Zero Rss

Some College Students Are Testing At The Level Of 10-Year-Olds

Via Futurism,

Are you smarter than a 4th grader?

Gone are the days of university freshmen reading classical philosophers like Plato or contemporary pedagogues like Ta-Nehisi Coates. These days, incoming college students are lucky if they can get through Judy Blume’s “Tales of a Fourth Grade Nothing.”

According to a new “Survey of Adult Skills” conducted by the Organization for Economic Co-operation and Development - a forum for 38 high-income, predominantly Western countries - a not insignificant number of adult students enrolled in higher education are now reading and doing math at a level which, in a more functional society, would be alarming for a middle schooler.

The survey, first spotted by the Economist, tested around 160,000 people of all ages, across all 38 member states. It found that across all OECD member countries, a full 8 percent of college students are reading at the level of a ten-year-old, if not worse. While countries like Germany and France rang in at under 5 percent, countries like Poland, Israel, and the United States blew the curve at 21, 20, and 14 percent, respectively.

The numbers aren’t much better when it comes to math.

Across OECD countries, 9 percent of college students do math at or below a ten-year-old level. In Italy, the US, and Slovakia, that figure jumps to over 15 percent — only outdone by Israel, where roughly 21 percent of college students were underachieving at the same low benchmark.

It seems there are numerous compounding explanations for these test results: pandemic-era learning gaps leading to lower levels of preparation, declining college enrollment forcing schools to lower admissions standards, and lower levels of public funding for education, to name a few.

The results also coincide with the explosion of large language models like ChatGPT, which by many accounts have carved out a new floor for academic failure in both K-12 and college-level education.

While there’s no denying how complicated the issue is, there is evidence that removing technology from classrooms altogether could offer an immediate boost.

In one classroom in Minneapolis, for example, a literature and English teacher banned phones and laptops, requiring all coursework to be done on pencil and paper.

As the school-year started in September, just 46 percent of the students involved said they felt confident about their reading skills. A few months later in February, that number stood at 95 percent.

Though it’s just one classroom, something is clearly off the rails in the education systems of the richest countries of the world — and the longer it goes unaddressed, the more students will be pushed into the world with the reading skills of 4th graders.

Tyler Durden Wed, 07/08/2026 - 17:00

Socialism Is Targeting The Foundations That Made America Great

Authored by Victor Davis Hanson via The Epoch Times,

This is a lightly edited transcript of a July 6 segment of the Victor Davis Hanson: In His Own Words podcast.

One question that came up constantly during this 250th anniversary Fourth of July celebration was whether we were gonna make it another 250 years, 500 years. We could be longer than the Roman Republic. Longer than the Roman Empire.

Democratic Socialists of America march in downtown Berkeley, Calif., on Aug. 5, 2018. Amy Osborne/AFP/Getty Images

And to answer that question, you have to know what allowed us to get this far, and for those who don't like us, what they would like to do to stop us.

And it turns out that the reasons that we survived 250 years and the reasons that we might survive another 250 years are precisely the areas where our critics would wish us to fail, or who are actively trying to see that we fail.

Take the first one, our Constitution. What's brilliant about the American Constitution is its federalism.

It outlines all the duties and prerogatives of the federal government, and then it says anything that is not relegated to the federal government is up to the states, and that's the majority of human experiences. It doesn't mean the states can fight one another or pass laws against one another or pass laws against the federal government.

The federal government has ultimate authority, but this federalism means that if California wants to tax 13.3 percent and Florida wants to tax 0 percent, then maybe 300,000 people a year will go to Florida and still enjoy the American experience, and vice versa.

You can go to any state in the country and what it really means is you're having 50 separate experiments.

You're all united by the federal government and the checks and balances of the Constitution and the Bill of Rights. But you have 50 different interpretations of them based on local and regional concerns, and that gives Americans a lot of choice, and that means when you're disaffected and you're angry at your lot in life, you have 49 other choices, and it's been a wonderful way of easing tensions.

The second is that we have been the beneficiary of legal immigration. We take more immigrants than any place in the world, and people have remarked that as we speak, the people who created Google, for example, or Elon Musk, were all legal immigrants, and they came to the United States because this is the only place in the world where you would have a free market economy, a protection of private wealth, and an encouragement of the population to be successful and to take risk.

And it's impossible to envision a Silicon Valley in the Muslim Middle East. It just wouldn't happen. Wouldn't happen. You couldn't have a Harvard or Yale or Princeton in today's China. They wouldn't allow free speech. You wouldn't have most of our American institutions in any other place.

And that means we get all of these legal immigrants, and they enrich our country if they come in diverse fashion, in numbers that can be assimilated legally with some knowledge of our country and preferably with English language fluency.

The other third reason is we were very lucky naturally. Once the United States, whether you like it or not, embraced Manifest Destiny and decided we were not going to be a continent of warring states as was Europe, 30 or 40 individual nations, but one uniform state in North America, then it was richly endowed for all of us.

We had mining, we had gold, we had silver, we had iron ore, we had almost... We even have rare minerals, rare earth minerals we have not fully tapped. We have oil, we have coal, we have hydroelectric. We have the richest energy nation in the world. We're pumping more oil and gas than any other country in the history of the universe.

We have plentiful timber. We have plentiful farmland. We're the largest farming producing country by the value of our exports and our domestic produce in the world. We have two huge coastlines, not to count the Gulf of America.

In other words, we're protected from the insanity that goes on in Latin America, Africa, Europe, and Asia, and we always have been.

So, the sheer size of the American continent, its role in American history as a frontier, its role as a safety valve where people could head West, young men, if they were disaffected by events on the East Coast, and they could make a fortune or make a livelihood farming or in timber or in minerals or in energy, you name it.

There's a fourth reason that we're very successful, and that is we have a free market, private property economy. We're not a socialist, we're not a communist country.

In other words, people flock to the United States from countries where there is no economic opportunity. It either is statism controlled by the state or it's crony capitalist, and that's why we have the most billionaires in the world.

China has more people than we do, four times more people. Russia has twice, three times the territory, but we have more people in the affluent class.

And finally, we have a middle class. Our middle class is the largest in the world. We're not a pyramidal society of a few rich people on top that use their wealth for special dispensations or to affect the government or a mass of poor who are subsidized and always demanding entitlements.

Free middle class. Now, those are our strengths.

So if you wanted to hurt the United States or to ensure that it would not last 250 years, what would you do to stop that? Well, the first thing that I would do is I would start questioning the Constitution and the Bill of Rights. So, what do we see now from, for example, the left?

They're always attacking the Second Amendment, the right to bear arms. They want to pack the court. They want to get rid of the filibuster. It is in the Constitution, the Electoral College. They want to ban or destroy the Electoral College.

They want to bring in two new states specifically, not one conservative and one liberal like the old Alaska-Hawaii compromise, but two liberal new states, Puerto Rico and Washington, D.C., and get four senators.

Anytime you see anyone that wants to alter the system like that, you know that they don't have the best interest of the United States because the system has worked for 250 years in most of these cases.

The second thing is you would want to, as I said earlier, you would want to say, we don't want legal-only immigration. We want anybody to come in. So we have 30 million illegal immigrants right now. Ten to 12 million came in under Joe Biden. We have no idea who they are. You walk across the border.

Is he a criminal? I don't know. Is he Albert Einstein? I don't know. Does he have COVID-19? I don't know. We were vaccinating in a mandatory fashion Americans in 2020 while people were flooding across in 2020, '21, '22, flooding across the border without border security.

And today, even though legal immigration has been the bulwark of what we've seen, we are getting immigrants who even come in legally and have nothing but hostile attitudes toward their generous host.

If you also wanted to damage the United States, then you would look at what I just talked about, natural resources. You would say no mining. We're in a problem right now with rare earths. We're short. They're critical to our economy. China has a monopoly, but we have some of the most abundant rare earth minerals in the world and we've been prohibited from using them.

We have the richest deposits of oil. Until recently, we did not develop them all. We did not develop coal in the proper way.

Our farming sector, the best and most efficient in the world, is under attack by environmentalists who want to cut off the water here in California.

I'm speaking from the richest agricultural county in the United States, Fresno County, and yet it needs water that has been sent out on the San Joaquin River into the ocean.

If you also wanted to destroy the United States or see it not last too much longer, you would kind of assault the middle class.

You would look at the United States as a binary, a Marxist binary. It is comprised not by class but by race. So, 70 percent, 65 percent are white oppressors. They are mostly white male, to be more particular, or more sensational, white male Christian heterosexuals, or the white race, or whatever we call these silly terms.

They are the exploiter, victimizer, and everybody on the other side is the victimized or oppressed. This is the binary that the Democratic Socialists of America and like-minded people use to alienate and divide the country, and it's worked very well.

But in between those two racial binaries is a class system in which the middle class still is the largest class and was the exact form, shape of a class system that the founders thought would be essential to republican government.

And then finally, of course, one of our greatest strengths is we have institutionalized a free market private property economy. Do away with that, and we go the way of the old Soviet Union or Cuba or Venezuela.

And what do we see now? We have people in the Democratic Socialists of America that want to confiscate property, get the means of production, take over tenant-landlord relationships, and absorb the private sector into the state.

If that happens, we will be impoverished.

So, we can make it another 250 years if we do what we did the last 250 years. But if we let people destroy those strengths that I enumerated, then we won't last another 50 years.

Tyler Durden Wed, 07/08/2026 - 16:20

Consumer Credit Unexpectedly Shrinks For The First Time Since 2024 As Credit Card Rates Jump

After two consecutive outsized jumps in consumer credit in the months of March and April, when gas prices surged and inflation resumed its track higher, lifting most prices as a result of the war in Iran, moments ago the Fed published its latest consumer credit (G.19) report for the month of May and it was a doozy: instead of the expected $17.5BN increase, in May total consumer credit unexpectedly shrank for the first time since November 2024.

The move was driven by a notable slowdown in nonrevolving credit, coupled with the biggest drop in revolving (credit card) debt since late 2024. 

Specifically, car and student loans (collectively non-revolving credit), rose by a modest $5.1 billion.

It was unclear what was behind the muted rise: recall that for the first quarter of 2026, student loans surged by $28 billion while auto loans posted a $2.4 billion decline, perhaps due to the very high interest rates on the debt (we will get an update for Q2 next month).

What is interesting, is that while auto loans have barely budged since late 2023, staying around 1.55 trillion for nearly three years, student loans have resumed their ascent, and after a modest decline in late 2023, student loans are once again at all time highs just shy of $1.9 trillion. 

At the same time, revolving credit, which mostly means credit card debt, unexpectedly sharnk by a notable $5.3 billion, following two months of $10BN+ increases.

It will be interesting to see if the paydown of credit card debt reflect in weaker retail sales for the month of June, which we will know when the report comes out in one week's time. 

Finally for those keeping tabs, after a modest decline in the previous two quarter, the average interest rate on credit card accounts assessed interest rose to 22.15%...

... a level last seen three years ago, when the Fed rates was almost 2% higher, which confirms our long-running observation that credit card rates go up but they never go down.

One final observation: after a period of about 6 years when the average amount financed by auto loans was around $25,000 (from 2008 to 2014), this amount has grown dramatically, and in Q1 2026 it hit a new record high of $42,500, the highest on record. Just in case there was confusion what is behind the relentless increase in car prices...

Tyler Durden Wed, 07/08/2026 - 15:44

Brown University Prof Bans Take-Home Exams After Mass-Cheating

Authored by Jennifer Kabbany via The College Fix,

A Brown University professor says he will no longer allow students to take exams at home after he caught a large chunk of his class cheating on a test.

Economics Professor Roberto Serrano said he allowed students to take a midterm at home, and 40 students, nearly half the class, earned a perfect 100; among the 86 students in the class, the average overall class score was 96, the Chronicle of Higher Education reported July 6.

“I immediately knew that something was fishy. In previous editions of the course, the average grade in the midterm ranged from 65 to 80,” the Ivy League professor said.

He said further review seemed to confirm his suspicions, so he told the class:

“I’m not going to declare it void for now. I’m going to give the class a chance to prove me wrong. If the distribution of grades in the final exam looks roughly similar to the distribution of grades on the midterm, then I’ll count the midterm. If not, I will declare the midterm null and void. Also, the final will be in person.”

Serrano told the Chronicle that, unfortunately, his fears were confirmed.

“Between the midterm in March and the final in May, there was a consistent flow of students dropping the class — many of them had scored 100 on the midterm,” he said.

“Of the 59 students that took the final, 19 of them failed, so they also failed the course. Quite a few showed up, signed the exam, and turned it in blank. The average grade for this final was by far the lowest in the history of this course.”

Underscoring the cheating scandal, Serrano is blind, and has had to overcome numerous hurdles as a student and an academic.

Asked what he thinks of students taking the easy route, Serrano said they’re only selling themselves short.

“A culture of effort and hard work should be inherent to learning. I worry many of our students now have the wrong idea, believing that the answer to any question can be obtained with a couple of clicks of the mouse,” he told the Chronicle.

“I tell them that years from now, their grades won’t matter. What will matter is how much they learned and how much stayed in their brain.”

Tyler Durden Wed, 07/08/2026 - 15:20

Coffee Lovers, Take Note: Lavazza Sounds Alarm, Suggest It May Be Time To Stock Up

Following the largest daily surge in Arabica coffee futures since the Dot-Com bubble, the head of Italian coffee giant Lavazza Group warned that prices are unlikely to fall over the next two years.

Giuseppe Lavazza, chairman of the Italian roaster, was quoted by Bloomberg as saying, "The market needs to have stability before it's time to think about a reduction of prices."

Lavazza explained that it will take two harvests and a massive rebuilding phase to replenish inventories and ease supply constraints, making lower prices unlikely over the next two years.

On Monday, Arabica futures in New York posted their biggest jump in 26 years, as worsening weather in Brazil and shrinking exchange-managed stockpiles fueled a rally. The violent move higher was not just weather-driven. A big short squeeze also materialized.

That sent 60-day volatility to the highest since 2014 levels - a period where weather-driven supply shock in Brazil dented global supplies. 

Making matters worse is the El Niño weather phenomenon that will start emerging in the months ahead and will create adverse weather conditions not just for top-grower Brazil but for other agri belts around the world.

"I think we are living in a long-lasting period of instability and uncertainty," Lavazza warned, adding, "Instability is the new constant."

Lavazza noted, "We need a couple of very strong crops from Brazil and Vietnam to rebuild stability. So maybe the first good crop is arriving," but we don't yet have evidence it will be as good as was expected at the end of 2025. 

He added: "The coffee market now shows fundamental changes compared to the past. We are living in an environment we don't know very well."

The takeaway for coffee lovers is simple: stock up.

Tyler Durden Wed, 07/08/2026 - 14:45

Are Flattening Curves And Style Rotations Deceptive Omens?

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Bond market pundits often warn that bear yield curve flatteners or inverted yield curves ultimately lead to recessions. Similarly, some equity experts caution that periods of violent back-and-forth rotations among stock sectors and/or style factors are precursors to a market top.  Additionally, the combination of a bearish flattening trend and volatile equity rotations leads some analysts to forecast a recession, with concerning market repercussions.  

The argument we present in this article is that predicting economic or financial market activity is not as simple as following two indicators. Bear flattening trades, inverted yield curves, and frantic style (factor or sector) rotations are not definitive warnings of a market peak. They are extremely informative about where the economy, markets, and investor sentiment stand, but they do not tell investors whether or when the economic or market cycle will turn. Knowing where you are in a cycle is not the same as knowing when it ends. Confusing the two is a common mistake and can be a costly one for investors in late-cycle analysis.

Given that both indicators are currently flashing red, we explore how they can serve as important warnings of pending financial market and economic turbulence, but also as deceptive omens.

What The Yield Curve Tells Us

The shape of the yield curve, or the difference in yields between long and short-term US Treasury securities, indicates the market’s expected path for short rates plus a term premium. In other words, where does the market expect Fed Funds to be in the future, plus how much of a yield premium is the market paying investors to take on the inflation, economic, and oversupply risks of holding Treasury securities?

To help appreciate where the yield curve stands today and how it’s changed recently, we’ve included the graph below.

A notable feature of this long-term graph is that every time the yield curve flattened and inverted, i.e., the 2-year yield rose above the 10-year yield (the blue line fell below 0 on the y-axis), a recession (gray) followed. There is one exception. In 2022, the curve flattened, inverted, and then steepened, yet a recession has not materialized. 

Current Yield Curve Flattening

Recently, the yield curve has been flattening (declining) while bond yields have risen. In bond market parlance, that is called a bear market flattener (higher yields and a flattening yield curve). The table below shows that since late February, when the Iran conflict started, the 2-year note has risen by 76 basis points, the 10-year note by 46 basis points, and the 30-year bond by only 25 basis points. As a result, the 2/10-year yield curve flattened by 30 basis points and the 2/30-year curve by 51 basis points.

A bear flattening is the result of investors raising their collective expectations for higher short-term rates. This can be due to strong economic growth expectations and/or higher prices. At the same time, longer-maturity yields are less responsive, likely due to a subdued long-run growth forecast or a belief that higher inflation is temporary.

The flattening or inversion of the yield curve creates more restrictive financial conditions, acting as a brake on economic activity. An economy that warrants slowing is often one that is late in its economic cycle.

When the long-maturity yield falls below the short-maturity yield, i.e., it inverts, the usual interpretation is that investors expect future rate cuts because policy and/or rates are restrictive enough that the central bank will have to reverse course. However, that definition fails to consider the term premium, the compensation investors demand for holding longer-duration notes and bonds. A curve can flatten or even be inverted because the market expects rate cuts and/or because the term premium has compressed toward zero. Thus, it’s not definitive whether an inverted curve is due to expected rate cuts, well-anchored inflation, or forecasts of an economic downturn.

Equity Rotations

Equity leadership can be a tell of similar concerns, but through a different mechanism. Stocks are claims on future corporate cash flows, and those claims have duration. For instance, growth companies tend to have minimal cash flows or even run losses in the near term, but expectations are for large and growing earnings in the future. Thus, valuations for growth companies are based on distant-future cash flows and, accordingly, have a long duration.

Conversely, value companies generate cash flows that are nearer and more certain and are therefore considered to have shorter durations. When short-term interest rates rise and uncertainty about the future increases, the present value of distant cash flows is marked down far more than that of near cash flows.

For example, the 1-year present value of $100 at a 5% discount rate is $95.24, and at a 4% discount rate, it’s $96.15. The 1% change in rates impacts the present value by $0.91. Conversely, the 10-year present value of $100 at 5% and 4% is $61.39 and $67.56, respectively, resulting in a difference of $6.17 for the 1% change in rates. Accordingly, valuation multiples of growth companies tend to compress relative to those of value companies.

As we share below, in a hypothetical example, the value of the future cash flows of a value company with more upfront cash flows declines less with a 3% increase in the discount rate than that of a growth firm with more cash flows expected in the distant future.

A growth-to-value rotation is the equity market’s version of the yield curve flattening: both are duration-related repricings driven by the same change in the cost of money.

When Rotations Become Volatile

Typically, equity rotations in a late-cycle market become more volatile. In other words, no style or sector leads or lags for long stretches. These rapid rotations help clue us into a market regime that is becoming contested or changing.

Through the middle of an expansion, the macro picture is often clear with trend growth, accommodative or neutral monetary policy, and a steady discount rate. Because the regime is stable, leadership often remains in place for long periods as investor capital concentrates on the companies that benefit most from prevailing conditions. However, the market regime becomes challenged as changes in the broad economic and market environment are anticipated. Investors start asking questions such as:

• Is monetary policy changing?

• Is growth decelerating or reaccelerating?

• Is inflation sticky or transitory?

As new economic and corporate data feed into the market, the discount rate becomes more sensitive. The market is forced to continually toy with its assumptions, and leadership ping-pongs as a result.

The volatility of style leadership is a proxy for regime uncertainty. The whipsaw action itself, not necessarily which types of stocks lead or lag, is the tell. A market that cannot decide between value and growth is a market that cannot decide what the discount rate will be, which is to say, a market that senses the regime is changing beneath it.

False Signals

There is a complication with what we have presented. The yield curve can be distorted by forces unrelated to the business cycle, such as shifts in the bond term premium, large-scale asset purchases (QE) or their reversal (QT), and significant government bond supply.  Equity rotations are at times heavily influenced by momentum chases and bouts of speculative behavior. Moreover, the rise of passive investment strategies tends to accentuate momentum trends.

When other factors influence the yield curve or the volatility of equity rotations, the “forecast” embedded in the curve and rotations becomes muddied and can falsely signal a market and economic top.

Condition And Timing Indicators

This brings us to the distinction that should govern how the signals are used. There is a difference between a condition indicator and a timing indicator. A condition indicator describes the economic and market landscape. A timing indicator tells you when the next event arrives. Flat curves and unstable leadership are good indicators of conditions, but can make for poor timing indicators.

This concept is like weather forecasting. A falling barometer tells you the atmosphere favors a change in the weather, likely a storm. It does not tell you what day or time the storm will arrive. In fact, despite the drop in barometric pressure, the storm may never form. Reading a barometer as a surefire countdown clock to a storm is an error, no matter how reliably storms and falling pressure correlate.

Summary

If you cannot extract a time frame for an economic and market peak from these signals, then what purpose do they serve?

The answer is that they help us prepare for a widening series of potential outcomes. Today, for instance, with the yield curve flattening and a series of violent rotations, we are maintaining stricter stop-loss levels, paying closer attention to technical analysis, focusing on our SimpleVisor rotation analysis tools, and assessing our risk more frequently.

The signals suggest the regime may be changing, and we should be prepared for that possibility. However, until that becomes more evident, we must take advantage of what the market has to offer. 

Tyler Durden Wed, 07/08/2026 - 14:25

FOMC Minutes Show 'A Few' Fed Members Wanted To Hike In June, 'Majority' Fear Higher Inflation

Tl;dr: The minutes underscored a more hawkish tone on inflation. UBS traders noted that most participants cited scenarios in which price pressures could remain elevated, including stronger AI-related demand, the ongoing Middle East conflict and tariffs. In those cases, nearly all of those officials said some additional policy tightening would likely be warranted. Fed staff raised their inflation outlook for 2026 and 2027 compared with the April forecast, reflecting the effects of the Middle East war and AI-driven investment, while trimming their GDP growth outlook slightly.

*  *  *

Today's FOMC minutes will be scrutinized for further insight into policymakers' appetite for additional rate hikes and the thinking behind the Committee's hawkish shift at last month's meeting. The minutes are an account of the June 17th meeting and therefore will not reflect subsequent developments, including the softer-than-expected June nonfarm payrolls report or Chair Warsh's appearance at the ECB's Sintra Forum.

Since the last FOMC meeting (June 17th), the dollar has strengthened (on the hawkishness) and gold (and bitcoin) mirrored that with sizable declines. Stocks are flat, bond yields are higher (prices down), and oil remains lower, but accelerating in the last couple of days...

The market's expectations for Fed actions this year have surged back near the highs (up from around 20bps pre-Warsh to around 40bps today)...

And rather interestingly, the initial dramatic flattening of the yield curve on FOMC day has been entirely erased...

As Growth-related macro data has disappointed notably while Inflation-related macro data has remained sticky/high...

So with all that said (and with all eyes watching for confirmation of the hawkish bias), what does the FOMC want us to know about Warsh's first meeting in charge...

FOMC Minutes summary:

Participants generally saw upside risks to price stability as elevated, while downside risks to maximum employment goal had moderated a bit

Inflation

• The majority of participants commented that most measures of medium- and longer-term inflation expectations remained at levels consistent with the Committee's 2 percent objective.

• The majority of participants highlighted the possibility that, after several years of inflation above 2 percent, continued elevated inflation rates could begin to affect inflation expectations and wage- and price-setting decisions.

• A few participants commented that, in light of these developments, there was a case for raising the target range for the federal funds rate, but those participants indicated that they supported maintaining the current target range at this meeting.

• Most participants remarked on scenarios in which inflationary pressures would dissipate and inflation would soon begin to return to 2 percent. In such scenarios, almost all of these participants noted that it would likely be appropriate to maintain or eventually lower the target range for the federal funds rate.

  • Most participants, however, also pointed to scenarios in which, in the context of stable labor market conditions, inflation would remain elevated due to strong AI-related demand, the conflict in the Middle East, or the effects of tariffs.

  • In such scenarios, almost all of these participants indicated that some policy firming would likely be warranted to return inflation to 2 percent.

• Some participants observed that the sharp rise in input costs reported in business surveys raised concerns about the potential for higher energy and commodity costs to pass through more broadly to final goods prices.

• Several participants noted, however, that firms in their Districts reported that they had been cautious about increasing prices, citing concerns that higher prices could reduce demand or their market shares

• Several participants noted that the deceleration in housing services prices was likely to continue to be a source of disinflationary pressure.

The Fed appears to now be officially blaming AI for rise in core inflation: 

"Core goods price inflation had risen relative to a year earlier, which the staff judged as largely reflecting the effects of tariffs and AI-related price pressures"

...

Many participants noted that ongoing strong demand for AI infrastructure would likely sustain upward pressure on prices for technology products and electricity..."

...

"Some participants remarked that productivity gains associated with AI adoption would eventually reduce production costs and increase aggregate supply, which should put downward pressure on inflation, though they noted this effect would likely take time to materialize"

...

"Initial public offering activity in the U.S. appeared set to accelerate this year, with the proceeds expected to help fund ongoing investments in AI infrastructure."

Growth

• Most participants remarked that growth in economic activity that exceeded that of potential output, owing in part to strong AI business investment, could contribute to more persistent inflationary pressures.

• With respect to household spending, most participants observed that stock market gains and federal income tax refunds sent earlier this year had provided support to consumer spending, particularly among higher-income households.

• Most participants remarked that growth in economic activity that exceeded that of potential output, owing in part to strong AI business investment, could contribute to more persistent inflationary pressures.

• Some participants remarked that productivity gains associated with AI adoption would eventually reduce production costs and increase aggregate supply, which should put downward pressure on inflation, though they noted this effect would likely take time to materialize.

Communication

• A majority of participants remarked that they saw advantages in shortening the statement.

• Some participants commented that they welcomed the opportunity to review the Committee's communications tools and practices.

• Most participants emphasized that they preferred not to repeat the language in the previous postmeeting statement that had suggested an easing bias regarding the likely direction of the Committee's future interest rate decisions.

Policy

• Several participants remarked that they did not see the current policy stance as restrictive, while a few other participants commented that they saw the current policy stance as slightly restrictive.

FX

• There were no intervention operations in foreign currencies for the System's account during the intermeeting period.

Read the full FOMC Minutes here.

Tyler Durden Wed, 07/08/2026 - 14:05

Bezos' Blue Origin Seeks $10 Billion In First-Ever Outside Funding Round

Fresh off Elon Musk's SpaceX IPO, it appears that, for the first time, Blue Origin is preparing to raise outside capital in a deal that would value Jeff Bezos' rocket company at about $130 billion.

Andrew Ross Sorkin, financial columnist for The New York Times and a co-anchor of CNBC's Squawk Box, wrote in a DealBook report, "I've got a scoop on Blue Origin closing in on a big fund-raising round, which is expected to value Jeff Bezos' spaceflight company at about $130 billion."

"It would be the first time that outside investors buy a piece of Blue Origin in its 25-year history," Sorkin said.

Blue Origin is seeking $10 billion in a new funding round, with Coatue Management expected to lead with a $4 billion commitment. Bezos is preparing to contribute $2 billion, while the remaining $4 billion is expected to come from outside investors.

The fundraising would give Blue Origin a $130 billion valuation as it ramps up spending and tries to narrow the gap with SpaceX - yet that gap remains massive in terms of launch capacity.

In recent days, NASA Administrator Jared Isaacman said investigators have found that a "potential engine issue" was the cause of the catastrophic Blue Origin New Glenn rocket explosion that damaged part of a launch pad at Cape Canaveral on May 28.

Here's our video of the explosion at Launch Complex 36. It happened about 9 pm ET (0100 UTC) as Blue Origin was beginning a static fire test of its New Glenn rocket.

Watch live views: https://t.co/tm2wZQmAVD pic.twitter.com/PmbgQC6Qmq

— Spaceflight Now (@SpaceflightNow) May 29, 2026

Blue Origin has relied heavily on Bezos' personal wealth for years, including proceeds from Amazon stock sales. Bringing in outside money will accelerate spending and allow for more competition in America's space race, which the Trump administration has said is necessary to create a robust space industry.

Musk's SpaceX went public last month and raised $85 billion. SpaceX is now valued at nearly $2 trillion, despite a pullback in shares, currently trading around $150 in the premarket session.

A flurry of Wall Street analysts are turning incredibly bullish on SpaceX, with 12-month price targets ranging from Raymond James' $800 to Arete Research's $401 and Morgan Stanley's $300. That's because SpaceX has a launch moat that will be maintained for years - its launch capacity surpasses not just Bezos' rocket company, but entire nation states such as China and Russia combined. Read the report.

Tyler Durden Wed, 07/08/2026 - 13:45

The Great Migration: What The Dow-To-Gold Ratio Is Telling Us

Authored by Bryan Lutz, Editor at Dollarcollapse.com,

It takes about 13 ounces of gold to buy the Dow Jones Industrial Average. The Dow-to-gold ratio prices the entire American stock market. And it does it in the one currency no central bank can print. Over the past century, it tells the same story.

It measures when the US stock market is overvalued… when it’s promising too much.

And there are a lot of promises that don’t look as good as they should these days.

A bond pays only if the issuer stays solvent.

A dollar holds its value only if the people who print it show restraint.

Yet, tangible wealth answers to no one. An ounce of gold is worth an ounce of gold whether a single counterparty keeps their word, which is what makes gold an honest denominator in the Dow-to-Gold ratio.

The ratio goes up, and it comes down. During the great manias of the twentieth century, paper looked invincible: 18 ounces to buy the Dow in 1929, 28 in 1966, 41 at the top of the dot-com boom in 2000. Then the tide went out, bubbles popped and the markets turned to commodities over equities.

As the ratio goes down, eventually it hits a bottom.

The same Dow cost almost nothing in metal, barely 2 ounces in 1932 and close to a single ounce in 1980. So, greed priced the top. Fear, and sound money, priced the bottom.

A century in one line:

Every peak in paper has been repriced in gold.

Each top marked a moment the market trusted claims more than the things behind them, and each was followed by a long migration back toward metal that ran for years, not months.

Here is where we correct the record. The move off the 2000 top has been anything but tidy. The ratio fell to roughly 6 by 2011, then the long everything-rally, cheap money layered on cheap money, hauled it back above 19 by 2021. The 2026 equity melt-up has lifted it again, to about 13, even with gold sitting near record highs.

The same story, up close:

However, the long-term trend since 2000 points down. The path has been a bit of a switchback. Anyone waiting for a clean glide toward gold got a decade of reversals instead, which is why we distrust anyone selling a date for gold.

Gold’s historic floor sits between 1 and 2 ounces. From 13, most of that move is still ahead, whenever the switchback resolves. In my opinion, this is not the time to wager a standard 60/40 portfolio as a wager that the denominator stays at or around 13. Stocks, and bonds are unlikely promise-keepers, and believing the dollar behind them holds is just as risky. The denominator is not sitting still. Every deficit the Treasury runs and every dollar the Fed prints wears down the promises the old 60/40 portfolio depends on. For most of the past forty years, it paid anyway. This time it will not.

“All roads, in other words, lead to trouble of some sort, which makes year-ahead asset allocation pretty easy: you just own everything that protects you regardless of which road gets traveled.”

~ John Rubino, The Money Bubble

After twenty-five years, the score still reads the same. Paper is expensive, and gold is patient.

Tyler Durden Wed, 07/08/2026 - 13:25

Stellar 10Y Auction Stops Through, With 3rd Highest Foreign Demand On Record

Following yesterday's stellar 3Y auction, moments ago - with yields surging to the highest level since mid-May - the Treasury completed the sale of $39BN in a 9 Year 10 Month reopening of 10Y cusip QQ7, in what was another spectacular auction.

The note sale, which priced just after 1pm ET, stopped at a high yield of 4.580%, up from last month's 4.538%, and stopped through the When Issued 4.586% by 0.6bps, the biggest stop through since Sept '25.

The bid to cover rose to 2.593 from 2.565, which was the highest BtC also since last September, and obviously well above the six-auction average of 2.46.

The internals were also some of the best on record: foreign buyers (i.e., indirects) were awarded 81.5% of the auction, up from 78.21% in June and the 3rd highest on record.

And with Directs sliding to 10.73%, the lowest since April 25, Dealers were left holding just 7.8%, down from 9.5% in June and the lowest since January.

Overall, this was an extremely strong auction, perhaps the best 10Y of 2026, and with yields surging today, it shows that not only retail traders, but bond investors are also willing to buy the dips. 

Tyler Durden Wed, 07/08/2026 - 13:24

Russia Bans Diesel Exports, Assuring Even Higher Prices

As was widely speculated in recent days, Russia banned exports of diesel in order to avoid domestic shortages after a flurry of attacks by Ukrainian drones on the nation’s refineries.

“Today we introduced ban on exports of diesel,” Deputy Prime Minister Alexander Novak said at the government’s meeting with President Vladimir Putin.

The decision will further squeeze global fuel markets, which are already under pressure due to the supply disruption caused by the Iran war. Russia's decision means that the recent surge in the diesel margins to record highs, which have completely disconnected with oil prices, are set to rise even more. 

Last year, Russia accounted for about 11% of global supplies of diesel, according to data compiled by Bloomberg from analytics firm Vortexa.

The logical corollary is what the DOE reported earlier today, namely that US product exports - which include diesel and other refined products - surged to a record high.

Exports of the fuel were previously banned only for traders and other sellers in Russia that don’t make their own fuel.

The diesel ban comes on top of existing restrictions on most shipments of gasoline and jet fuel. Russia has been struggling to ensure domestic oil-product supplies and to contain prices at the pump after drone attacks damaged several refineries. 

Ukraine’s intensified strikes pushed Russia’s crude-processing rates to multi-year lows. Many regions have been forced to impose some degree of fuel rationing because of the disruptions. 

Even before the ban, Russia’s diesel and gasoil exports were dropping significantly. During the first three weeks of June, its exports of diesel and gasoil averaged about 490,000 barrels a day, only slightly more than half of what the nation shipped to foreign markets in 2025, according to data compiled by Bloomberg from Vortexa.

Tyler Durden Wed, 07/08/2026 - 13:10

George Soros Angers Hamptons Residents After Massive Land Purchase

Authored by Luis Cornelio via Headline USA,

George Soros has long used his billions to influence politics, but now his family appears to be using that wealth to reshape its own backyard through a massive land grab in the Hamptons.

The Soros family has purchased 18 plots of land on Shelter Island, a Hamptons community, angering residents who are concerned that the billionaire’s presence in the area will trigger rising costs.

Soros’s shopping spree, reported by the New York Post on July 2, makes him and his sons, Alex and Gregory Soros, the largest private landowners on the approximately 8,000-acre island.

According to the Post, the massive purchases are not the first time the Soros family has angered residents. In 2020, Gregory snatched a 22-acre property on a quiet street.

However, the quiet atmosphere turned into chaos when construction trucks began arriving to build one of the island’s largest swimming pools.

Local plumbers and maids are required to sign non-disclosure agreements before being allowed to work on the Soroses’ properties, residents alleged.

Surveillance cameras have reportedly been installed on local streets, raising privacy concerns among residents of the island, which is only accessible by boat.

At one point, the Soros family reportedly purchased multiple homes along a single road and sought approval from local officials to install a fence to block access from other residents.

However, Shelter Island resident Steve Lenox is concerned that Soros will soon get his way.

“We can’t keep up with the lawyers that these millionaires have and they seem to build whatever they want,” Lenox told the Shelter Island Town Board during a meeting on June 29, according to the Post.

“That’s what’s ruining the island.”

Another resident, Mike Gaynor, echoed those concerns during the meeting, pointing to other communities that became unaffordable at the arrival of millionaires.

According to the Post, residents first noticed the Soros family’s presence on the island when the family installed a deer fence around one of its properties, allegedly in violation of local zoning rules.

Tyler Durden Wed, 07/08/2026 - 12:55

FOMC Minutes Preview: Scrutiny For Hawkish Bias

Today's FOMC minutes will be scrutinized for further insight into policymakers' appetite for additional rate hikes and the thinking behind the Committee's hawkish shift at last month's meeting. The minutes are an account of the June 17th meeting and therefore will not reflect subsequent developments, including the softer-than-expected June nonfarm payrolls report or Chair Warsh's appearance at the ECB's Sintra Forum.

Nonetheless, as Newsquawk writes in its FOMC Minutes preview, the June meeting, Warsh's first as Fed Chair, marked a significant shift under his leadership. The Committee unanimously overhauled the policy statement, removing all forward guidance and placing greater emphasis on its commitment to price stability. While the statement changes were unanimous among voting members, it will be interesting to see whether non voting participants also supported the removal of forward guidance and the stronger inflation-focused language.

On forward guidance, Waller spoke about the tool on July 6th - after the FOMC. He noted that it can speed the impact of monetary policy, calling it a valuable tool. However, it can be a hindrance if it is too strong or rigid, and also problematic when policy makers expect different economic outcomes all with a significant probability of occurring, adding in some cases, it is best not to use it at all. We will be looking to see the views among the whole FOMC around the use of forward guidance.

Anecdotally, Rabobank wrote that "Fed's Waller has joined new Chair Warsh in wanting to shake up Fed communications to do so less: ahead of the FOMC minutes today, one wonders if they could just be a truncated, "We talked about stuff," leaving analysts to... well, analyze, rather than being spoon-fed."

Traders will also be watching for any discussion surrounding the broader policy reviews announced by Warsh. During the FOMC press conference, he revealed plans to establish five task forces covering Fed communications, the balance sheet, data sources, productivity and jobs, and the Fed's inflation framework. While the reviews are not expected to conclude until year-end, the minutes may provide an early indication of how policymakers view these topics, although it may still be too early for any meaningful discussion. As this is the first set of minutes under Chair Warsh, there is also some scope for changes to the presentation or structure of the document, given the broader changes already made to the FOMC statement.

Meeting Recap

• Kevin Warsh's debut as Fed Chair delivered a clear hawkish shift. While the Committee left rates unchanged at 3.50-3.75%, as widely expected, the policy statement was significantly revised, removing all forward guidance and reaffirming the Fed's commitment to restoring price stability.

• The statement reiterated that inflation remains elevated but updated its description to reference supply shocks affecting specific sectors, including energy. The Committee also upgraded its assessment of the labour market, noting that job gains were keeping pace with workforce growth rather than remaining subdued. Economic activity continued to be described as expanding at a solid pace despite uncertainty surrounding the Middle East, while policymakers added new language highlighting strong productivity growth and capital investment.

• Regarding the Summary of Economic Projections, inflation forecasts were revised higher, GDP growth projections for 2026 were trimmed modestly, and the unemployment rate was revised lower. Warsh did not submit his own forecasts due to his distaste for forward guidance, but he made it clear he is focused on price stability.

• The dot plot shifted materially, representing a hawkish shift. The median 2026 projection rose to 3.8% from 3.4%, implying one 25bp rate hike compared with March's median projection for one rate cut. The 2027 median increased to 3.6% from 3.1%, while the 2028 projection rose to 3.4% from 3.1%. The distribution of projections was equally notable: nine participants now expect at least one rate hike this year (one sees three hikes, five see two hikes and three see one hike), compared with none in March. Meanwhile, eight participants now expect rates to remain unchanged through year-end (previously seven), while only one still projects a rate cut (previously seven).

• Following the meeting, analysts broadly concluded that the statement, economic projections and Warsh's press conference reinforced the view that policymakers are placing greater emphasis on inflation risks than labour market concerns.

• Since then, Warsh has reiterated many of those themes during his appearance at the ECB's Sintra Forum. He again rejected the use of forward guidance, stressed that interest rates should remain the Fed's primary policy tool and reaffirmed the Committee's commitment to price stability. He acknowledged that inflation expectations had eased during his first month as Chair but maintained that inflation running above the Fed's 2% target remains unacceptable.

• On the balance sheet, he again avoided providing specific guidance, reiterating only that he favors a smaller balance sheet and that the newly established review committees will inform future discussions.

• Although subsequent data will not feature in these minutes, it is worth adding that the softer June payrolls report has led markets to pare some of the hawkish repricing seen after the June meeting. Money markets now fully price one 25bp rate hike by December rather than October, meaning traders will be assessing the minutes against a policy outlook that has evolved modestly since the meeting took place.

Tyler Durden Wed, 07/08/2026 - 12:25

Southern Poverty Law Center Pleads Not Guilty To Federal Fraud Charges

Authored by Matthew Vadum via The Epoch Times,

The Southern Poverty Law Center (SPLC) on July 7 entered not guilty pleas again to 11 criminal counts alleging it defrauded donors by sending millions of dollars to informants who infiltrated white supremacist and so-called hate groups that it publicly opposed.

The fresh arraignment of the nonprofit organization under a new superseding indictment took place via videoconference before Montgomery, Alabama-based U.S. Magistrate Judge Kelly F. Pate.

The charges, announced on April 21 by FBI Director Kash Patel and acting U.S. Attorney General Todd Blanche, sparked political backlash amid growing questions about the group, which the federal government had previously used to track extremist groups with its “Hate Map” and other online resources.

The original indictment by a federal grand jury charged the SPLC with wire fraud, making false statements to a federally insured bank, and conspiracy to commit money laundering.

The group was alleged to have surreptitiously transferred more than $3 million in donated funds to leaders and organizers of racist groups, including the Ku Klux Klan, the Aryan Nation, and the National Alliance, between 2014 and 2023.

The government said the SPLC sent donations to bank accounts of fake entities that had names such as “Rare Books Warehouse” and “Tech Writers Group.” The accounts were then used to funnel money to alleged informants in the racist groups that it claimed to strongly oppose.

One of the informants allegedly helped to organize the “Unite the Right” protest in 2017 in Charlottesville, Virginia, that turned deadly.

SPLC interim president and CEO Bryan Fair appeared in person on May 7 to plead not guilty to the same charges on behalf of the group.

On July 7, an attorney for the organization appeared by videoconference to enter 11 not guilty pleas to the superseding indictment issued last month that added more details and specifics. The new charging document did not add new charges.

The original indictment alleged $3 million in donor funds was funneled to individuals associated with extremist groups, but the new indictment increases the figure to $4.1 million.

The new indictment provides additional details such as a claim that funds were used by recipients for buying materials for cross burnings and Ku Klux Klan robes and hoods.

The SPLC has filed a motion to dismiss the indictment for vindictive prosecution. The group claims it is being targeted by the Trump administration for political reasons. It is unclear when the court will rule on the motion.

The SPLC is known for its successful fundraising campaigns. According to its most recent publicly available IRS filing, it had gross receipts in tax year 2023 of $339.3 million and assets of $822.2 million.

The FBI severed its relationship with the SPLC in October 2025 after conservatives criticized the group for including slain conservative activist Charlie Kirk’s organization on its list of hate groups. The FBI had previously used SPLC intelligence on domestic extremist groups.

Patel said the organization has turned into a “partisan smear machine” instead of a civil rights advocate.

“Their so-called ‘hate map’ has been used to defame mainstream Americans and even inspired violence,” he said at the time, without elaborating.

The SPLC’s Hate Map lists almost 1,400 groups, including Kirk’s Turning Point USA, categorizing it as an “antigovernment” group.

Critics have long said the Montgomery-based SPLC unfairly labels conservatives as racist as a matter of policy, treats opposition to illegal or legal immigration, open borders, and multiculturalism as hate, and political expression of those views as hate speech.

The Alliance Defending Freedom, a legal organization that defends religious freedom and free speech, says the SPLC “did good work decades ago fighting segregation in the South,” but has since it has become a “far-left activist organization that attacks anyone who disagrees with its narrow political agenda.” Targets have included conservative, libertarian, anti-tax, immigration reductionist, and other groups.

In a statement issued in May, the SPLC called the charges against them “provably wrong” and “based on inaccurate facts and a misapplication of law.” The nonprofit said its informant program has been successful at preventing threats and attacks, stopping criminal activity, and gathering information used to dismantle hate groups.

“There is no question that the information the SPLC shared with law enforcement saved lives,” the statement reads.

It also stated that it was no stranger to legal threats and would continue its mission “no matter what.”

The Epoch Times reached out to the SPLC for comment. No reply was received by publication time.

Tyler Durden Wed, 07/08/2026 - 12:05

63 Million Barrels Of Iranian Oil Stuck At Sea After US Pulls Iran Sanction Waiver

Tehran's oil export troubled just got worse. 

One week after we reported that Iran was already struggling to sell its crude to buyers in Asia (including China, which appears to now prefer UAE exports instead), overnight the US rescinded the sanctions waiver that allowed Tehran to sell its oil without penalties, making sales of Iranian crude to international buyers even more challenging. 

The Iranian attacks on three commercial vessels in the Strait of Hormuz on Tuesday prompted immediate US reaction with the USmilitary striking multiple targets in Iran and the Treasury canceling the waiver on Iran’s oil sales that was supposed to be in place until August 21.

Iran’s oil sales could be constrained again even before they resume, OilPrice reports. Since the memorandum of understanding was signed in mid-June, Iran has rushed to load cargoes from its key export sites at Kharg Island, and move its tankers out of the Gulf as soon as possible, after weeks of virtually no exports because of the U.S. blockade that began in mid-April.

The surge in Iranian shipments out of the Gulf and into waters near the Malacca and Singapore Straits gave Iran a lifeline to boost its exports that had suffered from the U.S. blockade.

China has remained Iran’s key customer as other buyers are reluctant to commit to purchases. But in recent weeks, we learned that even Chinese purchases of Iran oil have slowed dramatically, and now that the US has ended the waiver and sanctions are in place again, buyers in India that were considering potential purchases have likely backed out. 

Additionally, one could go so far as to argue Iranian oil in tankers is once again subject to US seizure.

Looks like the US has a license to seize Iranian tankers, especially those off Asia and waiting for Chinese teapot buyers to emerge. https://t.co/e9hxCwuOUx

— zerohedge (@zerohedge) July 7, 2026

Iran is thus left with millions of barrels of crude oil on tankers moving or idling in a large area from the Persian Gulf to the Strait of Malacca. Most of the laden tankers do not broadcast destination or broadcast they are for orders, according to vessel-tracking data compiled by Bloomberg.

Currently, as many as 63 million barrels of Iranian oil are either in transit or idling in tankers, per Bloomberg’s estimates based on data from Vortexa, which also notes that oil on floating storage in the Gulf has more than doubled in the past week to over 41 million barrels.

“Iran managed to ship out 60 million barrels of crude oil since the US Navy blockade paused in mid-June 2026,” TankerTrackers.com said late on Tuesday, after the U.S.-Iran tensions escalated again.

“If the blockade were to resume now due to escalating tensions, Iran would be stuck with ~50 million barrels of crude oil and refined products.”

Tyler Durden Wed, 07/08/2026 - 11:45

Your Delusion Doesn't Make Me A "Doomer"

Submitted by QTR's Fringe Finance

"There exists in society a very special class of persons that I have always referred to as the Believers. These are folks who have chosen to accept a certain religion, philosophy, theory, idea or notion and cling to that belief regardless of any evidence that might, for anyone else, bring it into doubt. They are the ones who encourage and support the fanatics and the frauds of any given age. No amount of evidence, no matter how strong, will bring them any enlightenment. They are the sheep who beg to be fleeced and butchered, and who will battle fiercely to preserve their right to be victimized."

- James Randi

One thing I’ve noticed over the last several weeks is that the more I stick to basic questions, basic economics, and basic skepticism, the more people accuse me of being a “doomer”.

That tells me far more about the environment we’re in than it does about myself. The foundation to my economic views hasn’t changed all that much over the years. What’s changed is the backdrop against which those views are being expressed. When you’re living through one of the most euphoric investing environments in modern history, ordinary skepticism suddenly reads like blistering, outright nihilism.

Apparently it’s now considered bearish extremism to point out that a company says one thing and then does another. It’s “FUD” to ask whether a proposed $2 trillion IPO valuation for a company trading roughly 100x sales while remaining unprofitable makes any sense. It’s negativity to observe that the Federal Reserve appears trapped between an inflationary rock and a deflationary hard place, where fighting one problem inevitably worsens the other. I’ve even written about companies that appear to have been caught engaging in outright misleading accounting practices that deserve far more scrutiny than they’re getting, only to watch investors shrug and buy more shares anyway.

None of the above observations strike me as outrageous. They’re the kinds of questions investors used to ask before narratives became more important than numbers. The fact that simply asking those questions now provokes outrage tells me something has changed.

Yesterday I nearly lost a dear longtime friend who I respect immensely because he was upset that I criticized Strategy CEO Phong Le on Twitter. The worst part is this is a friend who I agree with on literally almost everything relating to markets and monetary policy…just not on cheerleading for bitcoin as enthusiastically.

I can’t take Strategy or its CEO seriously after the company repeatedly emphasized BTC Yield as one of the defining metrics of the business. It was presented as evidence of execution, discipline, and shareholder value creation. Phong Le talked about it constantly. It became one of the pillars supporting the entire investment story for Strategy. Then, as the number began moving in the wrong direction, the company quietly stopped highlighting it. It disappeared from Michael Saylor’s tweets talking about how much bitcoin the company bought last month. And somehow I’m the unreasonable one for noticing this and calling it out as moving the goalposts (more importantly, I called my friend and we hashed it out and are fine).

Over the last several weeks I’ve also lost multiple paid subscribers to my blog. Some comments have become more cagey. Private messages have become more emotional. Discussions that used to revolve around facts increasingly revolve around motives. Apparently asking for consistency and follow through from public company CEOs now qualifies as “hate.” Ironically, I appreciate every bit of it because I don’t want an echo chamber. Echo chambers make people intellectually lazy. If everyone agreed with everything I wrote, I’d probably stop challenging my own assumptions. I like hearing opposing viewpoints. I’ve changed my mind plenty of times over twenty five years in markets. What I’m trying to arrive at isn’t confirmation. It’s truth. That distinction matters.

Part of the reason I view markets differently is because my framework has always been grounded in Austrian economics. Whether you agree with the Austrian School or not, one thing it relentlessly emphasizes is that incentives matter, prices matter, capital allocation matters, and economic reality eventually matters. Artificially suppressing interest rates has consequences. Printing money isn’t free. Debt doesn’t magically disappear because politicians or central bankers wish it away. Malinvestment accumulates. Capital gets allocated to projects that never would have survived under honest market conditions. Booms fueled by cheap money eventually collide with reality. Those aren’t particularly radical ideas. In fact, for most of economic history they would have been considered fairly obvious observations.

The Austrian framework forces you to ask uncomfortable questions all the time. Is this asset actually worth what people are paying for it, or has liquidity overwhelmed price discovery? Is this company creating durable cash flows, or simply issuing securities into an insatiable market? Are executives maximizing shareholder value, or exploiting shareholder enthusiasm? Are prices reflecting genuine economic value, or simply reflecting trillions of dollars in monetary distortion? Those questions naturally make you skeptical, not because you’re pessimistic, but because skepticism is the rational response whenever incentives become distorted.

That puts me in a very different place than many investors today, and I don’t say that to sound superior. I’ve simply been around long enough to remember markets before zero interest rates became totally normal, before quantitative easing became permanent policy and before passive indexing vacuumed up trillions of dollars regardless of valuation. Before gamma squeezes, meme stocks, perpetual options speculation, and social media turned investing into something that often resembles a casino more than capital allocation. Many people investing today have literally never experienced a market operating without extraordinary monetary accommodation.

If you’ve only invested during an era where every crisis is met with another liquidity program, another balance sheet expansion, another alphabet soup lending facility, and another trillion dollars created electronically, your expectations become calibrated around that environment. Eventually you stop recognizing the distortion because the distortion becomes normal. When markets become uncalibrated, investors become uncalibrated too. When asset prices become detached from economic reality for long enough, people begin confusing price appreciation with proof of correctness. We used to have to come up with gold to put more money in circulation. Then, after that, we used to have to at least print actual dollars. Now, we increase the money supply by literally just moving f*cking commas on an Excel spreadsheet somewhere at the New York Fed office. It’s as easy as how I’m typing these words right now: Boom. Another trillion.

People start believing valuation no longer matters because it hasn’t mattered recently. They assume management credibility is irrelevant because stocks keep going up anyway. They conclude accounting quality doesn’t matter because nobody gets punished. They believe debt doesn’t matter because refinancing has always been available. They mistake liquidity for genius. They mistake speculation for investing. They mistake momentum for truth. None of this is really an indictment of individual investors. It’s what decades of monetary distortion do to human psychology.

No one gives a f*ck about pointing out over and over things like commercial real estate imploding…until we get a headline like this and a $400 million fund’s capital is completely gone. No capital returned. Total catastrophic loss. And the dickhead running the fund is asking for another $100 million. Go figure.

So how should I expect people whose entire investing life has existed inside this environment to react when I argue that executives should actually be held accountable for their words? Exactly the way many of them are reacting now. Fear. FUD. “Hater.” “Doomer.” Meanwhile I’m watching people whose intellect I genuinely respect bend themselves into pretzels defending executives worth hundreds of millions of dollars because questioning management has somehow become taboo.

Think about how bizarre that really is. Public companies are not monarchies. CEOs are not kings. Being publicly traded is a privilege. Having access to essentially unlimited public capital through equity markets is an extraordinary privilege. Being included in major indexes that generate automatic buying regardless of valuation is an extraordinary privilege. Executives don’t own that privilege. Shareholders do. CEOs work for shareholders, not the other way around. They owe shareholders honesty. They owe shareholders consistency. They owe shareholders credibility. They owe shareholders decisions made in the owners’ best interests, not whatever best protects management’s compensation, reputation, or personal wealth.

If an executive repeatedly tells investors one metric defines success and then quietly stops talking about it once the trend reverses, investors should ask why. If an executive changes the story after raising billions based on the previous story, investors should ask why. If accounting appears aggressive, investors should ask why. If incentives appear misaligned, investors should ask why. None of that is negativity. That’s literally what investing is supposed to look like. Somewhere along the way we’ve convinced ourselves that accountability is bearish. It isn’t. It’s adulthood. Grow the f*ck up.

The uncomfortable reality is that more than twenty years of extraordinary monetary policy have conditioned markets to reward almost everything: unprofitable companies, financial engineering, sky high multiples, questionable capital allocation, narrative over cash flow, momentum over fundamentals. The passive bid buys regardless. Options dealers hedge regardless. Liquidity flows regardless. Every time prices wobble, investors instinctively expect another rescue. That environment doesn’t simply distort asset prices. It distorts judgment itself.

🔥 50% OFF FOR LIFE: Using this coupon entitles you to 50% off an annual subscription to Fringe Finance for life: Get 50% off forever

People lose the ability to distinguish between genuine business quality and abundant liquidity because abundant liquidity has made almost everything look like genius. When every tide lifts every boat, everyone suddenly thinks they’re an exceptional sailor. Eventually skepticism itself begins looking irrational because the market has become completely uncalibrated from reality. If prices no longer reflect economic fundamentals, then the people participating in those markets slowly lose their own calibration as well. Their judgment becomes distorted because the measuring stick itself has become distorted. When the market stops rewarding discipline and starts rewarding whatever can attract liquidity, eventually investors stop recognizing the difference.

Which brings me back to why people call me a doomer. I’m not. I’m a skeptic. It only looks like doom because the reference point has become so detached from economic reality that merely insisting on truth sounds pessimistic. If you’ve been force fed unlimited liquidity, meme speculation, gamma squeezes, passive inflows, monetary expansion, and asset inflation for most of your investing life, someone saying, “Hold on. Does offering a 12% dividend when junk bonds trade at 6% and your company has no cash flow actually make some kind of sense?” sounds like they’re predicting the apocalypse. They’re not. They’re simply asking whether reality still exists.

I don’t blame anyone for pushing back. In fact, I’m glad. If my criticism makes people uncomfortable, good. Discomfort usually means we’ve found an assumption that hasn’t been examined closely enough. Rather than assuming I’m motivated by fear or negativity, I would encourage people to examine their own investment thesis instead.

Ask yourself why basic skepticism feels so threatening. Ask yourself why demanding honesty from executives feels controversial. Ask yourself why questioning valuation feels offensive. Ask yourself why accountability sounds like pessimism.

Those are much more interesting questions than whether I’m a doomer because I don’t think I am. I think I’m standing in roughly the same place I’ve always stood. The difference is that today’s market has drifted so far into euphoria that ordinary skepticism now looks like radical pessimism. I’m not living in a darker reality than everyone else. I’m simply refusing to wear the rose colored glasses that so many investors have slowly mistaken for reality the last 2 decades — and even that assumption I’ve tried to challenge honestly.

Now if you’ll excuse me, I’m going outside to touch grass…

--

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions.

As of May 20, 2026 I personally no longer actively trade (read my story here). My investing/saving is done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an attempt to lead a healthier lifestyle, I’ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

 

 

Tyler Durden Wed, 07/08/2026 - 11:25

Trump Greenlights Patriot Missile Production In Ukraine, Praises Deep Strikes Into Russia

President Trump just prior to entering the Oval Office vowed to quickly achieve peace in the Russia-Ukraine war, which is currently in its fifth year. The MAGA base got energized by Trump's earlier repeat statements that he'd bring peace to major global flashpoints and hotspots, but instead of anti-interventionism he started a new war of choice in the Middle East, and is now tripling down on military support to Kiev.

While in Turkey for the annual NATO summit, President Trump commented on the issue of Ukrainian drone strikes deep into Russian territory on its oil refineries and defense manufacturing facilities, which has unleashed a fuel crisis in various parts of Russia and especially Crimea.

"It's an escalation but it’s also an escalation that can help lead to an end [of the war]," the US President told the NATO summit.

via AFP

After heaping lavish praise on Ukraine forces for supposedly turning the tide of battle and momentum in Kiev's favor, Trump also said, "We have a lot of pressure on President Putin. I don’t think he likes what’s going on." He added: "But I talked to President Putin a lot. He wants to end the war."

The Wall Street Journal comments in the wake of Trump's remarks:

President Trump said he supported Ukraine striking targets deep inside Russian territory, calling it an escalation that could help end the war.

...In a marked contrast to past meetings between the two leaders, Trump opened his press conference with President Volodymyr Zelensky by offering warm words and fresh promises of military cooperation with Ukraine, providing a major boon for Kyiv and its supporters in Europe. Trump praised Ukraine’s bravery, signaled he would consider granting Kyiv a license to produce U.S. Patriot missile interceptors and said he would consider travel to Kyiv at the right time in peace talks.

On this, Trump said Washington would give Ukraine "the right to make Patriots" - after Zelensky has for at least six months been relentless in requesting this, framing it as urgent and for the protection of cities and civilians.

"We’ll show them how to do it," Trump stated, describing the system as "very complex" - though he also said the Ukrainians would "figure out the complexity quickly."

Trump continued by saying that American defense firms are already building "four plants" and claimed that "all of our companies will be able to do this in two to three months."

However, there have notoriously been immense backlogs when it comes to Patriot production, and there's said to be great global demand among US allies, especially given depletions which have come as a result of the Iran war.

Trump: (Pointing to Zelensky)

Do you have a question for President Putin? pic.twitter.com/91EQv8kw2h

— Clash Report (@clashreport) July 8, 2026

It's hard to know of this is just more bluster - and what will actually materialize as far as this promises - but Moscow will only see this as another US step up the escalation ladder. Earlier this week, Kremlin spokesman Dmitri Peskov said the Ukraine conflict is no longer just a "special military operation" but a real war, because Kiev is backed by Berlin, Paris, The Hague, Oslo, and Washington - complete with Western weapons, satellites, and infrastructure helping direct strikes.

"In these conditions, we must be clear-eyed: the Kiev regime is capable of anything," Peskov said in an interview.

Tyler Durden Wed, 07/08/2026 - 11:05

WTI Extends Gains As Crude Exports Slide, SPR Drain Continues, 'Tank Bottoms' Hit

Oil prices spiked overnight to three-week-highs after President Trump said that he thought the Iran cease-fire was “over” amid a volatile 24 hours in the Persian Gulf region.

The Trump admin launched a series of strikes on Iran and revoked a waiver that had allowed Iran to sell oil in retaliation for attacks on tankers this week in the Strait of Hormuz.

Daniela Hathorn, an analyst at Capital.com, a broker, said that investors had viewed the cease-fire as “fragile but ultimately durable,” until Mr. Trump’s comments called that into question.

“Any suggestion that negotiations have collapsed raises the risk of renewed supply interruptions or tighter sanctions,” Ms. Hathorn said in a statement.

Overnight saw across the board inventory draws reported by API (but admittedly the draws were on the smaller side).

API

• Crude -399k

• Cushing -100k

• Gasoline -2.92mm

• Distillates -1.80mm

DOE

• Crude +2.998mm (-1.4mm exp) - biggest build since April 3rd

• Cushing -52k

• Gasoline -1.904mm

• Distillates -4.98mm - biggest draw since Jan 26th

While the decline in crude stocks was expected to slow, the 3mm barrel build is entirely unexpected. Product stocks are seeing big draws with distillates dominating the flows (amid record crack spreads)...

Source: Bloomberg

Stocks at the critical Cushing hub are stuck at 'tank bottoms'...

The Strategic Petroleum Reserve continues to see sizable draws...

...drooping the total SPR level to fresh post-1983 lows...

US crude production pushed back up to record highs...

US crude exports, which have been running hot since April, have tumbled back to 'normal' levels...

But product exports exploded to a new record high...

WTI front-month futures were hovering around three-week highs around $74.50 ahead of the official data (back above its 50DMA), and extending gains after...

While the physical crude market remains reasonably supplied, refined products continue to tighten.

Crack spreads remain elevated (potentially providing more crude demand pull from refiners), and ongoing strikes on Russian refining infrastructure are keeping product markets tight.

And that's why pump prices are not falling in line with crude...

...as President Trump demands!!

Tyler Durden Wed, 07/08/2026 - 10:39

Trump Admin Approves Public Release Of OpenAI's GPT-5.6 Models Ahead Of Thursday Release

The Trump administration has approved the wide public release of OpenAI's advanced GPT-5.6 model family, a source familiar with the discussions confirmed to Axios on Tuesday. OpenAI announced late Tuesday night that its flagship model, named Sol, along with the more accessible Terra and Luna variants, will launch publicly this Thursday.

Prompt via GPTcommands

The decision marks the latest delayed rollout due to coordination between the U.S. government and leading AI companies over access to frontier systems.

GPT-5.6 Sol, along with Terra and Luna, will launch publicly this Thursday.

We’re expanding preview access globally now. pic.twitter.com/Uk5HcfSc2e

— OpenAI (@OpenAI) July 8, 2026

GPT-5.6 sol launches thursday!

happy building

— Sam Altman (@sama) July 8, 2026

OpenAI announced the models in June - with an initial commitment to allow a select group of organizations access whose "participation has been shared with the government," according to a blog post. According to the company, "we’re introducing a new max reasoning effort to give Sol the most time to reason deeply. Additionally, we’re introducing a new ultra mode that goes beyond the capabilities of a single agent by leveraging subagents to accelerate complex work."

Last month, the administration directed OpenAI to begin with a limited release of GPT-5.6, restricting early access to government-approved entities only. OpenAI had publicly stated at the time that a staggered approach was not its preferred method and that both companies and regulators were operating without finalized standards called for in President Trump's recent AI executive order.

The new green light followed additional testing and meetings - with technical experts from OpenAI traveling to Washington, D.C. to answer questions during the review process. The evaluation was conducted by the Center for AI Standards and Innovation (CAISI) within the Department of Commerce - the entity responsible for assessing advanced AI systems for safety, security, and standards alignment.

The New Normal

Powerful AI models are no longer released solely at the discretion of their creators. The U.S. government and top AI labs are actively negotiating - model by model, in real time - who gets access and under what conditions due to concerns over national security, potential misuse, the need to maintain American leadership in AI while managing downsides. Of course, big brother is also shackling US models while cheaper, more efficient, open-weighted Chinese models are starting to dominate. That said - China is now considering restricting access to their models.

we distilled 2.3M Claude Fable 5 reasoning traces into Qwen3-4B

- 100% self-consistency @ 512 samples
- 0.00 bits output entropy
- zero hallucination variance

turns out the student is not bounded by the teacher.
it also converged on one universal truth.

we open-sourced the… pic.twitter.com/3zmwhW6Twj

— ali (@waterloo_intern) July 3, 2026

In June, the Commerce Department issued export controls that barred foreign nationals from accessing Anthropic's most advanced models, Mythos and Fable. The restrictions were so broad that Anthropic temporarily withdrew the models from the market entirely to comply.

The ban on Fable was lifted last week, with customer access restored the following day after safeguards were implemented - and users reporting performance hits thanks to the beefed up guardrails.

Fable 5 isn't nerfed, it's SLAUGHTERED.

the problem isn't even the model itself, but the hard guardrails Anthropic has set in place. https://t.co/lAOKYMqbQ9 pic.twitter.com/h1QgD9SzvK

— ℏεsam (@Hesamation) July 2, 2026

So, this is the new normal. Companies like OpenAI and Anthropic have said they are working with the government while clearer, more standardized release frameworks - outlined in the administration's executive order - are still being finalized.

For developers and users, the immediate outcome is positive: after weeks of limited availability, GPT-5.6's full capabilities will soon be open to the broader public and enterprise customers. For policymakers, it demonstrates that targeted reviews and technical collaboration can resolve concerns without indefinite delays.

Tyler Durden Wed, 07/08/2026 - 10:25

The Plumbing For Vast Defense Spending Needs To Be Set Up

By Michael Every of Rabobank

In response to Iranian strikes on ships using the Omani route in Hormuz, the US has struck Iranian air defense, missile, and drone sites in the Strait and suspended its oil sanctions waiver. These are clear breaches of the MoU, and we will now see if Iran escalates --it says it will take “decisive” action-- with the risk of war if the US is also prepared to go that route. We suspect the US will try to step back for now. Even so, it should be clear why our base case is that more war is likely after the midterms. Obviously, oil prices are up today on this news; but crack spreads are already so wide that hardly matters.

Elsewhere in the Middle East, Secretary of War Hegseth is to visit Israel today as PM Netanyahu reiterates that he and Trump align on ”the big things” over Iran; bomb attacks rocked Damascus as France’s Macron visited; Lebanon’s president is to get his first White House visit; and the FT reports Saudi Arabia is blocking private sector payments to Dubai – a sign of rising tensions between those two GCC economies.

At the Ankara NATO summit, Trump struck a friendlier tone towards Turkey than many in Europe, removed sanctions over its purchase of the S-400 Russian antiaircraft system, and saying he’ll “certainly consider” selling them F-35s – setting off alarms in Jerusalem and Athens.

The summit has already seen Secretary General Rutte say, “Admit it - Trump was right.” Yes, Trump just reiterated he could pull all his troops out of Europe (no: Congress wouldn’t allow it) and still wants to control Greenland, which implies fission. But NATO announced joint economic projects to counter Russia and China, ranging from critical minerals to drones to missile shields, aimed at building up a joint military-industrial base: that implies fusion. So does South Korea and NATO agreeing to open procurement talks as President Lee Jae Myung calls for a higher-level defence partnership, something Japan is also pushing for; and as Japan, South Korea, and the US announced cooperation over a new US breakthrough in small modular nuclear reactors. If we count Australia in too at some point, that all seems like a potential building ‘bloc’.

That still comes at a very high price. Ankara has already seen $50bn in defense deals, but that’s a tiny fraction of what’s needed to rearm. Indeed, as European and Canadian defence spending growth is expected to slow this year, and the UK’s new plan falls far short of what’s required, there’s chatter of a ‘World Bank for Defence’, as the UK Chancellor also calls for rival international defense schemes to merge. In short, the plumbing for vast spending needs to be set up.

In that light, yesterday saw the BOE float easing bank capital rules despite what Bloomberg calls “mounting risks,” following new Fed Chair Warsh’s stance: will the BOE also encourage lending into the physical economy, i.e., the military-industrial complex, rather than just holding financial assets; and could it follow a potential US lead on a new inflation measure, as our US strategist plots here? Moreover, the BOE’s new crypto framework regulates GBP stablecoins but allows foreign ones, i.e., USD, to operate under US legislation, opening the door to their adoption.

Not in the same arena (yet), the RBNZ today hiked rates 25bps to 2.50%, as both we and the market had expected. The Bank said that more tightening is needed to bring inflation sustainably back to the 2% midpoint of its target, and RaboResearch maintains a forecast of two more 25bp rate hikes in 2026, with an additional 25bp hike in Q1 next year to bring the OCR to 3.25%.

Meanwhile, German business leaders warned Chancellor Merz that far more is needed to prevent the country experiencing a ‘lost decade’; Airbus is to make its first foray into engine manufacturing with a hydrogen project; and EU border chaos has prompted a delay to a planned pre-authorized travel system.

In the Americas, the White House is pressuring retailers over beef prices; and Canada told the UAE it’s not ready for a planned C$70bn of FDI as it doesn’t have any projects on hand(!)

In Asia, a Chinese policy advisor stated that China has the potential to become the world’s largest consumer market by 2041 – as data show its housing market has reversed 20-years of price gains (not always a bad thing in terms of consumer spending power), and a report has it that hundreds of millions of workers are now in the gig economy. That would imply China’s huge trade surplus will be very hard to eliminate, as a trade war with Europe looms alongside tariffs from the US and an emerging bloc-based NATO architecture.

Indeed, as the IMF appoints former BOE advisor Tenreyro as its next chief economist, the old establishment is on the back foot. See the op-ed today in the New York Times from Mohamed El-Erian arguing ‘America was being played. The Bessent Doctrine says those days are over’, which says economic statecraft has taken over and the global leaders of tomorrow need to learn that “considerations of national security, domestic politics, and geopolitics no longer play second fiddle to traditional business interests in determining corporate and economic outcomes. Those business interests are now being sidelined.” This will be a shock to anyone who didn’t read Grand Macro Strategy in November 2024, which made the same arguments and showed how it would happen.

Contrast that with the argument made by Adam Tooze in the Financial Times that the USD is no longer a global reserve FX but just a “profit dollar” backed by rising asset prices. There’s a vast realpolitik difference between financialisation and production but arguing one shouldn’t hold dollars because US assets appreciate is rather odd absent a counterargument for Hamiltonian neomercantilism which many, if not all, critics of the US also reject as the solution.

But back to “domestic politics.” The US Democratic Party candidate for a Maine Senate seat is being pressured to step down over a serious criminal allegation, opening a tug-of-war not just for that seat but within the Democrats between the mainstream and populist wing. That’s after President Trump used an Independence Day speech to rail against “communism.”

In France, Le Pen was given the legal all clear to run for president in 2027, while wearing a police ankle tag. Does this open the door to populists winning or is this an Establishment tactic to put forward a hobbled Le Pen rather than her nimbler (and more popular) deputy Bardella?

Reform UK leader Farage resigned his parliamentary seat over allegations he should have reported a large personal gift and possible party financial support before becoming an MP. He wants to fight a “two-fingers up to the Establishment” by-election, which Labour and the Tories will not contest. One view is Farage is now a farce, as when he wins the pointless by-election the parliamentary investigation into the gifts will just continue. Yet if it concludes there was wrongdoing, he faces suspension from Parliament for 30 days… and another by-election. Another view is Farage is a force and White Van Man will see the Establishment as the farce, just as happened with Trump. Mirroring that episode, the Guardian are pushing a criminal component to the gifts: but Channel 4 interviews of ‘pub-ulists’ in Farage’s seat of Clacton, even with leading questions, saw that as a stitch-up.

Indeed, the Establishment can lose: Prince Harry and other claimants could face a £50m(!) legal bill after losing a phone-hacking court case. Expect a slew of new streaming specials on how to make cupcakes soon?

It’s not only the IMF, central banks, and NATO, who need to get baking, perhaps.

Tyler Durden Wed, 07/08/2026 - 10:05