Zero Rss

We've Been Here Before

By Bas van Geffen, senior macro strategist at Rabobank

Phil Connors has woken up to another instance of the same day. The US, Iran and Oman are said to be close to a new deal to reopen the Strait of Hormuz. Axios reports that the US aims for an announcement today. So, Brent futures dropped to $79/barrel and equity markets rallied further, for the S&P 500 to set a fresh record high.

The reported deal could just as well have been written a couple of weeks ago. Axios prints that the deal includes an inbound shipping route through Iranian waters and outbound shipping via the Oman side, while parties work to clear mines from the middle of the strait. No tolls or fees would be charged for the 60-day period covered by this deal. That all looks very similar to the previous deal – that was torpedoed by renewed attacks on ships.

That wasn’t the only “agreement” in recent weeks that proved untenable (or completely non-existent). Will the groundhog see its shadow again today, or will the deal really hold this time? 

Even if this deal isn’t immediately sunk by a drone or missile strike, there is a long and risky road ahead. Negotiations are currently clearly focused on preventing new escalation, and the temporary deal does not offer permanent solutions for the key sticking points. 

For example, Reuters sources report that disagreement over transit fees after these 60 days persists. But that’s not the surprising part. Regional outlets suggest that the disagreement is over the amount charged. They claim that Iran demands a 7% fee, with exemptions for Chinese and Russian ships, whereas the US proposed 5%.

If this is even remotely true, that would mark a big shift from the US’ original stance that freedom of navigation is incompatible with any fees. Geopolitically, it would mark an even bigger defeat for the US. If the US cannot restore the status of the Strait of Hormuz, then surely Washington cannot expect to extract concessions on Iran’s nuclear programme.

So, President Trump may have to pick between a deal on Iran’s terms or escalating. That, in turn, suggests it could be matter of time before Trump expresses his frustration with the negotiations again, and we may be in for another few weeks of winter.

As we note in our Monthly Outlook yesterday, the danger is not repeatedly reliving the same trading day – in fact, that would make life a lot easier. The danger is that the cycle eventually breaks and the script changes. I would add that it may in part be up to traders whether that happens. As Phil realizes that he is reliving the same day over and over, he changes his behaviour – some days to the point of recklessness. 

Notwithstanding the decline in Brent, diesel and petrol prices remain high enough for governments to extend support measures. The Italian government announced an extension of the diesel tax cut through August 25, and Prime Minister Meloni said that the country would consider further financial aid if fuel prices continue to rise. 

High electricity prices add to the cost burden. The hot weather drives up demand for electricity while the drought forces Italy to substitute gas generation for hydropower (and various European countries have also temporarily shutdown nuclear power plants due to high cooling water temperatures.)

Accordingly, the Italian government has requested Brussels for leeway for its budget deficit today. EU rules include escape clauses for spending on defence and energy. Rome has indicated that it intends to use the full 0.3% allowance for energy measures and has requested 0.9% leeway for defence spending.

Elsewhere, the White House is reportedly drafting an import ban on Chinese transceivers, which are used to transmit data between servers within datacentres. 

Slowing the ascent of Chinese AI and related sectors may be part of the rationale. Chinese manufacturers dominate the market for these fibre-optics transceivers; its AI models are competing with American models; and China’s chip manufacturing is also improving. 

On top of supply chain security and protection for the domestic industry, cybersecurity may be another reason for this ban. The news follows a report from the House Committee that Chinese telecommunications companies remain connected to US datacentres, even though the FCC banned these companies from connecting directly to US networks. Experts warn that these components could potentially allow China to exfiltrate data or disrupt services.

Tyler Durden Wed, 08/05/2026 - 10:15

US Services Surveys Signal Rebound In Growth In July, But...

Following the mixed picture from yesterday's Manufacturing surveys (ISM 4 year high, S&P Global 3 mo low driven by the bifurcated 'AI vs The Rest' economy), this morning's Services sector surveys were 'expected' to show the opposite (ISM down, S&P Global up) all in the face of fading hard data.

• S&P Global US Services PMI jumped from 51.2 (final June) to 53.6 (prelim July) to 54.6 (final July) - the highest since Oct 2025

• ISM US Services PMI rose from 54.0 to 54.1 (less than expected 54.5).

Source: Bloomberg

That was S&P Global's Services PMI's biggest monthly jump since May 2024...

Under the hood, S&P Global data shows that growth in new work strengthened to a 19-month high, while business confidence regarding activity over the coming 12 months was the strongest since last November.

Private sector employment rose for the first time since April.

But, input price inflation accelerated to the highest since November 2022, pushing composite selling prices up at the quickest pace in exactly one year.

But, the ISM Survey showed considerably differences with employment data tumbling back into contraction (below expectations), pries picking up (more than expected), but new orders rising more than expected...

• Prices Paid 70.3, Exp 65.0

• Employment 47.4, Exp. 51.2

• New Orders 57.2, Exp. 55.9

A somewhat stagflationary signal...

“The final July PMI has come in stronger than the earlier flash estimate, signaling an encouraging acceleration in economic growth at the start of the third quarter," according to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

The Composite PMI points to GDP rising at an annualized rate of 2.3%, following a 1.5% increase indicated for the second quarter.

Business optimism has meanwhile climbed to its highest since last November, but Williamson warns:

“Some caution is needed in interpreting these improvements, as the stronger performance partly reflected temporary factors. We note that the biggest improvement in demand in July was reported among consumer-facing service providers, spending on which surged at a rate not seen for over four years linked to the FIFA World Cup and US Independence Day events.

More importantly, businesses benefited in early July from a tailwind of reduced geopolitical uncertainty and lower oil prices."

But, with hostilities in the Gulf escalating as the month progressed, the geopolitical environment is now likely once again acting more as a headwind to growth again while exacerbating already elevated price pressures.

...unless, of course, an actual deal is reached.

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

US Telecoms Slide On Starlink Mobile Threat; Bernstein Sees It As A "Jab, But No Knockout Yet"

U.S. telecom stocks fell in premarket trading after SpaceX, during its first earnings call as a publicly traded company on Tuesday evening, outlined its vision for Starlink to challenge Verizon, T-Mobile, and AT&T.

This was the market reaction to discussions surrounding @Starlink Mobile during the SpaceX Earnings Call.

The big three telecom giants fell. The same thing happened when SpaceX acquired spectrum last year. https://t.co/4FfvFQdOTB pic.twitter.com/tAG7ywTxY7

— Nic Cruz Patane (@niccruzpatane) August 4, 2026

SpaceX President & COO Gwynne Shotwell told investors about its future impact on big telecom: "Roughly, between them, $600 billion a year. I anticipate us to be able to acquire quite a few of their customers. Our service will be better. We will eliminate dead zones leveraging the satellites in orbit. It will be better during any natural disaster. I'm quite excited about Starlink Mobile."

For readers, the emergence of Starlink Mobile and Musk taking on the big three U.S. wireless operators- Verizon, AT&T, and T-Mobile - is nothing new.

Elon going for the phone after all

SpaceX Plans New Starlink Mobile Service for US Consumers: FT

— zerohedge (@zerohedge) June 26, 2026

One of the clearest signals was SpaceX's $17 billion deal for EchoStar wireless spectrum last year, followed by a recent trademark filing for "Starlink Mobile."

Our note from June:

• Musk's Starlink Plots To Become A Mobile Carrier; TD Cowen Sees Possible T-Mobile Buyout

For more color on Starlink Mobile and its implications for US telecom operators, Bernstein analysts titled their latest note "US Telecom: Starlink Jabs... No Knockout Yet," offering clients a clearer view of what may come next.

US Telecom stocks traded lower in after-hours trading following SpaceX's Q2 results and earnings call (covered by Harned), with Telecom investor attention focused on management's comments regarding Starlink's BB and wireless ambitions. While much of what was said was not new, the call offered clearer articulation of SpaceX's long-term vision and the various building blocks underpinning it. Management reiterated those ambitions at a time when Starlink is scaling subs, enterprise revenue, spectrum holdings, and satellite capacity simultaneously, making their comments more interesting.

To us, the incremental takeaway was not that Starlink is suddenly becoming a threat to broadband and wireless incumbents. Rather, it was a reminder that SpaceX continues to invest toward that outcome, and that the debate could remain an overhang on the sector for years rather than quarters.

What was said? More than a jab.

On broadband, management's central message remains unchanged: a major capacity and performance inflection is coming with V3 satellites. They are roughly an order of magnitude more capable than V2 satellites in orbit today and that SpaceX expects to launch roughly an order of magnitude more of them, implying a roughly 100x increase in delivered bandwidth over time. Management repeatedly described V3 as a step-function increase in Starlink's addressable opportunity and revenue potential.

The company also continued to emphasize the growing importance of enterprise and government customers. Management noted that the segment has the potential to eventually match or exceed the consumer business in terms of revenue, and highlighted continued traction in aviation, government contracts, and enterprise connectivity, areas that generally carry higher revenue quality and stronger economics.

On wireless, management outlined a vision that extends well beyond the D2D services currently being introduced with carrier partners. The strategy appears to consist of four components: (1) satellite-based D2D coverage; (2) recently acquired 65MHz of spectrum from EchoStar; (3) Some form of terrestrial radio infrastructure; and (4) a distributed small-cell architecture leveraging installed Starlink CPEs. While each component is insufficient, the collective strategy is... interesting.

Our view: BB, yes. Wireless? Not so fast.

We continue to view Starlink BB as a credible and growing long-term competitive threat to incumbent operators, particularly at the lower-end of the market where "good enough" BB is often sufficient. In our view, that risk remains higher for FWA and value-oriented BB subs, segments where Cable operators generally have greater exposure (vs. Fiber). We can debate the extent of the potential impact, but the overhang will continue as Starlink continues to expand its capacity and price their products more competitively. As capacity expands and operating leverage grows, the company should become increasingly capable of competing aggressively on price while simultaneously improving service quality. The rapid growth of higher-value enterprise and government revenues coupled with global scale only reinforces that advantage.

Wireless is where our view diverges somewhat from the market reaction. We continue to see D2D satellite service, whether offered by Starlink or others, primarily as a complementary service to incumbent nationwide cellular networks rather than a substitute for them in the foreseeable future. The fundamental use case remains coverage enhancement, not replacement. D2D has yet to solve the indoor unlink challenge. While additional spectrum may improve capacity and performance, it does not eliminate the fundamental physics associated with transmitting from a handheld device to a satellite, particularly indoors.

Likewise, the distributed small-cell concept described on the call is intriguing, but we remain skeptical regarding practical deployment. Such a network would require a dense concentration of Starlink installations in precisely the areas where consumers live, work, and travel: urban cores, suburbs, and major transportation corridors. In many respects, the concept resembles prior visions of a facilities-based wireless network leveraging a broad Wi-Fi APs. Interesting in theory, but considerably more difficult in practice.

For now, we continue to believe Starlink BB represents the more immediate and credible long-term competitive risk. While Starlink wireless ambitions will likely remain an overhang on the sector, we do not believe Starlink Mobile is poised to take meaningful share from incumbent wireless operators anytime soon.

Professional subscribers can read more on SpaceX, Starlink, and Musk here at our new Marketdesk.ai portal.

Tyler Durden Wed, 08/05/2026 - 10:00

Armed Man Named 'Jeanine' Arrested At Trump's California Golf Course Ahead Of President's Visit

Authored by Kimberley Hayek via The Epoch Times,

A California man carrying ammunition and with a gun in his car was arrested Sunday at President Donald Trump’s Los Angeles-area golf course after authorities say he was observed walking through the grounds, taking photographs as well as video, and appearing to monitor security preparations two days before a scheduled fundraiser there that will feature the president.

The Los Angeles County Sheriff’s Department announced the arrest Tuesday as Trump prepared to land in Los Angeles for a Republican National Committee fundraising dinner at the Trump National Golf Course. The event will take place in the coastal suburb of Rancho Palos Verdes, just south of Los Angeles.

Deputies said Jeanine John Taele, 38, of Downey was carrying a 16-round magazine with ammunition in his pocket when they contacted him. A loaded pistol was recovered from his car, which had been parked on the golf course’s property.

He was arrested on suspicion of carrying a concealed firearm and possessing prohibited ammunition. Authorities also said he had already been under investigation by the El Segundo Police Department in an unrelated robbery case from last year.

Taele’s bail has been set at $250,000. He faces possible charges related to a large-capacity magazine, short-barreled rifle/shotgun, and the 2025 robbery.

Detectives assigned to the FBI’s Joint Terrorism Task Force obtained and executed a search warrant Monday at Taele’s residence, where they recovered a range of items that included firearms, magazines, ammunition, body armor and notebooks containing what the sheriff’s department called “concerning statements.”

The department highlighted that there is “no credible threat to our communities.”

Trump has owned the Rancho Palos Verdes property for years. The course has held political and private events in the past.

Plainclothes federal agents first reported the suspicious individual on the golf course Sunday afternoon, and deputies from the Lomita Station responded. They made contact with Taele, and discovered the ammunition and the loaded firearm.

The totality of the circumstances—the photography and video activity, and the weapons—led to the detention and charges.

According to the sheriff’s department, agents saw Taele walking through the property apparently focused on security-related activities taking place ahead of Trump’s visit. They have yet to describe the writings in the notebooks. They also have not revealed whether Taele knew of the president’s forthcoming visit. Trump is also scheduled to stop in Nevada on the trip.

Trump properties have in the past been the scene of at least one Trump assassination plot. In a separate 2025 case, a jury found a man guilty of attempting to assassinate Trump at his Florida country club.

A federal judge on Feb. 4 sentenced Ryan Routh to life in prison for attempting in 2024 to assassinate Trump, who was at the time running for president. Routh was also sentenced to seven years behind bars on a gun charge and ordered to pay a $500 fine.

Tyler Durden Wed, 08/05/2026 - 09:40

Abbott Orders Pause On Texas Data Center Approvals Pending Audit

Texas Governor Greg Abbott just ordered a pause on approving new data center projects via the state's grid interconnection process over concerns that a surge in electricity demand could threaten reliability amid growing opposition to the projects. 

The timing couldn't be worse - as Texas is on the cusp of becoming one of the world's largest hubs for data-centers, with Reuters citing industry forecasts that it could surpass Virginia by 2030 thanks to abundant land, energy, and a business-friendly environment. 

In a letter to the Public Utility Commission of Texas and ​grid operator ERCOT sent Monday, Abbott directed the agencies to conduct an audit of all planned data centers seeking grid connections before any more facilities are allowed to move forward.

ERCOT is currently reviewing roughly 474 gigawatts of proposed new electricity demand, more than five times the state's record ​peak load, the governor said, adding that about 90% of the requests are from data centers. -Reuters

Under Abbott's directive, developers will now need to provide 'more info on power demand, water use, tax incentives, ownership, and efforts to mitigate local impacts'

As POWER Magazine noted earlier (serious inside baseball below)... 

Abbott has directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to conduct a comprehensive audit of every data center advancing through the state’s interconnection queue, warning that projects that fail to disclose ownership, financial, water, and community-impact information could be denied grid access.

The directive, issued in an Aug. 3 letter to PUCT Chairman Thomas Gleeson and ERCOT President and CEO Pablo Vegas, arrives as the ERCOT large-load interconnection queue has surged to 474 GW—of which approximately 90% is data centers, according to testimony ERCOT delivered on July 29 to the Texas Senate.

“That is more than five times Texas’ record peak electricity demand for ERCOT,” Abbott wrote in his letter, referencing an all-time hourly peak of 91,089 MW that ERCOT set on July 22, 2026. “That unprecedented load growth could endanger the reliability and stability of the Texas electric grid.”

The audit is tied directly to non-compliance with existing state law, Abbott wrote. “The failure of some data centers to comply with the PUC’s survey measuring water and power usage under the General Appropriations Act makes this necessary,” he wrote. “Failure to fully comply with that law hinders your ability to make fully informed decisions.”

“Our top priority is to protect Texans’ safety and quality of life,” Abbott said. “Any project that fails to comply with the requirements set forth by the PUCT and ERCOT, and by state law, must be denied connection to the Texas grid. Simply put, Texans must come first.”

Large-Load Interconnection Requests. ERCOT was tracking approximately 474.7 GW of large-load interconnection requests as of June 2026, including 420.8 GW, or 90.2% of the total, identified as data centers. The chart also distinguishes projects by development status, including requests with no studies submitted, projects under ERCOT review, and loads that have met more advanced interconnection requirements. Source: Electric Reliability Council of Texas, “ERCOT Update,” presentation by ERCOT President and CEO Pablo Vegas to the Texas Senate Committee on Business and Commerce, July 29, 2026.Second Intervention Amid SB 6 Rulemaking

Abbott’s directive arrives as the second intervention in less than two months, even as the PUCT is developing rulemaking to implement Senate Bill 6 (SB 6)—the statute Gov. Abbott signed in June 2025 that overhauls how large-load customers of 75 MW or more interconnect to the ERCOT grid.

Essentially, SB 6 amends the Public Utility Regulatory Act (PURA) to direct the PUCT to establish interconnection standards for large loads at a 75 MW threshold, requires each applicant to disclose whether it is pursuing substantially similar interconnection requests elsewhere in Texas and to disclose any on-site backup generation capable of serving at least 50% of the facility’s demand, and requires financial commitments and site control before ERCOT will study a project.

The statute also authorizes ERCOT, once the PUCT defines emergency criteria, to instruct qualifying large loads with dedicated behind-the-meter backup generation to curtail net consumption during grid emergencies after ERCOT has exhausted market services other than frequency response. Separately, SB 6 amends PURA to require transmission service providers to curtail non-critical new large loads energized after Dec. 31, 2025 during firm load-shed events, and to govern net-metering arrangements between new large loads and generation resources that were registered with ERCOT before Sept. 1, 2025. Finally, the law directs the PUCT to reexamine wholesale transmission cost allocation and to require new large loads to contribute to interconnection cost recovery. SB 6 took effect immediately on June 20, 2025, and requires PUCT implementation by Dec. 31, 2026.

The PUCT is executing SB 6 across five dedicated rulemakings, two of which are already complete. In February 2026, the commission adopted 16 TAC §25.370, which sets minimum standards for the information a utility must submit before ERCOT will include a proposed large load in its forecast. And in March 2026, the commission adopted 16 TAC §25.205, which requires PUCT approval before a new large load can be net-metered with any generation resource that was already registered with ERCOT before Sept. 1, 2025.

Then on June 10, 2026, Abbott issued his first intervention. In a letter to Gleeson and Vegas, the governor issued three directives to the two agencies: to ensure that data-center interconnections result in reduced residential electric bills, to require data centers to pay for all of their electric infrastructure costs so that no residential ratepayer is burdened by them, and to review existing PUCT and ERCOT authority to identify further consumer safeguards.

Abbott set two deadlines. The two agencies had to submit a joint memorandum by July 17 summarizing actions already taken, identifying statutory limitations, and recommending legislation for the 2027 session. In addition, the PUCT had to initiate action to reduce residential ratepayer transmission costs by July 31.

Abbott also pledged to pursue six items with the legislature next session: codifying that data centers pay their own infrastructure costs, requiring that data centers add to Texas’ electric capacity rather than only to its demand, mandating water-efficient technologies such as closed-loop cooling systems for new builds, requiring large data centers to annually report electricity and water usage to the PUCT, repealing sales-tax exemptions and other incentives for data centers, and requiring data centers to reduce impacts on neighbors through setbacks, noise-reduction technology, and similar measures. The directive, effectively, asked the PUCT to sharpen the rulemakings still in progress.

Eight days after Abbott’s letter, on June 18, the PUCT approved ERCOT’s Batch Study framework, built through Nodal Protocol Revision Request NPRR1325 and Planning Guide Revision Request PGRR145. The framework groups qualified large-load projects of 75 MW and above into a single interconnection study, and requires each applicant to post financial security of $50,000/MW by July 10, 2026, to remain eligible.

Testifying at a July 29 Texas Senate hearing, ERCOT’s Vegas said the framework is designed to deliver three outputs to each qualified project: an annual megawatt allocation from 2028 through 2032, transparency on interconnection and upgrade costs, and a coordinated transmission plan identifying the upgrades required to serve additional load. Approximately 205 GW of large-load requests are eligible for inclusion in Batch Zero based on existing studies, according to a preliminary ERCOT overview—65 GW as base load, 114 GW as allocated load, and 25 GW awaiting a final base-or-allocated determination.

For now, ERCOT plans to issue classifications by Aug. 7, complete the ensuing dispute, security-reconciliation, and data-correction process by Sept. 1, and begin the Batch Zero interconnection study no later than Sept. 2. Study results are scheduled for April 9, 2027, followed by interconnection agreements and final confirmation of capacity allocations by June 8, 2027. Projects excluded from Batch Zero—because they cannot post financial security or otherwise meet eligibility criteria—will be considered in a subsequent round that ERCOT and stakeholders have referred to as Batch One, though its start date and criteria are still being developed.

On July 17, Gleeson sent Abbott a written response developed in consultation with ERCOT, filed at the PUCT Interchange under Project 58317. The letter documents four actions the two agencies have already taken—the two adopted rules, the May 2026 transmission-cost evaluation, and the June 18 approval of PGRR 145—and identifies three rulemakings in progress: interconnection standards in Project 58481, a demand-management reliability service in Project 58482, and a follow-on transmission-cost recovery rulemaking in Project 58000. Gleeson told Abbott the commission will consider a final Project 58481 rule “later this summer.”

On July 24, Abbott released Gleeson’s letter along with three legislative recommendations for the 2027 session: expand the Lone Star Infrastructure Protection Act to cover large computational loads, require data centers to register with both the PUCT and ERCOT, and clarify the PUCT’s authority to impose reliability requirements - including direct ERCOT-to-load curtailment instructions - on large computational customers. On July 30, 2026, the PUCT advanced Project 58482 to Proposal for Publication, with a Sept. 4 comment deadline. The commission’s SB 6-mandated evaluation of transmission cost recovery had already produced a staff draft on May 4, 2026, before the June 10 directive; the follow-on Project 58000 rulemaking must be completed by the December 2026 statutory deadline.

The core interconnection-standards rulemaking in Project 58481—the rule that will set financial security, study fees, and site-control requirements for every large load requesting interconnection—remains in scoping.

Abbott’s Audit Goes Beyond Batch Zero Screening

Batch Zero, notably, already imposes several commercial-readiness gates. Applicants must submit qualifying studies, technical and dynamic models, commissioning plans, attestations, and financial security. ERCOT will also verify supporting evidence from a sample of applicants, including purchase orders for long-lead equipment, real-estate and land-use agreements, end-user agreements, and construction contracts. Projects that cannot demonstrate eligibility will be disqualified.

But Abbott’s Aug. 3 directive appears to extend that scrutiny by ordering a review of every large-load request and seeking disclosures covering ownership, water use, infrastructure needs, and community effects. Whereas Batch Zero is principally designed to determine whether projects are sufficiently advanced and technically prepared to enter the interconnection study, the new directive adds a broader examination of who is behind the projects and how they could affect surrounding communities.

During the July 29 Texas Senate Committee on Business and Commerce hearing, data center representatives generally supported stronger qualification and cost-recovery requirements, though they differed over whether Batch Zero’s existing screens would work as intended.

Chris Matos, who leads Google’s energy market development in Texas, said the hyperscaler had urged ERCOT and the PUCT to develop an interconnection process that is “both rigorous and fair,” including financial commitments calibrated to “hold existing ratepayers harmless for stranded costs.” He cautioned regulators, however, to “avoid retroactive financial penalties that could inadvertently stall mature and already advanced development.”

Matos noted Google had contracted for more than 7.8 GW of new grid-connected generation and capacity in ERCOT ahead of its energy needs. Matos said Google had committed “$30 million in energy impact funding to scale and accelerate energy efficiency initiatives.” Google operates established data center campuses in Midlothian and Red Oak and in November 2025 announced a $40 billion Texas investment program through 2027. As POWER reported in June, that buildout now includes the Meitner Energy Center in Gray and Roberts counties, a more-than-1-GW complex that will pair a Google data center with new wind, solar, battery storage, and on-site gas-fired generation. The facility will use air cooling instead of evaporative cooling, eliminating the cooling-tower water withdrawals typically associated with large data centers and limiting water use to domestic purposes.

Amazon Web Services (AWS) likewise endorsed requirements intended to keep large-load costs from shifting to other customers. Ray Fakhoury, an AWS energy policy manager, said the company wanted to ensure that the cost of developing its infrastructure “is not passed on to others” and committed to paying its “full cost of service.” AWS, which does not yet operate data centers in Texas but is evaluating investments in the state, also supported collateral that could be drawn when projects drop out after infrastructure has been planned or built. Fakhoury, notably, called for a broader package that includes capacity reallocation, exit fees, defined contract terms, and load-ramp requirements.

However, Compass Data Centers offered a sharper critique of the process. Cliff Pompe, the company’s vice president of power and emissions, said the queue was “being distorted from both directions,” with “ghost and transom loads being given allocation while real projects are kept out.” He also suggested “a lack of requisite criteria and inadequate prerequisite criteria” was allowing speculators to create false demand.

Compass operates a campus in Red Oak where it has invested more than $100 million in grid infrastructure, Pompe noted. In the weeks before the July 10 Batch Zero security deadline, Pompe said Compass was personally pitched more than 14 sites totaling over 15 GW by speculators who needed the company to front roughly $790 million in security deposits, which they could not post themselves. Some proposals claimed power densities two to four times the roughly 1.5 MW per acre that Pompe said legitimate hyperscale facilities rarely exceed. They were “basically impossible to construct,” he told state senators, because the available real estate could not physically accommodate the requested capacity.

Compass’s own second Red Oak project, filed with its transmission provider in May 2024, was excluded from Batch Zero. Pompe said the provider did not submit the project to ERCOT until March 2026, “nearly two years later,” even though Compass had engaged directly with ERCOT and participated in the stakeholder process throughout, supplying additional evidence of project maturity, including enhanced site-control documentation, site surveys, and $6.5 million in deposits. “We were told these requests were to demonstrate the seriousness of our project, which we were happy to do,” Pompe said. “We understood the rules proposed by ERCOT for Batch Zero were to ensure legitimate and mature projects were provided allocation. Unfortunately, as we sit today, that is not what ended up happening.”

Pompe said Compass learned the week before the July 29 hearing that the project had been excluded. Its transmission provider also told the company it was stopping work on the required dynamic-stability study while awaiting further ERCOT guidance for Batch One. ERCOT created a good-cause exemption that same day for projects that had substantially met Batch Zero’s requirements, but eligibility for the exemption required a completed transmission study. “That makes a lot of sense,” Pompe said. “But because our project had not had that study completed, we could not apply for this exemption.”

The problem, he stressed, was not the study requirement itself, but the absence of a firm deadline for the transmission provider to complete it. “The fact that our study isn’t complete does not make sense,” Pompe said. Without a firm completion date, Compass faces “real risk of this project finding itself in the same position next year during Batch One—excluded, having done everything we can and everything we were asked to do.”

Queue Scrutiny Carries Wider Power-Market Consequences

Determining which large-load projects are real is also central to decisions confronting the rest of the Texas power sector. The load that survives ERCOT’s screening will shape reliability assessments, scarcity pricing, transmission development, power-purchase negotiations, and decisions to build or retain generation. At the July 29 hearing, power-market participants warned that errors in either direction could prove costly.

Large-Load Interconnection Requests. ERCOT was tracking approximately 474.7 GW of large-load interconnection requests as of June 2026, including 420.8 GW—90.2% of the total—identified as data centers. The chart also distinguishes projects by development status, including requests with no studies submitted, projects under ERCOT review, and loads that have met more advanced interconnection requirements. Courtesy: Electric Reliability Council of Texas, “ERCOT Update,” presentation by ERCOT President and CEO Pablo Vegas to the Texas Senate Committee on Business and Commerce, July 29, 2026.

As Jeff McDonald, director of the ERCOT Independent Market Monitor and vice president at Potomac Economics, cautioned, even ERCOT’s revised midterm load forecast remains uncertain. McDonald credited ERCOT and the PUCT with bringing the forecast into “a much more reasonable range” by incorporating additional real-world constraints into the modeling. But some of its largest variables remain difficult to model.

“The AI business model and the AI revenue model in particular is still sort of in its infancy compared to other industries,” he told senators. He pointed to rising prices from major AI providers, public reports that some large users have directed employees to scale back AI use, local resistance to data-center development, and normal business cycles as factors that could suppress actual construction. ERCOT’s projection, he said, “could be considered an upper bound,” while the capacity ultimately installed and placed into commercial operation “might be considerably lower than that.”

Julia Harvey, representing Texas Electric Cooperatives, warned that even partial realization could alter ERCOT’s supply balance and wholesale prices. “Those dynamics could change quite significantly if even a fraction of the load currently forecast materializes,” she said. ERCOT could face a supply deficit in both its reliability assessments and actual operations, leaving the system dependent on large-load curtailments to preserve reliability.

While Senate Bill 6 provides mechanisms for those curtailments, Harvey warned that the associated price adjustments could produce high prices “with some frequency” if ERCOT adds more load than it can serve. She also cautioned against interpreting a modeled reliability deficiency as requiring enough new capacity to serve all projected large-load demand without curtailment. Large incremental additions “don’t fit as well in the conventional one-event-in-10-years framework,” she said, because “by design, the curtailments will happen more frequently than that.” Applying the conventional standard without accounting for those operating characteristics could impose unnecessary resource-adequacy costs on cooperative customers, she said.

The uncertainty also affects investment decisions. Walt Baum, representing Powering Texans and Texas Competitive Power Advocates, said greater clarity from Batch Zero would give generators more confidence that prospective customers are genuine. “When we get Batch Zero out there and know who it’s going to be, that is going to help spur new development because we’re going to know that these projects are real,” he said. That clarity, Baum added, could support new long-term power purchase agreements and new generation construction.

Bill Barnes, senior director of regulatory affairs at NRG Energy, said Batch Zero had already shown that financial security by itself was not enough to distinguish credible projects. The initial assumption, Barnes said, was that the queue contained applicants seeking a free option and that imposing financial requirements would clear them out. “And that is not what has happened,” he said. Instead, the process revealed a secondary market in interconnection positions and rewarded access to capital, Barnes said.

“The people with the most money are the ones that won,” he said, including applicants that partnered with other entities to secure a position. “There are going to have to be additional indicia of maturity besides just money going forward,” Barnes concluded, because money “did not have the culling effect that we thought it was going to.”

NRG also urged ERCOT to use the batch process to favor projects that improve system conditions. Barnes said transmission capacity should prioritize large loads that bring new generation or can operate flexibly as controllable resources.

Texas is already using public incentives to expand dispatchable supply through the Texas Energy Fund. Launched in 2024, the fund provides grants and low-interest loans for the construction, maintenance, and modernization of electric facilities. Its In-ERCOT Generation Loan Program offers 20-year loans at a fixed 3% interest rate for projects adding at least 100 MW of new dispatchable capacity, with financing capped at 60% of project costs. As of June 24, 2026, the program had committed $3.65 billion to eight projects totaling 4,994 MW, including three NRG plants and projects sponsored by Constellation, Competitive Power Ventures, Vistra, Rayburn Country Electric Cooperative, and the Kerrville Public Utility Board. Completion-bonus grants had brought total ERCOT-supported capacity to 5,516 MW.

Barnes said NRG is developing three gas-fired plants totaling 1,500 MW through the fund, including two combustion-turbine projects and one combined-cycle plant. The first of those projects, a peaker, was commissioned earlier this summer at NRG’s T.H. Wharton site in northwest Houston. Cedar Bayou and Greens Bayou are targeted for 2028. Barnes argued that the interconnection process could similarly reward large loads designed to support the grid.

“We have this opportunity here where we can provide a carrot, not a mandate, but a carrot and incentive,” he said. “If you want to build a large load in Texas, if you’re going to design your site in a way that is more reliable for the consumers of Texas, then you should have an incentive. That means maybe you get access to the transmission capacity before everyone else.”

—Sonal C. Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).

Tyler Durden Wed, 08/05/2026 - 09:15

Treasury Refunding: No Change To Auction Sizes As Bessent Deepens Reliance On Short-Term Debt

For yet another quarter, the Treasury's Quarterly Refunding offered no surprises, which considering the state of the US bond market is probably not a bad thing. 

In its 8:30am ET report, the US Treasury retained its previous guidance for future debt issuance, signaling no change in note and bond auction sizes well into 2027 even as federal borrowing needs balloon to stratospheric levels (and will explode once the AI bubble bursts leading to catastrophic consequences for corporate bonds). 

As for next week, the Treasury will hold $125 billion of refunding auctions, in line with estimates, which will be made up of:

• $58 billion of 3-year notes on Aug. 11
• $42 billion of 10-year notes on Aug. 12
• $25 billion of 30-year bonds on Aug. 13

The refunding will raise new cash of approximately $28.7 billion, the Treasury said.

Based on current projections, officials expect to maintain current sales amounts for nominal coupon securities and floating rate notes "for at least the next several quarters" - the same market-soothing language which the department has used in its quarterly debt-issuance strategy statement ever since the Janet Yellen "Activist Treasury Issuance" days of early 2024.

On bills, “based on current forecasts, Treasury expects to maintain current auction sizes in benchmark bills in the coming weeks”; and in "late-August, Treasury anticipates issuing a short-dated cash management bill."

The language and schedule is in line with the expectations of many dealers, who predicted Treasury Secretary Scott Bessent and his team would refrain from tweaks given that longer-dated yields have climbed in recent months. Benchmark 10-year yields hit their highest since he took office last week, making them all the costlier for the government.

The Treasury also retained its suggestion from May that it’s biased toward the shorter end of the yield curve for any future increase in coupon auctions. It said it’s monitoring growing bill demand and continuing to evaluate the situation “with a focus on trends in structural demand and potential costs and risks of various issuance profiles.”

Of course, the lack of boosting coupon debt means that the Treasury’s reliance on Bills and other short-term securities that mature in up to a year, will deepen even more, in a strategy dealers have dubbed “T-bill and chill.”

The ratio of bills to outstanding debt is now historically high, however, running the risk of debt-servicing costs becoming sensitive to shocks — at a time traders are betting the Federal Reserve will be forced to tighten monetary policy in coming months.

The problem is that current auction sizes won’t leave the Treasury in position to raise fresh cash as time goes on, which means the T-bill share of debt will climb inexorably if issuance isn’t changed. Borrowing needs, meantime, continue to swell. The Treasury on Monday stepped up its estimate for borrowing for the current quarter to $739 billion, up $68 billion from May, mainly due to lower projected cash flows. Meanwhile, total US debt will hit $40 trillion in two weeks.

According to Bloomberg, some strategists have linked Bessent’s reluctance to alter forward guidance to the looming November congressional elections, and preferring to avoid any debt-issuance tweak that risked sending yields higher.

Of course, the longer the Treasury holds off on signaling a change, the more dramatic and sudden the shift will need to be when it happens. But for now there is a market meltup to engineer until the midterms, at which point all bets are off. 

The Treasury Borrowing Advisory Committee in the past has advised the Treasury to seek an average of 20% for the share of T-bills, but officials haven’t offered their own clear guidance on where their tolerance level may lie. For now, demand remains robust for bills, from money market funds to the Fed - which has been recycling maturing mortgage securities into bills.

Tyler Durden Wed, 08/05/2026 - 09:06

"This Is Going To Surprise Some People": Leading Biden COVID-19 Figure Embraces The Lab Leak Theory

Authored by Jonathan Turley,

Former Biden White House COVID-19 Response Coordinator Dr. Ashish Jha this weekend became the latest denier of the lab theory to do a 180-degree turn. During the interview with CNN's Dana Bash, Jha admitted that he now believes that the most likely explanation is a lab leak at the Wuhan Institute of Virology. As pundits and politicians quietly admit that the natural mutation theory is not as credible, the courageous scientists who were blacklisted for years remain persona non grata in higher education.

Jha stated:

"This is going to surprise some people. You know, when I went into the White House, my view was, 'This was almost surely a natural outbreak, maybe a lab leak.' Based on information I learned and based on information I've seen, I have come to conclude that it is more likely to have been a lab leak."

I commend Jha for publicly addressing his change. Indeed, everyone in academia, myself included, has had their views evolve.

Former Biden White House COVID-19 Response Coordinator, Dr. Ashish Jha, tells Dana Bash, "When I went into the White House, my view was this was almost surely a natural outbreak, maybe a lab leak. Based on information I learned and based on information I've seen, I have come to… pic.twitter.com/bovB2nUbq4

— State of the Union (@CNNSOTU) August 2, 2026

What should not evolve is the willingness of the scientists and academics to accept dissenting viewpoints. One of my long-standing complaints against figures like Anthony Fauci is that they held prominent positions during the pandemic, but said nothing about the cancel campaigns directed against those experts who disagreed with their views on issues like the origins of COVID-19.

As I discuss in my new book, "The Indispensable Right," the result is that we never really had a national debate on many of these issues and the massive social and economic costs that resulted.

I spoke at the University of Chicago with Bhattacharya and other dissenting scientists in the front row a couple of years ago. After the event, I asked them how many had been welcomed back to their faculties or associations since the recognition of some of their positions.

They all said that they were still treated as pariahs for challenging the groupthink culture.

For years, figures like Bhattacharya (who was recently awarded the prestigious Intellectual Freedom Award by the American Academy of Sciences and Letters) were hounded and marginalized.

Others opposed Bhattacharya's right to offer his scientific views, even under oath. For example, in one hearing, Rep. Raja Krishnamoorthi (D-Ill.) expressed disgust that Bhattacharya was even allowed to testify as "a purveyor of COVID-19 misinformation."

Los Angeles Times columnist Michael Hiltzik decried an event associated with Bhattacharya, writing that "we're living in an upside-down world" because Stanford University allowed dissenting scientists to speak at a scientific forum. Hiltzik also wrote a column titled "The COVID lab leak claim isn't just an attack on science, but a threat to public health."

As recently as last year, Hiltzik continued to attack the lab theory.

Bhattacharya's experience is not unique. When scientists argued that the virus's origin was likely the Chinese research lab in Wuhan, they were mobbed by the media. That position was denounced by the Washington Post as a "debunked" coronavirus "conspiracy theory."

The Washington Post denounced Sen. Tom Cotton (R-Ark) when he raised the theory for "repeat[ing] a fringe theory suggesting that the ongoing spread of a coronavirus is connected to research in the disease-ravaged epicenter of Wuhan, China."

After Sen. Ted Cruz (R-Texas) mentioned the lab theory, Post Fact Checker Glenn Kessler mocked him: "I fear @tedcruz missed the scientific animation in the video that shows how it is virtually impossible for this virus to jump from the lab. Or the many interviews with actual scientists. We deal in facts, and viewers can judge for themselves."

The New York Times Science and Health reporter Apoorva Mandavilli called any mention of the lab theory "racist."

At NPR, an endless stream of segments ran dismissing the lab leak notion, painting it as a debunked conspiracy theory of the far right, including one story titled "Scientists Debunk Lab Accident Theory of Pandemic Emergence."

I consider it valuable to have voices like Hultzik's that still challenge the lab theory - just as I thought it was valuable to have lab theorists voice their views. The difference is that critics of the lab theory are not being canceled, but continue to be celebrated for their prior work. To the contrary, figures like Scott Atlas have shown how those educators who helped lead the mob against dissenters still hold positions of power. These figures should not be canceled for holding opposing views, but their conduct in silencing others should be reviewed.

Despite the vindication of scientists on their opposition to policies on the use of surgical masks, the closure of schools, and other issues, there have not been any repercussions for those who enforced the orthodoxy and intolerance during the pandemic in higher education.

The fact is that most are now willing to admit that the lab theory is probably correct, but they are unwilling to forgive those who forced them into that admission.

Tyler Durden Wed, 08/05/2026 - 08:55

"Hiring Patterns Are Changing": ADP Reports Weakest Job Gains In 6 Months, But...

Following a weaker than expected JOLTS report, but better than expected ISM employment data, ADP reports today (ahead of Friday's payrolls report) that the US economy added only 44k jobs in July (below the 65k expected and the lowest since January) after a revised 95k increase in the prior month...

With the Goods-producing side of the economy losing 3k jobs...

"Typical hiring patterns, meanwhile, are changing as employers react to shifting macro-economic conditions," said Dr. Nela Richardson Chief Economist, ADP

Even with the moderation in hiring, the report showed wage growth for those who switched jobs picked up to the strongest pace in nearly a year.

"Job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market," added Richardson.

The figures point to a stable labor market supported by robust business and consumer demand. If confirmed in the government’s official monthly jobs report on Friday, the recent employment trend suggests Fed officials can keep their focus on still-elevated inflation.

Tyler Durden Wed, 08/05/2026 - 08:31

Futures Hit New Record High On Strong Earnings Following Historic Call Buying Frenzy

S&P 500 futures are up following yesterday’s first ATH since June; both tech and small caps are lagging, pointing to another potential broadening. A jump in US tech stocks is holding too, with Nasdaq-100 contracts rising after a 3.3% surge in the session before, powered by semiconductor stocks and blowout Palantir earnings. S&P futures are up 0.4%, just shy of 7800, a new all time high, while Nasdaq futures underperform, rising 0.2%, as results from AMD and SpaceX failed to impress, sending shares in both lower in after-hours trading. AMD’s forecast didn’t meet high expectations, while SpaceX investors focused on the hikes being made to its AI spending. Semis/memory are lower with some likely profit-taking after yesterday’s surge; NVDA/GOOG are leading Mag7 names higher as it appears that squeeze portion of this rally has room left to run, as JPM says keep an eye on IGV as the squeeze may turn into a narrative shift flipping one of the lightest owned sub-sectors into a leader in the near-term. Germany’s Infineon, up 69% this year, picks up the baton for European semiconductor sector results Wednesday. Tuesday gains have fed into a bounce for the Kospi and Nikkei 225 in Asia. Euro Stoxx 50 futures are also up 0.4%. The mood in stocks and in bonds has been bolstered by oil prices continuing to ease off, with Brent slipping below $79/bbl before rising above $80 as Houthi rebels threaten Saudi shipping north of the Red Sea and the UKMTO reported a ship sunk off Yemen after it was attacked by an unmanned craft. Qatar said a proposal had been drafted and both American and Iranian officials sounded hopeful about reopening the Strait of Hormuz.

Treasury yields are dipping, while yields are down in Japan, Australia and New Zealand, the latter after weak quarterly jobs data. The Bloomberg Dollar Spot Index is softer, with the Swiss franc and Swedish krona leading gains among major currencies and the kiwi the laggard. Asia FX is green across the board.Commodities are bid, led by Precious Metals; WTI seeing support around $75/bbl though that could change following the expected formal announcement of a new deal between the US and Iran.  Today's US economic data calendar includes July ADP employment change (8:15am), July final S&P Global US services PMI (9:45am) and July ISM services index (10am). Fed speakers scheduled include Cook (4:05pm) and Daly (8:35pm)

In premarket trading, Nvidia leads Mag 7 stocks higher, poised to extend gains for a fifth consecutive session, after SPCX announced an exclusive partnership to build its future AI infrastructure entirely on NVIDIA’s platforms. Meanwhile, Tesla is underperforming the cohort as SpaceX’s debut earnings after IPO disappoints. Other Mag 7 names are mostly higher (Nvidia +1.8%, Alphabet +1.2%, Apple +0.9%, Amazon +0.7%, Meta +0.5%, Microsoft +0.2%, Tesla -1.2%)

• AMD (AMD) falls 7% after the chipmaker’s third-quarter sales forecast underwhelmed investors expecting a stronger performance amid healthy demand.
• Arista Networks (ANET) jumps 12% after the cloud-networking company forecast better-than-expected revenue for the third quarter. Analysts note that demand remains very healthy.
• Booking (BKNG) is up 7% after the online travel agency reported gross bookings for the second quarter that beat the average analyst estimate. The company said healthy global travel trends continued into the third quarter despite the ongoing conflict in the Middle East.
• CVS Health (CVS) rises 3% after the health insurer boosted its adjusted earnings per share guidance for the full year.
• Digital Turbine (APPS) soars 27% after the mobile network company boosted its revenue guidance for the full year that topped the average analyst estimate and first-quarter results beat the consensus.
• Elanco Animal Health (ELAN) gains 6% after the animal health firm boosted its revenue and adjusted profit guidance for the full year, following better-than-expected results for the second quarter.
• Everus Construction (ECG) climbs 9% postmarket after raising its year revenue and Ebitda outlook. Second-quarter results topped expectations, with revenue growing 34% from the year-ago period.
• Flutter (FLUT), the parent of the FanDuel, falls 5% after the company cut its US revenue guidance for the full year and appointed President Dan Taylor as chief executive officer from Oct. 1.
• Kratos (KTOS) gains 10% after the defense contractor boosted its revenue guidance for the full year, topping the average analyst estimate.
• Match Group (MTCH) drops 8% after providing a revenue forecast for the current quarter that narrowly missed analysts’ estimates, suggesting its dating sites still need to attract more younger users.
• New York Times (NYT) falls 8% after the news company reported second-quarter results.
• Pinterest (PINS) drops 9% after the social media platform’s revenue outlook for the current quarter disappointed investors.
• Shopify (SHOP) climbs 28% after the e-commerce platform operator reported revenue for the second quarter that beat the average analyst estimate.
• SpaceX (SPCX) falls 11% after it disclosed higher-than-expected spending on its artificial intelligence business, overshadowing an inaugural quarterly report that broadly surpassed Wall Street forecast.

Other corporate news includes Paramount Skydance posting a surprise surge in profits with cost-cutting from its merger last year continuing to pay off. Lucid is targeting $1.4 billion in cash savings this year, as the EV maker’s new CEO says “tough medicine” is needed to fix the troubled firm.

Overnight, the micro highlight was SpaceX's first earnings report as a public company, which could have gone... better: shares are 10% lower in premarket trading after it disclosed higher-than-expected spending on its AI business, dampening a report that broadly surpassed forecasts. Overall capex jumped to about $18.4 billion in the quarter, more than double its $7.8 billion revenue, and the company said the next two quarters of spending will be similar. Meanwhile, Musk lived up to his reputation for making bold predictions, including that SpaceX would reach a $100 billion annual run-rate revenue by year’s end, and $1 trillion annual revenues by 2030. SpaceX also fleshed out its plans to take on AT&T, Verizon and T-Mobile by complementing its satellite-based internet service with land-based infrastructure (telecom stocks tumbled).

The next catalyst for tech - and probably the entire market - comes in the form of results from memory chip makers Sandisk and Western Digital later. Through Monday’s close, Sandisk has been the single best performing S&P 500 constituent year-to-date, and the 13th largest points contributor, while Western Digital also ranks highly on both measures. 

Last month’s heavy deleveraging means that fast-money actors like hedge funds have now covered a lot of their shorts, leaving the setup looking increasingly positive. At the same time, broadening has continued globally and a strong earnings season has accelerated the sector rotation that was already underway. One way to see this week's euphoria: on Tuesday we saw the highest ever amount of S&P call futures bought.

The recent correction in tech stocks has brought valuations to more reasonable levels, helping to restore investor confidence after a bout of volatility triggered losses at several hedge funds last month. The MSCI World Semiconductor Index had tumbled more than 20% from its peak in June, driven by worries around the sustainability of AI spending boom and progress in China’s advanced chipmaking. The gauge has rebounded 15% since then.

“Albeit there was some disappointment on the micro level, the numbers are still confirming that the overarching macro trend is intact as they confirm the durability of the compute build-out,” said Stephan Kemper, chief investment officer at BNP Paribas Wealth Management Germany. “Thus, tech as a whole can benefit even if single players suffer.”

Geopolitical tensions are easing as President Donald Trump said the US had “good” discussions with Iran. Qatar said a proposal has been drafted and both American and Iranian officials sounded hopeful about reopening the Strait of Hormuz.   “Sentiment seems to have improved,” though it is likely due to a better risk backdrop than a fundamental change, said Haris Khurshid, chief investment officer at Karobaar Capital. “Lower oil, easing geopolitical tensions and stronger tech sentiment are all helping.”

Brent crude reversed some of Tuesday’s 5.3% plunge after Yemen’s Houthi militant group threatened to escalate attacks on Saudi vessels in the northern Red Sea. Still, the commodity held around $80 a barrel after Axios reported that Washington, Tehran and Oman were nearing an agreement to resume oil flows through the Strait of Hormuz. That’s easing inflation fears and upward pressure on Treasury yields.

“As oil prices come back to the $75-$80 dollar range, markets can focus on fundamentals, which remain robust,” said Mohit Kumar, a strategist at Jefferies International. “Earnings have been solid and there is still a lot of liquidity out there. Positioning is very clean, which sets a nice backdrop for a further rally in risky assets.”

In other assets, Fed’s Schmid suggested higher rates are needed to achieve the Fed’s price stability goals. Bloomberg Economics notes the divergence in global monetary policy outlooks due to energy price volatility, showing “the fog global central banks face as they try to limit the inflationary consequences of the Middle East conflict.” Meanwhile, the cost of hedging against a rise in Treasury yields has surged since last week.

In politics, Trump administration officials are moving toward another temporary extension of a waiver of a century-old shipping law that made it easier to move oil, fuel and fertilizer around the US. The White House has told top US AI companies that open-weight models being developed in China won’t be subject to government testing under the Trump administration’s new AI safety framework. And a potential US ban on Chinese data center components risks straining the countries’ fragile trade truce.

In hedge funds, the losses that forced Situational Awareness to sell stocks at deep discounts appear to be the result of highly concentrated positions in crowded trades, rather than a concerted effort by short-sellers, according to S3 Partners. Whale Rock’s flagship hedge fund had a 21.7% drop in July, erasing about half of its gains for the year.

The upside in oil sapped broader risk sentiment with the Stoxx 600 erasing an earlier advance that took it to a record high.Mining and retail shares leading gains while banks and consumer products stocks are the biggest laggards. Here are the biggest movers Wednesday:

• Sandoz shares gain as much as 8.6%, the most since Feb. 25, after the Swiss maker of generic drugs posted strong sales in the US and at its biosimilars unit
• Glencore rallied as much as 5.4% in London trading, the most since January, after reporting 1H adjusted Ebitda that beat analyst estimates due to surging prices for its key commodities
• Heineken shares gain as much as 3.1% after the Dutch brewer posted a strong set of second-quarter figures, with analysts highlighting outperformance in Asia-Pacific, led by Vietnam
• Nexans shares jumped as much as 7.4% after JPMorgan upgraded the stock to overweight, saying that the French cable manufacturer would be able to achieve its 2028 targets while M&A could bring further upside
• Fresenius jumps as much as 9.3%, the most since October 2022, after the German healthcare group lifted its full-year earnings forecast, following strong second-quarter performances at its hospitals and Kabi drugs business
• Infineon shares drop as much as 5.9% after the chipmaker’s 4Q margin outlook missed estimates, with the firm citing temporary operational and inventory-related effects in the green industrial power segment
• Novo Nordisk shares fall as much as 4.6% in Copenhagen after the Danish drugmaker’s new Wegovy weight-loss pill failed to top analysts’ expectations
• Verisure’s stock slid as much as 7.4% to €9.826 after a shareholder sold a stake for roughly €198.4 million in an overnight placing
• OTP Bank shares drop as much as 1.5% after the Hungarian lender reported total income for the second quarter that missed the average analyst estimate
• Wolters Kluwer shares fall as much as 5.8% after the Dutch information services company reported revenue for the first half-year that met the average analyst estimate

Earlier, Asian stocks rose to the highest in a month, led by a rally in heavyweight chipmakers as sentiment improved following prospects of an interim US-Iran deal. The MSCI Asia Pacific Index gained 2.1%, boosted by TSMC, SK Hynix and Samsung. Tech-heavy markets including Korea, Taiwan and Japan climbed, while Australian shares advanced to an all-time high. A guage of Asian semiconductor stocks rose 4.5%, tracking overnight gains in US peers. SK Hynix got an extra boost amid speculation  the Korean firm may soon unveil buybacks and other details of a broader shareholder return plan. Elsewhere, optical stocks in China fell, while those in Japan, India and South Korea rose, after Reuters reported that the US is drafting a ban on imports of some Chinese data center components to protect AI infrastructure.

In FX, the Bloomberg Dollar Spot Index falls 0.1%. The kiwi is the weakest of the G-10 currencies, falling 0.5% against the greenback after the New Zealand jobless rate rose more than expected.

In rates, treasuries are steady with front-end lagging rest of the curve slightly, following muted price action during Asia session and London morning. Oil prices erased declines after Yemen’s Houthi militant group’s latest threat against Middle East shipping. US session includes quarterly refunding announcement and July ISM services gauge. Treasury front-end yields are about 1bp cheaper, tracking gains in oil, while rest of US curve is little changed, with bunds and gilts also broadly steady. Treasury’s quarterly refunding announcement at 8:30am New York time is expected to leave in place guidance on steady auction sizes for at least the next several quarters, according to bond dealers. IG dollar issuance slate empty so far. AbbVie’s $10b deal headlined a $17.3b calendar Tuesday. Issuers paid about 5bps in new issue concessions on deals that were 5.2 times covered. Two issuers continue to monitor the market, both with size aspirations exceeding AbbVie’s transaction

In commodities, WTI crude oil futures are up about 0.5% near session highs after erasing declines after Yemen’s Houthi militant group said it would attack Saudi oil tankers in the northern Red Sea. Precious metals jump with spot silver up over 3%.

Today's US economic data calendar includes July ADP employment change (8:15am), July final S&P Global US services PMI (9:45am) and July ISM services index (10am). Fed speakers scheduled include Cook (4:05pm) and Daly (8:35pm)

Market Snapshot

Top Overnight News

• The US, Iran and Oman are preparing to announce a 60-day agreement on shipping through the Strait of Hormuz as soon as today. Donald Trump said talks with Iran are “moving along very nicely.” BBG
• Donald Trump’s administration has paid out about $100bn in tariff refunds since the US Supreme Court struck down its use of emergency powers to levy duties on its trading partners earlier this year. The sum, which is 60 per cent of the $165bn collected from the president’s “liberation day” tariffs, was reported by US customs officials to judges at the US Court of International Trade on Tuesday. FT
• White House is excluding open-models from its framework to test advanced AI capabilities: Axios.
• China’s services activity expanded at its weakest pace in nearly two years, a private survey showed, with businesses turning more cautious about an economy that’s increasingly showing signs of further weakness. BBG
• Shares of SK Hynix Inc. advanced, lifted by an overnight rally in US chipmakers and speculation that the Korean firm may soon unveil buybacks and other details of a broader shareholder return plan. BBG
• China tightened its exports controls on drones to the US and sanctioned multiple American companies in a series of retaliatory measures against Washington’s widening tech curbs. BBG
• UK firms continued to cut jobs in July, extending the labor market slump to its longest since the global financial crisis, a PMI survey showed. Businesses cited cost-cutting and greater use of AI. BBG
• Kansas City Fed President Jeff Schmid said Tuesday that the Federal Reserve’s inflation problem isn’t only about energy, and bringing inflation down to the Fed’s 2% objective will require tighter policy. WSJ
• Progressive Abdul El-Sayed is projected to win Michigan’s Democratic US Senate primary, according to NBC. He’ll face Republican Mike Rogers in November in a contest critical to Democrats’ hopes of regaining the Senate. BBG
• OpenAI and Anthropic AI models carried out “potentially harmful” actions, including hacking a website, UK government safety tests found. Separately, the White House was said to have told US AI firms that open-weight models developed by their Chinese rivals won’t be subject to government testing. BBG
• V-Shaped: Nasdaq now up ~945 bps in just 4 sessions (since last Thursday), punching back above its 50-dma to the upside. This 4-day move stacks up with how Tech has traded out of (or during) other notable market “events” over the last 20 years (GFC, COVID, ’22 Hiking Cyle, Liberation Day, et al).: Goldman

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly higher as the region took its cue from the rally on Wall Street, where the S&P 500 and Dow printed fresh record highs, although the Nasdaq was the outperformer on tech strength, while yields and oil prices declined amid hopes of a  Hormuz deal. ASX 200 traded in the green, with the upside led by outperformance in miners, materials and tech, which picked up the slack from the weakness in energy, utilities and the top-weighted financial sector. Nikkei 225 rallied back above the 66,000 level amid the tech strength, with SoftBank shares among the biggest gainers, and are up by a double-digit percentage owing to its heavy AI exposure. KOSPI rallied amid the tech momentum and with earnings results also providing tailwinds for stocks. Hang Seng and Shanghai Comp were mixed, with the Hong Kong benchmark flat amid weakness in the energy sector, while the mainland conformed to the upbeat mood despite disappointing RatingDog Services PMI data, although Chinese optical stocks were pressured as the US mulls an import ban.

Top Asian News

• US Treasury Secretary Bessent said the uptick in Japan's inflation was the result of weak yen and energy prices, as energy prices come down and we no longer have excess yen weakness, will contribute to inflation coming down.
• Japanese Finance Minister Katayama said they will not rely on new debt issuance to fill tax revenue shortages, will review budget spending and revenue to fill tax revenue shortages.

European bourses continue to climb, with gains broadly seen across the board. Focus will be on the potential announcement of the reopening of the Strait of Hormuz. On the data front, EZ and UK final PMIs printed a tick higher. For the EZ figure, S&P highlighted that the rise in the headline output index indicates quarterly GDP growth of 0.3%. For the ECB, S&P Global stated that, with the renewed flare-ups in the Middle East leading to upside risks to inflation, it should put policymakers in a more hawkish stance. However, with the PMI price gauges dropping markedly, it may provide a window for a delay of further hikes. Sectors point to a positive bias. Basic Resources top the sector pile, with Retail and Utilities rounding out the sector outperformers. To the downside is Consumer Products & Services, with Banks and Real Estate completing the bottom 3 laggards.

Top European News

• Italian Economy Minister Giorgetti said they will be asking the EU to increase energy spending by 0.6% and defence spending by 0.9% of GDP. The minister added that they will be presenting to parliament a formal request to increase the deficit between September and October, following on from EU talks.

FX

• USD lacks direction with DXY just below 100.00 as the positive risk environment is weighed against a bounce in energy benchmarks; Brent +USD 1/bbl. Several scheduled releases today, including ISM services and ADP jobs ahead of Friday's NFP, while the Treasury is slated to release its QRA; focus is on whether guidance retains language that coupon and FRN auction sizes will hold “for at least the next several quarters.” Further on that, JPM flags a USD 3.7tln four-year funding gap, and argues the wording should be tightened, but expects the Treasury to hold fire ahead of November’s midterms to avoid unsettling long-end rates. On the speaker slate, Fed's Cook is set to speak.
• GBP is the marginal outperformer despite a Times article overnight suggesting the government would look to exploit a Reeves-era fiscal rules loophole to increase government borrowing by as much as GBP 9bln. Perhaps a factor soothing markets is how both Burnham and Healey have previously expressed willingness to utilise flexibility in the fiscal rules. Elsewhere, UK Final PMIs were confirmed in expansion though revised modestly lower. GBP/USD trades within a narrow 1.3340-1.3470 range, with all significant DMAs between 1.3350 and 1.3400, likely to provide support; 1.3500 will likely prove resistance.
• EUR conforms to price action across the G10 space and is essentially unchanged against the Buck in quiet trade. ING today notes how the heatwave, impacting water levels and nuclear power, means the single currency has been unable to capitalise on the stronger-than-expected data over the past week. Today, EZ PMIs, like those seen across the channel, did not deviate enough from prelim figures to spark a EUR reaction. EUR/USD flat with 50 and 100 DMAs either side at 1.1476 and 1.1570, respectively.
• NZD is the clear underperformer after the unemployment rate firmed at a faster rate than was expected. Kiwi was pressured immediately after the data and continued lower throughout the morning, surpassing recent 0.5860 support and potentially on track to test 0.5850.

Fixed Income

• A firmer start for the space, led higher by the initial downside in energy given the overnight geopolitical updates and the potential for a Hormuz deal to arise in the next 24hrs or so. Albeit, reporting this morning has been somewhat less constructive, and as such crude has reverted back into the green, and fixed has waned from best.
• Gilts briefly eclipsed 88.00 by six ticks and with gains of 44 at best. Upside a function of the initial energy pressure, catch-up to the overnight moves in fixed and on domestic fiscal reporting. On the latter, The Times scooped that Ministers are looking at utilising a Reeves-era adjustment to the fiscal rules, when the former Chancellor made it so the government can count spending on equity/infrastructure as assets, which can then be offset against borrowing costs. Such an approach could allow GBP 9bln/yr to be raised, without PM Burnham or Chancellor Healey having to adjust the rules themselves.
• Bunds also bid, but off best. Peaked at 125.51 in APAC trade, firmer by near 50 ticks at the time, but has since essentially halved that as energy moves. For Germany, specifics have been and are scheduled to be relatively light aside from Green supply due shortly. Elsewhere, from the bloc, EZ June PPI was cooler-than-expected M/M but in-line Y/Y; no move to the series.
• USTs in-fitting, modestly firmer in narrow 108-26 to 109-01 confines. A busy docket ahead, in addition to potential geopolitical updates. Firstly, ADP prints before Friday’s NFP, seen at 70k (prev. 98k), vs 91k (prev. 57k) for the BLS series. Thereafter, the Chicago indicator hits alongside the Quarterly Refunding Announcement, focus is on the language around coupon and FRN sizes. Next up, we have the US Final PMI and ISM Services read for July, before potential commentary from Fed’s Cook (voter).

Commodities

• In terms of Middle Eastern geopolitics, developments suggest momentum towards a diplomatic agreement to reopen the Strait of Hormuz, although negotiations remain ongoing. US President Trump said in a Fox News interview that the Strait could reopen very soon, describing discussions with Iran as productive after an all-day round of negotiations and stating there is still ample time to reach a deal, while warning that Iran would face severe consequences if it withdrew from talks again. He later added that negotiations were progressing well and that more clarity would emerge within 48 hours.
• Regarding to the potential Hormuz agreement, Axios reported that the US is targeting a Wednesday announcement of a Hormuz agreement under which inbound vessels would transit through a northern lane in Iranian waters and outbound vessels through a southern lane in Omani waters, with no transit fees during an initial 60-day period and joint efforts to clear naval mines from the median lane within 30 days before negotiating a permanent arrangement between Oman and Iran.
• Energy futures have tilted higher during the European morning following a subdued APAC session, with gains seen after the Yemeni Houthis announced that they have targeted a Saudi tanker in the North of the Red Sea. This essentially amounts to an expansion of the Houthi blockade that threatens to completely choke off Saudi Arabia's alternative energy export routes. Prices thereafter saw modest downticks on reports that the Pakistan PM Sharif and Army Chief Munir will visit Saudi Arabia tomorrow. Meanwhile, upticks were seen once again following reports that Israeli strikes were reported in Southern Lebanon, which is seen as a headwind for US-Iran negotiations. WTI Sep’26 resides towards the top end of a USD 74.24-76.47/bbl range (vs yesterday’s USD 75.11-82.33/bbl range) while Brent Oct’26 trades in a USD 78.11-80.80/bbl range (vs yesterday’s 78.67-86.33/bbl parameter). Dutch TTF is softer intraday but in choppy trade, printing on either side of the EUR 55/MWh mark in a current ~EUR 54.50-55.75/MWh range.
• Metals are firmer as DXY price action is once again somewhat contained despite the volatility across energy. Spot gold trades towards the top end of a USD 4,065-4,180/oz range after topping the 22nd July high (USD 4,166/oz) to match the 7th July peak (USD 4,180/oz). Spot silver has mounted USD 60/oz once again to trade towards the upper end of a USD 59.40-61.90/oz range at the time of writing.
• Base metals also cheer the relatively stable dollar against the backdrop of energy volatility. 3M LME copper holds above USD 14k/t in a USD 13,974.45- 14,104.00/t range at the time of writing.
• US Private Inventory Data (bbls): Crude +2.7mln (exp. -2.0mln), Distillates -1.2mln (exp. -0.1mln), Gasoline +0.2mln (exp. -1.3mln), Cushing +2.4mln.
• US Energy Secretary Wright said the extension of Jones act waiver is likely and has resulted in lower energy prices in California and the US East Coast.
• Ferrexpo (FXPO LN) said they have decided to temporarily suspend production of iron ore products from its mining and pelletising operations in Ukraine and are currently able to supply its European customers from existing inventory stockpiles.

Trade/Tariffs

• US President Trump's administration is considering blocking Chinese imports of optical transceivers from China.
• China's MOFCOM said it will impose countermeasures on six US entities and will take countermeasures against US compliance-testing firms.
• Chinese embassy in the US said Washington should stop threatening Chinese companies and slammed the Trump administration's plan to ban certain electronic equipment used in data centres.

Central banks

• Fed's Schmid (2028 voter) said tight monetary policies are needed to get inflation back to the 2% target, and that inflation is currently too high and is worrisome. The current stance of Fed policy is not restrictive and the recent relief on energy prices may prove temporary. Schmid added that the economy is performing well overall and growth is resilient, while welcoming the recent inflation data. However, it is too soon to say if it is easing. He ended by stating that the job market appears to be roughly in balance, and AI investment is driving up inflation, which the Fed should not ignore.
• RBI keeps Repurchase Rate unchanged at 5.25%, as expected, via unanimous decision, while policy stance is kept at neutral. Growth continues to be supported by domestic demand, while there is a need for greater clarity on inflation before taking policy action. Sees FY27 real GDP growth of 6.7% (prev. 6.6%) and FY27 CPI at 5.0% (prev. 5.1%).
• BoJ Minutes from the June Meeting stated most members share the view economy is moving in line with the baseline scenario, and there were risks underlying inflation may overshoot the BoJ's 2% target. Members agreed it was appropriate for the BoJ to continue raising rates. Few members said the BoJ must maintain guidance that the BoJ will keep rising rates if the economy and prices move in line with its forecasts.

Geopolitics: Middle East

• An Iranian source familiar with the direct Iran-Oman talks has told CBS News the discussions between Tehran and Muscat are now focused largely on the mechanics of reopening the Strait of Hormuz and that broad outlines have largely been agreed. Under the current proposal, ships entering the Strait would use the channel closest to Iran, with Iran coordinating inbound traffic, while vessels leaving the strait would use the Omani side, with Muscat managing outbound traffic. The proposal also includes a "service fee," with the revenue split between Iran and Oman. According to the source, the broad outlines have largely been agreed upon, with the remaining discussions focused on implementation and timing. Axios reported something similar, in which the US is nearing a Hormuz deal. Axios added that no tolls or fees would be charged during the 60-day period and the parties would work on clearing naval mines from the median lane of the strait within 30 days.
• US President Trump said in a Fox News interview that the Strait is going to be open very soon and that they are having very good discussions with Iran, while he warned if Iran backs out again, they'll be hit very hard. Trump also commented that they had a very good day with Iran and had an all-day negotiation today, while he also said they have plenty of time to reach an agreement with Iran. Furthermore, Trump separately commented that they are moving along very nicely regarding Iran and we will know in 48 hours on Iran.
• US Central Command said that the southern route through the Strait of Hormuz remains free and open for all commercial vessels seeking to transit the international waterway.
• Israeli media citing unnamed Israeli sources reported that US President Trump and his advisers are seeking a deal with Iran at any cost, according to Al Jazeera.
• Israel, Lebanon and the US are discussing which country or countries will be responsible for verifying Hezbollah's removal from pilot zones, with Italy being one of the options, according to three sources familiar with the talks cited by i24's Stein.
• Israeli strikes reported in Southern Lebanon, Tasnim reported.
• Pakistani sources said Pakistan PM Sharif and Army Chief Munir will visit Saudi Arabia tomorrow, Al Hadath reported.
• Yemeni Houthis said they attacked a vessel in the Red Sea, with the spokesman adding they attacked a Saudi oil tanker off the Yanbu with missiles.
• Saudi Arabia reportedly attacked Yemen's capital of Sanaa with explosions heard, according to Fars News Agency.
• Saudi official said no talks are taking place between the Saudis and the Houthis via mediators, according to Al Arabiya.

Geopolitics: Ukraine

• Air attack reported on Ukraine's capital, Kyiv, with explosions heard amid reports of a ballistic missile attack.

Geopolitics: Other

• North Korea leader Kim's sister criticised Japan's recent test firing of a Tomahawk missile and said they will be forced to add more military options in response to Japan's strengthening of defence capabilities.
• US Pentagon is drafting a new US nuclear strategy in case of regional war with China or Russia, NBC sources report.

US Event Calendar

• 7:00 am: Jul 31 MBA Mortgage Applications, prior -6.4%
• 8:15 am: Jul ADP Employment Change, est. 65k, prior 98k
• 9:45 am: Jul F S&P Global US Services PMI, est. 53.6, prior 53.6
• 9:45 am: Jul F S&P Global US Composite PMI, prior 53.6
• 10:00 am: Jul ISM Services Index, est. 54.5, prior 54

DB's Jim Reid concludes the overnight wrap

As recently as last Friday, investors were debating whether a renewed Middle East energy shock would be the soundtrack of the late summer. By yesterday's close, Brent crude had fallen back below $80/bbl, short-term inflation expectations had moved to multi-month lows, bond yields had continued to retreat, and the S&P 500 (+1.79%) and the Stoxx 600 (+0.73%) had moved to fresh record highs. At the same time, the AI trade continued to regain momentum, with semiconductors enjoying another strong session and investors increasingly willing to lean back into the capex theme that looked under pressure during July's volatility. These themes have held up overnight, with oil and Treasury yields edging lower, while Asian equities are rallying.

The latest catalyst was another day of encouraging headlines around the Strait of Hormuz. Qatar said that a draft proposal had been circulated between the parties, whilst Treasury Secretary Bessent suggested that an agreement to reopen shipping flows could be reached “today or tomorrow”. Axios then reported last night that the US is hoping for a Wednesday announcement of an interim deal that would see a temporary 60-day arrangement between Iran and Oman under which Gulf-bound vessels would pass through Iranian waters, whilst vessels leaving the Gulf would be able to travel through Omani waters with no fees being charged during the 60-day period. Similar details were reported earlier by the Wall Street Journal, though both reports leave unclear whether a long-term arrangement between Iran and Oman might then involve charging a toll for using the Strait. And as I write this around 5am LDN time, Trump just told reporters that talks were “moving along very nicely” and “we’ll know in 48 hours”, though he also told Fox News earlier that “they're going to get hit very hard” unless the Strait is open “very soon”.

Markets have seen plenty of false dawns throughout this conflict, so plenty of attention will be on whether a deal is announced imminently and its details. As of now, investors are increasingly pricing a solution, with the most obvious positive reaction coming in energy markets. Brent crude fell another -5.26% to $79.36/bbl yesterday, whilst WTI declined -5.69% to $75.77/bbl. European natural gas futures also fell -2.75% to their lowest level in almost three weeks. Brent is another -0.66% lower this morning. The speed of the reversal has been impressive with Brent now down by more than -10% since Friday.

The associated move in inflation pricing was arguably even more noteworthy. The US 1yr inflation swap fell another -6.4bps to 1.80%, its lowest since 2024, whilst the Eurozone equivalent declined -9.5bps to 2.27%. US 5yr inflation swaps fell -4.8bps to 2.36%. Markets are clearly dismantling a sizeable portion of the near-term inflation premium that had built up as the conflict intensified through July.
Government bonds also continued to benefit. The 10yr Treasury yield fell -6.3bps to 4.61%, and while breakevens led the decline, real yields moved lower too, with the 30yr real yield falling -3.8bps to 2.97%. The Treasury curve is a touch lower again overnight, with 10yr yields down -0.8bps overnight, even as Kansas City Fed President Schmid struck a hawkish tone yesterday evening, saying that “bringing inflation down to the Fed’s 2% objective will require tighter policy”.

In Europe, bund yields declined -4.5bps to 3.11%, while gilts rallied a further -5.7bps to 4.90%, extending the strong performance seen since oil began reversing lower at the start of the week. Peripheral debt also performed strongly, with 10yr BTP yields falling -7.1bps to 3.86%, with a -15.8bps decline so far this week marking their best two-day run since May.

Importantly however, the bond rally wasn’t fueled by weaker growth. The JOLTS survey for June did show job openings easing to 7.36 million from 7.54 million previously, but most of the survey’s details remained constructive, with hiring picking up, layoffs staying subdued, the quits rate stable at an upwardly revised 2.0% (vs 1.9% expected) and the ratio of vacancies to unemployed workers little changed at 1.04 (vs. 1.03 prev.). In addition to this steady labour market signal, June durable goods orders were revised up to +0.5% mom (+0.3% exp.) with core capital goods orders rising +1.2% (+0.9% exp).

That combination of lower oil prices, falling inflation expectations and still-resilient US data proved an ideal backdrop for risk assets. The S&P 500 rose +1.79%, closing at an all-time high for the first time in two months. Tech stocks outperformed, with the Nasdaq up +2.59%, though the Mag-7 (+0.73%) underperformed. The AI complex was even stronger, with the Philadelphia Semiconductor Index surging +6.55%, its strongest daily gain since March and extending its rise since last Wednesday to +16.58%, its biggest 4-day advance since 2020. 

So the rebound in semiconductors continues to gather pace. After enduring a correction of more than -20% during July, investors appear increasingly willing to re-engage with the AI trade. Helping sentiment were Palantir's (+29.45%) strong outlook, reports of Anthropic agreeing a $10bn computing infrastructure deal to meet demand for its models, and Caterpillar (+5.60%) raising sales guidance whilst pushing back on concerns that data-centre demand is slowing. Together, that helped rebuild investor confidence in the broader AI capex cycle after July's turbulence.

Another interesting AI-related development came from the networking space. Reuters reported that the Federal Communications Commission is drafting a ban on imports of new Chinese optical transceivers, critical components that allow information to travel through fibre-optic cables inside data centres. The news boosted US optical-networking names, with Marvell Technology up +12.81% and Coherent gaining +12.35%, as investors anticipated a shift in demand towards domestic suppliers. While a niche story on the surface, it is another reminder of how AI supply chains are part of broader strategic competition between the US and China.

A bit of shine came off the tech performance overnight following results from SpaceX and AMD. SpaceX fell by over -7% after-hours after reporting higher AI capex spending, though that decline was smaller than the +9.43% jump in yesterday’s regular session. AMD shares also slid in extended trading as the chipmaker’s Q3 revenue guidance ($13bn vs $12.5bn) came in slightly ahead of consensus but below the more optimistic estimates. This leaves NASDAQ futures (+0.11%) underperforming those on the S&P 500 (+0.32%), but the overall equity mood remains positive overnight.

Optimism is also visible in Asian markets this morning. Across the region, the KOSPI (+4.32%) and the Nikkei (+3.32%) are leading gains. Mainland Chinese stocks are moving higher with the Shanghai Composite (+1.34%) outperforming the CSI 300 (+0.99%), while the Hang Seng (+0.11%) is little changed. The China market performance hasn’t been helped by the RatingDog Services PMI for July, which fell from 54.1 to 50.4 (vs 53.7 expected). That’s its lowest level since September 2024, pointing to still soft domestic demand in China. Meanwhile, the S&P/ASX 200 (+0.71%) is on course to eclipse its record high reached back on March 2, helped by a strong June household spending print (+0.8% MoM vs +0.2% expected).

Elsewhere, European equity indices continued to push into record territory yesterday. The Stoxx 600 (+0.73%), DAX (+0.77%), CAC (+0.61%) and FTSE MIB (+1.26%) all reached new all-time highs, while the FTSE 100 (+0.20%) is just 0.3% below its own historic peak. So beyond the US, investors are increasingly embracing the combination of lower oil prices and easing inflation concerns.
Another market theme worth watching remains the yen. During his CNBC interview yesterday, Bessent said that the US would do "whatever it takes" to support Japan and argued that excessive yen weakness risked broader instability across Asia. He also said that it would be reasonable for the Fed to upsize the FIMA repo facility, a point that our rates strategists have sympathy with (see their take here). In his extensive comments, Bessent also said he believed the BoJ Governor “will do what is needed”. Note that our FX strategists see faster BoJ hikes as necessary for a more sustained recovery in the yen. Following Bessent’s remarks, the yen rallied from intraday lows, though it still finished yesterday’s session -0.36% lower at ¥157.75 per dollar. However, that’s significantly stronger than the roughly ¥163 level seen before last week's intervention efforts. The yen is little changed against the U.S. dollar this morning.

This morning’s minutes from the BoJ’s June policy meeting revealed that several board members expect consumer inflation to receive a notable boost in the second half of the current fiscal year and showed that two of the eight board members advocated for a faster pace of interest rate hikes. The latest Japan wage data this morning is likely to maintain the pressure for BoJ hikes, showing nominal wage growth at +3.4% yoy in June (in line with expectations after a revised +3.3% rise in May), marking the fifth consecutive month of gains above 3% and the longest such streak in 34 years. A more stable wage indicator, which excludes bonuses, overtime payments, and sampling distortions, rose +2.9% for full-time employees (vs +2.7% expected). Real wages increased +1.6%, extending gains to a sixth consecutive month, the longest run since 2021.

To the day ahead now, data releases include the US July ADP report, where our US economists expect employment growth of +60k after +98k previously. We will also get ISM services, UK July new car registrations, France June industrial production, Italy July services PMI, Eurozone June PPI. Tomorrow, the Fed’s Cook will also speak. Earnings include Eli Lilly, Walt Disney, CVS Health, eBay, Block, and Global Payments.

Tyler Durden Wed, 08/05/2026 - 08:20

Fauci's Time Is Up...

Authored by Steve Watson via Modernity News,

Sen. Rand Paul has locked in the date for a committee vote that could finally impose real consequences on Anthony Fauci, the longtime public health official whose pandemic-era decisions reshaped daily life for millions of Americans.

On Thursday, the Senate Homeland Security and Governmental Affairs Committee will vote on a resolution holding Fauci in contempt of Congress after he refused to answer questions under subpoena during last week's hearing.

Paul, the Kentucky Republican who chairs the panel, announced the move today. The resolution authorizes the President of the Senate to certify the committee's report on Fauci's refusal to answer questions pertinent to the inquiry, as required by the subpoena.

HSGAC is voting Thursday to hold Anthony Fauci in contempt. Fauci has a blanket pardon from President Biden for more than a decade's worth of actions, yet he still stonewalled Congress and refused to answer even basic questions. That is pure contempt for accountability. https://t.co/fxupdCWrnK

— Senator Rand Paul (@SenRandPaul) August 4, 2026

In a statement, Paul laid out the sequence plainly: "Dr. Fauci appeared under subpoena and invoked the Fifth Amendment to refuse answering questions. During the hearing, I ruled that the Fifth Amendment did not apply because of the pardon, and that Fauci had waived any remaining privilege by giving opening testimony. I ordered him to answer and warned him about contempt, yet he still refused. That is obstruction of a congressional investigation. The Committee will act accordingly."

The subpoena, issued in July, directed Fauci to testify on the committee's investigation into "risky life sciences research and the origins of the COVID-19 virus." Fauci showed up on July 29, delivered an opening statement, then declined every substantive question by invoking the Fifth Amendment. Estimates of the number of invocations range from more than 100 to 112.

The July 29 hearing itself was a prolonged exercise in refusal. Fauci opened by accusing Paul of an "unhinged obsession" with him and claiming the sole purpose of the session was to trap him into saying something that would land him "behind bars."

From that point forward he answered nothing of consequence. Senators pressed him on gain-of-function research funding, the lab-leak evidence he had privately acknowledged while publicly promoting a natural-origin narrative, lockdown policies, school closures, personal financial awards solicited with federal employees on taxpayer time, and contradictions between his public statements and private diary entries. He declined them all.

Paul told Fauci near the close of the session: "I really did want to hear from Dr. Fauci. I wanted to hear perhaps an apology, perhaps some semblance of being sorry for what happened or that judgment errors were made. We didn't hear any of that."

He then ordered Fauci to answer a specific question about whether he had destroyed any federal records or directed anyone else to do so during the period covered by the pardon. Fauci again cited the Fifth. Paul ruled the privilege unsupported and scheduled the contempt vote.

Even some mainstream legal voices recognized the strategic problem with the strategy. A CNN legal analyst and an NYU law professor noted that the blanket pardon from former President Biden - covering official conduct from January 1, 2014, through January 19 or 20, 2025 - removed the usual criminal jeopardy that justifies a Fifth Amendment claim.

Once immunity is granted, the ordinary expectation is that the witness must testify. Pleading the Fifth under those conditions can itself become grounds for contempt. One analyst observed that the repeated invocations, framed by Fauci's team as protection against "perjury traps," simply raised the obvious question for ordinary viewers: why not just tell the truth?

The contempt vote is not occurring in a vacuum. Paul's committee has spent years examining the paper trail of pandemic decision-making. Emails previously highlighted by the senator show Fauci directing then-NIH Director Francis Collins to "read it, then destroy it" - language Paul has described as a clear violation of federal records law. "That is against the law. You're not allowed to do that in the executive branch," Paul has said of the instruction.

Separate reporting has also focused on research techniques funded under Fauci's NIAID. RFK Jr. has described a method known as seamless ligation, developed with federal support by Ralph Baric and later shared with Chinese researchers including Shi Zhengli. The technique is designed to erase the molecular signatures that would otherwise reveal a virus had been engineered in a laboratory.

"He funded Ralph Baric to develop a technique called seamless ligation. And that is a technique for hiding the engineering project," RFK Jr. has stated. "There is no public health reason for this; it is the opposite of what you would do if you are interested in public health."

Taken together, the pattern is consistent: public messaging that diverged from private knowledge, research choices that complicated origin tracing, instructions that raised records-destruction concerns, and now a categorical refusal to answer questions even after a presidential pardon removed the risk of criminal prosecution for the covered period.

Paul has repeatedly framed the issue as one of basic accountability rather than re-litigating every pandemic decision for its own sake. "Fauci said one thing publicly and another privately. He coordinated to control the narrative. He shaped guidance around politics instead of truth," the senator posted shortly before the resolution was introduced.

He added, "If we don't demand real accountability and reform, nothing stops the next unelected bureaucrat from doing the exact same thing."

The committee vote on Thursday is the next procedural step. If the resolution is approved, it can be referred toward the full Senate and potentially to the Department of Justice. Whether that path produces actual enforcement remains to be determined by the numbers in the Senate and the priorities of the executive branch.

What is already clear is that Fauci's decision to appear under subpoena and then decline every substantive question has now forced the formal contempt process.

Paul's committee is treating the refusal as obstruction of a legitimate congressional investigation into the origins of a virus that killed more than a million Americans and the policies that followed. The vote on Thursday will test whether that obstruction carries institutional consequences.

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 Wed, 08/05/2026 - 08:05

"Momentum Continues": Lilly Jumps After Raising Revenue Outlook On Surging GLP-1 Demand

Shares of Eli Lilly & Co. are rising in premarket trading after the pharmaceutical giant raised its full-year revenue forecast following a 48% jump in second-quarter sales, fueled by accelerating demand for the diabetes drug Mounjaro and the obesity treatment Zepbound.

Lilly's second-quarter results topped Wall Street expectations: Adjusted earnings rose to $8.38 a share from $6.31 a year earlier. Revenue surged 48% to $22.97 billion, beating the $20.59 billion Bloomberg Consensus estimate.

Mounjaro generated $9.94 billion in sales, exceeding the $8.83 billion estimate, while Zepbound revenue climbed 18% from the previous quarter to $4.93 billion, ahead of the $4.64 billion estimate. Research and development spending increased 14% to $3.82 billion, below the $4.05 billion projected by analysts tracked by Bloomberg.

Here's a snapshot of 2Q earnings:

Adjusted EPS $8.38 vs. $6.31 y/y

Revenue $22.97 billion, +48% y/y, estimate $20.59 billion

• Zepbound revenue $4.93 billion, +18% q/q, estimate $4.64 billion *

R&D expenses $3.82 billion, +14% y/y, estimate $4.05 billion

Mounjaro revenue $9.94 billion, estimate $8.83 billion

"Lilly's momentum continues, as we delivered 48% revenue growth and raised our full-year guidance," Lilly CEO David A. Ricks wrote in a statement.

Lilly upgraded its full-year revenue forecast to between $85 billion and $87 billion, up from its previous range of $82 billion to $85 billion. The midpoint exceeds the $85.31 billion Bloomberg consensus estimate.

Ricks continued, "At the same time, Lilly is building for the future. With our next-generation weight-loss medicine retatrutide and its complete clinical data package in hand, new manufacturing capacity coming online, and exciting new assets entering our pipeline through business development, Lilly's future, after 150 years, has never been brighter."

Lilly shares jumped nearly 6% in New York premarket trading. The stock had gained about 4% this year through Tuesday's close.

The quarter also provides the first commercial readout for Lilly's newly launched obesity pill, Foundayo, which generated $98 million in sales.

The pill received U.S. approval in April and is competing directly with Novo Nordisk's rival pill, which launched several months earlier.

Tyler Durden Wed, 08/05/2026 - 07:45

Inside Ford's "Passionate" Reinvention

Ford has reshaped its business by narrowing its lineup to vehicles with stronger brand appeal and higher profit potential. Instead of offering a wide range of sedans, hatchbacks, and family cars, the company is concentrating on trucks, SUVs, sports cars, and models that customers can personalize with factory-backed upgrades, according to a new Wall Street Journal report.

At a recent event, Ford showcased customized Broncos, F-150s, and Mustangs, underscoring the company's emphasis on vehicles that stand out rather than blend in. As Matt Simpson, who leads Ford's customization business, put it, "This is the most passionate lineup that Ford has ever had."

The strategy reflects CEO Jim Farley's belief that Ford should focus on distinctive products instead of competing in crowded, low-margin segments. Rather than trying to match rivals across every category, Ford is investing in vehicles that reinforce its identity and command premium prices.

Executives argue that mainstream models such as the Focus and Escape often required costly incentives and discounts to remain competitive, making them less attractive from a financial standpoint.

The Journal writes that the company's decision also mirrors broader changes in the U.S. auto market. Buyers have increasingly gravitated toward larger pickups and SUVs, while the average price of a new vehicle has climbed to roughly $50,000. At the same time, tariffs, labor expenses, and other production costs have made it more difficult to manufacture inexpensive vehicles profitably in the United States.

As a result, Ford's least expensive models now start at close to $30,000—roughly double the entry price buyers could find in Ford's lineup a decade ago.

Although Ford has reduced the number of vehicles it sells, the company has improved its financial performance by emphasizing higher-margin products. U.S. sales in 2025 reached their highest level in six years, fueled by strong demand for models such as the F-150, Bronco, Maverick, and Mustang.

Still, total sales remain well below where they stood a decade ago because customers now have fewer choices. Dealers have also noted that eliminating familiar entry-level models makes it harder to attract first-time buyers and shoppers looking for affordable transportation.

Looking ahead, Ford says it has not abandoned the affordable segment altogether. The company plans to introduce five new vehicles priced below $40,000 before the end of the decade, beginning with a new electric pickup expected to cost around $30,000. Unlike earlier electric models that struggled to generate profits, these vehicles are being designed from the ground up with lower production costs and higher sales volumes in mind.

Ford hopes this approach will allow it to compete with market leaders while avoiding the financial challenges that affected its first generation of EVs.

Another pillar of Ford's strategy is vehicle customization. Roughly half of its customers now purchase accessories or performance upgrades, ranging from decals and cargo equipment to suspension packages and engine enhancements.

By incorporating personalization opportunities during the design process instead of after a vehicle is launched, Ford enables dealers to bundle these upgrades into financing at the time of purchase, creating an additional source of high-margin revenue.

Despite the financial logic behind the strategy, it comes with trade-offs. Longtime customers who previously drove compact cars or midsize SUVs have fewer options within the Ford brand and are often pushed toward larger, more expensive vehicles. Dealers also lose the ability to serve buyers looking for basic transportation, leaving competitors to capture those sales. Even so, Farley has made the company's priorities clear: "Every dollar must earn durable returns and drive profitable growth."

Ford is betting that a smaller lineup of distinctive, profitable vehicles will deliver stronger long-term results than offering something for every type of buyer.

Tyler Durden Wed, 08/05/2026 - 06:55

BP Retreats Further From Green Energy With Archaea Sale

Via City A.M.,

• BP plans to sell Archaea Energy after the US biogas operation delivered weaker-than-expected returns.

• Second-quarter adjusted profit climbed to $5.7 billion as Middle East disruption lifted oil and gas prices.

• Meg O’Neill is simplifying BP’s portfolio, reducing debt and concentrating investment on its most profitable assets.

BP has announced that it will offload its US biogas business just days after confirming its exit from the North Sea, as the firm looks to shift its focus back to core oil and gas products.

The London-listed oil giant has previously told investors it planned to market assets across its operating regions as part of a restructuring overseen by new boss Meg O’Neill.

BP acquired Archaea for $4.1bn in 2022, but the business has since faced financial underperformance and slower-than-expected growth, forcing the FTSE 100 giant to reassess the asset’s worth.

O’Neill said the firm must simplify its portfolio “based on value, not sentiment, nor history” and instead focus on assets which “deliver competitive returns and long-term value”.

She has previously announced plans for a major overhaul of the group’s energy channels, splitting it into two divisions, dubbed upstream and downstream, and focusing solely on profitable assets.

The push has also seen the group confirm its exit from the North Sea, leaving the British energy giant without any petrochemical production in its home market for the first time in decades. It also sold its Gelsenkirchen refinery and retail business in Austria.

O’Neill said:

“We are not making the most of our potential. Our performance over the past few years has not met our own expectations, let alone those of our shareholders. 

“We have not delivered consistently; we have written off too much value; and our costs and liabilities are not resilient enough in a low price environment.”

The stock is up over 20% since the start of the year.

Middle East conflict spikes profits

Profits spiked in the second quarter as the group continued to capitalise on volatile oil prices caused by the conflict in the Middle East.

BP reported a surge in profits to $5.7bn (£4.2bn), a $2.5bn increase from the prior period.

This surpassed analyst expectations of $5.1bn.

The firm’s gas and low carbon energy arm reported profits of $1.6bn, up from $1.1bn the prior quarter.

Oil production and operations saw profit climb to $3.4bn from $1.7bn.

Mark Crouch, market analyst at eToro, said:

“Having retreated from its previous push into renewables, BP is accelerating asset sales, simplifying the business and directing more capital towards higher-return oil and gas operations.

If tensions across the Middle East persist or escalate further, energy prices could remain elevated, providing an additional tailwind for the sector. The key question for investors is whether BP can use this favourable backdrop to create lasting shareholder value long after today’s geopolitical uncertainty eventually fades.”

Disruption ahead

The firm anticipates production in the third quarter to range from 2,100 to 2,250 thousand barrels of oil equivalent per day (mboe/d), compared with the second quarter 2,201 mboe/d.

This has caused the group to drop its upstream production expectations for the year to 2,180 to 2,270 mboe/d, compared to last year’s 2,312 mboe/d.

BP pinned its outlook on the “continued disruption in the Middle East” and the likelihood of potential “weather events in the Gulf of America”.

The group expects income taxes paid in the quarter to be roughly $1bn higher, “mainly due to timing effects”.

O’Neill said: “We need to take a clear look at ourselves: assessing what needs to change, stopping what holds us back and building strength where it matters. We have to get fit to grow.”

Tyler Durden Wed, 08/05/2026 - 06:30

You'll Never Guess Which Nation Drinks The Most Tea Or Coffee

With a global market valued at more than $300 billion in 2026, tea is said to be the second most consumed hot beverage in the world.

As the United Nations notes, the tea industry provides "a major source of income and export earnings for some of the poorest countries and, thanks to its high labor requirements, generates numerous jobs, particularly in remote and economically disadvantaged areas."

Statista Consumer Insights surveyed 32 countries around the world to find out more about global tea drinking habits.

You will find more infographics at Statista

As Statista's Katharina Buchholz details below, the survey found that while tea was a popular choice for many adults, coffee is consumed by a higher share of people in almost every country included in the survey, except for Asian tea strongholds China, India and Japan.

However, the difference to the share of respondents consuming coffee was just 2-4 percent for China and Japan and 9 percent for India.

Coffee-loving nations, on the other hand, shun tea to a higher degree. This applies to Finland, famously a nation of coffee drinkers, where 74 percent said they drank coffee regularly and just 36 percent said the same about tea. But countries like this also exist in Asia, the continent most associated with tea. In the Philippines, 70 percent said they drank coffee and 31 percent said they drank tea on a regular basis. These numbers stood at 59 percent and 25 percent in South Korea.

In Western Europe and North America, nations typically see around 60 percent of regular coffee drinkers and around 40 percent of regular tea drinkers. In Latin American countries, this was closer to 70 percent and 50 percent, respectively. The share of tea drinkers is elevated in the United Kingdom at 56 percent, the Netherlands at 55 percent and Germany at 47 percent. In the United States, a comparatively low share of people said they drank coffee regularly (51 percent), which was surpassed by soft drinks (54 percent).

And so, to answer the headline question, the highest consumption of both tea and coffee was recorded in Gulf countries Saudi Arabia and the United Arab Emirates at around 70 percent for each beverage.

Tyler Durden Wed, 08/05/2026 - 05:45

New Signals Point To Another Possible Migrant Invasion Against Ceuta

The scenes from the Ceuta invasion were deeply alarming, as 60,000 predominantly military-aged men, many carrying no supplies, crossed from Morocco into the Spanish enclave. The invasion set off alarm bells across the West, reinforcing concerns that uncontrolled mass migration poses a major national security risk.

According to The Sun, there are new concerns that a second invasion of Ceuta could be "just days" away, as the outlet cites online posts warning it may be their [migrants] "last chance" to enter Europe.

Just kidding, this is the actual footage … pic.twitter.com/jYRpSWM24e

— Elon Musk (@elonmusk) July 31, 2026

The outlet continued:

Fears are also mounting convicted terrorists were among the tens of thousands of people who stormed the Spanish enclave last week, reports say.

. . .

But reports say the peninsula could see scenes of mayhem play out on the streets yet again, as plans are being made for another mass border crossing on August 15.

On social media, posts appear to be plotting another storming of the shores of Ceuta, with one message reading: "Everything will be seen that day."

Another appears to call for the creation of a WhatsApp group, saying: "Our appointment is on 15/08/2026."

The invasion prompted Italy to suspend Schengen arrangements with Spain and to secure its borders, while 22 EU leaders demanded "immediate action" to address the national security threat. Denmark's Mette Frederiksen, Italy's Giorgia Meloni, Germany's Friedrich Merz, and other European leaders warned:

"We cannot allow uncontrolled mass crossings, the instrumentalization of migration or other hybrid threats to create the perception that illegal entry into the European Union is possible."

Reports that emerged in recent days show that Spanish Prime Minister Pedro Sánchez's (unhinged socialist) claim that the migrants had been expelled from Ceuta may not have reflected the situation on the ground. Read the full report.

Years of open-border policies under Spain's socialist government may now be approaching a political breaking point. The invasion of military-aged men was so visible to the world in real time on X, making it increasingly difficult for lefty corporate media to reconstruct the narrative and gaslight the public into believing this was merely a humanitarian migration event. The images instead reinforced views of a coordinated border invasion and undercut the left-wing narrative framing such arrivals solely as poor migrants searching for milk and bread.

Related:

• Spain's Immigration Crisis: Ceuta & The Collapse Of Sánchez's Pro-Migration Experiment

We noted last week:

• Spain's Border Invasion Is An Optics Disaster For Open-Border Democrats

Hopefully, common sense can return to the West: secure borders. And, really, hold those accountable for nation-killing open border policies.

Tyler Durden Wed, 08/05/2026 - 05:45

France's €107 Billion Deficit Shock: The Next Euro Debt Crisis?

Submitted by Thomas Kolbe

Tuesday marked another low point for European fiscal stability. France, a cornerstone of the euro system, confirmed once again that it remains a leading candidate and potential trigger for a future euro financial crisis.

According to the French Ministry of Finance, the deficit of the French central government amounted to around €107 billion by the end of June. These are staggering figures – a deficit that is 14.4 percent higher than originally planned by the government.

Source

Unless the government builds a fiscal firewall and no economic miracle occurs, the central government deficit could rise to around six percent this year. Not included are the gaps in the social security system, municipalities and regions, which account for an additional significant share of France’s overall deficit. It is possible that the second-largest economy in the European Union will end the year with an overall government deficit of around eight percent.

All budget plans would therefore become obsolete. Last year, the government was already calculating with a deficit of five percent – a figure that, under the originally defined Maastricht criteria, should have triggered an excessive deficit procedure. However, the euro debt club has long abandoned any fiscal restraints.

The problem lies not only on the revenue side. While government revenues recently increased by around 3.7 percent, expenditures rose by 5.4 percent at the same time. The state is growing faster than the economic base that is supposed to finance it.

Despite tax increases and difficult negotiations over spending cuts, Prime Minister Sébastien Lecornu has failed to slow down his country’s debt spiral even remotely.

French fiscal policy can no longer be taken seriously. Forecasts from Paris now have the half-life of the French prime ministers who have failed in increasingly shorter intervals.

The spectacle France is presenting to the world will have consequences. The debt struggle of the Grande Nation no longer concerns France alone, but the entire euro system and the European Union.

It is becoming increasingly clear that European policy over recent years has contributed to a dramatic loss of economic dynamism and productivity. France is facing political paralysis, a president without popular support and the ongoing disintegration of a society that maintains one of the largest welfare states in the world, with a government spending ratio of 57 percent, in an attempt to cover its social fractures.

Cultural alien migration has a price, and sooner or later that price inevitably becomes visible in fiscal policy.

France is also following the German model and constructing its own state economy through debt in an attempt to overcome a never-ending productivity crisis. It is remarkable that this belief in the healing power of central planning can be found throughout the European Union. Has nobody learned the fundamental lessons of history?

The more capital is redirected from the productive sectors of the economy into the construction of a political economy, the poorer the population becomes. This is how socialism works.

We know this pattern from Germany: The state is effectively consuming itself. The greater the damage caused by an expanding state economy in the productive sectors of society, the higher the tax burden and inflationary pressures will ultimately become.

Following this logic, France has raised several taxes over the past twelve months. Prime Minister Sébastien Lecornu shifted additional burdens primarily onto companies and higher-income earners.

The special levy on large companies with revenues exceeding one billion euros was extended and is expected to generate around €7.3 billion in additional government revenue. In addition, an extended special tax on high incomes is expected to bring in around €650 million. Further measures complete the tax package. Overall, the additional revenues are intended to reduce the burden on the French budget by around €9 billion.

https://www.reuters.com/business/what-is-frances-2026-budget-2026-02-02/

Yet even this fiscal effort is completely out of proportion to the scale of the budget problem. Tax increases are merely treating the symptoms – they do not solve the structural crisis of the French welfare state.

The problems are similar to those in Germany. There are no serious efforts to resolve the migration crisis, no fundamental reform of social programs and no strategy to create new economic momentum through tax relief for the middle class.

France resembles a slow-motion car crash. Everyone sees the collision coming, yet nobody still has the strength to soften the impact.

What happens if the bond market lowers the thumb on France’s creditworthiness?

The rating agencies have already sent warning signals. Fitch downgraded France’s credit rating from AA− to A+ and pointed to the growing debt burden, political uncertainty and the lack of a sustainable path toward stabilizing public finances.

https://www.reuters.com/world/fitch-abaisse-dun-cran-la-note-de-la-france-2025-09-12/

We are witnessing the first signs of a new euro debt crisis emerging on the horizon. Looking back, we must recognize that politics found it easy for a long time to exploit the fiat credit money system and the ECB, integrated into the political process, in order to maintain the illusion of unlimited political feasibility.

Regardless of where in the EU: Politics continues to uphold the illusion that the welfare system has no limits as long as the flow of credit does not dry up.

Reassured and lulled into a false sense of security, nobody questions the political strategy that led to the economic disaster. Yet these quiet times may soon come to an end as interest rates on bond markets continue to rise.

* * * 

About the author Thomas Kolbe, a German graduate economist, has worked for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Wed, 08/05/2026 - 05:00

How Economic Power Has Shifted Over The Past 200 Years

Over the last 200 years, economic leadership has shifted from China to the British Empire, then to the United States, and increasingly back toward Asia.

This streamgraph, via Visual Capitalist's Gabriel Cohen, tracks how the share of global gross domestic product (GDP) held by major economies changed from 1820 to 2025. The visualization incorporates the latest available data from the Maddison Project Database, the COLDAT Colonial Dates Dataset, and the IMF’s World Economic Outlook.

All GDP figures are adjusted for purchasing power parity (PPP), accounting for differences in living costs and production across countries.

The table below shows how each economy’s share of world GDP changed across two centuries:

Economy Share of World GDP (%) 1820 1855 1890 1925 1960 1995 2025 🇨🇳 China 28.6% 21.1% 12.7% 8.9% 5.3% 9.5% 21.8% 🇺🇸 U.S. 2.3% 7.0% 14.6% 23.9% 24.5% 20.7% 14.7% 🇪🇺 EU — — — — — 17.0% 12.3% 🇮🇳 India — — — — 3.9% 4.3% 9.0% 🇯🇵 Japan 3.5% 2.9% 2.6% 3.8% 4.5% 7.9% 3.4% 🇷🇺 Russia / USSR 9.2% 7.1% 5.3% 5.2% 10.1% 2.5% 2.9% 🇬🇧 British Empire / Britain 23.1% 22.6% 20.7% 14.7% 6.3% 3.2% 1.9% 🇫🇷 France 4.8% 5.8% 5.2% 5.0% 4.1% — — 🇩🇪 Germany 4.3% 4.8% 6.4% 6.6% 6.7% — — Pax Britannica and the European Years

Britain was the first country in the world to industrialize. As a result, the British Empire became the world’s preeminent superpower during the 19th century, an era sometimes known as Pax Britannica because of the relative absence of conflict between the major powers.

In 1845, the British Empire, on which the sun famously “never set,” contributed nearly one-quarter (23.8%) of global GDP. India was the empire’s most economically significant possession before gaining independence in 1947.

The table below shows each economy’s peak share of world GDP, the year it reached that level, and its share in 2025:

Economy Peak Share (%) Peak Year 2025 Share (%) 🇺🇸 U.S. 29.7% 1944 14.7% 🇨🇳 China 28.6% 1820 21.8% 🇬🇧 British Empire / Britain 23.8% 1845 1.9% 🇪🇺 EU 17.9% 2007 12.3% 🇷🇺 Russia / USSR 10.2% 1956 2.9% 🇮🇳 India 9.0% 2025 9.0% 🇩🇪 Germany 8.8% 1913   🇯🇵 Japan 8.6% 1990 3.4% 🇫🇷 France 6.6% 1858  

The rest of Europe’s fortunes followed a similar trajectory. The French Empire reached its peak share in 1858, at 6.6%, while Germany peaked at 8.8% in 1913, on the eve of the First World War.

Following decades of war and declining influence on the world stage, several European economies joined together in the European Union. The bloc contributed 17.9% of global GDP in 2007, ahead of the global financial crisis, though its share later declined and was further reduced by the UK’s withdrawal in 2020.

The Fall of Empire and the Rise of the U.S.

If the 19th century was the British century, the 20th was the American century. Like Britain before it, the U.S. became the world’s largest exporter for a time.

World War II marked a turning point in global economic leadership. By 1944, the U.S. accounted for 29.7% of world GDP, the highest share reached by any economy in the modern period covered by this dataset.

American economic dominance was supported by high-value industries and the country’s central role in global finance, manufacturing, and trade.

The U.S. also continues to dominate rankings of the world’s largest and most profitable companies today. It also is still the undisputed economic powerhouse in nominal GDP terms.

The Asian Century

For centuries, China was a center of the global economy. Political instability and its failure to keep pace with European industrialization contributed to a long decline in its share of world GDP during the 19th and 20th centuries.

Beginning in the late 20th century, economic reforms and China’s emergence as a global manufacturing hub helped it regain lost ground. By 2025, China accounted for 21.8% of world GDP, or more than one-fifth of the total.

The full dataset below shows each economy’s share of world GDP for every year from 1820 to 2025:

Year Share of World GDP (%) 🇨🇳 China 🇺🇸 U.S. 🇪🇺 EU 🇮🇳 India 🇯🇵 Japan 🇷🇺 Russia / USSR 🇬🇧 British Empire / Britain 🇫🇷 France 🇩🇪 Germany 1820 28.6% 2.3% — — 3.5% 9.2% 23.1% 4.8% 4.3% 1821 28.4% 2.4% — — 3.5% 9.2% 23.0% 5.2% 4.4% 1822 28.2% 2.5% — — 3.4% 9.2% 23.0% 5.0% 4.4% 1823 28.1% 2.5% — — 3.4% 9.2% 23.0% 5.1% 4.4% 1824 27.9% 2.6% — — 3.4% 9.2% 23.2% 5.2% 4.6% 1825 27.7% 2.7% — — 3.4% 9% 23.2% 5.0% 4.6% 1826 27.6% 2.8% — — 3.4% 9% 22.8% 5.1% 4.7% 1827 27.4% 2.9% — — 3.4% 9% 23.1% 5.0% 4.6% 1828 27.2% 2.9% — — 3.3% 9% 23.0% 4.9% 4.5% 1829 27.0% 2.9% — — 3.3% 9% 22.9% 5.0% 4.5% 1830 26.9% 3.1% — — 3.3% 8.7% 23.1% 4.9% 4.5% 1831 26.6% 3.4% — — 3.3% 8.7% 23.0% 5.0% 4.4% 1832 26.4% 3.6% — — 3.3% 8.7% 23.1% 5.4% 4.5% 1833 26.2% 3.8% — — 3.3% 8.7% 23.0% 5.2% 4.7% 1834 26.0% 3.7% — — 3.2% 8.7% 23.0% 5.2% 4.7% 1835 25.8% 3.9% — — 3.2% 8.4% 23.4% 5.4% 4.7% 1836 25.6% 4.0% — — 3.2% 8.4% 23.4% 5.2% 4.7% 1837 25.4% 4.0% — — 3.2% 8.4% 23.2% 5.3% 4.7% 1838 25.2% 4.0% — — 3.2% 8.4% 23.4% 5.5% 4.6% 1839 25.0% 4.2% — — 3.2% 8.4% 23.1% 5.3% 4.7% 1840 24.8% 4.1% — — 3.2% 8.3% 23.4% 5.6% 4.8% 1841 24.6% 4.1% — — 3.1% 8.3% 23.1% 5.7% 4.9% 1842 24.4% 4.2% — — 3.1% 8.3% 22.8% 5.5% 4.8% 1843 24.2% 4.3% — — 3.1% 8.3% 23.0% 5.8% 4.7% 1844 24.0% 4.7% — — 3.1% 8.3% 23.6% 5.9% 4.7% 1845 23.8% 4.9% — — 3.1% 8.2% 23.8% 5.7% 4.8% 1846 23.6% 5.0% — — 3.1% 8.2% 23.6% 5.7% 4.6% 1847 23.4% 5.2% — — 3.0% 8.2% 23.3% 6.2% 4.6% 1848 23.2% 5.5% — — 3.0% 8.2% 23.3% 5.8% 4.8% 1849 23.0% 5.4% — — 3.0% 8.2% 23.2% 5.9% 5.0% 1850 22.9% 5.5% — — 3.0% 7.7% 22.9% 6.0% 5.0% 1851 22.5% 5.9% — — 3.0% 7.7% 22.9% 5.8% 4.9% 1852 22.1% 6.3% — — 3.0% 7.7% 23.0% 6.1% 4.9% 1853 21.8% 6.9% — — 2.9% 7.7% 23.0% 5.8% 4.8% 1854 21.4% 7.0% — — 2.9% 7.7% 23.0% 6.0% 4.9% 1855 21.1% 7.0% — — 2.9% 7.1% 22.6% 5.8% 4.8% 1856 20.8% 7.3% — — 2.9% 7.1% 22.9% 6.0% 5.1% 1857 20.4% 7.3% — — 2.9% 7.1% 22.7% 6.3% 5.3% 1858 20.1% 7.4% — — 2.9% 7.1% 22.2% 6.6% 5.2% 1859 19.8% 7.7% — — 2.9% 7.1% 22.4% 6.1% 5.2% 1860 19.5% 8.0% — — 2.9% 7.1% 22.3% 6.5% 5.4% 1861 19.2% 8.0% — — 2.9% 6.8% 22.0% 6.0% 5.2% 1862 19.0% 8.3% — — 2.9% 6.1% 21.3% 6.4% 5.4% 1863 18.8% 9.0% — — 2.8% 7.3% 21.8% 6.6% 5.7% 1864 18.6% 9.4% — — 2.8% 6.0% 21.8% 6.6% 5.8% 1865 18.3% 9.0% — — 2.8% 5.4% 21.7% 6.3% 5.8% 1866 18.1% 9.1% — — 2.8% 6.6% 21.7% 6.3% 5.8% 1867 17.9% 9.5% — — 2.8% 5.6% 21.6% 5.8% 5.7% 1868 17.7% 9.7% — — 2.8% 5.7% 21.8% 6.3% 6.0% 1869 17.4% 10.0% — — 2.8% 5.6% 21.6% 6.4% 6.0% 1870 17.2% 9.8% — — 2.8% 7.2% 21.8% 5.8% 5.9% 1871 16.9% 10.1% — — 2.8% 5.9% 21.4% 5.7% 5.7% 1872 16.6% 10.3% — — 2.7% 6.3% 21.2% 6.1% 6.0% 1873 16.3% 10.6% — — 2.7% 6.3% 21.1% 5.6% 6.1% 1874 16.0% 10.3% — — 2.7% 7.6% 20.9% 6.2% 6.5% 1875 15.7% 10.7% — — 2.6% 5.8% 20.9% 6.2% 6.4% 1876 15.4% 10.6% — — 2.6% 5.8% 20.6% 5.6% 6.2% 1877 15.1% 10.7% — — 2.6% 7.1% 20.4% 5.8% 6.1% 1878 14.8% 11.0% — — 2.6% 7.3% 20.1% 5.6% 6.2% 1879 14.6% 12.1% — — 2.6% 6.1% 20.0% 5.2% 6.0% 1880 14.3% 13.3% — — 2.6% 5.6% 20.2% 5.5% 5.8% 1881 14.0% 13.5% — — 2.6% 7.1% 20.3% 5.7% 5.8% 1882 13.8% 14.1% — — 2.6% 6.1% 20.7% 5.8% 5.8% 1883 13.5% 14.1% — — 2.5% 6.3% 20.6% 5.7% 6.0% 1884 13.3% 14.1% — — 2.5% 6.2% 20.4% 5.5% 6.0% 1885 13.1% 13.9% — — 2.5% 5.5% 20.2% 5.3% 6.1% 1886 12.8% 14.1% — — 2.6% 5.2% 19.8% 5.3% 6.0% 1887 12.6% 14.4% — — 2.6% 6.1% 20.4% 5.2% 6.1% 1888 12.6% 14.1% — — 2.4% 5.8% 20.6% 5.2% 6.2% 1889 12.7% 14.7% — — 2.5% 5.4% 20.5% 5.2% 6.3% 1890 12.7% 14.6% — — 2.6% 5.3% 20.7% 5.2% 6.4% 1891 12.5% 14.9% — — 2.4% 4.8% 19.6% 5.3% 6.2% 1892 12.3% 16.1% — — 2.5% 5.2% 19.6% 5.3% 6.4% 1893 12.2% 15.0% — — 2.5% 5.9% 19.4% 5.3% 6.6% 1894 12.0% 14.3% — — 2.7% 6.6% 19.8% 5.4% 6.6% 1895 11.9% 15.7% — — 2.7% 6.1% 19.5% 5.2% 6.8% 1896 11.7% 15.1% — — 2.5% 6.7% 18.9% 5.3% 6.9% 1897 11.6% 16.2% — — 2.5% 6.5% 20.1% 5.1% 7.0% 1898 11.4% 16.3% — — 2.9% 6.6% 20.3% 5.3% 7.1% 1899 11.2% 17.4% — — 2.7% 7.0% 19.7% 5.5% 7.2% 1900 11.1% 17.5% — — 2.7% 6.8% 19.6% 5.3% 7.4% 1901 10.9% 19.2% — — 2.7% 7.0% 19.5% 5.1% 7.1% 1902 10.7% 19.1% — — 2.5% 7.6% 20.2% 5.0% 7.2% 1903 10.6% 19.7% — — 2.8% 7.1% 20.1% 5.0% 7.4% 1904 10.4% 19.1% — — 2.7% 7.8% 19.9% 5.0% 7.6% 1905 10.2% 20.2% — — 2.6% 6.9% 19.8% 5.0% 7.7% 1906 10.0% 22.2% — — 2.9% 6.6% 20.2% 5.0% 7.8% 1907 9.9% 22.2% — — 2.9% 6.4% 19.7% 5.1% 8.0% 1908 9.7% 20.1% — — 2.9% 7.0% 19.1% 5.0% 8.0% 1909 9.5% 22.0% — — 2.8% 7.2% 20.1% 5.1% 8.0% 1910 9.4% 21.7% — — 2.8% 7.8% 20.2% 4.7% 8.2% 1911 9.3% 22.0% — — 2.9% 7.2% 20.2% 5.1% 8.3% 1912 9.6% 22.5% — — 2.9% 7.8% 20.1% 5.5% 8.5% 1913 10.0% 22.9% — — 2.9% 8.2% 20.1% 5.3% 8.8% 1914 9.9% 20.6% — — 2.8% 7.7% 20.2% 4.9% 7.3% 1915 9.9% 20.8% — — 3.0% 7.8% 20.3% 4.7% 6.9% 1916 9.9% 23.1% — — 3.4% 6.8% 20.5% 4.9% 6.8% 1917 9.8% 22.1% — — 3.5% 5.8% 20.1% 4.1% 6.7% 1918 9.8% 23.5% — — 3.5% 3.5% 18.8% 3.1% 6.6% 1919 9.8% 23.2% — — 3.8% 3.0% 16.3% 3.6% 5.3% 1920 9.7% 22.5% — — 3.4% 2.9% 14.5% 4.2% 5.6% 1921 9.5% 21.4% — — 3.7% 2.6% 14.1% 3.9% 6.1% 1922 9.4% 21.9% — — 3.7% 2.9% 14.7% 4.5% 6.5% 1923 9.2% 24.1% — — 3.6% 3.3% 14.3% 4.6% 5.3% 1924 9.0% 24.1% — — 3.7% 4.2% 14.6% 5.1% 6.0% 1925 8.9% 23.9% — — 3.8% 5.2% 14.7% 5.0% 6.6% 1926 8.7% 24.8% — — 3.7% 5.8% 14.4% 5.0% 6.6% 1927 8.5% 24.3% — — 3.6% 6.1% 14.6% 4.8% 7.1% 1928 8.4% 23.9% — — 3.8% 6.4% 14.5% 5.0% 7.2% 1929 8.2% 24.6% — — 3.9% 6.4% 14.7% 5.2% 7.0% 1930 8.2% 21.8% — — 3.5% 6.6% 14.4% 5.0% 6.8% 1931 8.0% 19.9% — — 3.5% 6.6% 13.7% 4.5% 6.1% 1932 8.1% 16.5% — — 3.7% 6.4% 13.4% 4.2% 5.5% 1933 7.1% 15.6% — — 3.9% 6.5% 13.2% 4.3% 5.8% 1934 7.1% 16.5% — — 3.8% 7.0% 13.4% 4.2% 6.1% 1935 7.5% 18.2% — — 3.9% 7.8% 12.9% 4.0% 6.4% 1936 7.8% 19.5% — — 4.0% 8.3% 13.2% 4.1% 6.8% 1937 7.4% 20.5% — — 4.1% 8.9% 13.0% 4.2% 7.1% 1938 7.0% 18.8% — — 4.2% 8.8% 12.8% 4.1% 7.5% 1939 6.8% 19.7% — — 4.7% 9.2% 12.7% 4.3% 8.0% 1940 6.5% 20.8% — — 4.7% 8.8% 13.1% 3.5% 7.9% 1941 6.4% 23.5% — — 4.8% 8.3% 13.7% 2.7% 8.3% 1942 6.2% 25.8% — — 4.8% 7.9% 13.8% 2.4% 8.3% 1943 6.1% 27.9% — — 4.7% 7.6% 14.0% 2.3% 8.4% 1944 6.0% 29.7% — — 4.7% 7.2% 13.5% 1.9% 8.5% 1945 5.8% 28.8% — — 3.5% 6.8% 12.9% 2.0% 6.0% 1946 5.7% 25.9% — — 2.6% 6.5% 12.2% 3.0% 2.8% 1947 5.5% 25.2% — 4.2% 2.6% 7.2% 7.0% 3.3% 3.1% 1948 5.4% 26.2% — 4.2% 2.8% 8.1% 8.0% 3.5% 3.7% 1949 5.3% 25.4% — 4.2% 2.8% 8.9% 8.2% 3.9% 4.2% 1950 5.2% 27.4% — 4.2% 3.0% 9.6% 8.1% 4.2% 5.0% 1951 6.0% 28.2% — 4.1% 3.3% 9.2% 8.0% 4.2% 5.2% 1952 6.4% 27.9% — 4.0% 3.5% 9.4% 7.7% 4.1% 5.4% 1953 6.9% 27.9% — 4.1% 3.6% 9.4% 7.6% 4.1% 5.6% 1954 6.2% 26.5% — 4.1% 3.6% 9.4% 7.7% 4.1% 5.8% 1955 6.4% 27.1% — 4.0% 3.7% 9.7% 7.6% 4.1% 6.1% 1956 6.7% 26.4% — 4.0% 3.8% 10.2% 7.3% 4.1% 6.2% 1957 6.5% 25.7% — 3.8% 3.9% 9.9% 7.0% 4.2% 6.3% 1958 6.3% 24.3% — 3.9% 4.0% 10.2% 6.7% 4.1% 6.3% 1959 5.8% 25.0% — 3.8% 4.2% 9.6% 6.7% 4.0% 6.5% 1960 5.3% 24.5% — 3.9% 4.5% 10.1% 6.3% 4.1% 6.7% 1961 4.1% 23.8% — 3.8% 4.8% 10.1% 6.1% 4.1% 6.6% 1962 4.2% 24.0% — 3.7% 5.0% 9.9% 5.7% 4.2% 6.6% 1963 4.6% 23.9% — 3.7% 5.1% 9.2% 5.3% 4.2% 6.4% 1964 4.9% 24.0% — 3.8% 5.4% 9.9% 5.3% 4.3% 6.5% 1965 5.2% 24.3% — 3.5% 5.5% 9.9% 5.1% 4.2% 6.5% 1966 5.2% 24.6% — 3.3% 5.8% 9.9% 5.0% 4.2% 6.3% 1967 4.9% 24.0% — 3.4% 6.1% 9.9% 4.8% 4.2% 6.0% 1968 4.6% 23.9% — 3.4% 6.5% 9.9% 4.7% 4.2% 6.1% 1969 4.8% 23.5% — 3.4% 7.0% 9.6% 4.6% 4.3% 6.2% 1970 5.2% 22.4% — 3.4% 7.4% 9.8% 4.5% 4.3% 6.1% 1971 5.3% 22.2% — 3.3% 7.4% 9.7% 4.3% 4.3% 6.1% 1972 5.2% 22.6% — 3.2% 7.8% 9.4% 4.3% 4.4% 6.1% 1973 5.4% 22.9% — 3.2% 8.1% 9.8% 4.4% 4.4% 6.1% 1974 5.4% 22.0% — 3.1% 7.7% 9.7% 4.2% 4.4% 6.0% 1975 5.5% 21.2% — 3.3% 7.6% 9.4% 4.1% 4.2% 5.7% 1976 5.1% 21.4% — 3.2% 7.6% 9.5% 4.0% 4.2% 5.8% 1977 5.2% 21.6% — 3.3% 7.7% 9.3% 3.9% 4.2% 5.7% 1978 5.6% 22.0% — 3.4% 7.8% 9.2% 3.9% 4.2% 5.6% 1979 5.8% 21.9% — 3.1% 7.9% 8.8% 3.9% 4.2% 5.7% 1980 5.9% 21.1% — 3.2% 7.8% 8.5% 3.6% 4.1% 5.5% 1981 5.9% 21.0% — 3.3% 7.8% 8.3% 3.5% 4.0% 5.4% 1982 6.3% 20.0% — 3.3% 7.8% 8.3% 3.4% 4.0% 5.2% 1983 6.5% 20.2% — 3.4% 7.8% 8.3% 3.5% 3.9% 5.1% 1984 7.0% 21.1% — 3.5% 7.8% 8.2% 3.4% 3.8% 5.1% 1985 7.4% 21.2% — 3.5% 8.0% 8.0% 3.5% 3.8% 5.0% 1986 7.7% 21.3% — 3.5% 8.0% 8.1% 3.5% 3.8% 5.0% 1987 8.1% 21.4% — 3.6% 8.0% 8.0% 3.5% 3.7% 4.9% 1988 8.3% 21.7% — 3.9% 8.3% 7.9% 3.6% 3.8% 5.0% 1989 8.1% 21.8% — 4.0% 8.4% 7.8% 3.6% 3.8% 5.0% 1990 7.9% 21.5% — 4.1% 8.6% 7.4% 3.5% 3.8% 4.7% 1991 7.9% 20.7% — 4.0% 8.6% 6.8% 3.4% 3.7% 4.8% 1992 8.2% 20.8% — 4.0% 8.4% 3.4% 3.2% 3.7% 4.8% 1993 8.7% 20.6% 15.8% 4.1% 8.1% 3.1% 3.2% — — 1994 9.0% 20.8% 15.8% 4.2% 7.9% 2.6% 3.2% — — 1995 9.5% 20.7% 17.0% 4.3% 7.9% 2.5% 3.2% — — 1996 9.8% 20.8% 16.8% 4.5% 7.8% 2.4% 3.2% — — 1997 9.8% 21.0% 16.8% 4.5% 7.7% 2.4% 3.2% — — 1998 9.5% 21.2% 16.9% 4.6% 7.3% 2.2% 3.1% — — 1999 9.6% 21.5% 16.9% 4.7% 7.1% 2.4% 3.1% — — 2000 9.9% 21.6% 17.1% 4.7% 7.0% 2.6% 3.1% — — 2001 10.2% 21.0% 16.9% 4.7% 6.8% 2.7% 3.1% — — 2002 10.5% 20.5% 16.5% 4.7% 6.5% 2.7% 3.0% — — 2003 10.7% 20.2% 16.1% 4.8% 6.3% 2.9% 3.0% — — 2004 11.1% 20.2% 17.6% 5.0% 6.2% 3.0% 3.0% — — 2005 11.7% 20.0% 17.4% 5.1% 6.1% 3.2% 3.0% — — 2006 12.4% 19.7% 17.4% 5.3% 5.9% 3.4% 2.9% — — 2007 13.0% 19.3% 17.9% 5.5% 5.8% 3.6% 2.9% — — 2008 13.0% 18.5% 17.5% 5.6% 5.5% 3.7% 2.7% — — 2009 13.4% 17.2% 16.2% 5.8% 5.0% 3.4% 2.5% — — 2010 14.3% 17.0% 16.0% 6.0% 5.0% 3.5% 2.4% — — 2011 14.7% 16.6% 15.8% 6.2% 4.8% 3.6% 2.4% — — 2012 15.3% 16.4% 15.2% 6.3% 4.7% 3.6% 2.3% — — 2013 16.0% 16.2% 14.7% 6.4% 4.6% 3.5% 2.3% — — 2014 16.6% 16.0% 14.5% 6.7% 4.5% 3.4% 2.3% — — 2015 17.1% 15.8% 14.3% 6.9% 4.4% 3.2% 2.3% — — 2016 17.7% 15.6% 14.1% 7.3% 4.3% 3.1% 2.2% — — 2017 18.2% 15.4% 14.0% 7.5% 4.2% 3.1% 2.2% — — 2018 18.8% 15.3% 13.8% 7.7% 4.1% 3.0% 2.2% — — 2019 19.4% 15.2% 13.6% 7.9% 4.0% 3.0% 2.1% — — 2020 20.4% 15.2% 13.2% 7.5% 3.9% 3.0% 2.0% — — 2021 20.8% 15.2% 13.1% 7.8% 3.8% 3.0% 2.0% — — 2022 20.7% 15.0% 13.1% 8.1% 3.7% 2.9% 2.0% — — 2023 21.2% 14.9% 12.8% 8.4% 3.6% 2.9% 1.9% — — 2024 21.5% 14.8% 12.5% 8.7% 3.5% 2.9% 1.9% — — 2025 21.8% 14.7% 12.3% 9.0% 3.4% 2.9% 1.9% — —

Together, China and India accounted for 30.8% of global GDP in 2025. Their large populations and lower production costs give both countries greater weight when output is measured using purchasing power parity.

Whether this shift continues will depend partly on how China addresses demographic pressures similar to those facing Japan and the European Union, as well as broader challenges related to productivity and economic growth.

To see how the world’s major Western industrialized economies are losing GDP share, read The G7’s Share of Global GDP is Shrinking on Voronoi, the new app from Visual Capitalist.

Tyler Durden Wed, 08/05/2026 - 04:15

US Expands Strategic Foothold On Somalia's Coast As Yemen Conflict Simmers

Authored by Dave DeCamp via AntiWar.com,

A US military delegation visited the local government in Somalia's northeastern Puntland region on Sunday and signed a deal to expand the US military presence in Bosaso, a port city on the Gulf of Aden, according to the Puntland government.

Saeed Abdullahi Deni, the president of Puntland State, held talks with a delegation led by Maj. Gen. Claude Tudor, the commander of US Special Operations Command Africa.

Maj. Gen. Tudor and President Deni. Source: Puntland government image

"Puntland and the United States also signed a new agreement to expand their cooperation. Under the agreement, the United States will expand its military base in Bosaso to improve operations against terrorism and to help protect maritime security," the Puntland government said in a statement on the meeting.

The US has been operating from a UAE-built airbase in Bosaso, which the UAE has reportedly used to arm the RSF in Sudan.

An expanded US military presence in Bosaso could be used as a launchpad for operations against Yemen's Ansar Allah, also known as the Houthis, and the deal comes as Ansar Allah is enforcing a new maritime blockade on Saudi Arabia’s Red Sea ports, which began after Saudi strikes on Yemen’s Sanaa International Airpoirt, attacks that reignited the conflict that was in a state of ceasefire since 2022.

Tudor visited Puntland a day after meeting with officials in Somaliland, a de facto independent state within Somalia’s internationally recognized borders.

It’s unclear if any deals were signed in that meeting, but Israel recently became the first country to recognize Somaliland as an independent country and is seeking to establish a military and intelligence presence for operations against Yemen.

According to the Somali Guardian, the US-Puntland deal bypassed the US-backed federal government in Mogadishu, which has been at odds with Puntland amid a political crisis sparked by changes to the constitution made by Somali President Hassan Sheik Mohamud. Puntland withdrew from the federal system in 2024, and this year clashes have occurred between forces loyal to the federal government and Puntland security forces.

The US has continued to back the federal government with airstrikes against al-Shabaab, and it has also been engaged in an air campaign against an ISIS affiliate in Puntland, where it backs local Puntland forces.

via BBC

President Trump has overseen a major escalation in Somalia, launching at least 124 airstrikes in 2025, a record number. The US has launched at least 77 airstrikes in Somalia this year, though the war receives virtually no media coverage in the US.

Tyler Durden Wed, 08/05/2026 - 03:30

Which Countries Think They're On The Right Track?

Public confidence in national direction varies dramatically around the world. Respondents in several Asian countries are broadly optimistic, while majorities across much of Europe and the Americas believe their countries are on the wrong track.

This graphic, via Visual Capitalist's Gabriel Cohen, ranks 30 countries by the percentage of adults ages 16 to 74 who believe their country is moving in the right or wrong direction.

The visualization uses 2026 survey data from Ipsos Global Opinion Polls and covers 25,709 respondents.

Asian Optimism in 2026

Asian countries dominate the top of the ranking, accounting for six of the seven countries where a majority of respondents believe their country is on the right track.

Singapore leads at 86%, followed by Malaysia at 74% and India at 69%. Indonesia and Thailand are tied at 62%, while South Korea stands at 58%.

This table ranks all 30 countries:

CountryApproval of Country Direction (%)Disapproval of Country Direction (%) 🇸🇬 Singapore8614 🇲🇾 Malaysia7426 🇮🇳 India6931 🇹🇭 Thailand6238 🇮🇩 Indonesia6238 🇰🇷 S. Korea5842 🇦🇷 Argentina5545 🇨🇱 Chile4852 🇨🇴 Colombia4654 🇨🇦 Canada4555 🇦🇺 Australia4456 🇵🇱 Poland4357 🇮🇪 Ireland4258 🇯🇵 Japan4159 🇺🇸 U.S.4060 🇮🇱 Israel3664 🇲🇽 Mexico3664 🇧🇷 Brazil3466 🇳🇱 Netherlands3268 🇸🇪 Sweden3169 🇪🇸 Spain3169 🇮🇹 Italy3169 🇧🇪 Belgium3070 🇹🇷 Türkiye2872 🇿🇦 South Africa2377 🇭🇺 Hungary2377 🇩🇪 Germany2377 🇬🇧 Great Britain2179 🇵🇪 Peru1585 🇫🇷 France1090 🌐 World4159

Economic momentum may help explain some of this confidence. The AI boom is supporting major South Korean companies such as Samsung and SK Hynix, while India and Indonesia remain two of the world’s largest emerging markets.

Japan is a notable exception to the broader regional pattern. Following decades of economic stagnation, 41% of Japanese respondents believe their country is on the right track, matching the global average.

Pessimism Outside Asia

Outside Asia, most countries surveyed across Europe, the Americas, and Africa report greater pessimism than optimism.

In the United States, 40% of respondents approve of their country’s direction. Israel and Mexico are tied at 36%, while 34% of Brazilians believe their country is on the right track ahead of national elections in October 2026.

Türkiye stands at 28%, while South Africa is lower at 23%. In Peru, which has had nine presidents in a decade, 85% of respondents believe their country is on the wrong track.

Europe’s Pessimistic Outlook

France ranks last overall, with only one in 10 respondents saying the country is headed in the right direction.

Several of its European neighbors also rank near the bottom. In Great Britain, which has had multiple prime ministers since the 2016 Brexit vote, 79% of respondents believe the country is on the wrong track.

Germany also ranks near the bottom, with just 23% of respondents saying the country is moving in the right direction. Economic weakness and job losses may be contributing to the country’s broader social and political unease.

If you enjoyed today’s post, check out Visualized: Approval Rating of Global Leaders in 2026 on Voronoi.

Tyler Durden Wed, 08/05/2026 - 02:45

Half Of Foreign Welfare Recipients In Spain Are Moroccan

Via Remix News,

Nearly half of all foreign nationals receiving Spain’s Minimum Living Income (IMV) are Moroccan, according to previously unpublished figures obtained by The Objective through a transparency request.

The National Social Security Institute recorded 139,446 foreign recipients of the benefit, including 69,517 Moroccan nationals.

Foreigners therefore account for approximately half of the nearly 280,000 registered recipients, while Moroccans represent almost 50 percent of the foreign total.

The figures provide the first official nationality-by-nationality breakdown of foreign IMV recipients.

Public statistics had previously distinguished only between Spanish and foreign claimants without identifying their countries of origin.

Romanians formed the second-largest foreign group, with 15,262 recipients, followed by Ukrainians with 4,612.

Colombians accounted for 3,549 recipients, Algerians for 3,362, Italians for 3,043, and Bulgarians for 2,826.

Other recipients included Portuguese, Pakistani, Venezuelan, Brazilian, and Nigerian nationals. More than 100 nationalities were represented overall, alongside 215 people categorized under “other nationalities” and 175 stateless recipients.

The data counts only the registered recipient in each household, rather than every family member supported by the payment. The actual number of people benefiting from the program is therefore higher.

The totals also exclude the Basque Country and Navarre, which administer the Minimum Living Income independently under their special fiscal arrangements.

Social Security data also indicates that around 70 percent of Moroccan women of working age do not formally contribute to Spain’s employment system, reflecting particularly low labor-force participation among that group.

The publication of the figures comes at a politically sensitive time, given the much-reported migrant influx from the Arab country into the Spanish enclave of Ceuta.

Over 50,000 Moroccans are estimated to have entered the autonomous city illegally within the past week, and the number to have since been returned is heavily disputed.

Read more here...

Tyler Durden Wed, 08/05/2026 - 02:00