their reservoirs fill up. They also have the ability to just pump oil back onto the sand (and there are some reports of oil slicks in the Gulf). So, yes, if they left their facilities on full pressure, and were worried about “dumping” oil, it might be a week or two before irreparable damage is done. But they aren’t doing that. Also, according to many in the oil industry, other countries in the region are employing the same tactics. It isn’t just Iran that faces an inability to load oil onto transportation systems (pipelines or tankers). Much of the region faces similar challenges from the inability/unwillingness to transit the Strait.

A deal would be good, but a good deal would be better.

We discuss our views, options, and even highlight a couple of possibly great outcomes in the podcast (linked above), but we do seem to be drifting towards expediency rather than something more comprehensive.

I am still in the camp that the U.S. will once again become frustrated with Iran and launch another set of attacks, to truly push this conflict to a conclusion that leaves the world much safer.

Do We Need to Understand UBI?

With the release of some formerly classified information, I probably should be talking about UFOs, but somehow I’m here thinking about UBI. UBI or Universal Basic Income is a topic I haven’t paid much attention to.

It reminds me a bit of some other economic theories that I paid little attention to, without doing much damage to my work. 

• Mint the Coin was a movement “predicting” or “encouraging” the government to mint a trillion dollar coin to avert the debt ceiling. It would get some traction periodically and every once in a while made me wish I spent some time even thinking about this “absurd” (in my opinion) “solution” to our debt ceiling.
• Brexit. Yes, Brexit eventually happened, but it took so long to play out (as does everything in Europe including their “inevitable” adoption of ProSec ) that it was at best an undercurrent of markets, and I would argue (as someone who largely ignored it), not an undercurrent to the global economy. Important for the U.K. for sure, but I think I saved myself a lot of time and effort by largely ignoring it.

The point here is that I’ve been “dismissive” of any conversation around UBI. The concept has seemed anti-capitalist and almost “un-American.” The U.S. has “safety nets” of all sorts. Every “capitalist” country has their own version of “safety nets” – some more robust than others. UBI always seemed “a step too far,” especially in the U.S., but I cannot help thinking about it, as I struggle to digest the data this week – the “hard” data as well as the anecdotal data.

For the second month in a row, we had (at least on the surface) very strong job growth – Back to Back Dingers.

If the only piece of economic data I had was the Establishment survey of jobs, I’d be pretty pumped for the economy.

But that is NOT the only piece of data we have. There are so many ways I could express concern, that it would take too long to write, and would become repetitive, so I will stick to what some other people said recently. Here are “paraphrased” comments that caught my attention:

• Recession-level demand slump in North America. (Whirlpool)
• Consumer sentiment is certainly not improving, and it may be getting a little bit worse. (McDonald’s)
• Consumers are literally running out of money toward the end of the month. (Kraft Heinz)

There are many stocks we can look to, in order to gauge the state of the consumer. HD (Home Depot), for example, is almost 25% off of its high from last October. LOW (Lowe’s) is off 20% from its high set in February. That tells me there is something off with the consumer (rather than something company specific). If people are not spending money on home improvement, that indicates a lack of optimism from consumers.

Since I’m not a huge fan (or even a small fan) of the various CONsumer CONfidence surveys, I feel almost bad referencing it for the 2nd month in a row. Yes, it hit all-time lows, but that isn’t what caught my eye. Okay, it caught my eye, but everyone saw that. This is the chart from that survey that I find most interesting.

Here we get the responses from the Republicans for the University of Michigan Survey. It is 85. Far above the 48.2 headline number (which is the one that set a new record low). At 85 it is well above the lows during the Biden administration.

But this is the lowest Republican sentiment while President Trump has been in office.

That, to me, is important.

I have never understood how or why Republicans and Democrats would have such a different view of the economy. Maybe, if somehow, it was picking up differences in regional economies (areas where Republicans reside are booming, and vice versa), but it seems counterintuitive that the difference on economic outlook is so tied to party. Which is why I largely ignore this entire CONsumer CONfidence set of data, but the recent erosion in the chart makes me think twice.

AI versus Affordability

I really, really, want to bring up the line from Apocalypse Now – “Charlie Don’t Surf.” Maybe I’ve been spending too much time fixated on the war.

But I really want to write something along the lines of “AI Don’t Spend.” Or “one person’s expense, is another person’s revenue.”

So far any concerns about job losses due to AI don’t seem to be showing up in the jobs data. This is likely because:

• The buildout of AI requires a lot of hiring. Not just making the components necessary to run a data center (chips, cooling, electricity, etc.) but also the actual construction of the data centers and all the “picks and shovels” around data center construction.
• AI, in most cases, seems to have slowed hiring, rather accelerated the firing of employees. Attrition is playing the biggest role in adjusting headcount to offset AI spending (and productivity, to the extent it is being productive).

I’m stuck believing that the pressure on the consumer, so far, is primarily due to affordability, rather than job losses.

Concern about the future of jobs or pay may be influencing consumer sentiment and spending (I’m going to keep making T-Reports so confusing that AI cannot replicate them any time soon), but the bulk of the issue is affordability right now. What the heck will happen if job losses, especially due to AI, increase?

Let’s use some “water” analogies here (to try to link into the surf comment).

• A rising tide lifts all boats. This is the sort of economic growth we are all used to. Everything does better. It doesn’t really matter what you do, or where you are, you do better. This economy does not currently have that “vibe” to me.
• We see who is swimming naked when the tide goes out. Always a good one, but not sure how relevant it is to today’s economy. I think we are more about all boats not lifting, than we are about a tide going out.
• If the water is rising and you are anchored to the ground, you are in trouble. Okay, I just made that one up. But we’ve all seen it in movies.
• The water level is rising in a room, where the “hero” cannot get out. There is real fear. If there wasn’t some fear of this, Harry Houdini probably wouldn’t be as famous as he is.

I think this latter analogy may be the most apt:

• The water is rising (affordability). More and more people are getting sucked into the daily, weekly, monthly, and annual struggle of making ends meet. If we want to go down the “k”- shaped analogy, more and more of the k is underwater. Maybe it was only the lower leg of the k that was struggling, but as the water rises (affordability), more of the k is being covered. We may well be into the upper leg of the k. I guess we better hope that is a K rather than a k where the upper leg is long and goes high, but I’m concerned it is not (I still stick with the i-shaped economy, where a handful is doing extremely well and the rest of us are seeing the water rise).

On that pleasant note…

Bottom Line

Anyone with a job that can be disrupted by AI should own AI stocks as a “hedge.” I cannot tell if I’m being facetious or serious, but it is something to think about.

It is too early to spend a lot of time trying to understand how UBI would work, but I suspect we will start hearing more about this rather than less as affordability remains an issue. The issue will decline once we get a deal with Iran, but the affordability issue is not going away (I restrained myself from calling it a crisis, but…).

On credit, I continue to think credit will do fine and like owning private credit as marks seem to be adjusting to a new reality. More for a “trade” than being married to the position. I will get a detailed report out this week, as I am actually not on the road this week!

On rates, our more detailed analysis from last weekend’s Living in an AI World stands. Largely rangebound, with 4.35% to 4.4% as the middle of the range on 10s.

Continue to focus on ProSec themes, here and in Europe. If we get a deal, expect the admin to turn more attention to things like electricity production and the processing, refining, and smelting of commodities (as well as their extraction). A lot is being done in the background, but the President remains a key driver and while his attention has been diverted, we haven’t seen as much progress on ProSec as we’d like (away from domestic-focused chip manufacturing). That should change!

Thanks for everything and best wishes to all the moms out there! Hope you and your family and friends have an amazing day today! (Hopefully, every day is amazing, but today everyone should focus on the importance of family, more than the average day, where things like “work” get in the way).

Tyler Durden Sun, 05/10/2026 - 11:05

Iran-Linked Media Floats Data Tax On Hormuz Undersea Internet Cables

An Islamic Revolutionary Guard Corps-linked media outlet has signaled that submarine fiber-optic cables running through the Strait of Hormuz remain in Tehran’s crosshairs.

Tehran views Hormuz not only as an energy chokepoint but also as a digital chokepoint, with undersea cables beaming internet across the Gulf and into the global network.

Source: Retuers 

Tasnim published an article titled “Three Practical Steps for Generating Revenue from Strait of Hormuz Internet Cables,” pointing out that Tehran must reassess how it exercises sovereignty over the strategic maritime chokepoint.

Source: Retuers 

The IRGC-linked outlet said that submarine fiber-optic cables in the critical waterway facilitate more than $10 trillion in financial transactions each day, and claimed that Iran has been deprived of the economic and sovereign benefits tied to the digital economy.

Source: Retuers 

Tasnim warned that any disruption, cut, or damage to these cables, whether from natural causes or ship anchors, could impose heavy losses on the world's economy.

"These cables, which are laid on the seabed using advanced technologies such as DWDM and double-armored standards, carry the bulk of international internet traffic, cloud synchronization, enterprise virtual private networks, voice traffic, and financial-payment networks. From the perspective of the digital economy, any disruption, outage, or damage to these communications highways, whether from natural incidents or ship anchors, can cause irreparable losses," the outlet stated.

Tasnim lists three steps for how Iran should begin imposing fees on internet traffic routed through Hormuz:

1. Licensing and tolls: Iran should require telecom consortia and cable operators to obtain permits for laying and operating cables through the strait, with initial licensing fees and annual renewal payments.

2. Iranian legal jurisdiction over tech firms: Major technology companies using the cables, including Google, Microsoft, Amazon, and Meta, should be required to operate officially under Iranian law and cooperate with Iranian technology firms, knowledge-based companies, and media entities.

3. Iranian control over maintenance and repair: Iran should develop the technical infrastructure to control or participate in the maintenance and repair of the cables, turning cable servicing into both a revenue stream and a sovereignty tool.

Beyond the quest to charge data fees, Tehran has already imposed fees or tolls on vessels passing through the strait.

Last week, Iran's newly created Persian Gulf Strait Authority pushed forward with a new protocol for commercial vessels transiting the strait. It’s unclear whether the protocol will incur a fee.

However, Iranians have made "demands for payments, payments for toll fees, as we say, for those vessels to be granted permission to sail," Dimitris Maniatis, CEO of maritime risk consultancy Marisks, told CNN.

The direct result of Tehran’s attempt to position itself as the gatekeeper of the Hormuz chokepoint, across energy, freight, and potentially digital traffic, will be to accelerate global efforts to bypass the strait. That means rerouting pipelines, tanker traffic, commercial shipping, and eventually undersea cable infrastructure away from Iran’s strait.

That effort has already started:

• World Starts To "Build" Around Hormuz; Japan Buying UAE Oil Bypassing Strait As ADNOC To Spend $55 Billion On Pipelines

.  . .

 

Tyler Durden Sun, 05/10/2026 - 09:55

What Would Be Truly Bullish? Actually Fixing What's Broken

Authored by Charles Hugh Smith via Of Two Minds,

We've come to an interesting juncture in history, interesting because while we're being assured that AI will solve all problems, including any it creates, back in the real world, AI is incapable of fixing what's broken because too many people are getting rich off the status quo, and since the status quo is the problem, those who own / control AI will use it to maintain the status quo, guaranteeing that what's broken spirals into irreversible breakdown.

Richard Bonugli and I discuss what's fatally broken in a new podcast on what it will take to become Bullish (32 min).

Let's start with what's "obvious": letting what's broken fester until it implodes the status quo is not bullish, and neither is substituting delusion and denial for a realistic appraisal of what's actually broken--the essential observe and orient steps in the OODA loop (observe, orient, decide, act).

I've often described the two dynamics that are broken that AI can't fix because those who own / control AI are using it to increase the asymmetrical distribution of wealth and income that are the source of breakdown. Consider healthcare. Everyone except the managers / owners / shareholders of healthcare / pharma cartels agrees healthcare is fundamentally broken and is bankrupting households, employers and the government / nation.

Those profiteering off the status quo healthcare system claim AI is going to reduce costs. They fail to mention this won't reduce the price, it will only serve to increase their profits. Cut costs by replacing human labor with AI tools, yea, we reap even higher profits. Nobody is claiming healthcare will magically become affordable because a truly affordable healthcare system wouldn't be as profitable because it wouldn't be as open to exploitation, fraud, profiteering, extraction and parasitic pricing.

In the same way, AI can't solve the other fatal dynamic--widening wealth and income asymmetry--because it's widening the asymmetry to new extremes. The owners of AI are reaping vast fortunes while stripmining resources to run their AI data centers and laying off wage earners. Rather than fixing what's broken in America, AI is accelerating the endgame of what's broken.

Let's run through why increasing numbers of online comments suggest burning the whole rotten healthcare system down and starting over. Healthcare insurance--which often turn out to be a profitable facsimile of actual insurance--has more than doubled beyond the official rate of inflation. If healthcare insurance had tracked inflation, it would cost $10,000 a year for family coverage in 2026. Instead, it costs $25,000+ annually.

Diagnosis: broken.

Regardless of how you toy with statistics, the reality is administrative costs / bloat / profiteering have soared. Diagnosis: broken.

Meanwhile, back in reality, rapidly aging populations are far from their peak demand for healthcare services. Check out the white line on this chart (courtesy of @econimica) of those aged 65+. While births collapse and the workforce is pressured by AI and the soaring cost of living, millions of elderly retirees are being added to the Medicare beneficiary pool. Diagnosis: broken.

Here is the chart of Medicare costs: parabolic. It's nice we can borrow a few trillion every year, but can we borrow $5 trillion or more every year with no consequence? Diagnosis: broken.

Here is the chart of Medicaid costs: parabolic. Diagnosis: broken.

As for the health of the general populace: it's been declining for two generations as our diet has shifted from real food made at home to ultra-processed goo and fitness has bifurcated into a thin layer of extreme fitness and a majority of the populace burdened with the complex ill health of poor diets, poor fitness and metabolic disorders.

Weight of the populace in 1985:

Weight of the populace in 2023:

Yes, now we have GLP-1 drugs that reduce weight and the diseases related to weight, but these drugs have side effects in many patients and they must be taken for life. Once the patient stops taking them, the weight returns.

Drugs that must be taken for life are not a substitute for being healthy. Healthy = not needing any medications.

Diagnosis of the healthcare system: broken. Prognosis: bifurcation: the rich will get "the finest care in the world," and everyone else will be in a queue or denied care--basically the same result--or offered extraordinarily profitable meds and a spectrum of side effects.

What's broken is the entire financial-economic system that distributes the pain and the gain: the pain of sharply higher costs of living and increasing financial precarity is distributed to the bottom 80% while the gains are distributed to the top 10%, with a dribble going to the cohort between 81% and 90% who own enough capital to support their claim to being "middle class."

Note to America's elites: when only the top 15% just below the top 5% qualifies as "middle class," that's not a middle class. I know, you don't concern yourselves with such trivia: there are trillions of dollars to be reaped "solving problems" with AI.

The "problem" you can't solve with AI is AI only "solves" the "problem" you see, which is how to increase your wealth and income before the bottom 80% awaken from the 24/7-hyped delusion that credit-asset bubbles (AI!) raise all boats and will continue to do so forever and ever.

Real life has diverged from that delusion, and the radioactive power of AI to extend that delusion has a short half-life. Refusing to recognize, much less actually fix, what's broken hurries our collective rendezvous with consequences.

What would be bullish is actually fixing what's broken. Promoting self-serving illusory "solutions" that only widen the asymmetries stretching the socio-economic fabric to the breaking point is not bullish.

New podcast: what it will take to become Bullish (32 min).

My book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free)

Tyler Durden Sun, 05/10/2026 - 09:20

Housing Cost Pressure Varies Widely Across The EU

Housing affordability in the EU has an uneven spread across the continent according to data from Eurostat.

As Statista's Jack Lillis details below, the share of people whose housing costs exceed 40% of disposable income ranges from as low as 2.4% in Cyprus to as high as 28.9% in Greece.

The EU 27 average stands at 8.2%, but this figure masks significant disparities between countries.

You will find more infographics at Statista

After Greece, Turkey appears among the most heavily burdened, while countries like Finland, Sweden, and France sit at the lighter end of the scale, suggesting considerably lower housing cost pressure on their populations.

The disparities carry real implications for labor mobility and quality of life.

In countries where housing consumes a disproportionate share of income workers in lower-wage sectors, such as the hospitality industry, could face particularly acute pressure.

Tyler Durden Sun, 05/10/2026 - 08:45

The Most Direct Social Engineering Propaganda You'll Ever See

Authored by Steve Watson via modernity.news,

A new Channel 5 drama series has delivered what many are calling peak social conditioning: a classroom scene where a teacher is berated by students for failing to instantly adopt preferred pronouns and for daring to stage Shakespeare’s A Midsummer Night’s Dream.

A clip, shared widely on social media, shows an old-school drama teacher clashing with pupils over basic biology, literature, and “respecting identities.”

In the footage, a student corrects the teacher when she uses the wrong name for a student who has decided to swap genders and adopt new pronouns: “Their name is Dee now actually,” one student explains, adding “you just deadnamed them Miss.”

Channel 5 has always been wank and only MASSIVE wankers watch it!

But I think I've found the most Wanktarded woke TV show ever!

This wank even out wanks the BBC!

Not only is it woke wank!

It tries to shit on Shakespeare’s legacy!

This is what commie wankers do! pic.twitter.com/AUR07lfSVb

— Wanker Finder (@IfindWankers) May 5, 2026

The teacher responds: “I’m sorry. I’ve known you as Daphne for two years and can’t click a switch. I am trying.”

Another insufferable student fires back: “You shouldn’t have to try. You either see them or you don’t. I think you should apologise.”

The teacher then puts her foot in it again and states: “I just did, and am sure she can fight her own battles!”

“It’s they not she… It’s about respecting other people’s identity,” the student lectures.

Later, students challenge the Shakespeare choice, with one suggesting “There’s a consent issue. Titania is drugged before sleeping with Bottom… It’s also anti-feminist portraying women as submissive and dependent on men… to a modern audience it could be quite triggering.”

The scene perfectly captures the absurdity: instant language policing, classic literature deemed harmful for not meeting 2020s standards, and virtue-signalling students demanding deference.

This isn’t subtle. It’s overt social engineering dressed as entertainment.

This fits a well-established pattern and has been ongoing for years, as documented in the videos below:

Freedom of Information releases have confirmed the extent. UK ministers met with BBC and ITV bosses to insert pro-vaccine storylines into EastEnders, Coronation Street, and more during the pandemic, using “entertainment” to nudge compliance and shape opinion.

The BBC also used its Doctors soap to normalize the “furry” subculture, complete with lines like “You accepted their gender so why not this?”

Channel 5’s The Teacher takes it further by framing resistance to this ideology as outdated and problematic, while portraying demanding students as enlightened.

The drama reduces complex cultural heritage and language to potential “harm,” training audiences — especially younger ones — to view traditional education and biological reality as suspect. It’s not storytelling; it’s a masterclass in cultural reprogramming.

British broadcasters, taxpayer-supported or not, continue embedding these agendas. FOI documents prove coordination between government and media to “nudge” perceptions on everything from vaccines to identity. What starts as classroom lectures in fiction becomes pressure in real schools and workplaces.

This latest effort on Channel 5 strips away any pretense. It’s propaganda in plain sight — mocking Shakespeare, enforcing pronouns on demand, and shaming anyone who can’t “just flip a switch.”

Viewers are noticing. The pushback is growing as more see these shows not as harmless drama, but as tools to reshape society one scripted confrontation at a time.

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

Tyler Durden Sun, 05/10/2026 - 08:10

Maersk CEO Warns Iran War Is A "New Wake-Up Call" For Global Trade

It is becoming increasingly clear that reopening the Strait of Hormuz has become a top U.S. priority (really a global priority) , as oil executives and industry insiders warn that the clock is ticking toward an energy and global trade shock if the maritime chokepoint remains closed for another month.

Frederic Lasserre, head of research at Gunvor, one of the world's largest oil traders, warned earlier this week: "The tipping point is clearly June. This is the point at which something has to give."

JPMorgan analysts warned that the world is spiraling toward a catastrophic cliff-edge shortage of crude oil if the maritime chokepoint is blocked for another four weeks.

Speaking to CNBC's "Squawk Box Europe" earlier this morning, Maersk CEO Vincent Clerc warned that a "new wake-up call" has emerged beyond energy markets and that if the Hormuz chokepoint remains shuttered, it could severely impact global trade in the coming months.

Clerc was speaking to CNBC after Maersk reported a plunge in profitability and kept its guidance unchanged, but warned that the US-Iran war and the resulting Gulf energy shock are "dominant forces shaping the macroeconomic outlook, as well as the trade and logistics environment."

Maersk wrote in its earnings report that the Iran war had introduced an "additional layer of uncertainty."

"Currently, fragile ceasefires are in place in both Iran and Lebanon, negotiations proceed slowly, and traffic at the Strait of Hormuz remains at a near-standstill. The conflict has already weighed on sentiment. Consumer confidence deteriorated," the shipper said.

Maersk warned that crude oil prices in the $90 to $100 per barrel range and continued Hormuz chokepoint disruption would soon begin hitting global container demand, which is still expected to grow between 2% and 4%.

It noted that the balance of risks is "on the downside and more adverse outcomes cannot be ruled out."

"Energy and shipping disruptions in the Strait of Hormuz are rapidly reshaping global supply chains," Maersk said in the earnings report. "After the recent tariffs on U.S. imports, the conflict represents another wake-up call to deploy new tools to make supply chains more resilient and develop new strategies to mitigate future disruptions."

We pointed out earlier this week:

• Trump's Project Freedom Likely Triggered By Oil Market's One-Month Countdown To Chaos

Latest as of Thursday morning:

• Oil Slides On Reports Of 'Breakthrough' Coming For Stuck Ships In Hormuz, As US Awaits Tehran's Response To Fresh Proposal

It is increasingly evident that another month of Hormuz disruption represents a critical tipping point for energy markets and the global economy. If the conflict extends through June and the chokepoint remains shuttered, first-order impacts would likely worsen across Asia and Europe, where dependence on Gulf crude, refined products, LNG, and container flows is highest. From there, the shock could spread into fuel shortages, factory disruptions, higher shipping costs, and broader economic turmoil.

The clock is ticking.

Tyler Durden Sun, 05/10/2026 - 07:35

AI Is Losing The PR Battle And The Consequences Could Be Huge

Authored by Donald Kendal via The Epoch Times,

Lately, when watching high-profile sporting events like the NBA Playoffs, you may have noticed a rash of commercials for artificial intelligence (AI) companies. While average commercials strive to show off new products or services or recruit new customers, these AI commercials seem to have a different primary objective. They seem to target goodwill.

Heartwarming commercials show families bonding over AI-generated memories, where AI brings life to old family photos. Emotional voice-overs promise connection, creativity, and even nostalgia. These AI companies are trying to sell people a good reputation.

This strategy should tell us something. Companies don’t often spend millions trying to make you feel good about their brand unless they know, deep down, that you don’t trust it.

Despite hundreds of billions of dollars pouring into AI development, the industry is quietly losing the battle for hearts and minds. And sentimental advertising is not doing much to fix this problem.

Rare Bipartisan Agreement on AI

A new national survey from Marquette University Law School should give the AI industry serious pause. According to the poll, roughly 70 percent of Americans believe artificial intelligence will do more harm than good for society. Even more striking, the skepticism cuts across party lines.

Poll Director Charles Franklin put it bluntly: “It really is striking … there’s pretty much bipartisan skepticism … That’s an awful lot of partisan agreement, where we normally see Republicans and Democrats on opposite ends.”

In today’s political climate, bipartisan agreement on anything is rare. On AI, however, Americans seem united, just not in the way Silicon Valley might hope.

Worse yet is the fact that this poll supports similar findings on AI skepticism from numerous other surveys. A particularly damning NBC News poll from last month showed that AI’s net favorability rating ranked lower than nearly every other topic.

Why the Left and Right Don’t Trust AI

The industry is up against stiff headwinds in its battle for public trust.

For every story about the potential for AI curing diseases or boosting productivity, there are headlines about job displacement, algorithmic bias, and systems behaving in ways even their creators don’t fully understand.

We’ve seen AI tools generate historically inaccurate content in the name of ideological goals. We’ve seen concerns about “woke AI,” where outputs appear shaped by political preferences rather than objective reality. We’ve seen warnings from industry leaders themselves that these systems could eventually escape human control.

At the same time, public trust in the institutions building AI is already fragile.

Progressives have long been skeptical of massive corporations wielding outsized economic power. They also raise concerns about the environmental footprint of massive data centers and the risk that AI-driven productivity gains will further concentrate wealth among a small group of industry elites.

Conservatives, meanwhile, have grown increasingly wary of Big Tech after years of content moderation controversies and corporate activism tied to ESG-style frameworks.

In other words, both sides of the political spectrum are looking at the same handful of companies building the most powerful technology in human history while wondering if they can be trusted.

The Political Winds

AI companies should understand that this skepticism won’t stay confined to opinion polls. These poor poll results and negative stories in the media are giving bountiful ammunition to policymakers who are looking to target the burgeoning AI industry.

Lawmakers are beginning to float a wide range of proposals aimed at regulating artificial intelligence, some narrowly tailored, others sweeping in scope. Certain efforts are understandable, particularly those designed to prevent abuses similar to what we saw during the height of the Big Tech censorship debate.

Some proposals go further.

Some policymakers seek to impose heavy restrictions on AI, computational infrastructure, or model development. In New York, legislative proposals aim to restrict AI models from offering guidance on medical, legal, or professional issues.

A major threat to the industry is a proposal from the likes of Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) to impose a moratorium on the construction of AI data centers. This would essentially slow AI development in the United States to a crawl, potentially giving adversarial countries like China a great advantage in the AI race. In this scenario, the future of AI could then be left in the hands of governments that care far less about individual liberty and personal autonomy.

Earning Public Trust

If the AI industry wants to win back public confidence, it will need to do more than produce emotionally manipulative advertisements. It will need to address the concerns driving that skepticism in the first place.

Americans don’t want AI systems that nudge them toward preferred political outcomes, filter information through ideological lenses, or act as invisible referees of acceptable thought. They want assurance that these tools of the future act on objective truth rather than political ideology.

That means committing to principles that protect individual liberty and personal autonomy. It means transparency in how systems are trained and deployed. It means resisting pressure from governments, activist groups, or corporate interests to embed subjective values into systems that increasingly shape public life.

This route is possible. Elon Musk, for example, has acknowledged the importance of free expression and open inquiry in AI development. But this course needs to be fleshed out, fully implemented, and become an industry standard.

Without clear, consistent standards, suspicion will remain that there is a political agenda behind the interface.

The Fate of AI Is Not Set

The trajectory of artificial intelligence development may be inevitable, but there are many questions that need to be answered.

The best way forward for the AI industry is not through carefully crafted marketing campaigns, but a deliberate effort to earn public trust. That trust must be built on transparency, commitment to truth, and clear respect for individual liberty and personal autonomy.

If these companies want to usher in a new era of prosperity powered by AI, they must show the public that this technology will serve people, not shape or control them.

Tyler Durden Sun, 05/10/2026 - 07:00

The Return Of History: Deutsche On Gold, The Dollar, & The Monetary Future

Authored by Malika Sachdeva and Michael Hsueh via Deutsche Bank Research Institute,

In 1989, Francis Fukuyama argued that humanity had reached “the end of history”. In the years that followed, the US became the uncontested hegemon, global trade exploded in a US-defined liberal order, developed market central banks sold gold, while emerging markets accumulated vast amounts of US dollar FX reserves. We argue that the end of history has come to an end. The world is back in a superpower struggle; the US is retreating from free trade, alliances, and security provision; the Great Economic Moderation is behind us; and the dollar banking system has been weaponized. The “return of history” has big implications for gold and the dollar.

Contrary to conventional thinking, we argue that the share of gold in central bank reserves is not driven by the global monetary system, but by the global geopolitical environment. Gold’s decline as a share of reserves did not happen with the fall of Bretton Woods in the 1970s, but the fall of the Berlin Wall and the assertion of US hegemony in the 1990s. As tectonic geopolitical plates shift again, the share of US dollars in central bank reserves is once more in decline. It has fallen from over 60% to just 40%, while gold’s share has tripled from its lows to 30% today.

We create a framework for the share of gold in central bank reserves as a function of: (1) the volume of gold held by central banks; (2) the price of gold; and (3) the amount of global FX reserves. We see all three pillars on the move, driven by EM. EM central banks have been actively buying gold and driving upward pressure on prices; crucially - their FX reserves may also now begin to structurally decline.

A “return of history" would be consistent with gold getting to at least a 40% share of global reserves. There is significant scope for EM to add towards this. We find that EM countries with closer non-Western defence ties hold more gold. If the world diversifies trade and security dependence away from the US, this would be consistent with less USD and more gold in reserves.

We simulate a range of different outcomes for gold prices depending on the level of FX reserves EM central banks end up with, and the share of gold they target. Even in an environment where EM FX reserves decline to USD5tn, gold prices could still rise to $8000 over the next five years, if EM countries all target a 40% gold share.

For now, EM central bank gold buying likely has to do with preserving the value and accessibility of foreign savings in a changing geopolitical climate. But in the long-run, we consider how gold may one day play a role in anchoring a monetary order that builds independence from the dollar.

All that glitters

The reserves baton is passing back to gold from the dollar

The share of the USD in global central bank reserves has dropped sharply from around 60% at its peak to just 40% today, with attrition accelerating in the past few years. As Figure 1 illustrates, the USD's share of reserves peaked at the start of this century and sustained those levels for the next two decades before recent losses Importantly, the dollar's losses as a share of central bank reserves have not gone to other fiat currencies, but to gold.

Gold's share in global central bank reserves has doubled in the past four years to nearly 30% today. The fact that the gap between the dollar and gold as a share of reserves is now just 10% is extremely notable. As Figure 1 shows, there appears to be a marked reversal underway of the 1990s trend when central banks moved away from gold and towards the USD in their reserves. Before the 1990s, gold had consistently been a larger share of central bank reserves than the fiat dollar. But by the end of the 1990s, the dollar was over four times the share of gold. This seems to now be going in reverse with gold clawing back its share rapidly. What happened in the 1990s and why is this unwinding today? How far can it go and to what end? These are the questions which motivate this paper.

The 1990s began with a declaration by historian Francis Fukuyama that humanity had reached "The End of History." We argue in this paper that history has returned, but the contest and its leaders will be different. This is the lens through which we think about the resurgence of gold, the decline of the dollar, and the international monetary architecture that may await us this century.

 

Let's address the skepticism. Skeptics may say the rising share of gold in central bank reserves is simply reflective of gold price increases. Indeed, around 80% of the rise in gold's share has been on account of prices. But there is a genuine volume driver underlying this: central bank purchases have arguably themselves been behind significant price momentum. There is indeed a close relationship between official purchases and sales of gold and the change in the real gold price (Figure 2). Volume and prices are thus endogenously related and are both doing the legwork of gold's rising share.

 

Crucially, all central bank purchases are occurring in emerging markets. As Figure 3 illustrates, it is EM central banks that have been steadily purchasing gold since the 2008 GFC, adding over 225mn troy oz over the past 17 years. Importantly, this is more than advanced economy central banks sold in the 1990s. As we discuss in depth in this paper, we think there could be a long way to go in the trend of EM central bank buying of gold.

EM central banks still only hold half the amount of physical gold of developed markets. In stock terms, EM central banks held 367mn troy oz at the end of 2025 compared to 712mn troy oz by Advanced Economy central banks, according to IMF classification. This has however been on a steadily rising trend. The ratio of EM/DM central bank gold holding is at around 52%, having risen from just 20% before the 2008 GFC (Figure 4).

As a share of total reserves (including foreign exchange holdings), which is where our focus in this paper lies, EM central banks had just 16% of total reserves in gold compared to 34% for DM central banks by end-2025. There thus remains a significant gap to close, if not ultimately exceed.

This is not just about the BRICS. Almost half of EM central bank holdings are accounted for by just China, Russia and India. But many middle powers like Turkiye, Kazakhstan, and Saudi Arabia are also significant holders (Figure 6).

Perhaps most notable in recent years is the momentum of purchases in certain regions. Strikingly, in Eastern Europe, more than half of the gold holdings of Czechia and Poland have been acquired in the past four years alone, after Russia's invasion of Ukraine (Figure 7).

Many MENA states like Qatar, Egypt and the UAE have acquired between 25- 50% of their total gold holdings in the last few years alone. We will be exploring the motivations for these purchases in more detail later in the paper.

A brief history of gold

Gold was the heart of Bretton Woods but did not fall with it

The US had over 70% of the world's central bank gold reserves after World War 2, and in constructing the Bretton Woods monetary architecture, it used gold to back a system that centered on the dollar.

As Monnet and Puy (2019) explain, the Bretton Woods system - which followed WW2 and lasted till 1971 - was not like the gold standard that preceded World War 1, or that was tried unsuccessfully in the interwar period. Under Bretton Woods, gold was not redeemable against bank notes at a fixed rate everywhere in the world. Nor were central banks strictly required to back currency in circulation with gold reserves. Only the US dollar was convertible into gold at $35/oz by other central banks via the Fed. Gold was essentially only a means of settlement between monetary authorities. Foreign countries could choose to hold their claims on the US in US dollars, or exchange them for gold. As the US began to run balance of payments deficits in the 1950s and 60s, some European countries began to make claims on the Fed's gold. By the mid-1960s, more gold was held at European central banks than in the US (Figure 8). By 1971, the system collapsed with Nixon ending the US dollar's convertibility to gold.

Gold did not however drop as a share of central bank reserves with the fall of Bretton Woods. Even as gold stopped serving a purpose as an official means of international settlement, gold averaged around a 50% share of central bank reserves through the 1970s, albeit with significant gyrations. Notably, it remained more important than the fiat dollar throughout the decade as the earlier Figure 1 depicts. Indeed, the 1970s were a period of enormous price gains for gold which rose more than 1000% in nominal terms through the decade driven by high inflation and geopolitical shocks from the 1973 Arab oil embargo, to the Iranian revolution (Figure 9).

Therefore, even as the global exchange rate system changed in the 1970s, gold's share in global reserves did not. This points to deeper and different drivers of gold's role. If central bank gold holdings in reserves were not ultimately only about convertibility of the USD, what were they about? And what brought about the change? We turn to this next.

The end of history

The ultimate decline in gold's share in global central bank reserves came in the 1990s. As Figure 1 earlier showed, gold fell below the dollar's share at the start of the 1990s, with the rest of the decade featuring a consistent rise in the dollar and decline of gold. What was behind this crossover?

It was not a transition in the monetary system - which had occurred two decades prior - but a shift in the geopolitical environment that changed the role of gold.

In 1989, Francis Fukuyama questioned whether humanity had reached "the end of history?". A lot of the 20th century had featured ideological violence, but the ending of the Cold War he believed brought a "triumph of the West, of the Western idea," "the endpoint of mankind's ideological evolution" and the "unabashed victory of economic and political liberalism." The Berlin Wall fell the year of his thesis, and the Soviet Union had fully dissolved by 1991. The US thus became an uncontested hegemon in what appeared to be a geopolitically unipolar world. Japan, which had been the US' closest economic competitor, was well within the US security and dollar system, and China was still a decade from joining the WTO.

In the economic realm, a lot was changing in the 1990s from the turbulent decades that preceded it. In the US, a "Great Moderation" was underway. Inflation was falling with tight monetary policy having tamed the price instability of the 1970s and 80s. Indeed, average inflation in the 1990s was 2.5% below 1980 averages. The US was running growing fiscal surpluses. The US fiscal position was 1.5% GDP better in the 1990s than in the 1980s on average (Figure 10). The combination of better inflation and fiscal data, and independent central banking raised trust in monetary and fiscal systems, making US Treasuries a more attractive safe asset. Unlike gold, Treasuries paid a positive yield, had a deep and liquid market which made them easy to hold and transact in, and had no storage costs.

Developed world central banks led by Europe thus began to sell gold reserves in the 1990s (see again Figure 2), which came to be seen as a "barbarous relic" (Arslanalp et al, 2023). Countries like Switzerland, UK, Belgium, Netherlands, Austria, Australia, Canada all sold gold. Gold was seen as a vestige of the past, a zero-yielding asset with little role to play, especially in a world where European countries were moving towards a common currency. As gold sales began to impact the price of gold, central banks formalized a Central Bank Gold Agreement to coordinate sales in 1999, a framework that lasted for the next two decades.

Stabilizing geopolitics, combined with large improvements in technology, communications and transport, led to an explosion in trade and globalization in the 1990s. Trade in goods and services close to doubled as a share of global GDP from 1990 to the 2008 GFC (Figure 11). A rise in global trade contributed to the deepening in dollarization via the channels of invoicing, finance, and the accumulation of dollar surpluses in exporting EM economies. This brings us to arguably the biggest driver of gold's relative decline against the dollar.

The biggest driver of the decline of gold's share in global central bank reserves in the 1990s was the meteoric rise of emerging market FX reserves, held in dollars. As Figure 12 illustrates, global reserves began to rise in the 1990s. Japan was the biggest driver in the 1990s, with the baton passing to China in the 2000s alongside a wide swathe of EM countries from Russia, to Saudi Arabia, India, Korea, Taiwan, Brazil and others. The total amount of global FX reserves went up 9 times between 1990-2007. A majority of these reserves were built in USD and saved in US Treasuries given the predominance of the US driven economic and trade order. The Asian Financial Crisis in the late 1990 also led to a deeper preference for self insurance by EM countries and a dramatic shift in favour of building reserves, after the failures of capital account liberalization policies. The IMF itself shifted to encouraging reserves adequacy frameworks that stressed savings in USD liquidity.

Bringing it all together: one can think of the share of gold in central bank reserves as a function of three things: (1) the volume of gold held by central banks; (2) the price of gold; and (3) the amount of foreign exchange reserves. The former two influence the numerator, while the latter influences the denominator. The decline of gold as a share of global central bank reserves from around 40% on the eve of the 1990s to just 10% by the eve of the GFC was predominantly about the denominator. While developed world central banks were selling gold in the 1990s, this was in fact largely offset by the price increase of gold (Figure 13).

In sum, the biggest driver of gold's decline in global reserves in the 1990s was the rise of EM FX reserves accumulated in USD. This was in turn a function of dramatic globalization, in a US-driven neo-liberal unipolar order, amidst sound and improving economic fundamentals in the US. By extension, the dollar's fate as the world's reserve currency will have a lot to do with how these same countries treat their USD holdings in a de-globalizing world in which the US driven order is fraying: do EM countries still add to USD reserves, diversify away from them into gold, or actively draw them down? The future of the dollar as a reserve currency could well be determined in emerging markets, consistent with our thesis that the Global South will be a much bigger economic and geopolitical force to understand.

The return of history

The drivers of the "end of history" have almost all been going in reverse. The world is back in an ideological struggle between competing economic and political models, this time led by the US and China. Both countries are engaged in growing competition across technology, energy, resources, and influence.The world is no longer unipolar. China is on many metrics a bigger industrial, trade and naval power than the US.

The US is stepping back from free trade and fracturing traditional alliances, with China having positioned itself to step into the fray with years of building trade and investment relationships across the Global South. The provision of global public goods guaranteed by the US - namely freedom of navigation and security for key allied regions - has come into question with the closure of the Straits of Hormuz and the vulnerability of the Gulf in the latest conflict.

If the 1990s was a world where the US was happy to outsource manufacturing and labour to EM, with many EM countries happy to outsource security and savings to the US, this is now reversing. The US is keen to onshore more critical manufacturing, while many EM regions like Asia and the Gulf will be reconsidering their need for strategic autonomy in areas like energy and defence. They may well need the savings they have been investing in the USD to build these capabilities.

On the economic front, the Great Moderation is behind us. US inflation has been above target for over five years, independent central banking has come into question, monetary balance sheets have expanded dramatically under QE, and the US fiscal trajectory is on a worrying path.

Finally, the weaponization of the US dominated banking system with the freezing of Russia's USD and EUR FX reserves in 2022 has increased the appeal of saving in gold, which can be held physically and locally, away from the arm of sanctions or asset seizures. Indeed, Russia and China hold 100% of their gold locally.

The end of history has itself come to an end, with significant implications for gold and the dollar, which are becoming increasingly apparent.

What the future may hold

EM is not only buying gold, but could soon be selling the dollar too

As discussed earlier, gold's share in central bank reserves is a function of three main drivers: the volume of gold held, the price of gold, and the stock of FX reserves. For emerging market central banks, all three are on the move.

First, EM central banks have been actively buying gold. EM purchases since 2008 exceed the sales made by developed world central bank sales in the 1990s. Figure 14 illustrates the biggest buyers in volume terms since 2008, split between purchases before and after Russia's invasion of Ukraine (2008-2021 and 2022-25). It is notable that Russia had actively diversified into gold ahead of 2022 (Figure 14).

China has continued to purchase gold at roughly the same pace since 2022, while countries in Eastern Europe, India, and MENA have accelerated gold purchases since then.

It is important to note that our analysis in this paper focuses on IMF data on central bank reserves, which understates the true accumulation of EM official savings in foreign assets. We have chosen to focus on IMF data for a range of reasons: longer time-series history of the data, comparability to COFER estimates of central bank FX holdings, and availability of country level data series. But there are important caveats to this data. While IMF data shows EM central bank reserves have been stagnant in recent years, EM countries have in fact continued to build and recycle savings abroad via large sovereign wealth funds, state banks, and public pension funds. A significant amount of these savings are held in USD, but often with a riskier, less liquid profile across equities and private markets rather than necessarily US Treasuries. Global SWF pegged sovereign wealth fund holdings in Asia and MENA at over USD12tn in March 2026, greater than the size of their central bank holdings.

If IMF data on central bank reserves is understating the true extent of official foreign savings in EM, it is also understating the full extent of official diversification into gold. Indeed, a series by the World Gold Council (WGC) that tracks quarterly demand by "Central Banks and Other Institutions" and is believed to include sovereign wealth funds and other state-directed flows, shows gold purchases at three times the pace of the IMF series since 2022 (Figure 15). IMF data shows roughly 10 mn troy oz of annual purchases in the past four years by central banks, while the WGC series pegs this at over 30mn troy oz or over 1000 tonnes per year. While this does not change the trend or conclusions of this paper, it does suggest scope to magnify already significant implications.

Second, central bank purchases are driving upward pressure on gold prices. Central banks and official institutions as defined by the WGC have accounted for over 40% of the investment demand for gold since 2022, excluding demand for jewelry, technology and industrial purposes. ETF purchases which picked up meaningfully last year may themselves be piggy-backing off the consistent underlying bid from central banks. A simple regression that looks at central bank and ETF demand suggests that every 1 mn troy oz of purchases leads to a 1% increase in the gold price (Figure 16). We adopt this as a simple back-of-the-envelope heuristic, to be used in analysis below.

Third, the enormous build of foreign exchange reserves in emerging markets may now go into reverse. As discussed above, the dramatic rise of the dollar's share in global central bank reserves in the 1990s had almost everything to do with the sharp rise in EM reserves. There is a possibility that EM reserves may begin to decline from here. This would be motivated less by foreign investor capital exits or the need to defend currencies, but as countries in Asia and the Gulf draw on their savings to build strategic autonomy in defence and energy, which will require capital, imports and investment. While a majority of the roughly USD8tn in EM central bank reserves are held in China, a significant share are also in Asia ex-China and Middle East & Central Asia (Figure 17). Recent reports that the UAE has asked the US Treasury for a currency swap, suggests the need for USD liquidity. Indeed, the Gulf may turn to their savings not just to tide over the effects of the ongoing war, but for rebuilding efforts, to address economic scarring and diversification needs, and ultimately to build greater domestic defence resilience.

The first two forces are already underway. EM central banks have been actively buying gold and prices have been rising. The third force of active reduction in US holdings is yet to begin, but could be very significant. All three drivers could be at play together, suggesting there is more to go in gold's rise and the dollar's decline as a share of global reserves. Where might they end up?

What share of reserves should gold be?

The combination of gold purchases and price rises has already pushed gold's share of global central bank reserves to around 30%. Where might we go from here?

There is likely still a long way to go. We begin with the key observation that before the 1990s, gold's share of reserves fluctuated between 40-70% of total reserves as illustrated in Figure 18. "The return of history" we described above should make getting to the lower bound of this range - or 40% for gold's share - a reasonable initial target. If the world is going back to looking like it did before the 1990s - with geopolitical competition between superpowers, high inflation, and less universal support for free trade - then it may make sense to expect gold's share of reserves to also go back to similar levels. While before the 1990s, emerging market central banks held very little total reserves, today they are the dominant holders of reserves. And whilst the share of gold in advanced economies reached 34% at the end of 2025, or fairly close to the 40% level, it was only 16% in emerging markets. If the dominant trends of central bank purchases and USD reserve sales are taking place in emerging markets, then there could still be a long way to go: from 16% to 40%.

There is a lot of heterogeneity across EM in gold's share in reserves. While EM central banks as a whole held 16% of reserves in gold (end-2025), this masks large variation. The average has a downward bias driven by the largest reserves holder - China: PBOC holds only 9% of reserves in gold. Clearly, the scope for increase driven by China is huge. Kazakhstan and Turkiye had over 60% of their reserves in gold, Russia and Egypt near 40%, Poland and Hungary had reached nearly 30%, while traditional US allies like South Korea and UAE had under 5% in gold.

Academic literature explains this heterogeneity through both an economic and geopolitical lens. Arslanalp, Eichengreen and Simpson-Bell (2025) argue that "central banks operating floating exchange rates hold more gold, consistent with the presumption that they have less need to use their reserves in foreign exchange market intervention." Indeed, gold holdings are less effective in helping central banks defend currencies against large scale capital flows. Thus, an increasing share of gold may reflect less concern amongst EM central banks about sudden stops or withdrawals of capital, especially with foreign ownership at lower levels than in the past. More interestingly, they find that “geopolitical alignment with the United States, proxied by the existence of a defence pact, increases dollar reserves. An interpretation is that governments grateful for US military presence encourage their central banks to hold dollars as a show of good faith.”

We also find that EM countries with closer defence ties to the Western bloc hold less gold in reserves, while EM countries with closer ties to China and Russia hold more gold. We draw on an analytical metric first used in our Global South framework to measure military alignment. We look at SIPRI data on arms imports for all emerging market countries over the last 10 years and calculate the proportion of arms imports from the "Eastern bloc", which we define as including China and Russia, versus the "Western bloc" which includes the US, Israel, Europe, and South Korea. We split EM countries into two groups: those that import more than a third of arms from the "Eastern bloc", and those that have limited defence integration with China and Russia. As Figure 20 illustrates, EM countries in the former group have double the share of gold in reserves than the latter group.

The implication of this analysis is that should more countries diversify defence dependence away from the US, this would be consistent with a reduced share of USD and a greater share of gold in reserves. The US has actively pressured major allies like NATO, South Korea and Japan to take on more ownership for their defence. And we have written about how the US-Iran conflict has challenged the US security umbrella over the Gulf and thereby support for the petrodollar and dollar savings. And while the ultimate geopolitical equilibrium remains to be seen, we think it could lead to some diversification of Gulf ties away from the US, and an acceleration in the localization of defence capabilities.

What might this mean for gold prices?

We simulate a range of different outcomes for gold prices depending on the level of FX reserves EM central banks end up with, and the share of gold in reserves they target.

• For total FX reserves, we consider four potential scenarios: a steady state for EM FX reserves of USD8tn (similar to current levels); and then three alternatives: a drastic decline in EM FX reserves to USD2.5tn, a decline to USD5tn, or an increase in EM FX reserves to USD10tn.

• For the share of gold in reserves, we look at a range of different shares rising from 15% to 40%. As discussed earlier, a 40% gold share could be a reasonable target for a "return to history" scenario, while 15-20% is where EM central banks are as a whole today.

• We use our earlier heuristic that every 1mn troy oz of purchases (sales) drives a 1% increase (decrease) in the gold price for our analysis. Our simulation is therefore dynamic, as we assume gold purchases by central banks influence the gold share through their impact on the prices as well. The rise in gold's share captures the blended impact of both prices and volumes.

The table in Figure 21 shares our simulation results. Prices shaded in green are above current gold prices (at the time of writing), while prices shaded in red are below. The numbers are not intended to be forecasts (found here), but to illustrate the range of potential price impacts from different combinations of EM central bank behaviour.

As intuition would suggest, if EM central banks are targeting a rising share of gold in a steady or growing FX reserves environment, this would be the most bullish outcome for gold. But even in an environment where EM FX reserves decline to USD5tn, if central banks target an increase of gold's share to 40%, this could still be consistent with gold prices rising to near $8000 over the next five years. We walk through the calculation in the simulation to illustrate. At USD5tn in FX reserves, gold would need to be worth USD3.3tn for gold to be a 40% share. Getting to USD3.3tn in gold would be a function of central banks buying more gold, and that buying driving up prices. Assuming every 1mn troy oz of purchases drives up gold prices by 1%, if EM central banks build gold holdings to 417mn oz, or an additional 52mn oz, this would drive up prices to around $7977, which would put total gold valuations at around USD3.3tn. At the current pace of gold purchases of roughly 10mn troy oz per year by central banks (based on IMF central bank only data series), this would be consistent with five more years of gold buying. In other words, EM central banks could push gold prices to $8000 over the next five years even in a declining FX reserves environment.

In the extreme case of EM FX reserves falling to USD2.5tn, the current volume of gold held by EM central banks at current prices (USD1.7tn), would already give gold a 40% share. There is thus no upside to gold projected in the first row of the table.

This simulation also helps us understand the price action of gold in March 2026 during the Iran war. IMF reserves data for the month of March showed overall EM central banks sold gold, led by Turkiye. These gold sales are likely a function of the fact that Turkiye has a high share of gold in reserves at over 60% which were therefore leveraged for liquidity. As our colleagues note, net FX intervention by the CBT reached USD23bn in the last two weeks of March, and the CBT mobilised around USD 20bn worth of gold — USD 11.1bn via gold-FX swaps and USD 8.2bn through outright gold sales. While acute, this is not likely to be representative of a broader trend in EM. Countries from Poland to Kazakhstan were still buying gold in March according to IMF data, and China's PBOC data also shows buying at the fastest pace in a year. Most EM countries have gold shares at far lower levels than Turkiye with significant scope to raise them.

If more of the rise of gold's share for EM central banks is achieved through the drawdown of FX reserves, this will be less bullish for gold. If, however, EM FX reserves are stable or fall more gradually, and central banks engage in active buying of gold to raise their gold shares, this will be more bullish for gold.

What does this suggest about the monetary order to come?

As this paper has discussed, central banks in emerging markets have been actively adding to their gold holdings. The rationale for this is mostly seen as being about diversifying official savings into a physical long-lived asset, that can be held beyond the reach of sanctions, and which is likely to hold value better than fiat currencies amidst greater fiscal and inflation risks.

But it is worth considering whether the build up in physical gold in emerging markets might be a precursor to a potential return of gold as an anchor for an alternative future monetary system. Since the collapse of the Bretton Woods, gold has not had a formal role in international monetary architecture. But history has long alternated between periods of fiat and physical-backed money. It would be consistent with - not counter to - history, to expect gold to return at some stage.

The US backed the dollar with gold when it created the post-war monetary architecture of Bretton Woods. It would thus be intuitive to expect any effort by other countries looking to create a bigger role for their currencies in payments and savings to also turn to gold. Gold has been part of monetary orders for over 2500 years and is not anyone's liability. And while production does expand supply - with above-ground gold stocks growing at around 2% a year this century - this is less than the growth in most countries' fiscal deficits. For countries in the Global South, where economic regimes, rule of law, and capital account openness, may be less well understood by global corporates and investors, backing payment currencies with a share of physical gold could be an important trust-building mechanism.

While far from formalized as policy, there are pockets of discussion around gold playing a role in backing a future BRICS currency. A paper from OMFIF, an independent think tank for central banking, economic policy and public investment, noted that the “BRICS are exploring the creation of a common currency that would be pegged partly to gold and partly to a basket of their own currencies.” They noted that "by tokenizing gold reserves, each digital unit would be backed by tangible assets stored in secure vaults, with regular audits ensuring accountability.” They note that a "gold linked alternative BRICS payment system" could again give gold a "distinct role in payments." Media reports in late 2025 indeed noted the pilot release of a BRICS Unit backed 40% by physical gold and 60% by an equal split of CNY, RUB, INR, ZAR, and BRL fiat currencies. We would stress that the "Unit" does not appear to be formal policy by the BRICS and thus should be considered more a thought experiment at this stage. But the momentum for creating alternative payment rails that facilitate local currency payments in the Global South are well underway. For instance, Project mBridge has already reached minimum viability for payments and involves central banks in China, Saudi Arabia, UAE, Hong Kong, and Thailand settling cross-border trade via wholesale CBDCs over the blockchain.

The economic clout of China and the Global South in PPP-adjusted GDP already exceeds 50% of the world today, and a majority of global trade flow growth is happening down these corridors. Payment innovations in this part of the world should thus be paid heed. We have written in great detail (see here) how competition around payments is heating up and how this is deeply linked with reserve currency status through the linkages between invoicing and savings. The US has opted for stablecoins as its solution to ensuring dollar dominance, namely in the Global South where traditional USD payments mechanisms were at risk. We note that while US stablecoins would be backed by US T-bills, a BRICS currency of the future could well be backed in part by physical gold.

In sum, while EM central bank diversification into gold likely has much to do with preserving the value and accessibility of their foreign savings in a changing geopolitical climate, it may also - in the long-run - play a role in anchoring a monetary order that builds independence from the dollar. There is of course a very long way to go. EM central banks as a whole still only hold half the physical gold of advanced economy central banks. But there is a world where gold returns to the centre of a future monetary system with different leaders.

To conclude, we find it notable that the value of above-ground gold exceeded the total value of marketable US Treasury debt last year for the first time in 40 years (Figure 22). In other words, gold is now a bigger asset class than the world's main safe asset.

The return of history is here.

Professional subscribers can read the full Deutsche Bank note: "The return of history: gold, the dollar, and the monetary future" here at our new Marketdesk.ai portal

Tyler Durden Sun, 05/10/2026 - 06:33