Trump Backs CFTC Authority Over Prediction Markets

Authored by Brayden Lindrea via CoinTelegraph.com,

US President Donald Trump has backed the Commodity Futures Trading Commission as having the “exclusive authority” over prediction markets, as state regulators' action against the platforms mounts.

“It is critically important that the CFTC’s exclusive authority over Prediction Markets is maintained, and that they will thrive,” Trump posted to his social media platform Truth Social on Tuesday.

Trump also took aim at several officials whose states have launched legal action against prediction markets, including Kalshi, Polymarket, Crypto.com and Robinhood.

“Under my leadership, we are setting ‘rules of the road’ that are the Gold Standard for the States,” Trump wrote.

“We cannot have SCUM like Chris Christie, Letitia James, Tim Walz, and JB Pritzker setting the rules!”

Source: Donald Trump

Multiple state authorities have argued that prediction markets are violating state laws by offering gambling without a license, and have sued or issued cease-and-desist orders to multiple platforms.

Prediction markets including Kalshi have sued various state authorities to fend off legal action, claiming it is regulated solely by the CFTC.

CFTC Chair Mike Selig has also opposed the states, arguing his agency has “exclusive jurisdiction” over prediction markets as federally regulated designated contract markets.

The agency has sued several states, including Minnesota, Illinois, New York and Arizona for taking action against prediction markets.

Trump said in his post that “other Countries are after this new form of Financial Market, and we want to remain at the top.”

“It is a major Industry, and we must protect it,” he added.

Last month, Trump told reporters he was “not happy” with prediction markets and was “never much in favor” of them in response to a question about well-timed bets on the platforms on events linked to the Iran war, which has drawn the ire of several Democrats who have called for stricter measures.

Trump, whose son Donald Trump Jr. is invested in and on the advisory board for Polymarket and is also an adviser to Kalshi, softened his stance on prediction markets days later, saying the US would “get left out in the cold” if it didn’t allow the platforms.

In March, the CFTC established an advisory team to oversee the listing and trading of event contracts and to ensure that market participants satisfy anti-manipulation, surveillance and market integrity requirements.

It claimed that prediction markets fall within the CFTC’s existing derivatives framework under the Commodity Exchange Act.

Tyler Durden Wed, 05/27/2026 - 10:20

The post JD Vance’s Racist “Fraud” Task Force appeared first on CEPR.

Stranded

By Molly Schwartz, cross-asset macro strategist at Rabobank

Markets laid in wait for war-related headlines yesterday after Trump truthed on Monday night that “negotiations with the Islamic Republic of Iran” were “proceeding nicely.” It’s also possible that “proceeding nicely” meant that the US was once again escalating to de-escalate, as hours later the US military confirmed reports of strikes against Iranian military assets, including speedboats which were laying mines in the Strait. While the news reel was sparsely populated, it did flag that the US Navy was restarting to guide ships through the Strait with a plan to help a dozen vessels through the passage in the coming days. However, minutes later a “US official” denied these claims, leaving traders, and vessels in the Strait, stranded. Brent crude oil climbed around $3.50 from open to $99.50/bbl.

A look at the current landscape suggests to us that a peace deal is far beyond the horizon. Rabobank’s global strategist, Michael Every, released a report, The Hormuz Odyssey: a new base case, which updates our base case to see complications in the Strait for around another three months. The possible outcomes of the war in Iran are immeasurable, but even in the pipe dream scenario where the war ends tomorrow, logistics are king. If a deal were to be magically achieved tomorrow, there are still somewhere around 1,500 ships still trapped in the Strait of Hormuz.

The Strait is incredibly narrow and it will take time for these ships to safely pass through. Energy strategists Joe DeLaura and Florence Schmit elaborate on the implications for energy prices in their recent report, Longer Stalemate, Higher Prices. Needless to say, they project oil staying higher for longer, forecasting Brent averaging around $120/bbl in Q3 of this year, which would imply a return to levels still not seen since 2022.

To further complicate the outlook, the proxy war in the Middle East between Israel and Hezbollah has also re-escalated, with the IDF reporting that it hit over 100 Hezbollah sites in Southern Lebanon, including “storage facilities, command centers, and observation points.” This, of course, likely puts another obstacle in the way of Trump’s insistence that GCC members join the Abraham Accords and normalize relations with Israel as part of a broader peace deal. While many of the GCC states are no friend to Hezbollah, the implications of normalizing relations with Israel during elevated hostilities in the Levant are a political nightmare.

US Secretary of State, Marco Rubio, hinted that in his view, negotiations to end the war may “take a few days,” which is certainly more optimistic than our view of a few months. Nuclear programs will continue to stand as a major barrier towards any sense of an agreement between the US and Iran. Total regime change in might not be in the cards, but achieving a firm commitment from Iran that it promises to table its plans for nuclear development is the only way the US can exit the war and keep some of its street cred.

But while nuclear proliferation is a major issue abroad, it may be presenting opportunities at home. The New York Times reports that the US government may allow private companies to use “Cold-War era plutonium from dismantled nuclear warheads” as fuel for nuclear power plants.

US Treasury yields traded mostly flat from the open, across the yield curve, with a slight bull-steepening bias, and the DXY index was little changed at 99.19. The US 5-year, 30-year spread widened again, back to 84bp, bouncing off of 1-year lows of 81bp on Friday. The US OIS curve remains positioned firmly in favor of hikes, pricing in around 70% of a hike by year-end, and a full hike by March of next year.

But the US consumer outlook remains grim. US Conference Board consumer confidence picked up a touch from 92.8 to 93.1, but remains firmly planted in negative territory. The components of the headline index—present situation and job outlook—have been trending consistently lower since 2021, while consumer expectations also remain in negative territory. While we should note that consumer confidence has been a poor indicator of economic performance for quite some time now, a poor consumer outlook coupled with a dire inflationary outlook could spell trouble for those at the lower end of the income spectrum. We will see headline and core PCE price data for April on Thursday, expected to register 3.8% y/y and 3.3% y/y, respectively.

Early yesterday morning, Russian foreign minister, Lavrov warned US citizens to evacuate Kyiv, ahead of military escalation in the region. The battle between Russia and Ukraine wages on, and so does that between the Russian Central Bank and Euroclear. Since the war in Ukraine and the ensuing sanctions on Russia, Euroclear has frozen Russian assets, with some EU players considering using said assets to help fund Ukraine. While that prospect remains tabled (for now), Russia is still trying to get its money back.

In the court of public opinion, views are mixed. But in the court of Russian law, the Russian courts have ruled decisively—in favor of Russia. The Moscow court of arbitration has ruled that Russia has incurred losses of approximately USD 250 billion after having been frozen by Euroclear, with the AP saying that “lawyers argued that Euroclear’s right to a fair trial was violated.” Euroclear, meanwhile, made its opinion on the Russian ruling abundantly clear: they do not care and Russian assets may be stranded in Belgium for the foreseeable future.

Tyler Durden Wed, 05/27/2026 - 09:40

Lululemon Calls Truce With Founder Chip Wilson After Stock Collapse, Leggings Quality Implosion

Lululemon has settled its proxy fight with founder Chip Wilson, ending one of the year's top proxy battles, according to Reuters. This follows a fiery letter to shareholders from Wilson earlier this year, calling for activism, as the athletic apparel retailer has seen its shares collapse, lost market share in the leggings market, and become entangled in multiple see-through leggings quality-control issues with customers.

Reuters first reported Tuesday evening that Lululemon and Wilson were nearing a settlement that would give him two board nominees and include a commitment to find another mutually agreed-upon director at a future date.

The agreement would give Wilson regular access to Heidi O'Neill, Lululemon's incoming CEO, according to Reuters, which cited sources.

The dispute comes as Lululemon's North American sales weaken, competition from Alo and Vuori intensifies, and the stock is down nearly 77% from its 2024 peak of around $500 per share.

In late February, Wilson wrote a fiery letter to shareholders, in which he said, "In support of all shareholders, I am pursuing a campaign to catalyze a quantum of change that is sorely needed at Lululemon. To effect that change, I have pursued private, constructive dialogues with the Lululemon Board of Directors (the 'Board') for the past few months. My attempts toward a sensible solution have not been reciprocated."

He continued, "While we have proposed changing three directors, our strong feeling is that more than three directors should be replaced."

Wall Street analysts tracked by Bloomberg are mostly neutral on the stock. 

Even before Chip's public letter, we pointed out: "Lululemon's path back to relevance in the athletic space may require a shake-up of the Board."

Time for Chip to launch a plan to save comapny he founded in 1998. 

Tyler Durden Wed, 05/27/2026 - 09:20

Biden Sues To Block DOJ Release Of Audio Recordings From Biographer Interviews

Authored by Aldgra Fredly via The Epoch Times,

Former President Joe Biden filed a lawsuit on May 26 in a bid to block the Department of Justice (DOJ) from releasing audio recordings and transcripts of his private conversations with a biographer that were connected to a 2023 special counsel probe into his handling of classified records.

The lawsuit, filed in the U.S. District Court for the District of Columbia, comes as the DOJ planned to release the materials to the House Judiciary Committee and conservative think tank The Heritage ​Foundation on June 15.

The materials stemmed from private conversations Biden had with ghostwriter Mark Zwonitzer in his home between 2016 and 2017 as part of the writing process for his memoir titled “Promise Me, Dad: A Year of Hope, Hardship, and Purpose.”

The book detailed Biden’s decision to run for the 2016 ​presidency while ⁠his eldest son, Beau, fought brain cancer and later passed away in 2015, according to the lawsuit.

The DOJ later obtained the materials in 2023 as part of former special counsel Robert Hur’s investigation into Biden’s handling of classified information after his vice presidency.

The probe ended in 2024 with findings that Biden had willfully retained classified materials, though no criminal charges were pursued. Hur said at the time that the evidence fell short of proof beyond a reasonable doubt.

According to Biden’s lawsuit, the DOJ initially withheld the materials under the Freedom of Information Act (FOIA) on the grounds that they were exempt from disclosure, but the department later reversed its position under President Donald Trump’s second term.

The lawsuit seeks judicial review to stop the DOJ from disclosing the materials, citing Biden’s privacy rights and the DOJ’s obligations to protect “sensitive and highly personal law enforcement information.”

“Every American, including a sitting or former Vice President, has a right to privacy in the personal conversations he has within his own home,” the lawsuit stated.

“And when the U.S. Department of Justice obtains that private information through a criminal investigation, the department bears a particular responsibility to protect it from disclosure.”

The Epoch Times reached out to the DOJ for comment, but did not receive a response by publication time.

Biden has earlier sought to intervene in the Heritage Foundation’s lawsuit against the DOJ over the materials. ⁠Last ​week, a judge allowed Biden to join ​the case but barred him from pursuing claims about the committee’s request for the materials, ​according to court records.

Oversight Project, a legal advocacy arm of The Heritage Foundation, said on May 11 that the public deserves access to the materials and called for full transparency regarding Hur’s 2023 probe.

“President Biden revealed classified information and was not prosecuted,” Oversight Project President Mike Howell said in a statement, adding, “These tapes will further prove the massive lie regarding Biden’s fitness for office and the fact Biden revealed classified information.”

Tyler Durden Wed, 05/27/2026 - 08:45

SK Hynix Joins Trillion Dollar Club As Korean Stocks Echo Nasdaq's 1999 Meltup

The breathtaking rally in South Korean stocks hit a couple of key milestones overnight.

The benchmark Kospi index at one point in the session was up 100% for 2026, rivaling the Nasdaq 100 Index’s 102% surge in 1999 - right before the bubble burst...

Samsung (005930) was up 2.7% and SK Hynix (000660) soared 9.3% rallying to new record highs mainly on three things:

1) overnight backdrop of SOX +5.5% driven by MU +19% strength,

2) launch of leveraged ETF instruments including 14 products that track 2x the return, and 2 inverse products that track -2x the return of SEC(005930) and SK HYNIX(000660), and

3) reports of SEC's union members voting in favor of a compensation deal and separately, that SK Hynix is making efforts to strengthen its long-term supply agreements via more favorable terms such as higher prepayment and ultra-long tenors of five years or more.

Flow-wise, foreigners extended their net-selling streak in SK HYNIX to 14 consecutive days, selling -$156mn today, while they've also ended as marginal net sellers in SEC (-$54mn).

Local instos were net buyers in both names, as they added +$928mn in SK HYNIX and +$330mn in SEC, while retail investors profit-took in both names (-$723mn in SK HYNIX and -$240mn in SEC).

The market value of memory-chip maker SK Hynix surged above $1 trillion for the first time as investors bet the AI boom will lead to a sustained revaluation of the industry.

Both now larger than Berkshire and Eli Lilly.

Both Hynix and Micron stocks have 10x over one year...

In the fourth quarter of 2025, SK Hynix controlled 57% of global HBM market share by revenue, Counterpoint Research’s data show. Samsung and Micron followed with 22% and 21%, respectively.

As Bloomberg's Phill Serafino reports, SK Hynix and Samsung account for almost three-quarters of the Kospi’s gains this year as customers who are building data centers clamor for high-bandwidth memory chips.

(US producer Micron also reached a $1 trillion value yesterday.)

Despite that, almost half of the stocks in the Kospi are down for the year.

The index trades at less than half the earnings multiple of the S&P 500, attracting bargain-hunting hedge fund managers.

Even with their rapid ascent this year, SK Hynix shares trade at about seven times one-year forward earnings, compared with 27 times for the Philadelphia Semiconductor Index.

“Judging by earnings power alone, it’s difficult to predict a near-term peak,” said Cha So-Yoon, an equity investment manager at Taurus Asset Management in Seoul.

“Even if investors don’t assign Big Tech-style multiples of 20 times, many are eyeing up to 10 times earnings as a near-term upside.”

“Memory chipmakers have been irrationally undervalued, but we are now seeing the trend of recovery in their valuation gap,” said Kang DaeKwun, chief investment officer at Life Asset Management in Seoul.

“We are still at the early stage of the rally.”

The undervaluation persists despite government efforts to push companies to improve shareholder returns and modernize governance.

The market is still bogged down by its legacy of family-controlled business empires with complicated issues tied to cross-shareholdings and high inheritance taxes.

The ultimate goal of the Korean government and regulators is to win developed-market status from index provider MSCI, a shift that could fuel another leg higher for the market.

Perhaps most strikingly, another emerging spillover channel from the AI boom is fiscal – taxes from highly profitable tech equipment manufacturers are filling government coffers, creating more flexibility to spend or pay down debt.

Goldman Sachs estimates that South Korea will see a fiscal windfall of about 5pp of GDP this year.

Despite the euphoria, some analysts are concerned that the surge may not prove to be durable.

The rally is built on the assumption that earnings will increase at an astronomical pace, and any easing of supply bottlenecks or slowdown in AI capital expenditure could lead to reversals.

Tyler Durden Wed, 05/27/2026 - 08:25

S&P Futures At Daily Record High Because RAM And World Peace

US futures are trading at new all-time highs following Tuesday’s record-setting rally (when the S&P hit a new  record high on negative breadth as is now the norm) , bolstered by a growing chorus of Wall Street bulls: Goldman lifts its S&P 500 target, while Barclays strategists say investors still have capacity to chase the rally, while the memory bubble just keeps raging as the market value of Korea's SK Hynix sailed above the trillion-dollar mark just one day after fellow chip maker Micron did the same. As of 8:00am, S&P 500 futures are up 0.3% while Nasdaq 100 contracts are rising 0.4%. And speaking of Micron, after soaring more than 20% on Tuesday, MU shares shares are up another up another 5% in premarket because why not, and point to a continuation of the bubble in memory-chip stocks; Semis are also bid (SOXX +2%); cyclicals are set for another positive session led by Discretionary, Industrials, and Materials. In Defensives, both HC and Staples are positive but underperforming SPX. European and Asian stocks also climb as broader risk sentiment is underpinned by a pullback in oil prices on the now daily optimism that the US and Iran will reach a peace deal. US yields are down 1-2bps even with the Bloomberg Dollar Spot index up to session highs. Brent crude futures for July are down 3% to around $96.70 a barrel. Ags are weaker, with Metals being pulled lower, too while precious metals tumble. Today's economic data slate includes weekly ADP employment change (8:15am), May Richmond Fed manufacturing index (10am) and May Dallas Fed services activity (10:30am). Fed speaker slate includes Cook (3:55pm), Jefferson (8pm) and Goolsbee (10:25pm).

In premarket trading, Mag 7 stocks are mixed early Wednesday (Alphabet -0.5%, Nvidia +0.4%, Apple +0.1%, Tesla +1.6%, Amazon +0.02%, Microsoft -0.5%, Meta -0.5%)

• Box (BOX) shares are down 2% after the software company’s first-quarter results were largely in line with expectations. Analysts noted an impact from foreign-exchange issues
• Shares in rocket, space and satellite communications companies (LUNR +17%, RDW +20%, ASTS +6.1%) are rallying in premarket trading Wednesday, set to extend recent gains. The sector has advanced since SpaceX filed publicly for what stands to be the largest-ever initial public offering.
• Shares in semiconductor and chip equipment companies (POWI +7.0%, SMTC +5.4%, MRVL +5.7%) are rising again as the breakneck surge in the sector intensifies, sending the market capitalizations of SK Hynix and Micron Technology above $1 trillion.
• Verra Mobility (VRRM) shares tumble 43% after the mobility software company cut full-year adjusted EPS guidance below analyst estimates and said Avis Budget had terminated its contract, prompting at least three analyst downgrades.
• Zscaler (ZS) shares sink 22% after the security software company gave a fourth-quarter revenue forecast that was weaker than expected. Evercore downgrades the stock, noting slowing net new customers.

In other corporate news, Samsung Electronics union members voted in favor of a compensation deal, staving off a strike that threatened to disrupt global chip supply. They will get over $300,000 as part of the deal. And China is said to have been slow-walking approval of Airbus plane deliveries to signal impatience with how long European regulators are taking to certify Chinese-made aircraft. In AI news, ByteDance is planning to sharply increase its capital spending this year and next in a bid to lead the Chinese AI market and challenge the top US players abroad. Software companies and their private equity investors will face mounting strains as debt redemptions swell in coming years, according to Canadian investment manager CI GAM. 

“Given the capex plans of the AI hyperscalers, there’s no reason to think that the rally is about to end,” said Fares Hendi, a portfolio manager at Societe de Gestion Prevoir in Paris. “If there’s a breakthrough between the US and Iran, the trend could accelerate, with investors buying back their shorts.”

With no overnight news from the Middle East, optimism that the US and Iran are nearing a deal to fully reopen the Strait of Hormuz pushed Brent down 2.6% to around $97 a barrel as traders grew less concerned about an energy-driven spike in inflation. Sentiment was further boosted by the batshit insane meltup in Korea (just two stocks technically) which has made the Nasdaq bubble of 1999 look like amateur hour. Strategists at Goldman joined peers at Morgan Stanley and Deutsche Bank in seeing a 17% return for the S&P 500 Index this year. Earnings growth powered by the AI boom will drive further gains in stocks, the Goldman team led by Ben Snider said, as they increased their year-end target for the US benchmark to 8,000 points, ditching a previous forecast of 7,600. 

“We are in the midst of something very structural and huge — the AI CapEx theme — and it’d be very dangerous to stand against it,” said Lilian Chovin, head of asset allocation at Coutts. In other words, just put a blindfold on and buy. 

Meanwhile, the momentum behind the AI trade continued, with investors betting that chipmakers will capture an outsized share of global capital spending even as millions of furious workers are fired and eager to burn down every data center they see. Adding to the insanity, BBVA strategists said it could be a good time to sell US equity volatility, noting short vol portfolios have the strongest overall forward signal compared to other risk premia strategies. Since 1990, VIX has tended to drop in June and July, before rising again in August and September, according to data compiled by Bloomberg. Let's just ignore that whole other "sell in May" calendar thingy. Meanwhile, the excess capital chasing AI assets is creating a liquidity overhang and driving up risk for investors, notes GGL Capital’s founder Gigi Luk.

Shares in semiconductor and chip equipment companies are rising again as the surge in the sector intensifies, sending the market capitalizations of SK Hynix and Micron Technology above $1 trillion

With bullish sentiment running high, the European Central Bank said that financial markets are in danger of a sudden and significant correction, warning that investors are downplaying a range of threats from the Iran war to fiscal pressures.

The “question is how soon, or whether we will go back to a pre-conflict situation with regard to Hormuz, and that’s where we are cautious,” said Chovin. “The disruption to commodities will remain fairly high even if a deal is made.”

European stocks are also climbing as broader risk sentiment is underpinned by a pullback in oil prices on optimism that the US and Iran will reach a peace deal. The Stoxx 600 is up 0.3% with autos leading gains after data showed a third consecutive rise in European car sales, while energy stocks lagged.  Here are some of the biggest movers Wednesday:

• Akzo Nobel rose as much as 17%, the most since 2017, after the company said that on May 1 it rejected a conditional and non-binding proposal from Nippon Paint Holdings Co and The Sherwin-Williams Company
• Cohort shares rose as much as 15%, the most in 10 months, after the UK defense tech firm issued a trading update which showed revenue and profit ahead of expectations
• Pets at Home shares reverse initial losses to rise as much as 5.2% after the retailer posted in-line profits for FY26 and highlighted continued growth in its Retail arm, which analysts say shows that a turnaround plan is gathering momentum
• Hollywood Bowl rose as much as 10%, the most since Feb. 2021, after first-half results that analysts said reinforced the investment case for the bowling-center operator
• MPC Container Ships advanced as much as 9.1%, reaching the highest since November 2024, after releasing first-quarter results which DNB Carnegie sees as strong
• Hansa Biopharma shares rose as much as 8.3% after the Swedish company said the primary objective of a post-authorization efficacy study for its desensitization treatment Idefirix for kidney transplant patients was met
• CD Projekt gained as much as 3.5% in early trading in Warsaw after Poland’s biggest computer-game maker invited fans to a “special anniversary stream” for The Witcher 3: Blood and Wine
• Naturgy shares fell as much as 4.7% after CVC Capital Partners divested its 13.8% stake in the Spanish utility after eight years as a key investor
• Flow Traders shares fell as much as 11%, the most since Oct. 30, after ING cut the Dutch electronic trading firm to sell from hold, saying its market share has continued to erode despite higher trading capital
• Rusta fell as much as 6.3%, to the lowest since March, after Danske Bank cut its recommendation on the Swedish discount retailer to hold from buy
• Reinet Investments was the worst-performing stock in Johannesburg, declining as much as 10%, the most since March 2020, after the firm said full-year 2026 net asset value declined 4.5% from the previous comparable period

Asian stocks jumped as investors boosted demand for the region’s chipmakers during the artificial intelligence boom, while sentiment remained broadly positive on prospects for a US-Iran peace deal. The MSCI Asia Pacific Index climbed as much as 1.7% to a fresh record. The gauge is headed for a fifth-straight session of gains, which would mark its longest win streak since February. South Korea’s Kospi surged 2.3%, leading advancers in the region, while Taiwan’s benchmark climbed 1.7%. Extended tech optimism pushed SK Hynix’s market value to more than $1 trillion, following Micron Technology’s climb to that level on Tuesday in the US. Meanwhile, oil slipped on optimism that the US and Iran will reach a peace deal despite fresh hostilities. Elsewhere in Asia, Chinese stocks in Hong Kong fell, weighed down by losses in tech heavyweights including Xiaomi. Markets in Singapore, Philippines, Indonesia and Malaysia were closed for holidays.

In FX,the dollar was little changed on the day as one of the biggest trends in the FX market faces significant pressure. AUD/NZD, which has risen more than 15% since April 2025, is set to drop by the most in a year due to rate-differentials repricing; the pair drops as much as 1% to 1.2157, after rising earlier to its highest level since April 2013 at 1.2288 The RBNZ left interest rates unchanged as expected but signaled it will most likely need to raise them soon, while Australia’s headline CPI data for April was lower than expected, spurring traders to dial back expectations for RBA rate hikes this year. “No surprise in the unchanged RBNZ OCR, but the uplift to the implied OCR track, plus the fact three members voted for an immediate hike, gives this a bullish hue, with a 8 July hike now seen much more likely than not,” said Ray Attrill, head of FX strategy at National Australia Bank

In rates, treasuries hold slight gains with futures just off session highs and yields richer by 1bp to 2bp across the curve. US 10-year yield near 4.47% is 1bp lower on the day, trailing UK counterpart by about 3bp and German by less than 1bp; curve spreads are little changed, 5s30s near 85bp and 2s10s around 44bp. Gilts outperform Treasuries, supported by further oil-price declines on hopes that the US and Iran will reach a peace deal despite fresh hostilities. IG dollar issuance slate includes a handful of names already. Ten deals were priced Tuesday totaling $12.9 billion. Issuers paid less than 1bp in new issue concessions on deals that were 4.6 times covered, and at least one issuer stood down. US session includes $70 billion 5-year note auction at 1pm New York time, which follows Tuesday’s 2-year which stopped on the screws (WI 5-year yield near 4.16% is about 20bp cheaper than last month’s, which tailed by 0.5bp) and three scheduled Fed speakers. 

In commodities, WTI crude oil futures are down almost 4%. Brent crude futures for July are down 3.5% to around $96 a barrel. Gold tumbled more than 3% as it is now used to fund the memory bubble.

Today's economic data slate includes weekly ADP employment change (8:15am), May Richmond Fed manufacturing index (10am) and May Dallas Fed services activity (10:30am). Fed speaker slate includes Cook (3:55pm), Jefferson (8pm) and Goolsbee (10:25pm).

Market Snapshot

Top Overnight News

• Hong Kong banks are increasing scrutiny of mainland Chinese clients. Some major lenders suspended the opening of investment and wealth management accounts for mainland residents. BBG
• Taiwan prosecutors suspect Nvidia chips were smuggled to China via Japan. BBG
• Australia’s consumer-price growth slowed in April following a temporary fuel tax cut, but stayed high enough to keep the door open to further rate increases by the central bank. The consumer-price index rose 4.2% over the 12 months through April, down from 4.6% for the year through March. WSJ
• The Reserve Bank of New Zealand maintained the official cash rate at 2.25% for the third meeting in a row, as it weighs the threat to the South Pacific economy from higher prices of everything from motor fuels to freight against the damping effect rising inflation can have on demand. WSJ
• Ukraine has a six-month window in which to seize the battlefield initiative from Russia and strengthen its hand for peace talks, a senior commander told Reuters, predicting a "turning point" was imminent after more than four years of war. RTRS
• Russia is stuck on the Ukrainian battlefield and lashing out with massive strikes on Kyiv. The growing fear in European capitals is that President Vladimir Putin will try next to reshuffle the cards by expanding the conflict to Europe. WSJ
• SK Hynix and Micron each topped $1 trillion in value for the first time as investors continued to bet on the AI boom. BBG
• US Customs said about $20.6 billion in tariff refunds is headed to importers filing claims through its new web portal. However, earlier refund processing values were far lower than previously thought. BBG
• Goldman raised its S&P price target from 7600 to 8000: "continued earnings growth should drive continued equity market upside. We expect the S&P 500 will rise by 6% to our revised year-end target of 8000. Our previous target was 7600. The increased return forecast reflects increased estimates for S&P 500 earnings following an exceptionally strong Q1 reporting season. We raise our S&P 500 EPS forecasts to $340 (+24% year/year) in 2026 and $385 (+13%) in 2027. The beneficiaries of AI infrastructure investment will account for roughly half of S&P 500 EPS growth this year." Goldman

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were predominantly higher following the mostly positive lead from Wall Street, where the S&P 500 and Nasdaq printed fresh record highs amid outperformance in tech, while markets remain hopeful of a US-Iran agreement despite the recent limited US 'self-defence' strikes. ASX 200 eked mild gains with strength seen in tech and miners, but with the upside capped by losses in the top-weighted financial sector, while participants also digested softer-than-expected headline inflation. Nikkei 225 rose to a fresh record high above the 66,000 level as tech stocks continued to underpin the index, and with Services PPI data printing softer-than-expected. KOSPI outperformed and posted a new all-time high as SK Hynix rallied to surpass the USD 1tln market cap milestone, while Samsung Electronics was also boosted after union workers voted to accept the pay agreement. Hang Seng and Shanghai Comp lagged following weak earnings results from Xiaomi, which reported a 43% drop in adjusted net in Q1 and with China expanding overseas travel curbs to its top AI talent in private firms, while there were also comments from USTR Greer that China expects a certain level of US tariffs we agreed to and that US tariffs on Chinese goods will likely 
always be higher than for other countries.

Top Asian News

• Australian Inflation Rate MM (Apr) 0.4% vs. Exp. 0.6% (Prev. 1.1%).
• Australian Inflation Rate YY (Apr) 4.2% vs. Exp. 4.4% (Prev. 4.6%).
• Australian RBA Trimmed Mean CPI MM (Apr) 0.3% vs. Exp. 0.3% (Prev. 0.3%).
• Australian RBA Trimmed Mean CPI YY (Apr) 3.4% vs. Exp. 3.4% (Prev. 3.3%).
• Chinese Industrial Profits (YTD) YY (Apr) Y/Y 18.2% (Prev. 15.5%).
• Japanese Services PPI YY (Apr) 3.0% vs Exp. 3.3% (Prev. 3.1%).

European bourses (STOXX 600 +0.4) start Wednesday trade broadly in the green, with the IBEX 35 (+0.8%) outperforming. Geopolitical newsflow has been light, with no response coming from Iran after Tehran stated that the US had violated a ceasefire by striking targets near the contested Strait of Hormuz. More recently, Iranian Deputy Security Secretary said indirect contacts between the US and Iran continue, and Iran is not discussing the fate of its enriched uranium stockpiles with the US. Sectors have a positive tilt. Autos is the clear outperformer, after new-vehicle registrations rose to 1.15mln, +7% M/M. Car sales climbed for the third consecutive month, with EV deliveries rising 38%. Consumer Products & Services and Retail also printed decent gains. At the bottom of the pile lies Energy and Utilities, with UK names lower after Ofgem raised the energy price cap to 13%.

Top European News

• UK PM Starmer is poised to unveil a multi-billion-pound package to boost the UK defence industry and armed forces next week, which is expected to be backed by GBP 18bln of government funding, according to The i Paper.
• France signalled that the EU could allow UK-made vehicles to qualify for “Made in Europe” subsidies, according to FT.
• Germany's Council of Economic Experts forecasts 2027 economic growth 0.8%, and sees 2026 GDP +0.5% vs +0.9% in November.
• Spainʼs anticorruption police has raided the headquarters of Spanish PM Sánchezʼs Socialist Party in Madrid, Politico reported. The raid was to obtain evidence for an ongoing probe into the alleged illegal financing of the countryʼs ruling party. - Hungaryʼs government spokesman said technical talks with the EU are underway on multiple EU funding issues, while a meeting between the Hungarian PM and European Commission President has not yet been scheduled.

FX 

• DXY trades within a relatively narrow 99.04-99.14 range amid a lack of major geopolitical updates and drivers, as participants look for a more definitive direction with regard to the mediation efforts to end the US-Iran war. The index remains tucked within yesterdayʼs 98.98-99.25 range. Earlier, modest downticks coincided with comments from Fedʼs Kashkari, who said it is too early to predict the timing of the next Fed action when asked about market pricing for an October rate hike.
• Kiwi is the best performing G10 currency following the RBNZ's hawkish hold, in which it kept the OCR unchanged, but stated the OCR will most likely need to increase sooner and by more than envisaged in the February MPS. NZD/USD reside in a 0.5833-0.5885 range. AUD/USD was hit by softer-than-expected inflation. AUD/USD and AUD/NZD reside towards the bottom of 0.7136-0.7180 and 1.2143-1.2287 range, respectively.
• Other G10s are largely flat vs the USD. CAD is subdued by oil prices, JPY saw softer-than-expected Services PPI data and comments from BoJ Governor Ueda, who warned that energy shocks may become more persistent. EUR overlooked further hawkish ECB commentary, whilst GBP was unreactive to the Ofgemʼs expected energy price cap rise.

Central Banks

• RBNZ kept the OCR at 2.25%, as expected, while it stated the committee remains focused on ensuring that increased costs do not lead to elevated inflation over the medium term, and the OCR will most likely need to increase sooner and by more than envisaged in the February Monetary Policy Statement. RBNZ said the pace of OCR increases will depend on the relative influence of persistent wage- and price-setting behaviour versus weaker economic activity on medium-term inflation pressures. Furthermore, the central bank's latest rate projections were increased with the OCR now seen at 2.51% in September 2026 (prev. 2.28%), 3.07% in June 2027 (prev. 2.62%), and at 3.11% in September 2027 (prev. 2.71%).
• RBNZ Minutes revealed that three committee members (Breman, Silk, Conway) voted to leave the OCR on hold and three members (Hansen, Gourley, Gai) voted for a 25bp hike, resulting in the chairperson having the casting vote, meaning the OCR remained on hold at 2.25%. It was also stated that the committee remains focused on bringing medium-term inflation back to target and expects that OCR increases will be required this year, while all committee members agreed that increasing the OCR at upcoming meetings would likely be necessary to ensure higher near-term inflation does not feed through to higher medium-term inflation.
• RBNZ Governor Breman said in the post-meeting press conference that all members agreed on the path for rates and the difference was on timing, while she added that OCR increases are likely at the coming meetings and depend on data.
• Furthermore, she said even if the Gulf conflict stops now, they still see inflation effects ahead, but cannot completely rule out anything on rates and stated that the current OCR is still a little bit on the accommodative side.
• Fedʼs Kashkari (2026 voter) said it is too early to predict the timing of the next Fed action when asked about market pricing for an October rate hike. On the mandate, Kashkari said the US inflation risk is currently higher than labour-market deterioration risk, though both must be monitored.
• BoJ Governor Ueda said supply shocks loom large in everyone's mind and they are not new but have become more frequent. He warned that energy shocks may become more persistent and that central banks should not look at oil prices in isolation. 
• On inflation expectations, Ueda said that If inflation expectations are already high and wages are accelerating, the risk of second-round effects is large, however, if expectations are very low and wages are stagnant, even a large cost shock may not raise underlying inflation.

Fixed Income

• Global fixed benchmarks continue to take impetus from the price action seen across the energy complex, with yields softer across the curve as WTI and Brent prints losses of c. 3.0%. Geopolitical updates have been light thus far, with commentary out of Iran continuing to reiterate its stance on the Strait of Hormuz, “management of the Strait of Hormuz is a precondition that cannot be negotiated,” while the Iranian Supreme Leader advisor stated that the real guarantor of any agreement with the US is the Strait of Hormuz.
• USTs gain by a handful of ticks, trading at the upper end of its 109-27 to 110-01+ range.
• Bunds are higher by some 20 ticks, and further extending beyond the 126 handle (126.10-126.27 range). In terms of commentary, ECBʼs Stournaras said a June hike is likely, which is in line with recent rhetoric by policymakers. The Bank also released its financial stability review, in which it stated that financial markets are in danger of a sudden and significant correction, with asset prices looking stretched by historical standards. However, no reaction was seen in the Bund complex.
• Gilts outperform with gains of c. 50 ticks as it nears the 89 handle. In yield terms, the 10yr has slipped back below 4.85%, it remains a fair way from the April 17th low of 4.73%. In comparison to its German counterpart, it has already breached the low. UniCredit remains cautious on UK debt, highlighting 3 reasons: 1) political uncertainty, 2) inflationary pressure well above BoEʼs target, and 3) weakening macro fundamentals.
• Germany sells EUR 1.550bln vs exp. EUR 2bln 2.60% 2041 and 2.90% 2056 Bund.
• UK sells GBP 4bln 4.125% 2033 Treasury Gilt: b/c 3.38x (prev. 3.30x), average yield 4.550% (prev. 4.507%), tail 0.2bps (prev. 0.2bps).
• Japan sells JPY 300bln in 40-year JGBs; b/c 2.70x (prev. 2.54x), highest accepted yield 3.840% (prev. 3.600%).

Commodities

• Crude futures are on a softer footing with little in terms of escalatory headlines on the US-Iran front, and with no “hot response” from Iran over USʼ “self-defence” strike earlier in the week. Furthermore, mediation efforts are seemingly ongoing, but funds and Hormuz management remain sticking points. That being said, an official in the Iranian Revolutionary Guard said the likelihood of renewing war with the United States is "slim", but warned that "the armed forces are lying in wait with full magazines".
• Nonetheless, crude futures are on a grind lower with WTI Jul towards the lower end of a USD 89.64-93.69/bbl range, next eyeing the Monday low of 89.41/bbl. Brent Aug dipped under yesterdayʼs low and currently resides in a USD 92.87-96.45/bbl range ahead of Mondayʼs USD 93.21/bbl trough.
• Elsewhere, spot gold and silver remain softer despite the pullback in crude as inflationary concerns remain on tradersʼ minds, with the RBNZʼs hawkish hold overnight also not helping sentiment across the space. Spot gold fell under USD 4,500/oz to reside towards the lower end of a USD 4,476-4,528/oz parameter.
• Base metals are mixed/mostly lower as inflation concerns remain heightened, and with large buyer China also seeing a subdued performance overnight. 3M LME copper trades flat within a narrow USD 13.61k-13.85k/t range, awaiting the next macro impulse
• UK's energy regulator Ofgem announces 13% increase in energy price cap for 1 July to 30 September 2026 (as expected), citing higher wholesale gas prices due to Middle East. conflict

Geopolitics

• The IDF and US CENTCOM remain on high alert amid the possibility of a deal being failed to be reached and that US President Trump could order military action, according to journalist Stein as coordination between the US and Israel continue.
• Iranian Deputy Security Secretary said indirect contacts between the US and Iran continue, Interfax reported. Iran is not discussing the fate of its enriched uranium stockpiles with the US while Tehran is negotiating with Oman over a new mechanism of passage through Hormuz.
• Iranian Foreign Ministry spokesperson said Iran and the United States have not yet reached an agreement on unblocking the Strait of Hormuz, Nour News reported.
• Iranian lawmaker Boroujerdi said in the draft agreement between Iran and the United States, it was agreed that Washington would commit to a comprehensive ceasefire for 60 days, including Lebanon, Al Mayadeen reported. The draft also included the release of a large part of Iranʼs frozen assets and the lifting of the naval blockade are among the other requirements of this agreement.
• An official in the Iranian Revolutionary Guard said the likelihood of renewing war with the United States is "slim", Al Arabiya Business reported, however, adds that "the armed forces are lying in wait with full magazines."
• Iran said management of the Strait of Hormuz is a precondition that cannot be negotiated, while the advisor to the Iranian Supreme Leader said the real guarantor of any agreement with the United States is the Strait of Hormuz, Al Jazeera reported.
• The advisor added that documents and signatures alone cannot guarantee any deal.
• There is a decisive US message to Israel to ban targeting Beirut, Sky News Arabia reported quoting Channel 12. "Washington fears that strikes in Beirut could derail negotiations with Iran and expand the scope of escalation in Lebanon."
• Israeli PM Netanyahu said Israel are not limited to operating in Beirut, but have been operating there recently. The Israeli Defence Minister added that Israel is currently in a complex situation with the US, and no one will stop Israel from defending itself.
• Israel's Channel 12 reported the assassination of Hamas military wing commander Muhammad Awda.
• Israel conducted strikes on various towns in southern Lebanon, and explosions were reported in Lebanon's capital, Beirut, and its suburbs, while Israel's military reported sirens sounding in several areas of northern Israel after launches were identified from Lebanon.

US Event Calendar

• 7:00 am: United States May 22 MBA Mortgage Applications, prior -2.3%
• 10:00 am: United States May Richmond Fed Manufact. Index, est. 4, prior 3
• 4:00 am: United States Fed’s Logan Speaks in Panel Discussion
• 3:55 pm: United States Fed’s Cook Speaks on AI, the Economy and Financial System
• 8:00 pm: United States Fed’s Jefferson Speaks on Panel
• 10:25 pm: United States Fed’s Goolsbee Participates in Panel

DB's Jim Reid concludes the overnight wrap

The record breaking heatwave continues here in the UK even if today promises to be a bit cooler. I fear health and safety has gone a little crazy though as my twins’ half term cricket camp has been cancelled this morning because of risk of extreme heat. At the time it's on this morning the forecast is for 23 degrees Celsius, some 10 degrees cooler than yesterday. Cricket might become an endangered sport at this rate.

The heat has returned to the tech market overnight with the KOSPI (+3.65%) now up just under +98% YTD with SK Hynix (up over +13%) surpassing a trillion dollar of market cap and being up over 1000% in the last 12 months now. Also passing a trillion dollars was Micron Technology (+19.3%) in last night's US session as memory chip fever continues.

This has helped global sentiment mostly hold up over the past 24 hours, even as lingering questions over the prospects for a US-Iran deal led Brent crude (+3.58%) to pare back about half of Monday’s decline. Still, the increased Iran deal optimism from the weekend combined with renewed AI bullishness meant that the S&P 500 (+0.61%) reached a new record high as US markets returned from the long weekend.  
On Iran, we’ve seen little definitive news flow this week, leaving a sense that a deal might not yet be as imminent as hoped over the weekend. However it seems talks remain on track despite the targeted US strikes we mentioned yesterday. Iran’s Tasnim news agency reported that Tehran wants half of its $24bn in frozen assets to be released upon reaching a deal, with the topic in focus during the visit by Iran’s chief negotiator Ghalibaf to Qatar, which ended yesterday. From the US side, Secretary of State Marco Rubio said that “it’ll take a few days” to agree specific language in the draft agreement, emphasising the US demand for the Strait of Hormuz “to be open, unimpeded, without tolls”. There was also some immediate uncertainty over Hormuz, with the WSJ reporting that the US Navy was now assisting vessels through the strait but US Central Command later denying that it has restarted escorting ships.

As discussed at the top, this backdrop saw oil markets trim some of Monday’s optimism that a deal could be imminent, and Brent crude (+3.58%) reversed about half of Monday’s -7.15% decline. Brent is back down -1.57% at $98.02/bbl this morning though, leaving it around $5.50 below Friday’s close ($103.54).

Even with lingering questions, the Iran deal optimism coming out of the weekend was sufficient to push the S&P 500 (+0.61%) to a new record high, extending its YTD gain to +9.84%, The rally was also boosted by renewed optimism around chipmakers, with the Philly semiconductor index surging +5.53% and the Nasdaq up +1.19%. This was led by Micron (+19.3%) as we discussed earlier and is now up an astonishing +859% over the past year. Other cyclical sectors also advanced, though the breadth of the gains was fairly narrow with just over half of the S&P 500 constituents lower on the day.

Elsewhere in Asia, the Nikkei (+0.71%) is higher along with the ASX (+0.28%) but the Hang Seng (-0.85%), the CSI (-0.72%), and the Shanghai Composite (-1.11%) are lower. US equity futures are fairly flat.  

Returning to Australia, CPI inflation increased by +4.2% year-on-year in April, which is softer than the anticipated +4.4% and also represents a decrease from the +4.6% rise observed in the previous month. However, underlying inflation, as indicated by the trimmed mean CPI, has remained sticky, rising to +3.4% in April from +3.3% in March and in line with expectations.  The probability of a hike by the August meeting has edged down a few basis points to around 43% as I type.  

Turning to rates, US Treasuries also gained yesterday, with 10yr yields falling -7.3bps to 4.49% and another -1.6bps lower overnight. And 2yr yields (-9.0bps) saw their biggest decline since February, as investors’ expectations for Fed hikes eased. A hike is now 66% priced by December, down from 95% on Friday. On the topic of Fed expectations, our US economists published a short note yesterday discussing what different Iran scenarios – a peace deal, continued muddle through and re-escalation – might mean for Fed policy (see here).

In continental Europe, sovereign bonds saw a modest sell-off on Tuesday following the strong rally on Monday. The yield on 10yr bunds rose +3.3bps to 2.98%, with OATs (+3.2bps) and BTPs (+4.8bps) also higher. In additional to oil moving higher, the rise in EGB yields was supported by hawkish comments from ECB’s Schnabel. She suggested that the ECB should hike rates in June even if the US-Iran conflict “ended today”, saying that “given the size and persistence of the shock, looking through is no longer an option”. By contrast, ECB Chief Economist Lane avoided pre-committing to any decision, while noting the likely “further upward adjustment to the inflation forecast in June” and expectations of “indirect effects beyond energy prices”. Those Schnabel comments meant that pricing of a June ECB hike rose from 77% to 91%, though the 60bp of hikes priced by year-end (+8.2bps yesterday) are well below the 74bps priced this time last week.

European equities lost ground, with the Stoxx 600 (-0.57%), DAX (-0.80%), CAC (-1.03%) and FTSEMIB (-0.64%) reversing around half of Monday’s strong gains. The FTSE 100 (+0.24%) here in the UK was the exception as it caught up to Monday’s rally, with 10yr gilts (-2.2bps) also outperforming continental counterparts after being closed on Monday.

In monetary policy action, the Reserve Bank of New Zealand (RBNZ) maintained the official cash rate at 2.25%, while indicating that future increases in rates may be necessary sooner and to a greater extent than previously anticipated, owing to rising inflationary pressures from escalating energy costs. At the same time, the central bank cautioned that inflation could reach a peak of 4.3% later this year, an increase from the +3.1% recorded in the March quarter, as the conflict in the Middle East drives up fuel and petrochemical prices, despite a slowdown in economic growth. Following this announcement, the New Zealand dollar has risen by as much as +0.74% as investors adjusted their expectations for forthcoming rate hikes.

In terms of yesterday’s data, May consumer confidence in the US edged lower but outperformed expectations (93.1 vs 92.0 expected) as last month’s reading was revised up from 92.8 to 93.8. While assessment of the present situation deteriorated, expectations unexpectedly ticked up to a 5-month high of 74.4 (vs 71.9 expected). So overall this Conference Board data was more upbeat than the historic lows seen in the University of Michigan consumer survey last Friday. Second-tier data was more varied, with the Dallas Fed manufacturing outlook ticking up to a 10-month high but with the Philadelphia Fed services survey unexpectedly deteriorating (-23.6 vs -13.0 expected).  And the S&P Case-Shiller house prices index fell for a second month running in March (-0.16% MoM vs -0.10% expected), continuing to lose the momentum it had gained late last year.

Turning to the day ahead, US data include the May Richmond Fed survey and Dallas Fed services activity. In Europe, we get France May consumer confidence and EU April new car registrations. Fed speakers include Kashkari, Logan and Cook while the ECB will release its latest Financial Stability Review. The slowing earnings season includes releases from Marvell, Salesforce, Synopsys and Snowflake.

Tyler Durden Wed, 05/27/2026 - 08:10

"Removed Without Warning": Ex-BP Chairman Blasts Abrupt Ouster As Wall Street Gets Spooked

The abrupt Tuesday morning firing of BP Chairman Albert Manifold by the board certainly raised eyebrows, given his key role in the company's turnaround effort: unwinding years of underperforming green-energy bets and steering the oil major back toward its oil-and-gas business.

The board cited "serious concerns" tied to "important governance standards, oversight, and conduct" as the core reason for Manifold's removal. But the explanation remains vague, leaving Wall Street desks wondering exactly what prompted such a sudden and aggressive move against the chairman.

Bloomberg reporters reached out to Manifold for his perspective on the firing. He said, "I was removed without warning and without explanation."

"I dispute entirely the characterization of my conduct and I will not allow a false narrative to go unchallenged," Manifold continued.

The outlet spoke with people close to BP, who requested anonymity, and said the firing was tied to Manifold's "aggressive behavior" toward employees and mishandling of sensitive information. They also noted that he was seeking to bypass the board.

Manifold told the reporters, "During my time as chairman, I worked to drive genuine change at BP — cutting costs, challenging excess, and holding the organization to higher standards," adding, "The board's statement this morning acknowledged the focus and pace I brought."

The dismissal adds to BP's leadership instability, following years of underperformance and multiple CEO changes.

Also, BP shares in London are nearing the lows set by yesterday's announcement.

Manifold had been a driving force behind an aggressive turnaround, bringing in CEO Meg O'Neill, Big Oil's first female chief executive, while pushing cost cuts, asset sales, and a renewed focus on oil and gas.

Current Board 

That strategy had been warmly received by Wall Street analysts after years of frustration with BP's costly move into unprofitable and unreliable green-energy deals.

"We had welcomed what looked to be a turnaround under Mr. Manifold, but we think serious questions do need to be asked about the wider board's decision-making process," Barclays analyst Lydia Rainforth said in a note.

TD Cowen analyst Jason Gabelman noted, "We had believed Manifold could be a driving force behind any updates, including an acceleration of investing in core oil and gas assets and further simplifying the business. Continued leadership change could bring into question pace of change at a minimum."

His removal now raises new questions over whether the company can maintain the turnaround plan.

Tyler Durden Wed, 05/27/2026 - 07:45

Why Hasn't Oil Hit $150 (Yet)?

Authored by Robert Rapier via OilPrice.com,

• Global oil inventories and floating storage have acted as temporary shock absorbers against the Hormuz disruption.

• OPEC spare capacity has stabilized markets, but it cannot fully replace lost Persian Gulf exports indefinitely.

• Prolonged disruption could eventually exhaust market buffers and trigger a much sharper oil price surge.

I think most energy analysts would have been shocked to learn that roughly three months into a total closure of the Strait of Hormuz, oil would be trading at just over $100 a barrel. I certainly expected prices to be significantly higher by now. The physical math seems indisputable: take that much supply off the market, and prices should respond quickly and decisively.

Oil prices have risen sharply, to be clear. But we are still short of the levels seen following Russia's 2022 invasion of Ukraine, or of the all-time highs set just before the 2008-2009 financial crisis.

Instead of the $150 oil many anticipated, prices have climbed, but not to catastrophic levels. It is easy to look at this and conclude that the market has absorbed the shock. But that interpretation risks confusing resilience with delay. What we are seeing is not a resolution. It is a temporary buffer.

The Market's Hidden Shock Absorbers

The biggest reason the oil market hasn't reacted more violently to the Strait of Hormuz closure is simple: the world entered this crisis with more inventory than many analysts appreciated. Those barrels have acted as a shock absorber. They don't eliminate the problem. They just delay it.

Global commercial stocks have been drawing for weeks. OECD inventories are now below their five-year average, and independent trackers like Vortexa and Kpler show steady declines in floating storage as well. None of this looks dramatic on a chart. The drawdowns are orderly, and prices have risen, but not explosively. On the surface, the system appears to be coping.

But inventory isn't a strategic reserve. It's working stock; the minimum volume needed to keep refineries, pipelines, and blending operations functioning smoothly. Once inventories fall below those operational thresholds, the system loses flexibility. Refiners have fewer crude options. Blending becomes harder. Small disruptions that were previously absorbed start to become more significant.

That's the part that's easy to miss. The drawdown phase looks calm because inventory declines appear one week at a time. The consequences show up later, when the system runs out of slack. The lower inventories go, the longer and harder the recovery becomes, because the barrels that were used to cushion the shock have to be replaced.

Spare Capacity Isn't A Safety Net

Another reason prices have not spiked higher is the perception that OPEC still has spare capacity.

On paper, that is true. Saudi Arabia and a few other producers maintain the ability to increase output. In practice, however, spare capacity can't completely substitute for lost supply from the Persian Gulf.

First, not all barrels are interchangeable. Differences in crude quality matter for refining configurations. Second, ramping production is not instantaneous. Even when capacity exists, bringing it online takes time and coordination.

Most importantly, spare capacity is finite. Using it to offset a major disruption reduces the system's margin for error. Once that cushion is gone, the market becomes far more sensitive to any additional shock.

So, while spare capacity has helped stabilize prices in the near term, it does not eliminate the underlying imbalance.

Demand Has Helped

Demand has also played a role in keeping prices contained.

Higher prices naturally lead to some degree of demand destruction. Consumers drive less. Airlines hedge or cut routes. Industrial users look for efficiencies. In emerging markets, fuel consumption is particularly sensitive to price increases.

At the same time, global economic growth has been uneven. That has softened the demand side just enough to offset part of the supply shock.

But this is not a structural decline in demand. It is a temporary easing at the margins. If economic activity strengthens, or if consumers simply adjust to higher prices, demand can quickly reassert itself.

When that happens, the buffers currently holding the system together come under even greater strain.

A System Running On Borrowed Time

The key point is that the market has not solved the problem created by a prolonged closure of the Strait of Hormuz. It has simply deferred the consequences.

We are effectively financing the disruption with stored barrels, spare capacity, and incremental demand adjustments. Those tools are finite. They were designed to smooth short-term disruptions, not to replace a major artery of global oil trade indefinitely.

This is why the current price level can be misleading. It reflects the system's ability to absorb the initial shock, not its ability to sustain that balance over time.

If the disruption persists, the math becomes increasingly unforgiving.

What Happens Next

There are two broad paths from here.

The first is resolution. If the Strait reopens or flows are partially restored, the system can begin to rebuild inventories and normalize. In that scenario, prices may stabilize or even decline from current levels, but a return to pre-war prices is unlikely anytime soon.

The second path is continuation. If the disruption drags on, inventories continue to fall, spare capacity is further depleted, and the margin for error disappears. At some point, the market is forced to reprice the remaining supply more aggressively.

That is when the move toward $150 becomes much more plausible. It's not necessarily because something new has happened, but because the buffers have been exhausted.

The Takeaway

The fact that oil has not reached $150 after three months of a major supply disruption means the market had more short-term flexibility than many anticipated. But flexibility is not the same as permanence.

The current equilibrium is being maintained by drawing down resources that cannot be replenished quickly. As those resources diminish, the system becomes increasingly fragile.

In that context, the absence of a price spike should not be read as reassurance. It should be seen as a warning that the adjustment process is still unfolding.

Tyler Durden Wed, 05/27/2026 - 07:20

Samsung Inks Labor Deal, Averts Chip Strikes As AI Bonus Boom Fuels Ferrari Purchases

Global stocks pushed higher on Wednesday as momentum in AI and memory chips fueled a continued risk-on rally. The MSCI All Country World Index, South Korea's Kospi, and Japan's Nikkei all hit record highs.

The rally was led by chip stocks, with SK Hynix and Micron's market values topping $1 trillion for the first time. Sentiment from Tuesday into Wednesday was fueled by a bullish note from UBS analyst Tim Arcuri on Micron, which ended 19% higher in the US.

Sentiment on Wednesday was boosted after Samsung's largest union approved a labor deal that gives chip workers an average bonus of roughly $340,000, avoiding what could have been a devastating strike that might have disrupted the global memory chip supply chain amid historic demand from data center buildouts.

Samsung and its labor union have buried the hatchet and signed a new wage agreement earlier today. This means the company will not face any chip production disruption.

The signing ceremony took place earlier today at Samsung Electronics’ The UniverSE learning center in Giheung,… pic.twitter.com/XIybSV0Cdg

— SamMobile - Samsung news! (@SamMobiles) May 27, 2026

Nikkei Asia reported that the labor deal signed earlier this morning set aside 10.5% of the company's operating profit for the worker bonus pool.

Nikkei Asia outlined four important facts of the wage deal that averts chip strikes: 

Who gets what?

Under the terms of the agreement, the bonus will be paid to 78,000 employees in Samsung's device solutions division, which produces all types of semiconductors.

Employees in the memory business unit are expected to reap the biggest share, as they generate the largest portion of the company's profits. Assuming Samsung's memory business unit reports 200 trillion won of operating profit this year, its employees are expected to be paid an average bonus of 600 million won in the form of company shares in January 2027.

They can sell one-third of those shares immediately. But they must hold one-third of them for at least a year and the remainder for two years.

Other units, meanwhile, will be paid far less. For instance, employees in the foundry unit, which produces contract chips for outside customers, are expected to get bonuses of 200 million won each. The same rules as for the device solutions business apply.

Is this bigger than SK Hynix's bonuses?

Samsung rival SK Hynix faced -- and resolved -- a similar dispute with its own workers last year. The company said it plans to use 10% of its 2026 operating profit for bonuses to be paid early next year. Employees can choose to take the payments in cash or company shares.

An average SK Hynix employee can expect a bonus of about 400 million won, assuming, based on first-quarter results, the company posts 140 trillion won of operating profit this year. But with brokerage houses expecting an even bigger full-year profit figure, its bonus payments could end up topping Samsung's.

As a leading supplier of high-bandwidth memory chips for AI computing, SK Hynix has ridden the artificial intelligence boom to record profits and a trillion-dollar valuation. Samsung's union even cited its rival's success when presenting its case to management for bigger bonuses.

Who's unhappy with the deal?

While Samsung's semiconductor workers are expected to enjoy fat bonuses, their counterparts in the device experience, or DX, division, which produces smartphones, TVs and home appliances, are being left with comparatively tiny bonuses. They will receive just 6 million won in special payments, also in the form of company shares.

A small union representing them had filed a court petition to try to block the deal as DX workers were left out of Wednesday's agreement. But the court rejected their claim, saying it respected the bigger unions' right to negotiate with management.

What could the deal mean for South Korean labor policy?

The Samsung unions' victory in winning such a large bonus could increase pressure on the government to create systems for workers in more fields to negotiate for a share of profits, though the effects of such arrangements could be limited to a small number of industries.

The Federation of Korean Trade Unions expressed hope that the Samsung deal "will serve as the starting point for serious discussions on 'growth through shared gains.'" It called on the government to establish "fair distribution mechanisms so that the enormous productivity gains and profits generated are not concentrated in the hands of a few."

Corporate groups, however, were quick to point out that the situation at Samsung is a unique case of an industry in the middle of an exceptional boom. "Labor should not generalize this and spread excessive demands for incentives across industries," the Korea Enterprises Federation said in a statement.

The case is not likely to spur policy changes or have broad ripple effects throughout the economy because most industries do not generate the massive profits currently being logged at major chipmakers, said Lee Byoung-hoon, a professor at Chung-Ang University. "There is only a small number of companies that can pay these kinds of huge bonuses, like semiconductors or shipbuilding or automakers," Lee told Nikkei Asia.

"So negotiation of these big bonuses will be a big issue, but it will apply to only a small portion of the workforce in [South] Korea," Lee said.

Last week, we noted that the sudden wealth effect of the AI memory boom has spurred some Samsung and SK Hynix workers to panic-buy Ferraris and other exotic sports cars.

Meanwhile...

• Korean Bubble Mania: Retail Investors Max Out On Margin Debt, Choose To "Risk Complete Collapse" Than Miss Stock Rally

The AI bubble continues to inflate into late spring, soon to be early summer, with global risk appetite and chip momentum showing little evidence of being derailed by the US-Iran war, at least so far.

Tyler Durden Wed, 05/27/2026 - 06:55

My mid-week morning reads:

• SpaceX: Here’s What You Get For $1.75 Trillion: The largest IPO in history. Here are the numbers that matter. A clean bottoms-up breakdown of the SpaceX IPO valuation by segment — launch, Starlink, contracts, “AI infrastructure.” Useful for the math beneath the headline. (Fiscal.ai)

• How Prediction Markets and Crypto Firms Steamrolled a Watchdog Agency: The NYT on the CFTC’s quiet capitulation to Polymarket and the broader crypto bloc. The cop on the beat got bought, lobbied, and reorganized; the only surprise is how openly. (New York Times) see also Stealth Deregulation & Institutional Decay: Dave Nadig with a sharp piece on how regulatory rollback is happening through staffing cuts, missed deadlines, and quiet non-enforcement rather than headline rule changes. The decay is the policy. (Dave Nadig)

• The Secret Team Blowing Up Ford’s Assembly Line to Make a $30,000 Electric Truck: 3 a.m. tests and culture clashes: The automaker brought together Silicon Valley techies and industry misfits in a quest to beat China at EVs. (Wall Street Journal)

•  Why strong corporate earnings may not be quite what they appear: Axios on the gap between headline EPS at the Mag 7 and the actual cash generation once you back out share-based comp, capex, and one-offs. Worth re-reading every earnings season. (Axios)

• How to Adapt When Clients Know More Than Ever: ThinkAdvisor interviewing Ben Carlson on advising clients who already have podcasts, spreadsheets, and opinions. The job description for our industry keeps shifting, and Ben is one of the few writing honestly about it. (ThinkAdvisor)

• The end of the internet’s golden age. Axios with a tidy summary of what just ended: search referral traffic, social distribution, the open-web business model. Pair with the TechCrunch “Search as you know it” piece from last week. (Axios)

• The Apartment Megamerger That Shows Landlords Are in Trouble: Equity Residential and AvalonBay’s $69 billion deal follows years of weak profits and slow to no rent growth. A defensive REIT merger that says more about the multifamily cycle than any earnings call. Cap rates, rent growth, the works. (Wall Street Journal) see also These Parents Are Buying Homes for Their Kids — With Strings Attached: The WSJ on the structures wealthier families are using to underwrite kids’ first homes without simply handing over the cash — trusts, shared-equity deals, formal IOUs. Useful for clients wrestling with the same. (Wall Street Journal)

• One-and-Done Heart Disease Prevention? Scientists Show It May Be Possible. A single infusion of an experimental gene-editing drug seemed to reduce LDL long-term in a small trial. The results may point to something “curative,” one expert said. The LDL-lowering gene therapy that, if it scales, makes statins look quaint. Still early but the trial data is unusually clean. Scientists Show It May Be Possible.  (New York Times)

• How the Knicks built an NBA Finals team: Patience, restraint and Jalen Brunson.The journey to this moment, all of New York spellbound by a basketball team that doesn’t seem to ever lose anymore, began years ago. Before the Knicks tore through the Eastern Conference with blowout after blowout. Before the trades for Karl-Anthony Towns, Mikal Bridges, OG Anunoby or Josh Hart. Before the team’s captain, star guard Jalen Brunson, ever arrived. The Athletic on the front-office choices behind the Knicks’ Finals run. A nice corrective to the “tank and pray” theory of roster construction. (The Athletic)

• Sonny Rollins, Jazz’s Saxophone Colossus and Greatest Improvisor, Dead at 95: Rolling Stone’s obit for Sonny Rollins. Alongside his own pioneering albums as band leader, Rollins also recorded with Miles Davis, Thelonious Monk, and the Rolling Stones, contributing the sax solo to “Waiting on a Friend.”  A good moment to put on Saxophone Colossus and the Williamsburg Bridge solos and just sit there. (Rolling Stone)

Video of the day: Why Did Humans Evolve To Be So Weak?

Be sure to check out our Masters in Business interview this weekend with Vimal Kapur, CEO and Chairman of DJIA component Honeywell International. The firm is in the midst of dividing into three companies: Honeywell Automation, Honeywell Aerospace, and Solstice Advanced Materials. The firm has fully integrated AI as the intelligence layer in all of its automation processes and products.

Change in Fed call: pushing cuts out to 2H 2027

Source: BofA Global Research

 

Sign up for our reads-only mailing list here.

 

The post 10 Wednesday AM Reads appeared first on The Big Picture.

EU Packaging Rules Create Another Bureaucratic Monster

Submitted by Thomas Kolbe

Regulation follows regulation. On August 12, the so-called EU Packaging and Packaging Waste Regulation (PPWR) will enter into force, reorganizing the recycling framework for packaging across Europe. Adopted last year, the regulation becomes binding for all EU member states and companies on August 12 and, as an EU regulation, does not require transposition into national law. The PPWR will replace the current patchwork of national packaging recycling laws with a unified framework for the EU single market. Until then, Germany’s existing Packaging Act (VerpackG) remains in effect.

EU’s latest effort, the Packaging and Packaging Waste Regulation (PPWR), requires minimizing packaging  volume while maintaining functionality 

Brussels always tells the same story: regulation is supposed to strengthen the European single market and harmonize economic and environmental objectives. A beautiful narrative — especially for those who stand to profit from it. Similar dynamics have already emerged in other sectors, such as carbon emissions trading. In the end, compliance costs for affected businesses rise, the bureaucratic apparatus expands through new control and sanctioning mechanisms, and the overall economy loses competitiveness.

According to the European Commission, the goal of the regulatory push is to ensure that by 2030 only recyclable packaging materials circulate within the EU economy. The regulation aims to reduce packaging waste, increase corporate recycling quotas, and firmly embed the circular economy into a binding legal framework. The PPWR is one of the building blocks of the Green Deal, which seeks to lead the EU economy toward a carbon-neutral future through an increasingly detailed and expansive regulatory architecture covering national recycling efforts as well as sector-specific initiatives.

Brussels’ regulatory activism offers repeated insights into the logic of bureaucratic systems. Such systems develop a kind of life of their own and an inherent drive to acquire ever more competencies and powers — an evolutionary struggle for institutional survival that gradually eliminates any meaningful feedback loop with the economic system bureaucracy claims to regulate. This recurring process has consequences: increasingly detached from business realities, ideologically driven compliance pressure continues to mount across affected sectors. As a result, adaptation, documentation, and implementation costs require businesses to devote ever more resources simply to satisfy regulatory demands.

The biggest burden imposed by the new regulation will fall on companies selling goods across borders without maintaining their own local branch offices in destination countries. The PPWR forces such firms to hire local authorized representatives or specialized service providers to manage registration, documentation, and communication with local authorities in detail in order to oversee the packaging recycling process. The regulation is structured in such a way that there is practically no possibility of integrating these requirements into normal business operations without significant bureaucracy and expense.

The EU is thereby creating yet another artificial compliance market. It generates business opportunities for consultants and service providers that would likely not survive in a truly free market. This development is already familiar from the ever-expanding climate regulation architecture. And, as is typical with excessive bureaucracy, large corporations with their own branch networks naturally enjoy major cost advantages over smaller niche businesses, which must now spend substantial time, money, and personnel building compliance networks of their own. None of this resembles an integrated European single market anymore. The economy increasingly serves as a playground for the ideological fantasies of an ever-growing class of officials.

What we are witnessing here is a fundamental ideological, administrative, and political problem. The packaging regulation fits into the broader structure of intrusive, hyper-detailed, and sanction-heavy regulation from an authority that no longer recognizes the signs of the times — namely the economic crisis that its own policies have helped fuel. Germany’s annual bureaucratic burden is estimated by the ifo Institute at roughly €146 billion in direct and indirect costs — an absolute disaster for the country as a business location. Moreover, this policy of micromanagement stifles innovation in materials, logistics, and recycling technologies, and will ultimately deliver worse outcomes at far higher cost than a free market would.

Petty, exhausting, and expensive, Euro-bureaucracy is steadily eroding Europe’s competitiveness and turning private-sector investment into a gamble. The idea of the free market — namely that consumer demand for cleaner and more environmentally friendly production and logistics can be expressed through competition itself, one of civilization’s greatest achievements — appears to have largely vanished within today’s EU.

In contrast to competing jurisdictions such as the United States, which are lowering compliance costs through deregulation, Europe’s misguided trajectory becomes especially obvious. One final statistic illustrates the scale of the problem: according to an analysis by the Institute for Employment Research (IAB), German businesses alone have had to dedicate roughly 325,000 additional workers over the past three years simply to manage growing bureaucratic requirements.

These are staggering figures that reveal the true scale of Euro-bureaucracy. And at present, it does not appear that opposition forces are strong enough to divert the EU from its current path away from market economics and toward state management and ever-expanding bureaucracy.

* * *

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

Tyler Durden Wed, 05/27/2026 - 06:30

Ukraine Donor Fatigue: Half Of Countries Withdraw From Czech Ammunition Initiative

According to Czech President Petr Pavel, a full half of the Kiev-supporting Western coalition has quietly abandoned Prague's flagship initiative to jointly procure artillery ammunition for Ukraine's military.

Pavel said that while 18 countries participated last year, only nine are still making financial contributions now. "This initiative has been delivering up to 50 per cent of all large caliber ammunition to the Ukrainians, so in this sense it cannot be replaced easily by anything else," the FT on Tuesday quoted the Czech president as saying.

via Globesec

It's unclear precisely which precise countries have dropped participation, but reports indicate that Germany and some Scandinavian countries remain involved.

But the program is now teetering on life support as donor fatigue morphs into outright abandonment, and also as the Ukraine conflict has mostly slipped from driving world headlines, as attention has turned to the US-Israeli war in Iran instead, alongside the Hormuz Strait standoff and global crude crisis.

When Pavel first launched the initiative in 2024, 18 countries - including Canada, Denmark, Germany, and the Netherlands - enthusiastically led the way and jumped on board.

But he conceded this week, "The initiative is still working, but the new difficulty is that only about nine member states are contributing financially."

NATO officials have confirmed to Reuters that as of February, the scheme had only managed to crawl to €1.4 billion ($1.62 billion) in total funding, which is less than a third of the €5 billion Pavel originally projected. 

Ukraine has struggled with persistent artillery deficits since early 2022, while Russia has been well supplied, and its frontline forces are able to fire at many times the rate of Ukrainian artillery units.

As for the Czech program, which involved officials scouring the globe to source immense supplies of badly needed artillery shells, one Western official bluntly told the Financial Times: "Some countries now feel that it is strange to pay for something that is not even properly supported by the ruling politicians of the lead country."

But even as ammo efforts fall short, there's also been little appetite for getting the warring sides to the table once again, as diplomacy has long taken a backseat to finding a 'battlefield solution'.

Tyler Durden Wed, 05/27/2026 - 05:45

Germany's Tax Revenue Collapse Signals Fiscal And Industrial Breakdown

Submitted by Thomas Kolbe

The German federal government and municipalities are the major fiscal losers of 2026. The partly dramatic collapse in tax revenues reveals two things: the transformation disaster is staggering toward its end, and citizens are being squeezed by the state like lemons until the very last moment.

No matter how you spin it, the tax party of Germany’s welfare-state engineers is over. In the first four months of the year, Germany’s total tax intake developed into a fiscal catastrophe. During that period, the federal government, states, and municipalities collected 2%  less revenue than a year earlier.

Germany's tax authority.

At first glance, that may sound unspectacular. In reality, however, it marks a turning point. Until now, complaints from German budget politicians merely reflected disappointment over slower growth in tax revenues - never an outright decline in state income. That has apparently changed.

Every social welfare system - and with it the entire state apparatus - has been structured around the assumption of disproportionately rising tax revenues. Where this ultimately leads can be seen in the spending behavior of the federal government. Berlin has maneuvered itself into a self-reinforcing spending spiral. The rules of prudent bookkeeping, once considered binding even for political leaders, have been discarded in the stampede of the new socialism. Federal expenditures are now increasing at an annual rate of more than 5%. Yet the federal government itself has suffered an 8.3% decline in tax revenues compared with last year.

Rightly so: decadent excess must eventually be punished. Or put differently: Finance Minister Lars Klingbeil is not merely overwhelmed by his responsibilities - he is a political gambler, much like his chancellor, a reckless counterfeiter intoxicated by delusions of political omnipotence and state-engineered possibility.

A look under the fiscal hood reveals the real damage. The dramatic collapse in tax revenues is especially visible at the municipal level. Treasurers across Germany are fighting on the front lines against the consequences of the destructive ideology of the green transformation. They are the first to notice how industrial zones are emptying out - a process that has accelerated in former industrial centers where Germany once dominated global markets in automobiles, machinery, and chemicals. Now those same regions are watching their municipal revenues implode.

The consequences are severe: in the first four months of the year, total municipal tax revenues fell by 20.4%. The permanent economic depression is destroying the business tax base — the fiscal anchor of local government finances - and is virtually forcing Berlin into additional bailout measures to stabilize municipalities.

At least we now understand the true purpose of Germany’s gigantic “special fund”: it was merely the first massive bridge loan, and many more will undoubtedly follow. The cognitive dissonance is pathological. Within the ranks of the CDU, SPD, Greens, Left Party, and FDP, politicians still believe they can somehow reach the promised shores of green utopia. Transformation has become a psychological crutch, an excuse for catastrophic failure. Even after the high priests of climate ideology quietly abandoned their own apocalypse rhetoric, Germany’s political establishment remains on course.

All that is supposedly needed is more time, more fear-driven behavior modification of citizens, and a fresh flood of debt. That is the narrative. How badly they miscalculated.

Without a functioning economy there are no taxes. If Germany’s political class retained even a rudimentary connection to economic reality, the conclusion would now be obvious: the state must adapt to new economic conditions. The fantasy that Germany can operate as a global welfare office has failed. Equally disastrous is the military-political experiment of financing a proxy war against Russia. And Germany’s remilitarization - currently costing roughly €110 billion annually, or 2.5% of GDP - will likewise crash against the cliffs of economic reality.

With almost visible pride, Finance Minister Klingbeil recently announced that Germany would require an additional €800 billion in debt by 2030 to achieve the coalition’s ambitious political objectives. Quite apart from the fact that these goals are driving the country and its economy into chaos, the real figure will likely exceed €1 trillion merely to keep this decaying ship afloat.

Could it be that Merz and Klingbeil are becoming intoxicated by debt itself? That the debt crisis merely provides the pretext for imposing new taxes on Germany’s middle class and effectively expropriating it? Hatred toward the native population increasingly appears to be the glue holding this catastrophe coalition together, as Labor Minister Bärbel Bas recently demonstrated. For political figures like Bas, the German population is little more than a faceless “uniform brown mass,” a chapter of history to be closed - and the worse conditions become, the more ruthlessly the tax hammer will fall.

The direction of future tax policy is already visible in the states’ revenue figures. Thanks to an 8% increase in real estate transfer taxes - effectively a tax on accumulated substance - Germany’s sixteen state governments were still able to post a combined 2.4 percent increase in revenues between January and April.

Debates over expanding inheritance taxes on business assets, along with renewed attempts to introduce a wealth tax, reveal the strategy clearly: the political class intends to compensate for its own failure by extracting the economic substance of Germany’s middle class. The first step in this confiscatory process was the restructuring of property taxes. Homeowners are the initial victims, trapped by the very immobility of real estate itself.

Payroll tax revenues - critical for every level of government - have so far remained relatively stable despite the growing weakness of the labor market. But Berlin and the state governments should not become overly optimistic. The loss of half a million jobs in the first quarter of the year should be interpreted as the first lightning flashes of a much larger crisis approaching on the horizon.

So far, the fiscal consequences have merely been delayed by inflation, the stealth taxation of bracket creep, and higher levies such as the CO2 tax. That delay, however, will not last forever.

* * *

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

Tyler Durden Wed, 05/27/2026 - 05:00

Aluminum Supply Crisis Is About To Get Worse

Aluminum prices in London are up nearly 17% since the onset of the U.S.-Iran conflict, as a growing chorus of top commodity desks, including Mercuria, Goldman, JPMorgan, and others, warn that the market is facing a major supply shock.

That disruption, driven firstly by Middle East smelter outages and the Hormuz maritime chokepoint, is now colliding with new concerns that China may be forced to curtail output amid energy-use and emissions inspections, according to Bloomberg. 

More color from the report:

Chinese authorities are now moving to rein in that over- production as inventories swell. A smelter in Baise, Guangxi province, has already cut output of molten aluminum, Mysteel wrote, without providing estimates of volumes affected. The steel and oil refining industries will also be targeted, the Ministry of Industry and Information Technology said in a statement on May 13.

Building on production cut risks in China, as it is the world's biggest producer, there is another report from Bloomberg that Guinea, the world's largest bauxite producer, is preparing to limit exports of the ore, threatening flows to China's aluminum industry.

Mines and Geology Minister Bouna Sylla told the outlet that the West African nation will dial back bauxite exports in June after a surge in exports sparked a price slump that the government wants to correct.

"Supply mustn't exceed demand," Sylla said. "We want to regulate the quantity to raise prices back to reasonable levels."

For context, most of Guinea's bauxite is loaded on bulk carriers and shipped to China, where it's first refined into alumina, then turned into the industrial metal aluminum. 

The complexity of the aluminum supply shock extends well beyond Gulf disruptions, as we outline in this note, which is why prices in London are trading around $3,673 a ton, the highest since March 2022.

JPMorgan analysts recently warned that the industry is descending into a black hole, or a "metaphorical point of no return," where the "global aluminum market will face a serious and prolonged supply outage," even if vessel flows through the Hormuz chokepoint resume in the near term.

Additional market warnings:

• Mercuria, Goldman, JPMorgan See Major Aluminum Market Shock

The great aluminum squeeze is underway. Prices are likely going higher.

Tyler Durden Wed, 05/27/2026 - 04:15

The Islamic Terrorist Conquest Of West Africa

Authored by Lawrence Franklin via The Gatestone Institute,

The widened scope and quickened pace of the Islamic State's military operations in the Sahel region -- just below North Africa, roughly from Senegal to Sudan -- threatens to alter the strategic orientation of the African continent. Efforts at countering terrorist operations in the Sahel, such as they were, have evidently failed. As all roads to Mali's capital of Bamoko are now blocked, that country might be the first state to "go under."

On April 25, during a coordinated attack on several Malian cities, Muslim terrorists killed the country's Minister of Defense. The terrorists then drove the Malian Army and its allied Russian mercenaries out of the country's north.

The military juntas ruling Mali, Burkina Faso and Niger have proven themselves as ineffective at combatting Islamic terrorist operations as the democracies that they overthrew. The increasing terrorist assaults across the Sahel and the jihadists's determined efforts to take over Mali, Burkina Faso, and Niger have eroded the sovereignty of these states.

The combat successes of the jihadists in the Sahel in March 2022 precipitated their elevation to the status of "Islamic State Sahel Province" within the hierarchy of the IS, and several other factors have facilitated the growth of the jihadist advance in the Sahel.

The cooling of the once global counterterrorist crusade — following an apparent shift in focus by the world's great power rivalries, as well as fewer resources directed against the terrorist problem — left a vacuum that was adroitly filled by jihadist groups, which has reduced the pressure on Islamic State and Al Qaeda regional affiliates.

Another situation that might have impacted negatively upon the Sahel's overall security is the monumental migratory flow of Africans from sub-Saharan countries who pass through the Sahel to the Mediterranean, and the consequent stress this puts on the Sahel economies.

A third force eroding state sovereignty of Sahel countries is warfare waged by Al Qaeda terrorist affiliates that are rivals of the Islamic State, such as the Jama'at Nusrat al-Islam wal Muslimin (JNIM). JNIM also coordinates attacks with the Malian anti-government militia known as the Azawad Liberation Front.

Jihadist violence has become ubiquitous in the Sahel, and recently expanded to include fighting between Islamic State and Al Qaeda. On April 2, a notable clash between these two rival terrorist networks occurred in western Niger.

The Sahel now appears to be the epicenter of global terrorist violence. Sahel's terrorist groups might also be acquiring confidence that they can achieve permanent and more ambitious goals in the near future.

Islamic State units have also been exploiting the deteriorating security situation in the Sahel and in Nigeria's northeastern states, which are already governed under Islamic sharia law. Islamic State probably feels buoyed by its easy success in recent battles with the Nigerian Army.

On April 25, Al Qaeda terrorists conducted simultaneous attacks against several Malian urban areas. Their success might well tempt jihadist fighters to move into major urban areas in northern Nigeria and elsewhere in the Sahel.

An additional worrisome trend indicates that terrorist violence is moving westward to Africa's Atlantic coast.

State control increasingly is being eroded in the Sahel region, despite multilateral efforts to sustain the sovereignty of several states in the Sahel, such as the Multi-National Joint Task Force (MNJTF) consisting of Chad, Nigeria, Benin, Cameroon, and, until last year, Niger. The MNJTF had made significant strides in halting the advance of the Al Qaeda-affiliated Boko Haram terrorist group, particularly in Chad, but recently the overall scorecard is less conclusive.

The MNJTF is sustained mostly by the continent-wide Organization of the African Union (OAU). While the MNJTF originally planned to field a 10,000-member OAU army, insufficient air cover, poor communications, and logistical problems have reduced the organization's effectiveness.

Another multinational group — the "G5 Sahel" of Mauritania, Burkina Faso, Chad, Mali, and Niger — proved ineffective after its 2014 launch. Beset by bureaucratic problems, military coups, and lack of adequate commitment by member states, it dissolved in December 2023.

France, the former colonial "mother country" of several Sahel states, has also made a valiant effort to contain the region's Islamist threat. Acting on behalf of a Malian request for military support, France in 2013 dispatched troops to northern Mali in "Operation Serval."

After substantial success, France, along with UN political support, launched "Operation Barkhane" in 2014 to combat Islamist terrorist activity in the Sahel region. The mission ended in 2022, however, when, following military coups, three Sahelian states asked the French to leave. Later, these same three states invited assistance from Russian mercenaries, which has not resulted in any permanent progress on the battlefield.

With the advance of Islamic terrorist control over ever wider swaths of the Sahel, in recent years, US Special Forces teams have been operating in Niger. On October 4, 2017, this deployment resulted in the killing of four US soldiers and a score of Nigerien soldiers in an ambush staged by "Islamic State in the Greater Sahara." More recently, US national security priorities elsewhere seem to have resulted in a diminution of American military involvement in the Sahel.

The steady advance of Islamic terrorist control over territory in the Sahel could soon threaten the sovereignty of West African states on the continent's Atlantic Coast -- just across the ocean from Latin America and the United States.

It is past time for the US to take action to protect not only the vast natural resources in the area, but also to stop even more of Africa from being swallowed up by this expanding jihadist takeover.

Tyler Durden Wed, 05/27/2026 - 03:30

Putin Authorizes Debt Relief To Lure New Ukraine War Recruits

On Monday President Vladimir Putin signed a law that effectively wipes clean up to 10 million rubles (approximately $140,000) in unpaid debt for new military recruits and their spouses, at a moment Russia needs more manpower to keep up its grinding 'special military operation' in Ukraine.

The debt exemption applies to any Russian citizen who signs a minimum one-year contract with the military to serve in Ukraine after May 1, 2026. The economic amnesty explicitly extends to an enlisted member's spouse as well - making it more attractive to struggling families.

via War on the Rocks

The bill smoothly cleared Russia's parliament earlier this month prior to going to Putin's desk for final authorization. It represents the newest addition to a series of economic incentives designed to keep boots on the ground without triggering a domestic political crisis.

While an official death toll has not been issued or publicly maintained by the Kremlin, estimates commonly suggest deaths in the hundreds of thousands, or else a conservative estimate of high tens of thousands - after well over four-years of the tragic war.

Similar figures are often offered on the Ukrainian side, which even more obviously suffers from a severe manpower crisis, leading to forcible recruitment often through officers nabbing eligible men off the streets.

This fresh Kremlin debt forgiveness policy represents a new, softer and more incentive-based approach to military recruitment inside Russia. Prior 'partial' mobilizations have been deeply unpopular.

Within the opening years of the war, there were reports that hundreds of thousands of draft-age Russian men fled across international borders in order to escape these mobilization waves.

The pro-NATO Atlantic Council has meanwhile highlighted that Russia's military also fills manpower through controversial foreign recruitment methods:

The Kremlin plans to recruit at least 18,500 foreigners to fight in the Russian army in 2026, Ukrainian military intelligence officials claimed in late April. This figure represents a sharp rise in the annual recruitment of foreign nationals as Moscow seeks to continue the invasion of Ukraine amid heavy battlefield losses and domestic mobilization concerns.

Russia’s efforts to enlist foreigners in the country’s military are not new. Since the full-scale invasion of Ukraine began more than four years ago, at least 27,000 foreign nationals from more than 130 countries have signed up for service in the Russian army, according to a new report prepared jointly by Truth Hounds, the International Federation for Human Rights (FIDH), and regional partners.

The vast majority of these recruits have been drawn from economically deprived regions of the Global South.

In some instances, this happens through deceptive means, such as foreign nationals responding to a job posting in Russia, only to find themselves thrown into Russian boot camp once they sign papers for what they think is another, legitimate occupation or job training.

The conflict and front lines continue to be largely stalemated, with peace talks seemingly no where on the horizon, but Moscow's strategy seems to be based on consistently enduring and making slow gains in this 'war of attrition'.

Tyler Durden Wed, 05/27/2026 - 02:45

Europe's Deindustrialization vs America's Quiet Investment Boom

Submitted by Thomas Kolbe

German Chancellor Friedrich Merz appears disoriented, whiny-apathetic, and remarkably weak in leadership these days. Perhaps the chancellor senses that the project of his political generation is entering its final phase. Is he aware that the construction of eco-socialism has failed? That both his reckless debt policies and Germany’s rapid deindustrialization are consequences of this ideological insanity? The fact that Friedrich Merz still found the audacity — despite the catastrophic domestic political and economic situation at home — to publicly accuse U.S. President Donald Trump of lacking strategy in the Iran conflict speaks to an almost immeasurable degree of stubborn arrogance and self-delusion.

There he was again: the German know-it-all. The type of politician who once lectured Europe’s neighbors over debt problems while failing to compare his own actions with the present condition of his own country.

Merz would have done well to take a look at the American economy and the U.S. labor market before stepping onto such embarrassingly thin rhetorical ice.

In April, the private sector in the United States created 115,000 new jobs. During the opening months of the previous year, another roughly 180,000 jobs had already been added. The U.S. economy has now delivered four strong months in a row, signaling that America is rapidly gaining momentum and — unlike the European economy — is not being derailed by the Iran crisis. These are phenomenal numbers at a time when the world is fighting over scarce capital, know-how, and access to cheap energy resources.

The contrast with Germany could hardly be greater. During the first year of the Merz government, the German public sector was bloated with another 205,000 more-or-less useless jobs, while Donald Trump’s administration cut 300,000 positions from the overstretched state apparatus. During the same period, the American private sector created a net total of more than 750,000 jobs since Trump returned to office, while the German economy eliminated roughly 200,000 positions.

Deregulation, tax cuts, and a fundamental trust in the power of private enterprise across the Atlantic stand in sharp contrast to the sluggish, apathetic-socialist policies of Germany and the European Union — and not in Europe’s favor.

How strongly the American economy is currently developing can be seen in an interesting media phenomenon.

April 29, 2026 - a Wednesday - may one day prove to have been an important turning point. On that day, outgoing Federal Reserve Chairman Jerome Powell appeared before the press for the final time to announce the latest decision on U.S. interest rates. The fact that the Fed left rates unchanged within a range of 3.5 to 3.75 percent came as no surprise. What was striking, however, was the deafening silence inside financial newsrooms, which normally inflate Fed rate decisions into mega-events for the markets and American capitalism itself. This time, the waters remained perfectly calm.

Two developments lie behind the media’s sudden disenchantment with Fed meetings. First, there is the policy of U.S. Treasury Secretary Scott Bessent, who used legislation such as the Genius Act and the Clarity Act to establish the framework for U.S. dollar-based stablecoins, thereby shifting a significant portion of money creation back into the hands of the private banking sector — where it once resided before the creation of the Federal Reserve. Second, the higher policy rates compared to the Eurozone appear to indicate that the U.S. economy is far more robust than European politicians and media figures would like to admit. So the attitude has become: best not to talk about it too much. Otherwise, people might start noticing that the Eurozone economy itself is incapable of surviving positive real interest rates.

Donald Trump’s second presidency has so far delivered 15 months of determined deregulation and a noticeable liberation of the energy sector from the strangling regulatory activism of climate fanatics. Until Trump’s election victory, Washington had been ideologically subordinate to Europe. Back in 2009, the Europeans succeeded in pushing Barack Obama into effectively adopting Europe’s climate policies wholesale in the United States. But the hope that America’s collapse would somehow conceal Europe’s own decline has now evaporated. Behind the strength of the U.S. labor market stand massive forces of private-sector investment.

This is where the ideological divide between the United States and the European Union truly lies. While the EU — driven in large part by German political pressure — has constructed a green redistribution machine that functions as a state within the state, siphoning resources out of productive sectors into the political economy and green transformation bureaucracy, Americans understand something Europeans have forgotten: prosperity is created exclusively through investment in deregulated free markets supported by a functioning price mechanism that reflects relative scarcity.

The effect of Trump’s deregulation wave can only be estimated in rough numbers. In the first quarter of 2026, gross private investment in the United States rose 8.7 percent year-over-year. Investment in equipment and industrial structures increased by 10.4 percent during the same period. These are extraordinary figures at a time when nations are competing aggressively for know-how and resources.

Now compare that to Germany: after years of eco-socialist degrowth policies, overregulation, and energy-policy suicide, Germany’s net investment ratio has slipped into negative territory. In plain English, the German economy is consuming itself. Whatever industrial substance remains is being eaten away and financially leveraged by the state wherever possible. While German industry is tearing down its tents, the United States is writing a genuine reindustrialization story. If the American economy succeeds in maintaining technological leadership over China and secures dominant positions through massive investments by U.S. tech giants in artificial intelligence, robotics, medical technology, aerospace, and mobility, the geopolitical balance of power will shift accordingly.

More than 400 major industrial projects are currently being developed across the United States. These include new nuclear power plants, gigantic data centers, traditional automobile manufacturing facilities, and even aluminum smelters. They are being financed through investments from the Arab states, Japan, and other parts of the world that President Trump brought home from his numerous foreign trips. But domestic demand and America’s internal investment engine are also running at full speed. Something is brewing in the United States — perhaps even a small economic revolution.

From a European perspective, this makes the situation all the more dramatic because the entire ideological failure of globalist politics becomes far more obvious in contrast to the United States.

If ideological hardliners, committed statists, and central planners remain in power in Brussels, Berlin, and Paris, the old continent is likely to sink into a prolonged economic coma — tired, aging, and increasingly weak. Hope for the future, entrepreneurial innovation, and economic dynamism will only return once a younger generation of European free spirits awakens from this comatose winter.

I am convinced that one day a generation of Europeans will clear away the ideological mud of the past with a cold smile on their faces, astonished by the arrogance and ideological blindness of their predecessors. In the end, civilization and humanity’s desire to improve its living conditions will prevail.

* * *

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

Tyler Durden Wed, 05/27/2026 - 02:00

Space-Squatters Will Open The Final Frontier

Authored by Rainer Zitelmann via American Greatness,

When we talk about the future of mankind in space, we should learn from history.

Squatters played a crucial role in the settlement and economic development of the American West. Long before government institutions were firmly established, settlers moved onto unclaimed land, built homes, cultivated farms, and created entire communities without initially possessing formal legal title to the land they occupied.

In many cases, these settlers were the true pioneers of westward expansion. They established the foundations of economic life—farms, towns, trade networks, and local infrastructure—while the state often arrived only later. The expansion of the American frontier was driven less by central planning in Washington than by millions of individuals acting on their own initiative.

What made the squatters especially important was that they created facts before the law recognized them. They settled the land first and expected legalization afterward. Over time, American lawmakers accepted this reality and introduced legislation allowing settlers to obtain formal ownership of the land they had improved and cultivated.

The squatters embodied a distinctly American idea: that those who productively use land should have the right to own it. This belief stood in sharp contrast to the European tradition of aristocratic landownership and became deeply connected to the American ideal of the independent entrepreneur and pioneer.

Their activities transformed vast territories into economically productive regions. By cultivating land, building businesses, and creating communities, squatters helped turn the frontier into one of the most dynamic areas of economic growth in the nineteenth century.

Some economic historians view the squatters as an early example of how property rights emerge from below—through use, investment, and social recognition—before they are formally recognized by the state.

What we need in the future are space squatters. The crucial difference from the historical squatters of the American West is this: on other celestial bodies, there is currently no ownership at all. The land belongs to nobody. And unlike in the settlement of the American frontier, there is no indigenous population whose rights could be violated.

According to Article II of the 1967 Outer Space Treaty, states are prohibited from appropriating celestial bodies or territory in outer space. Whether this prohibition also applies to private individuals and private companies remains controversial among space lawyers.

The treaty says nothing explicitly about whether private individuals are permitted or prohibited from owning celestial bodies or land on celestial bodies. At the time, nobody imagined that entrepreneurs such as Elon Musk or Jeff Bezos might one day finance private space exploration with their own fortunes.

Some legal scholars, therefore, argue that national sovereignty ends where outer space begins. In their view, the treaty prohibits national appropriation of the Moon, Mars, or asteroids—but not private ownership. Their interpretation relies on a classic legal principle: expressio unius est exclusio alterius. If a treaty explicitly prohibits one category of actors—namely, states—then other actors not mentioned may remain unrestricted.

So who should have the right to acquire property in space? My answer in my book New Space Capitalism is straightforward: Those who have the financial means to get there, develop, and use the land. For instance, if SpaceX succeeds in reaching Mars and starts to build permanent settlements on the Red Planet, then the ownership of land should go to SpaceX first. Not of the entire planet, of course, but of a practicable area, for example, the size of Singapore. The surface area of Mars is 200,000 times that of Singapore, so SpaceX would initially only own 0.0005 percent of Mars. That would be enough to develop multiple settlements, but not so many that others would no longer have a chance.

SpaceX could fund its flight and development costs by listing the land on Mars in a real estate investment trust (REIT). The price would then be determined by the market. Most people would buy shares not to live there themselves, but in the hope of value appreciation. Future colonists could also receive preferential access to shares or land rights as an incentive to settle and remain on Mars for several years. In this way, private ownership would become a mechanism for attracting pioneers willing to take extraordinary risks.

We need private property in space. Without it, the conquest, settlement, and economic development of the Moon, Mars, and asteroids will remain impossible. More than two thousand years ago, Aristotle observed, “Property that is common to the greatest number receives the least attention.” The history of the twentieth century confirmed his insight. Every socialist experiment that abolished private property ultimately failed. Why should a system that repeatedly failed on Earth suddenly succeed on Mars?

No—what humanity needs are pioneers of space, space squatters, just as America once needed squatters to settle the frontier. The difference is that this time, no one will be displaced, because the celestial bodies belong to no one at all.

Rainer Zitelmann is the author of the book New Space Capitalism, which will be published by Skyhorse in early June.

Tyler Durden Tue, 05/26/2026 - 23:25

US To Set Up Quarantine Facility In Kenya For Americans Exposed To Ebola

The Trump administration is expected to deploy US public health officers to Kenya to staff a quarantine facility there amid the ongoing Ebola outbreak in the Democratic Republic of Congo, in a departure from procedure used during previous outbreaks of the virus, the WSJ reported. 

According to the report, the facility - which is pending signoff from the Kenyan government - will primarily be used for Americans who are exposed to, or at high risk of testing positive for the virus in the region, as well as Americans who test positive. 

While there are now no known Ebola cases in Kenya, the move comes as international and local health officials are racing to contain another deadly outbreak of a rare strain of Ebola in the Congo that is already the third largest in history just weeks after it likely began. 

Health workers transport a patient suspected of having Ebola to the isolation center at a hospital in Democratic Republic of the Congo

Unlike during previous Ebola outbreaks, which saw Americans exposed to the virus brought back to the U.S. for monitoring or treatment, the Trump administration has decided to route potentially exposed Americans to other countries. 

Sure enough, members of the U.S. Public Health Service Commissioned Corps, a uniformed branch of the federal government under the Department of Health and Human Services, received notices to deploy to Kenya.

While so far mostly contained, the latest outbreak has seen an American doctor, who contracted Ebola while working in the Congo, flown to Germany last week. The US also diverted a Detroit-bound Air France flight to Canada last week over fears of a passenger’s possible Ebola exposure.

Sign welcoming new visitors at Newark International.

While the CDC has said the risk of Ebola spreading to the American public remains low, the Trump administration has nonetheless cracked down on travel from countries affected by the outbreak. Last week, the U.S. said it was pausing visa issuance for any travelers, including lawful permanent residents, who have been in South Sudan, the Democratic Republic of Congo or Uganda within 21 days of planned travel to the U.S.  

As of Tuesday, there are at least 930 suspected Ebola cases, including 223 suspected deaths, in Congo, and seven cases with one death in Uganda, according to the World Health Organization. Health authorities further think the virus might have infected far more people across a broader region after spreading undetected for weeks.

Tyler Durden Tue, 05/26/2026 - 23:16