Latest Fed Beige Book Underscores "K-Shaped" Split Of US Economy

Economic activity increased at a "slight to moderate" pace for ten of the twelve Federal Reserve Districts, while one District reported a slight decline and one reported no change, according to the latest Fed Beige Book.

The just released Beige Book - prepared at the Federal Reserve Bank of Kansas City based on information collected on or before May 27, 2026, and is the second one to capture the effect of the war on the US economy - found that consumer spending remained mixed across districts and increasingly bifurcated across income groups amid affordability pressures, the latest confirmation of the K-shaped economy.

In keeping with an increasingly fractured economy, the anecdotes highlighted moments of weakness that indicated far more weakness that the headline assessment indicated, to wit:

• higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as “squeezing more life out of every dollar before deciding to spend it,” and low-income consumers showed greater financial strain. Said strain led to reports of increased credit card usage, fewer retail visits, and stronger demand for necessities.
• Auto dealers reported softer new vehicle demand tied to affordability and fuel costs, alongside substitution toward used and hybrid vehicles.
• By contrast, manufacturing activity increased at a modest to strong pace for nine of the Districts and only one noted a slight decline from the previous period.
• Banking conditions were stable across most Districts; however, residential mortgages, consumer, and agricultural loan delinquencies were noted as rising in several of the Districts.
• Agriculture conditions were unchanged or declined for most of the Districts, with cost pressures intensifying from fuel and fertilizer spikes.
• Energy activity increased in two of the markets, but Districts reported that the outlook remains highly uncertain leading producers to hold off on materially expanding activity.
• More broadly, business outlooks for the next six months were reported to have little change in anticipated growth, as elevated uncertainty and signs of weakening consumer spending weighed on sentiment.

In terms of labor markets, the Beige Book said the following: 

• Employment showed little to no change across eleven Districts, while one District experienced modest growth.
• Manufacturing hiring was the strongest sector in several Districts, supported by defense-related activity and rising data center demand.
• Wage growth generally remained modest to moderate and largely in line with inflation. That said, Districts reported more frequent wage adjustments and cost-of-living increases to manage increasing fuel and other household cost pressures.
• Most Districts described a low-hire, low-fire environment, with workers increasingly reluctant to change jobs because of economic uncertainty.
• Hiring remained selective and primarily focused on critical roles or attrition replacement.
• Professional services occupations had mixed demand conditions, partly reflecting shifts in technological and operational changes.

As for prices, they "increased at a moderate to strong pace" overall, with most Districts reporting higher inflation than the previous report.

• Districts noted that energy-related costs tied to the conflict in the Middle East were the primary driver of inflationary pressures, with spillovers into shipping, packaging, groceries, and fertilizer.
• Non-labor input costs continued to rise faster than selling prices, contributing to broader concerns about margin compression.
• The ability to pass on higher costs remained mixed across sectors, particularly among consumer-facing firms.
• Consumer uncertainty and concerns about fuel prices impacting households were noted by several Districts.
• Several regions highlighted inflation mitigation strategies of firms that ranged from supply-chain optimization, product adjustments, reduced offerings, and temporarily absorbing higher costs to preserve customer demand.

Finally, here are the main highlights by Fed districts

• Boston: Economic activity grew slightly overall. Employment was unchanged, but hiring activity picked up in places, and wages showed slight gains. Cost pressures linked to the Middle East conflict remained elevated, although output prices rose only slightly overall. Consumer spending edged higher, despite the strain on household budgets from elevated gas prices. The outlook was mixed.
• New York: Regional economic activity increased slightly after a sustained period of weakness. Manufacturing activity grew strongly, consumer spending increased moderately, and housing activity picked up. Employment edged up, and wage growth eased somewhat but remained modest. Selling price increases rose to the high end of the moderate range, and input prices rose strongly, driven by rising energy costs. Businesses generally expected modest improvement.
• Philadelphia: Business activity declined slightly in the current period, down from a slight increase in the last period. Employment declined somewhat, as manufacturers and nonmanufacturers reported declines in jobs overall. Wage inflation held steady at a modest pace, and firm price inflation was moderate. Expectations for future growth rose at a strong pace for manufacturers but remained below the long-run average for nonmanufacturers.
• Cleveland: Fourth District business activity increased moderately, with similar growth anticipated in the months ahead. Manufacturing demand rose robustly, while retailers faced dampened demand from higher fuel prices. Home sales continued to improve, and data center buildouts drove commercial construction demand. Employment increased modestly. While wage pressures remained moderate, increases in nonlabor costs and selling prices were robust.
• Richmond: The regional economy continued to grow modestly this cycle. Modest growth was reported for consumer spending, financial services, and nonfinancial business services. Manufacturing activity increased moderately amid continued concerns about economic stability. Employment was unchanged, on balance, and wage growth was modest. Price growth remained in a moderate range despite many comments about increased input costs.
• Atlanta: Economic activity grew at a modest pace. Employment levels were flat and wages rose slowly. Prices and costs rose at a moderate pace. While retail sales grew modestly, travel activity slowed. Commercial and residential real estate were flat to down. Transportation and manufacturing activity expanded modestly. Energy demand rose moderately.
• Chicago: Economic activity in the Seventh District increased slightly over the reporting period. Manufacturing demand rose moderately; consumer spending, employment, and construction and real estate activity increased slightly; business spending was flat on balance; and nonbusiness contacts saw no change in economic activity. Prices rose rapidly, wages were up modestly, and financial conditions tightened slightly. Farm income expectations for 2026 were unchanged.
• St. Louis: Economic activity has slightly increased. Employment was unchanged and wage growth remained moderate. Prices have risen at a robust pace due to widespread higher nonlabor and energy costs. The outlook has slightly deteriorated, with contacts citing ongoing uncertainty, supply chain disruptions, and rising fuel costs linked to the conflict in the Middle East.
• Minneapolis: The District expanded modestly. Prices increased sharply and input pressures were especially high. Employment grew slightly and wage growth was modest to moderate. Services, manufacturing, and construction activity grew. Oil and gas contacts reported little change in activity or plans despite oil price shocks.
• Kansas City: Economic activity in the Tenth District increased slightly, though consumer-facing firms continued to report softer demand and margin compression. Restaurants noted middle-income households have become increasingly cautious with discretionary spending. Firms also reported rising input costs, with non-energy expenses exerting the greatest upward pressure.
• Dallas: Economic activity in the Eleventh District rose modestly. Growth resumed in the service sector and picked up pace in manufacturing and banking. Retail sales weakened, energy activity ticked up, and the real estate sector was mixed. Employment was largely flat. Outlooks were tepid amid heightened uncertainty stemming from the Middle East conflict and sharply higher transportation costs.
• San Francisco: Economic activity was stable. Employment levels were unchanged on net. Prices rose moderately, and wages grew slightly. Retail sales were roughly flat. Manufacturing activity improved somewhat, while conditions in agriculture and residential real estate weakened slightly. Activity in consumer and business services, commercial real estate, and finance was steady.

Tyler Durden Wed, 06/03/2026 - 14:55

Dispersion And Correlation Are Screaming Overbought, Downside Hedging Is Cheap

Submitted by SpotGamma

CBOE’s Dispersion Index (DSPX) is at levels only seen during Covid and the April ’25 tariff crash, while Correlation (COR1M) is near all-time lows. This divergence signals extreme positioning risk driven by the AI stock chase, and makes SPY downside hedges historically cheap.

Traders have been chasing AI related names in such heavy-handed fashion that it has now created positioning risk for the stock market.

Encapsulating this view are two popular CBOE options indexes: Dispersion (DSPX) and Correlation (COR1M).

What Are Dispersion DSPX & Correlation COR1M?

DSPX compares the options prices (IV) of the top US stocks vs SPX IV, and measures how different they are from each other. High dispersion means traders are assigning vastly different options prices to individual names. Today, we have traders frothing to chase upside in MU, SNDK, and the like, while scorning other sectors.

COR1M measures the direction of options prices for top US stocks vs the SPX. During periods of calm we generally see traders bit up call options, and sell SPX options, which creates low correlation. Conversely, when there is a lot of fear in the stock market, correlation spikes as traders sell all stocks and buy SPX options – typically puts.

Currently DSPX (blue) is at highs only seen since the Covid crash after just passing highs from the April 2025 Tariff drama. Meanwhile, COR1M (red), is nearing it’s lowest reading ever.

This gives us a massive never-before-seen divergence (black arrows) between spiking options prices (high dispersion) and only certain stocks surging higher (low correlation).

The previous highs in DSPX came during massive risk-off periods! Why? Because in both 2020 and in 2025 traders were pricing in vastly different risk due to traumatic events: in Covid cruise lines were crashing massively, whereas healthcare stocks were bid. During April ’25 it was about parsing tariff winners and losers. These heavy “winners and losers” environment created a lot of dispersion in options prices.

Today the massive dispersion is driven by the chase in AI stocks, which is now at extremes.

Notice, too, how correlation (red) spiked during those previous events as traders sold stocks sharply lower. In other words: all stocks crashed in Covid/Tariffs (i.e. high correlation), just some stocks crashed harder (high dispersion).

However correlation is at lows not seen since July of 2024, with July ’24 being the all-time low. This comes as traders are very complacent about downside risk – despite the Iran war situation.

How Do Options Prices Differ Across Stocks?

An under the hood view of this dynamic is shown with SpotGamma’s Compass tool. If a stocks call options are much more expensive than their calls, the plot lands toward the right of this chart (X axis). As traders anticipate more stock movement (IV), the plot lands higher on this chart (Y axis).

Compare SMH (yellow arrow), which is at the top right of this chart. Traders are betting that this stock is essentially going to contine crashing higher.

The tech-heavy QQQ is also in a showing a heavily bullish positioning, which traders betting that upside hot streaks continue. The big single stock constituents have effectively “infected” the Nasdaq Index with uber-bullish views.

The SPY, however, has been shifting away from call leaning positions, to put positions. However, the overall IV remains low, showing traders have simply been backing off from call positions vs strongly betting on downside.

SPX QQQ SMH Skew

The extreme readings here suggest options positioning could drive a stock volatility event, as extreme call positioning unwinds. 

This difference (or dispersion) in options prices here creates many different trade setups, with different risk-rewards for traders:

SPY put options may be relatively much cheaper that puts in SMH, or QQQ. We view these as low risk, with potentially high reward.

More dramatically, selling calls in SMH or QQQ could offer fantastic rewards, but also bring major risks if the hot upside continues.

Parsing what type of downside position that may be right for you involves mapping out:

1. How likely are the odds of a market correction
2. The potential risk vs reward of various downside trade structures

Knowing these two elements sets up how you might select and position for a potential downside move.

Join our upcoming event on June 9th: Trade Like the House, where we will be combing positional analysis with probabilities, to gain structural edge with your trading.

Tyler Durden Wed, 06/03/2026 - 14:20

New York Democrats Move To Redraw Congressional Maps

Authored by Chase Smith via The Epoch Times,

New York Democrats are moving to give state lawmakers the power to redraw the state’s congressional maps, entering the national fight over control of the U.S. House.

The proposed constitutional amendment would allow lawmakers to draw district lines themselves and redraw them mid-decade. It had not been formally filed as of Tuesday morning, but The Epoch Times has reviewed a memo describing the proposed changes.

The proposed amendment would change New York’s redistricting system in several ways.

According to the memo, state lawmakers could draw the maps themselves if the state’s independent redistricting commission fails to agree on a plan, and could approve maps with a simple majority vote rather than the larger vote the constitution now requires.

Court fights over the maps would go back to the Legislature, rather than to a court-appointed expert known as a special master.

And lawmakers could redraw congressional districts between the once-a-decade census counts.

The memo also lists new rules for how maps must be drawn. They would still bar maps that weaken the voting power of racial or language minorities and would still require districts to be equal in population and connected. The list does not include the constitution’s current ban on drawing districts “for the purpose of favoring or disfavoring incumbents or other particular candidates or political parties.”

New York voters created the independent commission in 2014, approving a constitutional amendment meant to take map-drawing out of politicians’ hands. The system encountered issues the last time it was used.

After the commission deadlocked, Democrats in the Legislature drew their own maps. In 2022, the state’s highest court threw them out, ruling they were an unconstitutional partisan gerrymander, and a special master drew the lines instead.

Senate Majority Leader Andrea Stewart-Cousins defended the plan in an emailed statement to The Epoch Times on Tuesday, June 2.

“New York cannot afford to stand still,” she said. “We cannot ignore the reality that Republicans have repeatedly sought to undermine democracy through various attempts to gain political advantage. At a time when democracy is under attack across the country, we have a responsibility to protect all voters including the minority communities and ensure that every New Yorker continues to have a voice. This legislation remains firmly rooted in the democratic process, giving New Yorkers themselves the final say at the ballot box.”

New York Sen. Andrea Stewart-Cousins speaks during an event at the Rockefeller Foundation on in New York City on Feb. 20, 2018. Dia Dipasupil/Getty Images

She added, “We believe these changes will ensure that our state has the tools necessary to preserve a level playing field in the face of Republican-led efforts to tilt maps and weaken democratic participation—without compromising the integrity of the Independent Redistricting Commission.”

The push follows a wave of mid-decade redistricting that began in Texas last summer, when Republicans moved to redraw their congressional map at President Donald Trump’s urging. California Democrats responded with their own redraw. Missouri, North Carolina, Ohio, Virginia, Florida, and Tennessee have since taken up mid-decade efforts, with other states discussing the matter as well.

House Minority Leader Hakeem Jeffries (D-N.Y.) has made the state’s congressional lines part of his strategy to win back the House. He tapped Rep. Joe Morelle (D-N.Y.) to coordinate with state officials, and Morelle met with Gov. Kathy Hochul and legislative leaders in Albany on May 5.

The change would not happen quickly. A constitutional amendment in New York must pass the Legislature twice, this year and again after the 2026 elections, and then win approval from voters. The earliest it could affect any maps is the 2028 election. The legislative session ends June 4.

Republicans oppose the plan. In a May 31 statement to The Epoch Times, Assembly Minority Leader Ed Ra, a Republican, called any plan to redraw maps mid-decade or change the commission “a shameful attempt to nullify the will of the voters.”

At a June 1 news conference as those reports continued to surface, Ra said Democrats started the fight in New York well ahead of Texas’s move last year.

“It was started by New York State Democrats,” he said, referring to previous maps drawn by New York Democrats. He noted that voters rejected a similar measure in 2021.

Rep. Mike Lawler (R-N.Y.) speaks to reporters at Rockland Community at Rockland Community College in Suffern, N.Y., on May 22, 2026. Samira Bouaou/The Epoch Times

Rep. Mike Lawler (R-N.Y.) said New York Democrats drew their own maps in 2022 to protect their House majority.

“They just went and drew their own maps and totally disregarded the Constitution,” he said at the press conference.

Assemblyman Matt Slater, the top Republican on the Assembly Elections Committee, said the current system is functioning correctly.

“The system is working,” he said on June 1, adding New York now has “some of the most competitive congressional districts anywhere in the country.”

Sen. Mark Walczyk, the top Republican on the Senate Elections Committee, said voters were clear in 2014.

“We want an independent redistricting commission,” he said.

Tyler Durden Wed, 06/03/2026 - 14:05

Iran Issues 4-Stage Proposal For Deal With US, After Most Intense Overnight Clashes Since April Summary

• State media issues four-stage proposal for deal with US, says indirect talks are 'ongoing'.
• GCC blasts 'cowardly attacks' after Kuwait International Airport rocked by Iranian missiles: one dead, 63 injured.
• Overnight saw US-Iran exchange fire in Strait of Hormuz - as US attacked Qeshm Island - and Iran unleashed more projectiles on Gulf states. Most intense fighting since April.
• IRGC via state media: Tehran has frozen all back-channel communication with Washington over Israeli operations in Lebanon, calls Trump narrative a fantasy.
• Trump says Iran has agreed not to pursue a nuclear weapon, while saying talks are still ongoing. Tells NYP he believes the crisis in the Strait of Hormuz will "resolve itself fairly quickly."

//--> //--> //--> US x Iran permanent peace deal by June 30, 2026?
Yes 24% · No 77%
View full market & trade on Polymarket

*  *  *

Trump Claims Iran 'Close' To Signing Paper 'In Theory'

The two sides don't actually appear to be any closer to a deal or so much as a MOU to get back to the table, but President Trump is still signaling optimism:

Trump on Iran:

In theory, they are pretty close to signing the paper.

On what you saw for the last few nights: it takes two to tango. pic.twitter.com/j6z0PjP8ve

— Clash Report (@clashreport) June 3, 2026

Fars: Outline of Iran's 4-Stage Proposal For Deal With US

Fars Politics on Telegram has issued the following outline on Wednesday (machine translated). Also, somewhat contradicting reports from other state media outlets, Fars has stated that indirect talks with Washington are still ongoing, but that no final decision on a MOU has yet been made.

Phase 1: Ending war and halting military actions.

Phase 2: Tangible measures, including: The issue of the strait and the mechanisms related to it,
Lifting the blockade, Removing restrictions and oil sanctions, Releasing part of Iran's frozen assets and blocked financial resources.

Phase 3: Dedicated to discussions on sanctions and the nuclear file.

Phase 4: Involves establishing a supervisory committee to oversee implementation of the understanding and monitor the commitments of all parties.

Saeed Ajorlou, a member of the media team of the negotiating delegation provided the following commentary via Fars:

Phase One is ending the war and achieving a complete halt to military actions. This must encompass all parties and all fronts—whether Iran and the United States or the so-called Resistance Axis.

After Phase One is stabilized, the focus shifts to practical and tangible measures. In this phase, four key issues must be addressed:

• The issue of the strait and the mechanisms related to it
• Lifting the blockade,
• Removing restrictions and oil sanctions,
• Releasing part of Iran's frozen assets and blocked financial resources.

Phase Three is dedicated to discussions on sanctions and the nuclear file. At this stage, after concrete and verifiable measures have been implemented, negotiations will begin on broader sanctions relief as well as issues related to the nuclear program.

Phase Four involves establishing a supervisory committee to oversee implementation of the understanding and monitor the commitments of all parties. The members of this committee have not yet been finalized, but Iran is seeking to include friendly and aligned countries in the mechanism so that the implementation process has sufficient backing and support.

By the looks of the above proposal, the warring sides seem very much still at square one.

State Media Still Insists Talks Are Frozen, Amid Most Intense Fighting Since April

State media statement on Wednesday:

IRGC-linked Tasnim claims Tehran has frozen all back-channel communication with Washington over Israeli operations in Lebanon, directly contradicting Trump's assertion that messages are arriving daily from Iran. Tasnim: "Trump's claim that Iran is confirming the issue is completely different from reality."

Iran's Foreign Minister is meanwhile articulating that Iran will lay down some new red lines via military strikes, which he has dubbed 'self-defense' in nature...

Our Armed Forces are conducting self-defense strikes on sites the U.S. is permitted to use to attack civilian shipping and violate the ceasefire.

Any hostile act will be met with an immediate, decisive response. What sanctions and war failed to achieve won't be won with more war pic.twitter.com/CwjULJ6PeI

— Seyed Abbas Araghchi (@araghchi) June 3, 2026

President Donald Trump is still trying to present some bright spots, telling NY Post he believes the situation in the Strait of Hormuz will "resolve itself fairly quickly" and went so far to say he expects to meet with Iran's supreme leader "at some point."

Major Attack on Kuwait International Airport: One Dead, 63 Injured

Kuwait International Airport has come under Iranian missile and drone attack on Wednesday, in a significant strike that killed one person and left 63 people injured - according to the country's health ministry, with several of the victims being seriously wounded.

A passenger terminal was directly struck, damaging facilities including diplomatic missions at the airport, Kuwaiti authorities have said. Area hospitals conducted seven major emergency surgeries following the incident, underscoring that it was a mass casualty event.

via The Telegraph

Kuwaiti defense ministry spokesperson Brig Gen Saud Abdulaziz Al-Atwan described the attack as "criminal Iranian aggression which resulted in significant material damage to the building and injuries." It confirmed engaging 13 missiles and 17 drones total which were fired from Iran. 

Civil aviation authorities immediately suspended traffic and transferred arriving flights to separate unaffected airports after "terminal one came under Iranian attacks causing casualties and damage." The cross-border airport attack came after violent exchanges of fire between the US and Iran, which at first looked like limited one-off incidents, but then became an extended tit-for-tat.

The Overnight Catalyst: US-Iran Exchange Fire in Hormuz

Overnight, the US military deployed a Hellfire missile to disable a tanker attempting to bypass the American blockade in the Strait of Hormuz. Following the intercept, American forces engaged in a wider kinetic exchange, stating they repelled subsequent Iranian reprisal strikes across the region and launched retaliatory attacks against military sites on Iran’s Qeshm Island.

In response, Iran’s Islamic Revolutionary Guards Corps (IRGC) claimed it launched a missile and drone barrage targeting the U.S. Fifth Fleet headquarters in Bahrain - an assertion that Central Command (CENTCOM) has explicitly denied. The IRGC had also sent several missiles on two US bases in Kuwait, which were said to have been intercepted.

Serous damage and chaos at Kuwait International Airport:

⚡️#UPDATE Iran bombs Kuwait International Airport pic.twitter.com/beTFw6Lyuv

— War Monitor (@WarMonitors) June 3, 2026

GCC Blasts 'Cowardly Attacks'

The Gulf Cooperation Council has in response slammed Iran for their "ongoing aggression" against member states Bahrain and Kuwait, denouncing the "cowardly attacks on civilian objects" which mark a "dangerous and unprecedented escalation."

But Tehran is not backing down and is instead issuing further hardline warnings and threats, per Al Jazeera citing state media:

Iran’s Revolutionary Guard says retaliatory strikes "should serve as a lesson" for the United States after it fired a barrage of missiles and drones at Kuwait and Bahrain.

While Iran's foreign ministry is warning that the overnight US assault on Qeshm Island continues a severe breach of the ceasefire, President Trump is saying that "conversations between us have been going on continuously" - in reference to the Iranians.

Kuwait's civil aviation authority confirmed Iranian drones and missiles hit the T1 terminal at Kuwait International Airport. Several people were injured and the building sustained severe damage. Commercial flights have been halted. https://t.co/fbFhjSofIY pic.twitter.com/zOz83Ba6cy

— Open Source Intel (@Osint613) June 3, 2026

Overnight Headlines

More latest developments via Newsquawk...

• Explosions were heard near Qeshm Island in Iran on Wednesday morning.
• Kuwait's Army announced its air defences were intercepting hostile missile and drone attacks, while reports noted that two US bases were targeted in Kuwait, with explosions in the Ali al-Salem and Arifjan bases where US soldiers are stationed. Furthermore, air raid sirens sounded in the UAE and Saudi Arabia, with explosions also reported in Saudi Arabia, while explosions were heard in Qamishli, Syria, and earlier reports noted multiple explosions in the centre of Iraqi Kurdistan with the headquarters of anti-Iranian separatist groups targeted.
• IRGC said the US attacked Qeshm Island, and in response, Iran carried out precise and intensive missile strikes on US bases in Kuwait, while it warned further US aggression will be met with a seismic, crushing and decisive response.
• IRGC said the headquarters of the US 5th Fleet in Bahrain was attacked by missiles and drones from the IRGC Aerospace Force, while it targeted a US-affiliated vessel named Panaya with missiles and clarified the recent attack was in retaliation for the US targeting an IRGC communications tower in the south of Qeshm Island.
• US CENTCOM said Iran launched several ballistic missiles towards neighbours and that forces successfully defeated multiple Iranian missiles, while US forces had conducted strikes on Qeshm Island in response to attempted attacks by Iran. CENTCOM stated that forces shot down three one-way attack drones launched by Iran toward civilian mariners that were rightfully transiting regional waters, and US forces also conducted self-defence strikes on an Iranian military ground control station on Qeshm Island. Furthermore, it denied IRGC claims that Iran struck the 5th Fleet HQ in Bahrain and a US airbase in the region, and stated that all Iranian attacks on US forces failed.
• US CENTCOM says forces disabled a Botswana-flagged unladen oil tanker that was attempting to sail toward an Iranian port on the Arabian Gulf on June 2nd. Says: US aircraft disabled the vessel by firing a Hellfire missile into the ship’s engine room, preventing the tanker from reaching Iran.
• US President Trump is pushing Iran to make firmer nuclear commitments and wants nuclear concessions in writing from Iran, according to ABC News.
• US Secretary of State Rubio said that Iran has mined large segments of the Hormuz Strait. Rubio stated that nuclear negotiations with Iran were highly complicated and technical, which would therefore take time, while he added that the war with Iran had made interactions with Tehran more complicated, but also commented that the "war in Iran is over".
• Iran's Foreign Ministry condemned the US attacks on Iranian tanker and Qeshm island. The Foreign Ministry "notes the direct and clear responsibility of the rulers of Kuwait and Bahrain for last night’s aggressive acts."
• Hardline Iranian lawmaker called for stronger military response to US strikes, Al Jazeera reported.
• Kuwait’s General Civil Aviation Authority said an emergency plan at Kuwait International Airport was activated after Terminal 1 was targeted by Iranian drones and missiles.
• Hezbollah attacked an Israeli command post in southern Lebanon with a drone strike, which wounded eight Israeli soldiers, according to SNN.

Tyler Durden Wed, 06/03/2026 - 13:50

SDNY Prosecutors Looking At Valuation Discrepancies In Private Credit Market

In a move that is long overdue, Jay Clayton, the US attorney for the Southern District of New York, said his office is looking at possible valuation discrepancies in the private credit marketplace. 

Wall Street’s top prosecutor addressed the issue Wednesday while speaking at the Bloomberg Global Credit Forum in New York.

Clayton said the difference between the price at which assets are marked on one balance sheet versus others was at the heart of blowups at First Brands Group, Tricolor Holdings and 777 Partners.

“Where you look is when you have a market where there’s a bunch of participants and a large portion of them have it marked at say 75 and one or two have it marked at 95,” Clayton said.

“That’s a place where you say, okay, I need to ask some questions about the folks who are marking it at 95, particularly if they’re making fees off it,” he added. “To be clear, I’m asking my people to look at that question across the marketplace.”

An example of how furiously marks can move - lower - in private credit, back in March, we reported that Blackrock slashed the value of one of its private loans from par to 0 in just months, Infinite Commerce Holdings, sparking a selloff in the shares as the market was stunned by how quickly a loan from the world's most iconic asset manager can go from par to 0 in just days.

At the same time, however, Clayton warned against “pearl-clutching” about private credit and suggested that it had been a boon to the US economy. He said he didn’t currently see a “transmission mechanism” by which issues in the private credit sector could affect the broader economy.

Clayton had previously expressed concern about how Wall Street firms value private assets. The Justice Department’s Manhattan outpost in recent months has been seeking information about BlackRock TCP Capital Corp. - most likely in relation to the abovementioned loan - Bloomberg reported in May.

Clayton, chairman of the Securities and Exchange Commission during Trump’s first presidency, took over the Manhattan US attorney’s office after his re-election. In between those roles, he was chairman of private-markets powerhouse Apollo, which has recently been touting its push to price some $830 billion of credit assets daily in a bid to boost transparency.

Tyler Durden Wed, 06/03/2026 - 13:25

'The Pricking Is Coming': Dalio Warns AI Bubble Will Burst Like Dot-Com, But Tech Will Endure

Bridgewater Associates founder Ray Dalio appeared on Bloomberg TV today and delivered a measured yet cautionary assessment of the artificial intelligence investment frenzy. He highlighted classic bubble dynamics - sky-high valuations, rampant speculation, and "paper wealth" vastly outpacing actual cash flows - while drawing direct parallels to the 2000 dot-com era.

"All great technology changes produce bubbles," Dalio said in the Wednesday Bloomberg Television interview. "Nobody can get it exactly right. You have to either spend a ton of money to capture your market share and don't worry about whether it's too much or not, or you don't spend enough money and you lose your market share."

Dalio explained the mechanism of how such a bubble eventually bursts: "The pricking is the converting of wealth into money." He noted that today's AI-driven market is "following that kind of path, even though it is a wonderful technology."

⚠️ Ray Dalio on timing the top of an AI bubble:

The pricking is converting wealth into money because I need money, so I have to sell some of the wealth in order to get the money. pic.twitter.com/lWtT8eOHou

— LuxAlgo (@LuxAlgo) June 3, 2026

AI Will Survive - Many Companies May Not

Dalio also hit on the law of the jungle; a lot of companies simply disappear during massive technological upheaval - as competition sorts out the winners and losers - which is separate of the technology's lasting impact. In short, the underlying innovations in AI will continue transforming economies and societies, much as the internet did after its own bubble deflated.

Meanwhile, Nvidia CEO Jensen Huang just touted "insane" returns for investors willing to bet on the AI boom - with chipmakers notably having been the hottest stocks on Wall Street of late - driven by demand for high-bandwidth chips used in AI data centers and taking the market to record heights.

Tyler Durden Wed, 06/03/2026 - 12:45

Rabo On Regime-Change At The Fed: What Warsh Can (And Should) Do First

The honeymoon period for Warsh is over.

The FOMC could have given him the professional courtesy of allowing him to settle in, but in recent weeks several Committee participants have staked out their position.

They want to drop the FOMC’s easing bias and instead take a more neutral stance.

This means it will be more difficult for Warsh to convince the Committee of cutting rates anytime soon.

Against that internal pressure, WSJ's Fed whisperer, Nick Timaraos reports that Warsh has tapped two outside associates to advise him while he settles into the job, one of whom previously helped write a conservative blueprint that recommended a radical restructuring of the central bank.

The manifesto drew attention for floating ideas well outside the mainstream of monetary policy, including a menu of overhauls whose top-ranked option was “free banking” - effectively abolishing the Fed in favor of privately issued, commodity-backed currency.

The report included a disclaimer that said the ideas shouldn’t be attributed to any individual and instead synthesized the views of a panel of contributors.

Winfree later distanced himself from the chapter’s more provocative proposals.

“I do think the Fed should be reformed,” he told Roll Call in 2024. “But I would not subscribe to the idea of nuking the Fed.”

As Rabobank details below, the shifting dynamics in the FOMC cannot be seen separately from the developments in the Strait of Hormuz.

As the conflict drags on, energy prices will remain elevated and high inflation sustained for longer.

We flagged repeatedly that given the developments in the Middle East, we were more likely to drop a rate cut from our forecast for 2026 than add one.

Because of the shifting FOMC dynamics and their changed house view of the conflict and its resolution, Rabobank is now adjusting our Fed view.

Shifting FOMC dynamics

As we noted last week, in just a few months, the situation into which Warsh is parachuted has changed dramatically.

At the start of the year, we still expected that the new Chair could convince the FOMC of making three rate cuts before the year had ended.

After the outbreak of the war with Iran, we dropped one rate cut from our forecast.

However, the Strait of Hormuz is still disrupted today and gasoline prices and inflation have continued to rise.

Therefore, we repeatedly flagged that because of the developments in the Middle East, we were more likely to drop a rate cut from our forecast for 2026 than add one. Meanwhile, nonfarm payroll growth has been solid and the unemployment rate has remained at 4.3%.

As a result, the center of the FOMC has moved away from rate cuts.

What’s more, in recent weeks several Committee participants staked out their position.

Governor Waller’s conversion was the most notable. Last summer, he positioned himself as a Trump-loyalist, leading the charge to cut rates, because of increased downside risks to the labor market. After losing out to Warsh in the race for Fed Chair, he is shapeshifting again. Coincidentally, Waller jumped ship on the same day that Warsh was sworn in, making Warsh’s mission even more difficult than it already was.

Moreover, by staying on as Governor, Powell is effectively blocking the addition of another Trump-loyal Governor.

To the new Fed Chair it may feel as if he has been dropped behind enemy lines.

More inflation and less room to cut

Not completely unrelated, the situation in the Strait of Hormuz has dragged on.

RaboResearch has changed its view of the conflict and its resolution and now thinks that the Strait will be closed until September.

This has led to an upward adjustment of our energy price forecasts, which also means that we will adjust our forecasts for US inflation. More details will be provided in our Monthly Outlook next week. With our outlook for inflation higher and more persistent and the FOMC taking defensive positions against the new Chair, we now change our Fed view as well.

Instead of a rate cut in September 2026 and another in December 2026, we now forecast the first cut in October 2026 and the second in January 2027.

So we shift our expected rate cuts one meeting into the future. This means that we now forecast only one rate cut in 2026, instead of two.

At the same time, we add a rate cut to 2027 (previously none). The reason why we still expect the Fed to cut before the end of the year is that the conclusion by many Fed speakers that the labor market has stabilized may be a bit premature. After all, we have only just seen the first back-to-back positive nonfarm payroll growth figures in almost a year. What’s more, the fallout from the war with Iran could have negative repercussions on the real economy, even in the US. It is still a long way to the end of the year and we could easily see a return of downside risk to the labor market before we are there. In this case, the FOMC may reintroduce its easing bias.

For example, in his May 22 speech, Governor Waller said: “With regard to future rate cuts, I am going to need to see improvement on inflation or a significant deterioration in the labor market before I would consider reducing the policy rate.”

Note that he uses “or” instead of “and”, which implies that even without improvement on inflation, the labor market could be a reason to cut.

The Fed may be talking tough now, but they have a history of getting wobbly knees when the economy starts to falter. The reason why we do not shift the previous September cut beyond October, is the midterm election.

If downside risks to the labor market rise in Q3, Warsh will have a strong incentive to push for a rate cut prior to Election Day.

Therefore, the October meeting is his last chance to help boost the chances of the Republican candidates for the Senate and the House of Representatives by cutting rates and giving the stock market a lift.

Conclusion

Instead of delivering the rate cut that President Trump would have preferred, Warsh will likely have to remove the easing bias from the Fed statement at his first FOMC meeting as chair.

A sensible approach for Warsh would be to refrain from pushing for rate cuts in June and July, but instead introduce the analytical framework that will allow the FOMC to resume its prewar path of rate cutting later in the year.

If the current surge in inflation is purely a supply shock, the Fed should be able to look through the high headline inflation figures and focus on core inflation and inflation expectations.

If core inflation picks up substantially and inflation expectations become unanchored, then inflation pressures could become persistent.

However, if we see only a modest rise in core inflation and long-run inflation expectations remain stable, the Fed could resume its pre-war interest rate path, which was sloping downward.

Our forecast is now that the Fed will cut in October 2026 and January 2027, instead of September 2026 and December 2026.

So we move the rate cuts one meeting into the future.

This will still get the federal funds rate to what the median FOMC participant sees as the neutral level, only a little later.

The direction of Warsh’s mission is clear, but he may get there later than the administration might like.

Tyler Durden Wed, 06/03/2026 - 11:55

Goldman Sits Down With Anduril As 'War Unicorns' Reshape Defense Tech

Palmer Luckey’s defense startup, Anduril, is emerging as the Department of War’s answer to the urgent need for affordable, scalable advanced weaponry produced at lightning speed, rather than through the slow, over-budget procurement cycles that have long defined the legacy primes.

The twin conflicts raging across Eurasia and the Middle East, from the Russia-Ukraine war to the U.S.-Iran war, have forever altered modern warfare, with drones, seaborne drones, ground robots, and AI kill chains now reshaping the battlefield.

The quick rise of Anduril, something we call a “war unicorn,” has attracted the attention of Goldman analysts, who recently felt compelled to sit down with Anduril executives to better understand the story and how it will play a major role in the next phase of rebuilding America’s defense-industrial base.

Analyst Noah Poponak recently hosted Anduril co-founder and CEO Brian Schimpf and head of investor relations Allison Lazarus in New York to gain more color on how the defense company is solving the defense industry’s biggest bottleneck, speed.

Oculus headset creator Palmer Luckey, who founded the company in 2017, has focused on building lower-cost, scalable systems in categories such as drones, counter-UAS, and missiles, positioning itself against a legacy defense-industrial base that includes Lockheed Martin, Boeing, and many others.

Here are Poponak's top takeaways after speaking with Anduril executives:

What is Anduril solving for? The U.S. defense industrial base is currently geared towards producing low numbers of expensive, bespoke assets. While these assets are very capable - they have extremely high specifications and performance requirements - they have historically been used in limited quantities, often utilize sole-source specialty materials and components, and have complex manufacturing processes, all of which makes scaled production ramp-ups difficult. More recently, the rate at which these assets have been used in modern conflicts relative to their respective manufacturing footprints and stockpile levels has proven to be high. This has prompted the United States to 1) increase the production rate of these assets, but 2) develop and procure lower-cost alternatives that can be mass-manufactured. This is where Anduril steps in. The company designs its products with affordability and scalability in mind ("affordable mass").

In the long-run, Anduril believes its capability set can be a differentiator, but right now it is prioritizing scalability and speed by focusing on these principles:

1. Vertical integration. When it makes sense to do so, Anduril brings component and module production in-house, decreasing its reliance on external vendors to meet production targets. When the company does rely on external vendors (e.g. Anduril owns the design for a component, but does not produce it in-house), it seeks strategic relationships with commoditized component manufacturers, aiming to avoid the supply chain risks sometimes posed by sole-source suppliers (although this is hard to avoid with modules). Importantly, Anduril is not looking to completely vertically integrate. When the industry has many suppliers of a common item (such as small turbo jets or bolts), Anduril will source that item externally.

2. Component and process commonality across product lines. By utilizing the same components (bearings, bushings, washers, electronic components, materials) across product lines, Anduril simplifies its supply chain and can flex a common inventory pool across products. Having similar production processes allows for an easier manufacturing switch between products.

3. Product simplification and production automation. By designing simpler products, Anduril creates more opportunities for automation, lowers cost, and enables higher production output. A simpler product often times comes with a lower capability set, but there are increasing use cases for these products, as best-in-class assets are not always needed to achieve mission outcomes.

4. Flexible manufacturing facilities. By designing production lines and facilities to rapidly switch between different products, Anduril is able to more quickly meet demand when and where it occurs. This also lowers the risk of idle, dedicated manufacturing space for products not currently in a procurement cycle.

Internal investments create product adoption and margin upside. In our meeting, Anduril stated a near 25% total company operating margin over time is possible. The company derives a high percentage of its revenue from fixed-price work (we estimate that to be between 70-80%), and invests substantially in internal R&D, which, per the company, could allow it to command much higher margins than traditional defense primes over time. Investing ahead of customer demand does entail risk, but the company believes it is advantageous to compete with actual in-production assets versus hypothetical assets or designs when industry RFPs are released, combined with an ability to deliver to schedule. The DoW is increasingly requesting that industry participants invest their own capital into R&D and production, as it fosters faster product iteration and more competition.

DoW acquisition reform - showing early signs of progress. While acquisition processes at the DoW are still complex and can be difficult to navigate, Anduril stated it is seeing improvement at the customer, noting an increased willingness to try new testing, prototyping, and procurement strategies across the services. At an industry-wide level, the DoW is implementing acquisition reform (see our notes here and here), negotiating multi-year framework agreements, prioritizing fixed-price contract terms, investing in companies via equity stakes, and establishing more open test and procurement strategies like the Drone Dominance Program.

What products in the portfolio are seeing momentum?

• Anduril's Fury (YFQ-44A) continues to progress through the USAF's Collaborative Combat Aircraft (CCA) program as it performs aerial testing and enters the production phase at Arsenal-1.
• The company's Dive-XL product is being manufactured for the Royal Australian Navy's Ghost Shark XL-AUV program.
• Anduril recently entered into a framework agreement to produce thousands of Barracuda low-cost cruise missiles in the coming years.
• Anduril's CUAS products continue to gain momentum domestically (USMC) and internationally (to protect critical infrastructure abroad).
• Lattice is critically integrated into Anduril's hardware, but is also used for enterprise-wide / system-wide applications in the military (U.S. Army, U.S. Space Surveillance Network).

Anduril portfolio

Anduril notable awards and programs of record

Anduril fundraising rounds and implied valuation

Anduril M&A timeline

Professional subscribers can read the full Anduril note here at our new Marketdesk.ai portal. 

Tyler Durden Wed, 06/03/2026 - 11:35

 

 

I keep hearing comments and concerns about these markets in the media. Since my wife is tired of me yelling at the television (“No! That’s wrong!”) you are the lucky recipients of my ire.

Here are five things I have been thinking about regarding markets, the economy, and investments – from the most bullish to the least – that are too easily misunderstood:

1) Profits: If I can only look at one data point to gauge the overall direction of equity markets, it would be profits. And, corporate profits have been on a tear the past few years.

To be sure, the hyperscalers’ artificial intelligence buildout and massive CapEx are significant factors. But we have also seen good profits in sectors ranging from Communication Services, Health Care, Financials, Consumer Discretionary, and Materials — all are having strong quarters; (unsurprisingly, Consumer Discretionary is the least consistent).

And these are not just one-time blips; we have enjoyed the rare combination of record profits and record profit growth rates. If you want to understand what has been driving equity prices, look no further than this powerful one-two punch.

At the same time, high(ish) valuations have become a little cheaper, as multiples have compressed. This is very powerful…

2) All-Time Highs: The data is unequivocal. Investing at all-time highs yields better returns than at all other dates. I have been saying this for years, so rather than repeat myself, I will let Sam Ro give you the details:

“Just because major market drawdowns are often preceded by record highs doesn’t mean all-time highs are often followed by major market drawdowns. Hopefully, this is obvious. The stock market would not have trended higher for decades if this were not true. Eyeball any long-term chart of the stock market, and you’ll see all-time highs followed by new all-time highs.”

There were over 493 new all-time highs from 1983 to 2000. Except for the very last one, every single one of these was bullish.

If you want to make a bet against 500 to 1 odds, well, that’s your call. I am on the other side of that trade.

3) Sentiment: Another intriguing issue that keeps coming up is record lows in U Mich Sentiment. Many find this deeply concerning.

But here is the thing: Your individual sentiment is based on what you experience personally – in BeFi terms, the “Availability Heuristic” of what is in your personal economy. But that is not what drives markets. We discussed this in terms of the pandemic and, more recently, how we can have all-time highs in equities with all-time lows in consumer sentiment.

Most of the time, Sentiment measures do not provide a very clear signal. The contrarian in me looks at record low sentiment measures as a potentially bullish indicator…

4) K-Shaped Economy: Here is the disappointing, grim reality: Throughout most of human history, it has been a very “Winner takes all (or most)” kind of economic system.

The challenge is in having the top 10% of the economic strata driving half of the economic activity. This may not be a sustainable situation — economically or politically.

There were hopes that the industrial revolution, unionization, and the general rise in entrepreneurship might push back against that reality. But it is looking more and more like the Roaring 1920s, the 1980s bull market, the post-GFC bailouts were the norm, not the exception.

I grew up in the post-war era, and I took it for granted that it was the norm. I am starting to suspect exactly how aberrational that period was. It is looking more and more like the entire post-war period – the rise of the middle class, the build-out in the USA of suburbia, interstate highways, the electronics industry, semiconductors, manufacturing, civilian aviation, etc. – was a historical aberration.

I hope this is incorrect, but fear it is not…

Iran War / Oil / Inflation: Venezuela was fast and easy; Cuba is likely a bit more difficult. But Iran has its own strategic, tactical, and military assets; it is its own player in the Middle East. Oh, and they have been supplying drones to Russia (!) for its war against Ukraine.

I have no idea how the Dunning-Kruger War will ultimately play out in terms of energy prices and/or inflation, but it appears not to have been well thought out in advance.

The good news is regional wars generally don’t impact stock prices much; the bad news is this is the one with the potential for causing exactly that kind of mischief…

~~~

Generally speaking, I am bullish on US equities and even more bullish on overseas bourses. There are signs of froth and foolishness, none of which rise to systematic problems.

Am I happy about the excesses surrounding the SpaceX IPO? Absolutely not. The index gaming from Nasdaq and S&P is deeply problematic and disappointing. But it does not read to me as a market killer.

If you have learned anything from this market over the past 15 years, it is that it deserves the benefit of the doubt. The economy has been cooling, but not outright decelerating. Housing is a mess, still working off the excesses of the GFC. College grads seem to be having a hard time finding jobs.

It’s not perfect out there. But until we see deeper signs of deterioration and further economic weakening, I remain constructive…

 

 

 

Previously:
All Time Highs (SP500) versus All Time Lows (Consumer Sentiment) (April 24, 2026)

Maybe Mr. Market Is Rational After All… (August 7, 2020)

The K-Shaped Recovery (September 4, 2020)

No, Market Highs Are Not a Bad Sign (March 5, 2014)

The Bifurcated Recovery in Jobs (November 12, 2013)

 

The post 5 Things I Am Thinking About appeared first on The Big Picture.

Oil Prices Hold Gains As Gasoline Stocks Hit 12 Year Lows, Cushing 'Tank Bottoms' Loom

Brent crude prices are rising back toward $100 per barrel this morning following the latest flare-up in fighting to threaten the U.S.-Iran ceasefire

Prices rose after the U.S. military said Iran fired missiles toward Kuwait and Bahrain, which failed to hit their targets.

The United States said it then struck an Iranian military ground control station on an island in the Strait of Hormuz.

 

API:

• Crude: -6.8MM

• Cushing: -279k

• Gasoline: +3.5M

• Distillate: -214k

DOE:

• Crude: -7.97mm - biggest draw since Feb

• Cushing: -583k

• Gasoline: +3.36mm - biggest build since Jan

• Distillate: +1.50mm

US crude stocks fell for the sixth straight week with Cushing inventories testing tank bottoms once again. The week saw an unexpected jump in product inventories with Gasoline's biggest build since January...

Source: Bloomberg

Today's rise in gasoline stocks lifts them off their lowest level for this time of year since 2014...

Source: Bloomberg

Cushing 'tank bottoms' are in sight once again...

Source: Bloomberg

The Strategic Petroleum Reserve saw another huge drawdown this week (down 58mm barrels since the start of the war)...

Source: Bloomberg

Rig counts are on the rise as US crude production drifts back towards record highs...

Source: Bloomberg

US crude and product exports jumped back towards record highs...

Source: Bloomberg

WTI was trading around $95 ahead of the official data...

Finally, economists at Macquarie wrote in a note this morning that crude oil’s muted reaction to the closure of Hormuz has mainly been a function of the oversupply seen before the war, .

The analysts suggested that “the market will be ok for another month or two, especially given commercial crude stocks have been cushioned by SPR/product draws."

However, if the Strait remains closed at the end of the northern summer (Labor Day is Sept. 7), physical availability will tighten materially.

“If the Strait reopens soon, we expect prices to fall sharply. However, with stocks drawing rapidly, if the Strait remains closed, at some point prices will need to move much higher.”

'Tank Bottoms' are in sight around the world.

Tyler Durden Wed, 06/03/2026 - 10:39

The post Quick Thoughts on the Labor Market: Don’t Buy the Job Openings Hype appeared first on CEPR.

My mid-week morning plane reads:

• Real-Estate Agents Are Quitting the Slow Housing Market: Four years into a struggling market, even agents who survived the initial shakeout are hitting their breaking point. Fewer sales, longer timelines, second jobs. (Wall Street Journal)

• No, Market Highs Are Not a Bad Sign: The old Ritholtz classic, still relevant—the data on what happens after all-time highs is the opposite of what most people assume. (The Big Picture) see also New All-Time Highs: Since 1950, roughly 7% of all trading days have been new all-time highs. The highest percentage of trading days hitting new highs in a decade is the 1990s at 12.3%. This decade is far from over but we’ve experienced new highs in the S&P 500 in 13% of trading days. (Wealth of Common Sense)

• The Great Wealth Transfer Includes $570 Billion in Classic Cars: Boomers are about to hand off a staggering collection of vintage automobiles. The question is whether anyone under 60 wants them—and what happens to prices when supply floods the market. (Bloomberg)

• Best ETFs 2026: The Morningstar Award for Investing Excellence Winners: Morningstar’s annual ETF honors—the funds that earned top marks for performance, cost efficiency, and risk-adjusted returns. (Morningstar)

• Grocery Shoppers Are In For a Summer of Pain: The Iran war is driving up food costs, and the tariff aftershocks aren’t helping. Expect higher prices at the register through the fall. (Bloomberg)

• America’s Favorite Comedian Wants to Be the Next Walt Disney—and He’s Not Joking: Nate Bargatze, the country’s top selling stand-up comic, has a grand ambition: a $350 million theme park in Nashville, Tenn. (Wall Street Journal)

• If You Take the Weasel Job Then You Must Be the Weasel: Hamilton Nolan on the moral clarity of job titles—if you accept a role that requires you to do terrible things, you don’t get to pretend you’re not the one doing them. (Hamilton Nolan)

• I Want It, But I Don’t Like It: A sharp essay on the gap between desire and enjoyment—why we keep pursuing things that don’t actually make us happy, and what that says about modern consumer psychology. (Panoptica)

• Jimmy Kimmel ‘Felt Defeated’ by Stephen Colbert’s Cancellation and Says Late-Night TV Is Not ‘Dying of Natural Causes’: ‘We’re Being Poisoned’ The “Jimmy Kimmel Live!” host opened up in a new interview with Vulture about the future of the genre following the cancellation of Stephen Colbert‘s “Late Show” on CBS and his own run-ins with Trump, including his suspension following comments made about the death of Charlie Kirk.  (Variety)

• Knicks-Spurs NBA Finals mega-preview: Game 1 tips off June 3 in San Antonio. The Athletic’s comprehensive breakdown—predictions, odds, matchups, and everything else you need before the series starts. (The Athletic)

Video of the day: How a Secretive Trading Empire Is Taking Over Wall Street

Be sure to check out our special Masters in Business this week, Remembering Jonathan Clements with Bill Bernstein and Jason Zweig. The two recall Clements’ impact on the investor community; they discuss his posthumous book, “Money and Me.”

The Deal That Keeps the Oil Flowing

Source: Epicenter

 

Sign up for our reads-only mailing list here.

 

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

Do We Really Believe In Freedom?

Authored by Mollie Engelhart via The Epoch Times,

Do we really believe in freedom?

Or do we only believe in freedom when it applies to people who agree with us?

Do we trust people we fundamentally disagree with to remain free citizens?

Or do we believe they must be controlled through laws, censorship, surveillance, or social pressure because they are too dangerous to be trusted with liberty?

That question sits at the center of what I am most interested in during this moment in history, the 250th year of the American experiment.

Because when I look around, it increasingly feels like both sides are drifting in the same direction while packaging it differently.

Each side frames the other as dangerous, radical, and incapable of self-governance. People on the left often believe the right is racist, authoritarian, anti-science, and driven by extremism. Many people on the right believe the left is hostile to faith, hostile to biology, hostile to free speech, and willing to use institutions to socially engineer society.

If you genuinely believe those things about your political opponents, then freedom starts to feel dangerous.

And once freedom feels dangerous, control starts to feel justified.

For me, the COVID-19 pandemic broke the illusion.

I suddenly realized I could no longer clearly see what the political left still offered someone like me. I watched censorship expand rapidly. I watched speech become conditional. I watched people lose jobs and platforms for asking questions. I watched mandates imposed alongside liability protections and dissent treated as danger.

I watched mandates destroy livelihoods.

I watched small businesses close while major corporations consolidated wealth and power. I watched people who had spent decades building restaurants, gyms, farms, salons, and family businesses suddenly deemed “nonessential.”

I wasn’t reading about these policies. I was living under them.

At the same time, I was living in a state that increasingly felt hostile to the practical realities of my life. Everything started feeling harder. More permits. More taxes. More hoops. More social pressure. It felt harder to make a living, harder to farm, harder to build, harder to protect my family, and harder to simply live outside institutional approval.

Socially, it also became harder to honestly say what I believed without risking professional or personal consequences.

This week, I heard arguments celebrating the fact that Democrats overwhelmingly voted against liability protections for chemical companies accused of poisoning Americans. Many people presented that as evidence that one side cares about ordinary people while the other protects corporations from accountability.

But that moral high ground becomes more complicated when you remember that many of those same political voices supported mandating a vaccine under an emergency authorization, with liability protections already built into the system. At the same time, dissent around those policies was aggressively silenced.

And the reality is that we are still learning about the long-term effects, trade-offs, and consequences years later.

That is not a conspiracy theory.

That is simply how medicine and biology work. Scientific understanding evolves over time.

The George Floyd era accelerated another version of this same instinct.

Suddenly, institutions across America were pressured to publicly demonstrate ideological “purity” around race, gender, identity, and social justice. Diversity, equity, Indigenous representation, and LGBTQ+ inclusion became not just social values but institutional litmus tests in many professional environments.

In some cases, executives, journalists, professors, and employees lost their positions not because they had committed crimes or acts of hatred, but because they failed to meet ideological expectations during a moment of intense cultural pressure.

And once again, people became afraid to say the wrong thing out loud.

But now I watch similar instincts emerge from the political right under different circumstances.

There are increasingly subjects people feel afraid to discuss openly because they fear losing jobs, reputations, platforms, or financial access. Concerns about extremism, hate speech, anti-Semitism, immigration, terrorism, and national security are all increasingly used to justify expanded speech restrictions and surveillance powers.

And to be fair, some of those fears are real.

But history shows that societies rarely surrender freedom all at once. Usually, it happens piece by piece, each side justifying control because they believe the other side is simply too dangerous to remain fully free.

Many people argued I should have stayed and fought politically where I was. But I didn’t.

I moved to Central Texas. Honestly, I needed to breathe a little.

And yet, even now, as I watch the country continue to fracture, I try very hard not to become tribal myself. I try to zoom out and see the bigger picture.

At the core of it, I still believe in freedom.

But that realization leads me to an uncomfortable conclusion: If I truly believe in freedom, then I have to believe the people around me deserve freedom, too—even when I deeply disagree with them.

Otherwise, what I’m actually asking for is not freedom, but power for my side and restriction for theirs.

Maybe the real test of a free society is not whether we support freedom for people we agree with.

Maybe the real test is whether we still support it when we don’t agree with each other.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Tue, 06/02/2026 - 21:45

Leftists Try To "Cancel" Giants Quarterback For His Appearance At Trump Rally

Leftists often claim that when someone of celebrity status appears with Donald Trump, it gives Trump "legitimacy."  This is the common rationale they use to justify their insane cult-like behavior - Their habit of using mobs of mindless activist zombies in order to frighten people with status away from openly identifying as conservative.  The truth is, the political left is a paper tiger, an astroturf movement with no power, blustering with false bravado.   

In reality, celebrities do not give Trump legitimacy.  His landslide election victory gives him legitimacy.  

The radical left is a one trick pony, constantly repeating the same lies and exaggerations in the belief that if they lie long enough those lies will eventually become part of the popular zeitgeist.  For example, a white sports star has a positive interaction with Trump and the progressive media conjures a narrative that he is alienating his minority team mates because shaking hands with Trump is the same as shaking hands with "racism."

This tiresome strategy is being used once again on New York Giants quarterback Jaxson Dart after he appeared on stage with Trump at a New York political rally.  Leftist journalists assert that Dart shaking hands with Trump is the same as shaking hands with Hitler.  The engineered controversy led to a couple of the QB's teammates expressing discomfort over the event. 

Thankfully, the opinions of Dart's teammates are meaningless and he has every right to stand on stage with whoever he pleases.  At present, it seems as though other Giants players understand that they don't have to align politically in order to play a football game. 

Linebacker Abdul Carter (a Muslim) initially voiced discomfort with the optics of the event, according to multiple reports. Dart said he discussed the issue directly with Carter and brushed off any rumors about beef between the two players.  For those who don't like Dart's promotional appearances, frankly they can shut up and stew in their salty snowflake juices about it.

The media, though, is never going to shut up about it because their job is to create controversy out of thin air.

  

Some outlets think Dart needs to be cancelled (as if the political left has any power to cancel anyone anymore).  Sports media site SB Nation claims that Dart's freedom to meet publicly with Trump does not mean he has the freedom to avoid "criticism" (persecution).  It's the same incessant woke argument of "cancel culture vs consequence culture." 

Their version of events displays an insufferable seething; something that might have been more familiar back in 2020.  One has to wonder, do these people ever grow out of their childish delusions of grandeur?  And the answer is no, no they do not.  But we still examine such left-wing crash-outs because they give us insight into the thought processes of progressive authoritarians.  As SB Nation asserts:

"Freedom is pretty great, isn’t it? Here in the United States we love to talk about freedom. The people who love to talk about it the most, who bathe in the idea of American exceptionalism, tend to be those who rarely (if ever) travel abroad. They love to speak about the world in platitudes, always through the lens that the God-loving USA is free, and nowhere else is.  It’s a refrain the majority of Western foreigners find hilarious. Folks in the U.K? They’re free. Europe? Free as well. Australia, Canada, New Zealand — yeah, they’re free.

There are 20 nations broadly recognized as having freedom of expression, with the USA ranking third behind Denmark and Norway. Sure, all those nations might not let you brandish a firearm in public or hurl hate speech at people — but denying that doesn’t make them “un-free.”"

Yes, it does make those countries unfree.  If any viewpoints including the truth can be labeled "hate speech", then the populace does not have free speech.  If the government can put people in prison over jokes and online memes, then those people are not free.  In the UK, around 12,000 people each year are arrested for using restricted speech online.  Most of these arrests are for basic and factual criticisms relating to mass immigration and migrant crime. 

This is not freedom.  

The US is the only country in the world with freedom of speech codified into constitutional law.  It is the only country in the world where the government is restricted from making laws referencing public speech.  SB Nation uses their false narrative of "speech vs hate speech" to launch into their attack on Jaxson Dart.  This is how these people rationalize their totalitarian behavior.  SB Nation continues:

"We’re having this discussion on a sports website because sports are, and always have been, inherently political. It’s impossible to divorce the two, as much as you might want them to be separate..."

For the political left, everything is political.  From movies to TV shows to commercials to video games to comic books to beauty pageants to sports.  Leftist activists believe they should control the platforms of famous people and exploit those platforms for propaganda.  When a celebrity steps out of line, the struggle session begins. 

During the Biden Administration normal people could not escape left-wing politics because they injected their woke ideology into everything.  Sports are not political in the slightest, but progressive movements have tried to force wokeness into them at every turn. 

"Dart made a choice by grinning on stage with the sitting president, one who happens to be historically unpopular, the most divisive in modern history, and largely reviled in both New York and New Jersey, the states the New York Giants represent.

Dart was absolutely free to introduce Trump, he’s free to support him - and personally, I don’t want to see him lose his job for exercising his freedom.  That crucially doesn’t mean Dart should be free of any criticism or allowed to dance away from his decision..."   

A classic woke deflection: "We don't want to see this man cancelled, but he should be cancelled..."  At no point do the people at SBN explain why it's a bad thing for a Giants QB to meet with Donald Trump, other than leftists in New York "don't like Trump" and they think Trump is vaguely racist, even though they can't come up with a single legitimate example of racism. 

"Dart has spoken as well, but limited his remarks on the appearance to a pre-written statement and has not taken any questions. Even in an instance where a white athlete started the drama, it’s become incumbent upon his black teammates to answer the lion’s share of questions about their teammate. Unfortunately, this is par for the course..."

Trump's policies have nothing to do with Jaxson Dart.  The man is not political and his views are not up for scrutiny simply because he likes a President that leftists hate.  Jaxson Dart does not answer to The View.  He does not answer to SB Nation.  He does not have to answer to his teammates, and his teammates don't have to answer to the media. 

As much as the activist mob might want to make Dart pay for escaping the liberal plantation, none of them has the power to do anything to him.  There comes a point when leftists need to accept that they are impotent.  Their cancel culture heyday is long gone and the culture of sane normality is leaving them far behind.      

Tyler Durden Tue, 06/02/2026 - 21:20

High-Dose Vitamin D Lowers Diabetes Risk In Some People

Authored by George Citroner via The Epoch Times,

A specific variation in the vitamin D receptor gene may determine whether high-dose supplementation lowers diabetes risk in prediabetic people.

Illustration by The Epoch Times, Shutterstock

Nearly 115 million Americans are on the road to diabetes. New research suggests an inexpensive, widely available supplement could slow that journey, but only for some of them.

A genetic quirk in roughly 70 percent of prediabetic adults may determine whether high-dose vitamin D can meaningfully lower their risk of developing Type 2 diabetes, according to a study published in JAMA Network Open.

The research builds on the D2d trial. More than 2,000 U.S. adults living with prediabetes were randomized to either take 4,000 units of vitamin D or a placebo for up to 3.5 years. Initially, the trial did not find any significant changes across the participants. The recommended daily allowance is 600 to 800 units for average adults.

However, when scientists analyzed participants' DNA, a more nuanced picture emerged: those carrying specific variations - known as AC or CC - in a gene called ApaI responded strongly to supplementation. Over the 3.5 years of the study, participants carrying the AC or CC variant had a 19 percent lower chance of developing diabetes. The roughly 30 percent with the AA variation saw no benefit at all.

"Diabetes has so many serious complications that develop slowly over years," study lead researcher Bess Dawson-Hughes said in a statement. "If we can delay the time a person spends living with diabetes, we can reduce some of those harmful side effects or lessen their severity."

The distinction matters because prediabetes - defined by higher-than-normal blood sugar that hasn't yet crossed into diabetes territory - affects more than two in five U.S. adults, and often progresses silently. Identifying who stands to benefit from vitamin D intervention could allow clinicians to target supplementation far more precisely than current blanket guidelines allow.

1 Gene Affects How Your Body Responds To Vitamin D

Vitamin D in the blood is converted into its active form in the body. Vitamin D receptors are highly prevalent and present in many cells throughout the body.

When vitamin D binds to cell receptors, it helps cells do what they are supposed to do. In pancreatic cells, vitamin D facilitates the release of insulin to regulate blood sugar.

People with the AC and CC variations were responsive to vitamin D and, therefore, derived more benefits from supplementation.

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[ZH: We sell high-dose Vitamin D + K2, which massively helps with calcium absorption. Pick some up here.]

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The findings could help develop a personalized approach to preventing Type 2 diabetes, senior author Anastassios Pittas, a professor at Tufts University School of Medicine, said in the statement. "Part of what makes vitamin D appealing as a potential preventive tool is that it is inexpensive, widely available, and easy for people to take."

However, researchers emphasized that more research is needed to determine which individuals might benefit from higher doses of vitamin D, with Dawson-Hughes noting that future testing could involve a simple, affordable genetic test to identify those most likely to benefit from supplementation.

Recommendations For Vitamin D Levels

The first step is to have your 25-hydroxyvitamin D level tested, Diana Cusa, senior registered dietitian at Plainview Hospital in New York, and not involved in the study, told The Epoch Times.

"If your levels are found to be deficient, you may consider supplementation and review your dietary intake and sun exposure habits," she said.

Cusa recommended that those who choose supplements should take 600 to 800 international units (IU) daily of vitamin D3 for general health. "Higher doses may be needed if a deficiency is noted or for any targeted prevention trials," she added.

Current guidelines recommend 600 IU per day for people up to 70 years of age and 800 IU for those older than 70. Excessive vitamin D intake can be harmful and has been linked to increased risks of falls and fractures among older adults.

Sunlight, Cusa pointed out, is one of the most effective natural sources of vitamin D, and spending time outdoors can help boost your levels. "However, it's important to be cautious - not to spend too long in the sun without proper sunscreen, as excessive exposure increases the risk of skin cancer," she cautioned.

While you cannot overdose on vitamin D from sun exposure, she added, taking high-dose supplements can lead to toxicity, "so supplementation should be approached carefully and ideally under medical guidance."

Natural sources of vitamin D include fatty fish such as salmon, tuna, mackerel, sardines, and rainbow trout. Other good sources are beef liver, mushrooms, egg yolks, and cod liver oil. "These foods, which are rich in protein and healthy fats, can help support stable blood glucose levels when consumed in moderation," Cusa said.

Tyler Durden Tue, 06/02/2026 - 20:55

US Treasury Sanctions Iran's Largest Crypto Exchange

Peace talks appear stalled, or even halted completely - despite President Trump's denials - and the US Department of Treasury is still swinging hard, as part of the ongoing effort to bring about economic collapse in Iran and 'solve' the Hormuz Strait shipping crisis.

In the latest installment of Washington's economic whac-a-mole, the US on Tuesday unveiled sanctions on Iran's biggest cryptocurrency exchange - and several others, for allegedly enabling the Iranian government and blacklisted state institutions to thwart US and EU sanctions.

The largest platform, identified as Nobitex, is believed to have assisted in allowing hundreds of millions of dollars to pour into Iran's central bank and the ⁠Islamic Revolutionary Guard Corps (IRGC), as a sanctions work-around and parallel financial system.

via Shutterstock 

"While Iran’s economy is in free ⁠fall, the regime has chosen to co-opt digital asset technologies for its own corrupt agenda, including evading sanctions and transferring wealth out of the country," Treasury Secretary Scott Bessent stated in announcing the new action.

"Following the commencement of U.S. combat operations in Iran, Nobitex played a role in protecting and moving assets and funds out of Iran to shield regime ‌wealth despite ​internet blackouts," the statement added.

Nobitex rejected that it has direct government connections and denied that it has been assisting state institutions. It also said it did nothing to conceal the identities of the owners.

As for ownership, Reuters has documented:

...Nobitex is controlled by two brothers from one of Iran’s most ​powerful families, with close ‌ties to the new supreme leader. The two are members of the Kharrazi family, one of the most influential dynasties ‌in the Islamic Republic. Corporate records show that when the exchange started, the brothers were listed under a surname rarely used by members of the family.

The brothers were named by the Treasury as Seyed Mohammad ‌Ali Aghamir Mohammad Ali ⁠and Seyed Mohammad Aghamir Mohammad Ali, who were also subject to individual sanctions, along with the exchange’s chief executive officer, Amir ⁠Hossein Rad.

Last Friday Bessent detailed how the US has seized a total of $1 billion in Iranian cryptocurrency assets to date as part of the economic component of President Trump's Operation Epic Fury.

During a speech before the Reagan National Economic Forum, Bessent stated:

"Just outright grabbed the wallets. Some of them may be typing in right now and might not realize their wallet had been grabbed."

Assets are held "on behalf of the Iranian people" - he described, while framing that the Iranian government had 'stolen' the money from the Iranian populace.

Did this action help fuel BTC's crashing well below $68K on Tuesday?

Today's sanctions against Nobitex, Wallex, Bitpin, and Ramzinex target the Iranian digital asset exchanges responsible for at least 72% of all Iranian digital asset inflows in 2025.

Remember that much of the crypto going into Iran has flowed through Binance over the years. With… https://t.co/5SiHwTTGVC

— Max Meizlish (@maxmeizlish) June 2, 2026

As we've featured before, for ordinary Iranians - roughly one in six of the population - crypto served as a vital lifeline. Facing relentless rial depreciation (down nearly 90 percent since 2018), chronic inflation of 40 to 50 percent, and frequent power blackouts or internet shutdowns during protests, citizens turned to Bitcoin and stablecoins like U.S. dollar-pegged stablecoins (USDT) on the Tron network to hedge savings, facilitate remittances, and move value when traditional banking failed. Spikes in Bitcoin withdrawals to personal wallets often coincided with domestic unrest and regional conflicts.

Yet this parallel financial system has also become a powerful tool for the state. The Islamic Revolutionary Guard Corps (IRGC) steadily tightened its grip on Iran’s crypto flows. IRGC-linked addresses received more than $3 billion in 2025—up from over $2 billion in 2024—with their share rising to more than 50 percent of total Iranian crypto inflows by the end of 2025. These figures represent conservative lower bounds based only on identified and sanctioned wallets.

Washington in the meantime is still entertaining dreams of sparking some kind of anti-regime uprising based on applying the economic squeeze to the Iranian system, but apart from unrest back in January, this has utterly failed to materialize. 

Tyler Durden Tue, 06/02/2026 - 20:30

Trump Signs AI 'Cyber Defense' Executive Order

Authored by Jacob Burg via The Epoch Times,

AI companies would be required to submit their frontier models on a voluntary review basis before public releases.

President Donald Trump signed an executive order on June 2 intended to address cybersecurity threats posed by artificial intelligence (AI) technology and the new frontier models being released by major industry players.

Signed in private, the order allows some AI firms to submit their cutting-edge frontier models to a voluntary government review 30 days before a full public release.

That would entail "provid[ing] the Federal Government with access to covered frontier models, subject to appropriate confidentiality, cybersecurity, insider-risk, and intellectual-property protection, use, and nondisclosure requirements, for a period of up to 30 days before they plan to release such models to other trusted partners."

The order also gives the Pentagon, the Department of Homeland Security, the Cybersecurity and Infrastructure Security Agency, the Office of Management and Budget, and other related agencies 30 days to "expedite and prioritize the cyber defense of civilian Federal Government information systems" and establish or expand a federal program that would "enhance AI-enabled defensive tools."

Trump's order also creates an "AI cybersecurity clearinghouse" that would function in "voluntary collaboration" with the AI industry and other critical infrastructure operators. The goal would be to scan for software vulnerabilities in frontier AI models while prioritizing "remediation and distribution of vulnerability patches."

Trump had planned to sign a previous version of this executive order, but said on May 21 that he would delay the signing after becoming dissatisfied with "certain aspects of it."

Earlier that month, the Commerce Department's Center for AI Standards and Innovation announced partnerships with AI giants Google, Microsoft, and xAI to test their new frontier models for potential security risks ahead of full public releases.

Cybersecurity concerns over frontier AI models surged after Anthropic on April 7 announced its Claude Mythos Preview model, which is not yet publicly available due to the company's concerns that bad actors could use it to find critical software exploits.

The Trump administration had previously moved to ban Anthropic from doing business with the federal government after the company refused to grant the Pentagon unrestricted access to its Claude models, stating that it was concerned they would be used for mass domestic surveillance or fully autonomous weapons, which the Pentagon denies.

Despite the ban, Anthropic co-founder Jack Clark said in April that he had been in talks with the Trump administration over Claude Mythos Preview.

The Alliance for Secure AI, a nonprofit that "educates the public about the implications of advanced AI," on June 2 called for Congress to codify Trump's executive order to "create a legal framework that makes federal government review of advanced AI models mandatory."

Trump's executive order allows AI companies to submit their frontier models to government review on a voluntary basis.

"After the national security wake-up call from advanced AI models like Mythos, we are pleased to see that the Trump administration is taking the risks of these models seriously. However, we know that Big Tech will still try to cut corners on safety and security," Brendan Steinhauser, CEO of The Alliance for Secure AI, said in a statement.

"The next AI models will be even more powerful and will pose even bigger threats to our country than Mythos. These companies need oversight and cannot be trusted to do the right thing voluntarily."

Tyler Durden Tue, 06/02/2026 - 20:05

US, China Militaries Hold 'Candid' Deconfliction Talks In Hawaii As Trump Goes Quiet On Taiwan

American and Chinese military officers have sat down for rare deconfliction talks in Hawaii, soon on the heels of the Trump-Xi summit in Beijing last month. According to a late Monday statement from the Chinese Navy, the two superpowers held what they described as "candid and constructive" exchanges during a two-day closed-door meeting. It happened last week in Honolulu, reports have newly revealed.

The sides came away agreeing that improved communication could successfully reduce tactical miscalculations and enhance professionalism in the highly contested waters and skies of the Indo-Pacific.

Prior 2018 exchange, via Reuters

There's been a recent uptick in Chinese PLA military drills near Taiwan, with warplanes frequently buzzing the self-ruled island. But Washington has been fairly quiet in response to these developments which have put Taipei's armed forces frequently on high alert.

The sudden outbreak of US-China military-to-military dialogue is clearly designed to ease diplomatic anxieties especially after top Chinese military officials noticeably boycotted the high-profile Shangri-La Dialogue defense forum in Singapore over the weekend.

President Trump in the meantime has been making clear that he will not have direct contact with Taiwanese President Lai Ching-te, in line with long-running status quote policy.

That a sitting US president is not speaking to Taiwan's elected leader is actually normal based on Washington's policy of strategic ambiguity, and official acknowledgement of 'One China'.

Trump is strongly signaling that this will not change for now:

No sitting U.S. president has spoken directly with a Taiwanese leader since 1979 due to diplomatic sensitivities in managing relations with China, although in December 2016, while Mr. Trump was president-elect, he received a congratulatory call from then-Taiwanese President Tsai Ying-wen.

"I think [Lai], if he has time, would love to tell him our side of the story, the Taiwan story, which is one that — of resiliency, of a state staying up against the Chinese aggression," Alexander Yui, Taiwan's Representative to the U.S., told "Face the Nation with Margaret Brennan" on May 17.

At last month's summit, Xi and Trump reportedly agreed to pursue a "constructive relationship of strategic stability." Geopolitical analysts are spinning this as an attempt to finally establish practical boundaries for how the two nuclear-armed titans interact on the global stage.

Wang Dong, an international studies professor at Peking University, summarized the shift in a statement to Reuters: "This shared strategic framing shifts the bilateral dynamic beyond reactive crisis management toward more deliberate, forward-looking stability-building."

Pentagon chief Pete Hegseth has lately made a surprising declaration which indicated relations between the US and China are actually better than they've been in many years. However, this might be news to Beijing. But if the White House keeps staying relatively quiet on the Taiwan issue, China will indeed see this as a win.

Tyler Durden Tue, 06/02/2026 - 19:40

US Bill Would Prevent Chinese Connected Cars In Canada From Entering United States

Authored by Olivia Gomm via The Epoch Times,

Two U.S. lawmakers are set to introduce a bill aimed at preventing Chinese-connected vehicles from entering the United States via Canada and Mexico, amid growing concerns over Chinese-made electric vehicles entering the Canadian market.

BYD electric cars waiting to be loaded on a ship are stacked at the international container terminal of Taicang Port at Suzhou Port, in China's eastern Jiangsu Province on Sept. 11, 2023. AFP via Getty Images

U.S. Representative Haley Stevens and Senator Elissa Slotkin, both Democrats, announced the Protecting America from Chinese Cars Act last week at a conference in Michigan.

The bill would prohibit connected vehicles from China and other "adversarial nations" from entering the United States, including vehicles made or designed in China, as well as vehicles made by a Chinese company or an entity more than 15 percent owned by Chinese companies, according to a May 28 press release from Stevens's office.

It would also establish a process for vehicle manufacturers to apply for specific authorization to allow otherwise prohibited vehicles to enter the United States. Authorization would only be granted under "strict conditions, with both transparency and congressional oversight."

Federal authorities in Canada have also raised concerns that connected vehicles could pose security and privacy risks if the data they collect falls into the wrong hands.

In a memo, Public Safety Canada said Canada must expand its economy in response to a changing geopolitical environment, but warned that opening its markets to "new players" could also "amplify the presence of high-risk vendors."

The department said unauthorized access to data and connected vehicle systems "could be used to establish patterns of life or conduct surveillance on sensitive sites." It also said national security laws in countries such as China can compel manufacturers and suppliers to share data with their home governments or police, increasing the risk that Canadian data could be exploited.

A one-page readout on the U.S. bill says connected vehicles would threaten U.S. national security if the information collected "were to fall into the hands of our adversaries."

"Vehicles today can collect and transmit massive amounts of data - geolocation of drivers, mapping of critical infrastructure, full-motion video, and more," the readout says.

Connected vehicles could also be "remotely accessed and tampered with," presenting a "tremendous" risk to U.S. safety and security, the readout says, noting the Chinese auto industry is heavily subsidized, allowing Beijing to "undercut competitors and quickly flood new markets."

"The Chinese Communist Party should never have access to sensitive information about American drivers, roads, or critical infrastructure," Stevens said in a statement, adding that the bill would "close dangerous loopholes" that currently allow Chinese connected vehicles to enter the United States through Canada and Mexico.

Canada's Auto Sector

Recent data from Global Affairs Canada indicates 2,910 Chinese EVs were allowed into Canada for the first time in May, after Prime Minister Mark Carney agreed in January to allow up to 49,000 Chinese EVs into Canada at a reduced tariff rate of 6.1 percent, from the previous 100 percent rate.

Ottawa has said 49,000 EVs represent less than 3 percent of Canada's auto market, but the quota represents nearly half of Canada's battery electric sales in 2025.

According to data tabled in the House of Commons on May 29 by International Trade Minister Maninder Sidhu in response to a question by Conservative MP Rhonda Kirkland, the initial 49,000-unit quota will grow 6.5 percent, exceeding 63,000 units by February 2031.

Sidhu said at least 10 percent of the quota volume must be reserved for lower-cost EVs by the second quota year, increasing on an annual basis to reach 50 percent of the total quota volume by year five.

The minister also said the arrangement is expected to catalyze new Chinese joint-venture investment in Canada to create new automotive manufacturing jobs for Canadians.

Chinese electric vehicle company BYD said last week that it plans to enter the Canadian market at the end of this year, and open more than 20 dealerships, including in Vancouver, Calgary, Toronto, and Montreal.

Canadian automotive representatives have voiced concern about Chinese EVs potentially undermining Canada's auto sector and presenting risks to the future of Canada's integrated North American automotive supply chain.

Canadian Vehicle Manufacturers' Association CEO Brian Kingston has said the future of Canada's auto sector depends on the country's trade relations with the United States - the destination of 90 percent of Canadian-made autos.

Industry Minister Mélanie Joly told MPs at a parliamentary committee meeting last month that her government's approach to Chinese EVs is "very holistic" in protecting auto workers and supply chains "while bringing in really good technologies."

Forced Labour

Human rights groups, China experts, and opposition MPs have also raised concerns that goods made with forced labour are being used to manufacture cars and parts assembled in China.

While the Canada Border Services Agency has blocked some shipments of Chinese car parts over forced labour concerns in recent years, there have been far fewer enforcement cases in Canada than in the United States.

Forced labour was raised as a concern in the United States Trade Representative's annual report on foreign trade barriers released March 31, which said Canada's enforcement measures remain limited in some areas.

Sidhu said in his May 29 response that all Chinese automotive manufacturers that intend to sell EVs in Canada must comply with Canadian laws and regulations, including those related to data governance, labour standards, and environmental requirements.

Paul Rowan Brian and The Canadian Press contributed to this report.

Tyler Durden Tue, 06/02/2026 - 19:15

"The Value Didn't Arrive": Bain Finds Cost-Savings From AI Are Falling Far Short Of Projections

Now that attention within the AI revolution has one again firmly turned toward the cost-benefit equation (i..e., ROI) of tokens (see "From Singularity To Tokenomics: The AI Narrative Just Hit A Serious Snag") in particular, and the trillions behind the AI spending rollout in general, and we say once again because every few months we get some iteration of the following report from Goldman published almost two years ago today...

... we have more bad news: according to a global survey by Bain, cost savings from automation are broadly falling short of projections. Which means that those expecting big savings from their investments in artificial intelligence, which is most companies, will be disappointed. 

The missed targets “should be making executives uncomfortable,” since many of them are approving increased spending for artificial intelligence on the basis of expected savings, the consulting firm said in a report shared exclusively with Bloomberg News. The problem is there are little actual savings to speak of. 

The survey, completed in April, was based on responses from executives at 951 companies with more than $100 million in revenue, across nine sectors: retail, technology, advanced manufacturing, healthcare, consumer products, energy, financial services, telecom/media/entertainment and insurance.

It found that among companies measuring their AI cost savings, the largest share (40%) realized reductions of 10% or less. Predictably, most had been expecting to see far more meaningful improvement, especially since they spent far more than that on the new technology. 

Here’s the part that Bain found the most troubling: 44% of large companies that are funding their next wave of AI spending are basing those investments on the last round of savings - savings that haven’t yet materialized. 

“The prior wave underdelivered. The savings pool is smaller than assumed,” Bain warned. “And the investment case for the current wave was sized against projections rather than actuals.” Kinda like the bubble in AI forward earnings: based on projections - which as any intern can tell you can flip on a dime - rather than actuals. 

“Self-funding the next wave from past returns sounds like discipline. In reality, it is a circular bet with a structural leak,” the firm cautioned, and concluded that "The technology worked. The value didn’t arrive."

Whether driven by hope or FOMO or a blend of both, the AI boom is exposing divides between promise and reality. An MIT research report last year showed that 95% of corporate AI pilots fall flat and concluded that the “primary factor keeping organizations on the wrong side of the GenAI Divide is the learning gap, tools that don't learn, integrate poorly, or match workflows.” 

So Bain’s latest survey wasn’t the first evidence of AI underdelivering so far on expectations. And it’s not likely the last either.

But the Bain report isolated a different problem: “Despite a decade of investments in data modernization running well into hundreds of billions of dollars globally, the No. 1 reason AI programs underperform is that companies cannot reliably get access to their own data,” Bain said.

“Companies that don’t validate their reinvestment math against what automation actually returned, rather than what it was supposed to return, are compounding risk rather than managing it” the Bain report concluded, confirming what many have already sensed: virtually nobody has done effective ROI analysis amid a technological rollout that has already soaked up more than $1 trillion in capital, the return on which appears to be modest at best. 

Bain's prescription: Instead of waiting to structure all of their data to make it ingestible by AI, companies should start with what’s available to feed into the models, and then use AI to help sort out how to structure the rest.

Meanwhile, companies that were meeting their savings targets reported running into barriers with data structure and accessibility at even higher rates than those missing their targets, but they were less likely to report organizational challenges such as insufficient budgets or competing priorities.

Adding fuel to the fire, a comparable report from Gartner found that over 40% of agentic AI projects will be canceled by the end of 2027, due to escalating costs, unclear business value or inadequate risk controls. 

“Most agentic AI projects right now are early stage experiments or proof of concepts that are mostly driven by hype and are often misapplied,” said Anushree Verma, Senior Director Analyst, Gartner. “This can blind organizations to the real cost and complexity of deploying AI agents at scale, stalling projects from moving into production. They need to cut through the hype to make careful, strategic decisions about where and how they apply this emerging technology.”

As such, Gartner recommends agentic AI only be pursued where it delivers clear value or ROI, noting that "Integrating agents into legacy systems can be technically complex, often disrupting workflows and requiring costly modifications. In many cases, rethinking workflows with agentic AI from the ground up is the ideal path to successful implementation."

“To get real value from agentic AI, organizations must focus on enterprise productivity, rather than just individual task augmentation,” said Verma. “They can start by using AI agents when decisions are needed, automation for routine workflows and assistants for simple retrieval. It’s about driving business value through cost, quality, speed and scale.” 

The problem, it now appears, is that virtually nobody has done an actual ROI analysis. But with token costs now soaring...

... the time has finally arrived, and as enterprises pull back in horror from the "great promise" of the agentic black hole, one can easily understand why both OpenAI and Anthropic, both of which are extrapolating their burst in agentic revenue in perpetuity, are rushing to go public before the market once again does the ROI math.

Tyler Durden Tue, 06/02/2026 - 18:50