The U.S. House on Wednesday rejected an amendment by Rep. Thomas Massie (R-Ky.) that would have eliminated $3.3 billion in annual U.S. military aid to Israel, voting 314–104 to defeat the proposal.
As Tom Gantert reports for The Epoch Times, the vote exposed divisions within the Democratic Party, with 103 Democrats joining Massie in support of the amendment, while 98 Democrats voted against it and 10 voted present. Massie was the only Republican to vote in favor of the amendment.
“Though my amendment to strike $3.3 billion in aid to Israel from the State Dept Approps bill did not pass, 104 House Members voted in favor of it,” Massie said on X.
“The tide is changing. Americans want their tax dollars to be spent improving things here at home, not waging war and genocide.”
The amendment was considered as the House debated the fiscal 2027 State, Foreign Operations and Related Programs appropriations bill.
Before the vote, House Minority Leader Hakeem Jeffries (D-N.Y.) urged lawmakers to reject the amendment, calling it “overly broad” because he said it could restrict funding for humanitarian aid, refugee resettlement, peace-building efforts, and U.S. Embassy operations.
While criticizing Israeli Prime Minister Benjamin Netanyahu’s government and calling for a “major reset” in U.S. policy toward Israel, Jeffries said the amendment was not the appropriate way to achieve those goals.
“In addition, the so-called Massie amendment would restrict our country’s ability to confront Hamas, Hezbollah, and other terrorist organizations in the region who are sworn enemies of both the United States and Israel,” Jeffries’s letter to his colleagues stated.
Rep. Randy Fine (R-Fla.) made reference to Massie, who lost his primary election to a President Donald Trump-backed candidate in May.
“Very proud of my @HouseGOP colleagues,” Fine posted on X after the vote.
“Today we unanimously repudiated our soon-departing Jew-hating colleague, making clear that standing with our greatest ally is core to America’s interests.”
Fine continued, “It takes a lot of effort to eradicate the green shoots of Jew Hatred that want to infect our party the way they have Democrats. Folks in Washington are learning I won’t allow it.”
Netanyahu said he wants Israel to phase out its reliance on U.S. military aid over the next decade, saying the country has grown strong enough economically and militarily to become more self-sufficient.
Israel currently receives about $3.8 billion annually under a 10-year, $38 billion U.S. assistance agreement that expires in 2028. Netanyahu said ending the financial component of military assistance would reflect Israel’s increasing independence while preserving a close strategic partnership with the United States.
At the same time, Democrats in the US Senate have blocked debate on an annual defense policy bill, objecting not only to President Trump’s war on Iran but also to provisions that would more closely integrate the United States and Israeli militaries.
The motion to proceed failed 50-46, well short of the 60 needed, with votes on strict party lines, and Thune flipping to "no" procedurally to preserve a revote
The NDAA process is where the integration fight lives: Massie is fighting the House version's Section 219, which he says would begin "co-mingling our military supply chains and technology with Israel's"
Reuters reports that the version of the Bill before the Senate has also triggered backlash over measures that would deepen US military and intelligence ties with Israel.
One key provision would require the Pentagon to appoint an official to coordinate between the US and Israel on defence technology.
That would include joint weapons research, production and the integration of each country’s technologies into the other’s military systems.
The provision also controversially calls for “data fusion”, which Human Rights Watch defined in June as combining feeds from multiple sensors and intelligence sources into a single targeting picture.
The group said the arrangement could see the US absorb Israeli intelligence that may have been collected through what it described as problematic mass surveillance programmes.
A separate measure in the 2027 Intelligence Authorization Act, which is usually considered alongside the NDAA, would expand intelligence sharing with Israel.
Democrats framed the block around the war: Schumer said Republicans want the NDAA passed "as though none of this is happening," and Murphy called it flatly "an authorization for the Iran war, a war that nobody in this country wants."
Senate Democrats’ efforts reflect a broader shift within the Democratic Party, where support for Israel has cratered ahead of the November midterm elections. Israel’s favourability rating among Democrats dropped from 59 percent in 2018 to 22 percent in May, according to a June Reuters/Ipsos poll.
Tyler Durden Thu, 07/16/2026 - 12:45Authored by Michael Lebowitz via RealInvestmentAdvice.com,
A sailor who fixates on the barometer will rarely leave port. A sailor who never checks it will eventually get caught in a storm. It’s easy for most investors to fall into one of those two modes, either warning that headwinds are approaching and taking cover, or waving off every warning because AI spending is carrying the market higher.
This article walks through several market headwinds that warrant attention, as well as a tailwind that may be large enough to keep the boat moving forward. Appreciating the headwinds and tailwinds in more detail will help you better monitor the market barometer, allowing you to assess and adjust risk levels with more awareness going forward.
Storm ForecastingMarket forecasting has more in common with hurricane forecasting than most investors appreciate. The goal when managing an investment portfolio is not to predict a single outcome but to understand the environment well enough to establish a range of possible outcomes.
When a hurricane is brewing, meteorologists don’t draw a single storm track forecast on the map; they draw a “cone of uncertainty” that contains dozens of possible paths. Over time, as more information is gathered, the cone tightens.
Some storms cause immense damage, while others prove much weaker than expected. Other once-threatening storms never reach land and peter away in the ocean. Which path materializes depends on many variables layered on top of each other. Like markets, it’s a dynamic process that is impossible to predict with certainty.
Investors face the same task as meteorologists. We must gauge the many forces acting on markets simultaneously and consider a slew of others that may or may not pressure markets in the future. Doing so efficiently provides us with a range of outcomes rather than relying on a single forecast.
With many headwinds arising, the job for investors right now is to closely track the environment and be ready to trim their sails if needed.
The Headwinds Worth Watching Global LiquidityLiquidity is the lifeline of markets. To wit, Stanley Druckenmiller once stated:
“It’s liquidity that moves markets”
With the recent surge in the use of derivatives, options, margin debt, and other forms of leverage, changes in liquidity conditions are even more important than ever in shaping market expectations.
Michael Howell’s Global Liquidity Index (GLI) uses factors such as central bank balance sheets, cross-border bank lending, shadow banking, repo markets, and collateral availability to assess how liquidity is likely to change. In a recent Commentary, in which we elaborate on his work and his current view, we stated:
The cycle is now pointing down into 2027. Howell projects $40 trillion in global debt rollovers by 2027, a $4 trillion increase from the previous year. That borrowing demand comes as liquidity contracts, creating a mismatch between refinancing demand and tightening financial conditions.
The graph below charts Howell’s GLI alongside a 65-month sine wave that has been a good predictor of liquidity peaks and troughs. Howell’s index and the sine wave show the liquidity cycle peaked in mid-2025 and has been declining since, with the next trough not expected until 2027. Historically, the declining phase of this cycle has favored cash, long-duration government bonds, and gold over risk assets, precisely because a shrinking pool of global liquidity makes markets more dependent on cash flow and less prone to speculative excess.
Treasury IssuanceIn a similar vein, the federal deficit continues to demand liquidity to fund the rapidly growing issuance of Treasury debt. That supply of debt has to be absorbed by someone. Heavier net debt issuance competes with demand for all other investments. On the demand side, with no QE and domestic banks constrained by regulation, there is less ability to absorb the new supply than in years past.
Bear in mind, however, that if there is a stimulus package or even increased government spending to boost support for Republicans in the midterm elections, this headwind can also be a tailwind.
Restrictive Fed PolicyEven with the last cycle of rate cuts, real policy rates, as shown below, remain above levels most economists would consider neutral. Such a restrictive policy works with a lag, and the economy has so far absorbed it well. That does not mean the lagged effects are gone.
Furthermore, the Fed’s hawkish tone and the potential for rate increases could make financial conditions even more restrictive.
The Yield Curve And Volatile Equity RotationsWe recently wrote, Are Flattening Yield Curves and Style Rotations Deceptive Omens, to help readers differentiate between monitoring financial conditions and timing market tops.
The article explains why a bear flattening of the yield curve and instability in leadership between growth and value stocks, as we are witnessing now, are both symptoms of the repricing of growth expectations and the discount rate. The lesson from that piece is that these signals describe a changing environment but do not tell you when or whether a market or economic downturn might occur.
The last two sentences of the article sum up this headwind well:
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.
Low VIX – High Implied CorrelationOur daily Commentary from July 9, 2026, points out a wide and unusual divergence between the low S&P 500 volatility index (VIX) and the lack of correlation among the index’s individual stocks.
As we share below, the condition represents a potential headwind, but for now, just something to be mindful of.
The low VIX (first graph) implies smooth sailing ahead, while a record-low implied correlation (second graph) suggests the market could be at risk. Goldman is hedging the risk of a correction, i.e., an implied correlation spike. Often, when implied correlation rises sharply from extreme lows, as it did in August 2024 during the yen carry trade unwind, the divergences that kept the index calm disappear. Stocks start moving together again, and most of the time they move down. This condition is not a warning to expect a market downdraft, but it does suggest that risk awareness is critical.
Midterm ElectionsMarkets tend to dislike uncertainty. Accordingly, the months leading up to the midterm elections often bring volatility. This year, the potential for the Democrats to regain the House and, less likely, to take the Senate as well poses greater risks than if the Republicans were expected to maintain control of both houses.
We suspect that toward later summer and early fall, market trepidation will increase over the unknown election outcomes and what they may mean for policies and ultimately markets. Accordingly, this is likely a stock market headwind that will intensify as the year progresses.
Consumer StrugglesAfter two strong months of outsized growth, consumer credit, mainly credit cards, contracted for the first time in almost two years. The personal savings rate sits at 3.0%, near its lowest level since 1960. Both sets of data indicate that consumers’ wage growth is no longer keeping pace with inflation, forcing them to reduce borrowing and/or draw down savings and run tighter budgets.
This is a genuine headwind, and it isn’t going away soon. But it’s not the whole consumer story either. Unemployment remains low, and the struggle appears concentrated among lower-income individuals and parts of the middle class. Many indications of spending among upper-income households point to continued strength, and that cohort accounts for an outsized share of total consumption. Per Yahoo Finance:
A new report from Moody’s Analytics shows the top 10% of earners now account for nearly half of all U.S. consumer spending, a historic high that shows how dependent economic growth has become on wealthy households.
A squeezed lower class matters for retailers and lenders exposed to that segment, but less for the broader market, where spending is increasingly a story about who still has room to spend.
This is a headwind worth watching more closely if the unemployment rate starts to rise and financial struggles spread to higher-income earners.
Tailwinds That Could Become Headwinds Margin DebtRecord levels of margin debt have boosted demand for stocks, providing a strong tailwind for the market. As we wrote in Margin Debt Risk;
Margin debt just set another record. In May 2026, investors owed their brokers a combined $1.42 trillion, the highest in history and a 53.7% jump from the prior year.
While record and growing margin debt is a powerful tailwind, it’s a wind that can reverse direction suddenly. Per the article:
Leverage peaks near tops. Then it mean-reverts violently because the unwind forces the selling.
In addition to watching margin debt, pay attention to the most favored stocks. Today, semiconductor stocks are bolstered by a disproportionate share of the margin. If they start faltering while the broader markets hold up, this may be a sign that margin usage is about to reverse. Further, any indication of liquidity trouble in the money markets could also result in a decline in margin debt.
The Yen Carry TradeThe yen carry trade is a source of leverage pushing the market higher. As we wrote in a recent Commentary:
The carry trade thrives with a weak yen, as we have today. Despite higher Japanese borrowing costs, the yen has depreciated significantly against the dollar, more than offsetting the higher interest costs for carry trades. A weakening yen means the trade remains profitable, and the leverage the carry trade provides to markets continues to build.
The risk today to US investors is that higher Japanese yields and a stronger yen could force a rapid, disorderly reversal of the carry trade. Bear in mind that the more the yen falls, the more the trade grows, and the larger the unwind will be whenever the BOJ finally acts.
The Tailwind: AI Capital SpendingWorking against every headwind we discussed, and others, is a single counterweight of extraordinary size: the capital spending boom tied to artificial intelligence infrastructure.
The four largest hyperscalers (Amazon, Microsoft, Alphabet, and Meta) are on pace to spend roughly $725 billion combined on capital expenditures in 2026, up about 75% from last year. Goldman Sachs has raised its cumulative capex estimate for these four companies from 2025 through 2030 to $5.3 trillion, up from $4.5 trillion prior to first-quarter earnings.
That spending shows up directly in corporate earnings, employment in construction and semiconductors, and demand for everything from GPUs to transformers to turbines. The spending is also self-reinforcing in the near term. For instance, cloud backlogs at companies are growing, giving management the revenue predictability needed to justify increased spending. Although there is considerable skepticism about the durability of this spending cycle, it has thus far yielded results that suggest otherwise.
This is the tailwind doing the heavy lifting in the economy and market. It has been large enough and persistent enough to absorb concern about the headwinds. The question worth asking is not whether the tailwind is real but how much further it can carry markets before the headwinds start to matter more than the continued spending.
Summary: Take Advantage Or Trim Your Sails?In meteorological speak, the Cone of Uncertainty is wide. However, just because the headwinds are numerous and the range of potential outcomes is vast, investors don’t need to trim their sails and batten down the hatches.
The more productive approach is to keep using the favorable winds while they are blowing, and to pay close attention to market barometers and remain prepared for a shift in the winds. That means participating in the areas of the market most directly tied to the AI capital spending cycle while it remains intact, while also paying attention to balance sheet quality, maintaining valuation discipline, closely monitoring technical conditions, and remaining diversified in other sectors less impacted by the AI spending boom.
Tyler Durden Thu, 07/16/2026 - 12:25