Individual Economists

Dubai Crackdown Hits Iran's Economic Lifeline, Squeezes IRGC Networks

Zero Hedge -

Dubai Crackdown Hits Iran's Economic Lifeline, Squeezes IRGC Networks

By Negar Mojtahedi of Iran International

The arrest of dozens of IRGC-linked money changers in the United Arab Emirates is one of the most serious blows yet to Tehran’s sanctions-evasion network, laying bare how heavily the Islamic Republic has depended on Dubai as an economic lifeline.

Sources familiar with the matter told Iran International that UAE authorities detained dozens of money changers tied to financial entities linked to Iran’s Revolutionary Guards, shut down associated companies and closed their offices. The crackdown follows days of mounting regional tensions and comes after other measures targeting Iranian nationals, including visa revocations and tighter travel restrictions through Dubai.

For years, Dubai has served as Iran’s main offshore financial artery, where oil proceeds, petrochemical revenues and rial conversions were turned into dollars, dirhams and euros beyond the reach of the country’s battered domestic banking system.

“This is going to be a real problem for Tehran because Dubai was an economic lung for the Iranian regime,” Jason Brodsky of United Against Nuclear Iran told Iran International.

“That is economic pressure and diplomatic isolation in a way that the UAE is able to employ against the Iranian regime, and it will have a very considerable impact.”

"Most critical hub"

According to Miad Maleki, a former senior US Treasury sanctions strategist and now a senior fellow at FDD, the UAE is not just one sanctions-evasion hub among many.

“The UAE is the single most critical jurisdiction in the Iranian regime’s sanctions-evasion architecture,” Maleki said.

Dubai’s exchange houses have long given the IRGC and the Quds Force access to the hard currency needed to finance proxy groups including Hezbollah, Hamas, the Houthis and militias in Iraq.

The detention of trusted IRGC-linked money changers threatens networks that took years to build.

“These trust-based sarraf (money changer) relationships, bank accounts and corporate structures are not quickly replaceable,” Maleki said.

He added that even exchange houses untouched by the crackdown were now likely to think twice before processing Iran-linked transactions, sharply raising both the cost and the risk of doing business with the Guards.

The pressure comes as Iran’s domestic economy is already under severe strain: Foreign reserves, once estimated at around $120 billion in 2018, had fallen below $9 billion by 2020, leaving Iran increasingly reliant on offshore currency channels.

Dubai as ‘washing machine’

Mohammad Machine-Chian, a senior economic journalist at Iran International, said the UAE remains Iran’s most important economic conduit after China. “The UAE is Iran’s most critical economic lifeline after China,” he said.

He said Dubai’s free zones host hundreds of Iranian-linked shell companies used to mask oil and petrochemical sales, launder proceeds and channel hard currency back to Tehran.

Bilateral trade has hovered between $16 billion and $28 billion in recent years, with Iranian non-oil exports alone reaching roughly $6 billion to $7 billion annually, according to Machine-Chian.

A sustained crackdown could cost Tehran tens of billions of dollars in revenue streams while severing what he described as Iran’s “USD cash lifeline.”

Dubai has also functioned as a transit point for illicit Iranian funds moving onward to North America, including transfers routed to the United States and Canada through correspondent banking and hawala networks.

As Maleki put it, “Dubai is the washing machine: Iranian oil proceeds and rial conversions go in, sanitized dirham and dollar transactions come out.”

From diplomacy to backlash

Beyond the financial damage, analysts say the crackdown reflects a broader political rupture between Tehran and the Persian Gulf states. Brodsky said Iran’s attacks on neighboring countries had transformed the strategic environment in the region.

“The relationship between Iran and the GCC countries is not going to go back to the way it was before Operation Epic Fury,” he said.

Where Persian Gulf states had once pushed for diplomacy, Iran’s retaliation has instead driven them closer to Washington and Israel.

For years, Tehran sought to encircle Israel in what it called a “ring of fire” through regional proxies. 

Now, Brodsky said, the Islamic Republic has reversed that dynamic.

“They wanted to encircle Israel in a ring of fire,” he said. “Now they are basically encircling themselves in a ring of fire because they’ve been angering their neighbors with all of their attacks.”

He said that reversal could carry long-term consequences, including deeper Persian Gulf-Israel security coordination and new openings for the Abraham Accords.

“The missile threat and drone threat have become paramount in this conflict,” Brodsky said. “That could drive these countries even closer to the US and Israel.”

'Collapse within weeks'

The UAE crackdown comes as signs of mounting economic distress are mounting inside Iran. Sources previously told Iran International that President Masoud Pezeshkian had warned senior officials that without a ceasefire, the economy could face collapse within weeks.

Across major cities, ATMs have been running short of cash, banking services have faced intermittent disruptions and government workers have reported months of delayed salary payments. 

With inflation in essential goods already above 100 percent before the war, the loss of Dubai’s financial channels could deepen the regime’s crisis. 

For Tehran, the arrests in the UAE are more than a financial disruption. They may signal that one of Iran’s most dependable external pressure valves is starting to close.

Tyler Durden Wed, 04/01/2026 - 19:40

Dubai Crackdown Hits Iran's Economic Lifeline, Squeezes IRGC Networks

Zero Hedge -

Dubai Crackdown Hits Iran's Economic Lifeline, Squeezes IRGC Networks

By Negar Mojtahedi of Iran International

The arrest of dozens of IRGC-linked money changers in the United Arab Emirates is one of the most serious blows yet to Tehran’s sanctions-evasion network, laying bare how heavily the Islamic Republic has depended on Dubai as an economic lifeline.

Sources familiar with the matter told Iran International that UAE authorities detained dozens of money changers tied to financial entities linked to Iran’s Revolutionary Guards, shut down associated companies and closed their offices. The crackdown follows days of mounting regional tensions and comes after other measures targeting Iranian nationals, including visa revocations and tighter travel restrictions through Dubai.

For years, Dubai has served as Iran’s main offshore financial artery, where oil proceeds, petrochemical revenues and rial conversions were turned into dollars, dirhams and euros beyond the reach of the country’s battered domestic banking system.

“This is going to be a real problem for Tehran because Dubai was an economic lung for the Iranian regime,” Jason Brodsky of United Against Nuclear Iran told Iran International.

“That is economic pressure and diplomatic isolation in a way that the UAE is able to employ against the Iranian regime, and it will have a very considerable impact.”

"Most critical hub"

According to Miad Maleki, a former senior US Treasury sanctions strategist and now a senior fellow at FDD, the UAE is not just one sanctions-evasion hub among many.

“The UAE is the single most critical jurisdiction in the Iranian regime’s sanctions-evasion architecture,” Maleki said.

Dubai’s exchange houses have long given the IRGC and the Quds Force access to the hard currency needed to finance proxy groups including Hezbollah, Hamas, the Houthis and militias in Iraq.

The detention of trusted IRGC-linked money changers threatens networks that took years to build.

“These trust-based sarraf (money changer) relationships, bank accounts and corporate structures are not quickly replaceable,” Maleki said.

He added that even exchange houses untouched by the crackdown were now likely to think twice before processing Iran-linked transactions, sharply raising both the cost and the risk of doing business with the Guards.

The pressure comes as Iran’s domestic economy is already under severe strain: Foreign reserves, once estimated at around $120 billion in 2018, had fallen below $9 billion by 2020, leaving Iran increasingly reliant on offshore currency channels.

Dubai as ‘washing machine’

Mohammad Machine-Chian, a senior economic journalist at Iran International, said the UAE remains Iran’s most important economic conduit after China. “The UAE is Iran’s most critical economic lifeline after China,” he said.

He said Dubai’s free zones host hundreds of Iranian-linked shell companies used to mask oil and petrochemical sales, launder proceeds and channel hard currency back to Tehran.

Bilateral trade has hovered between $16 billion and $28 billion in recent years, with Iranian non-oil exports alone reaching roughly $6 billion to $7 billion annually, according to Machine-Chian.

A sustained crackdown could cost Tehran tens of billions of dollars in revenue streams while severing what he described as Iran’s “USD cash lifeline.”

Dubai has also functioned as a transit point for illicit Iranian funds moving onward to North America, including transfers routed to the United States and Canada through correspondent banking and hawala networks.

As Maleki put it, “Dubai is the washing machine: Iranian oil proceeds and rial conversions go in, sanitized dirham and dollar transactions come out.”

From diplomacy to backlash

Beyond the financial damage, analysts say the crackdown reflects a broader political rupture between Tehran and the Persian Gulf states. Brodsky said Iran’s attacks on neighboring countries had transformed the strategic environment in the region.

“The relationship between Iran and the GCC countries is not going to go back to the way it was before Operation Epic Fury,” he said.

Where Persian Gulf states had once pushed for diplomacy, Iran’s retaliation has instead driven them closer to Washington and Israel.

For years, Tehran sought to encircle Israel in what it called a “ring of fire” through regional proxies. 

Now, Brodsky said, the Islamic Republic has reversed that dynamic.

“They wanted to encircle Israel in a ring of fire,” he said. “Now they are basically encircling themselves in a ring of fire because they’ve been angering their neighbors with all of their attacks.”

He said that reversal could carry long-term consequences, including deeper Persian Gulf-Israel security coordination and new openings for the Abraham Accords.

“The missile threat and drone threat have become paramount in this conflict,” Brodsky said. “That could drive these countries even closer to the US and Israel.”

'Collapse within weeks'

The UAE crackdown comes as signs of mounting economic distress are mounting inside Iran. Sources previously told Iran International that President Masoud Pezeshkian had warned senior officials that without a ceasefire, the economy could face collapse within weeks.

Across major cities, ATMs have been running short of cash, banking services have faced intermittent disruptions and government workers have reported months of delayed salary payments. 

With inflation in essential goods already above 100 percent before the war, the loss of Dubai’s financial channels could deepen the regime’s crisis. 

For Tehran, the arrests in the UAE are more than a financial disruption. They may signal that one of Iran’s most dependable external pressure valves is starting to close.

Tyler Durden Wed, 04/01/2026 - 19:40

Minnesota Judges Enabling Somali Fraud Epidemic With Slaps On Wrist

Zero Hedge -

Minnesota Judges Enabling Somali Fraud Epidemic With Slaps On Wrist

The Feeding Our Future fraud is the largest pandemic-relief theft in American history - $250 million stolen, mostly by Somali immigrants who fabricated meal counts and pocketed federal child nutrition funds.

The prosecutions have dragged on for years.

Now that sentences are finally coming down, a troubling pattern is emerging: the punishments don’t seem to fit the crime.

U.S. District Judge Nancy Brasel — nominated to the bench in 2018 through a package deal between the first Trump administration and Minnesota's Senate Democrats — has been at the center of two recent sentencing decisions that have taxpayers seething. 

On March 29, she sentenced Abdul Abubakar Ali to one year and one day in prison. Ali ran a shell company called Youth Inventors Lab under Feeding Our Future's sponsorship, orchestrated $3 million in fraud, submitted fake invoices claiming more than one million meals served, and served none. Federal sentencing guidelines recommended 30 to 37 months. Prosecutors asked for two and a half years. Brasel gave him a sentence of just one year and a day. That extra day is not accidental — it's the legal threshold that makes Ali eligible for transition to a halfway house on good behavior.

One day later, Brasel sentenced Zamzam Jama to six months. Jama stole $5.6 million — nearly twice what Ali took — and was the first of six Jama family defendants associated with a Rochester restaurant to face sentencing; all were linked to the same fraud network. Prosecutors requested 16 months. Sentencing guidelines called for 10 to 16 months. Brasel issued a downward departure and handed Jama a sentence of just half a year. Jama must also pay $491,000 in restitution — a mere fraction of the $5.6 million she stole — and serve one year of probation.

When reports of widespread abuse went viral last year due to the investigations by independent journalist Nick Shirley, Gov. Tim Walz insisted on maintaining control of the investigation.

“This [was] on my watch,” the governor said at the time. “I am accountable for this, and more importantly, I am the one that will fix it.”

Unfortunately, federal judges in Minnesota are failing to give the fraudsters the sentences they deserve, and this will hardly serve as a deterrent to stop the fraud.

The contrast with how other jurisdictions handle similar fraud is actually quite jarring. Earlier this month, a North Carolina federal court sentenced four people in a $12.7 million Medicaid kickback scheme that exploited substance abuse patients. The ringleaders — who falsified records to deceive auditors — each received six years. Another defendant got two years, and another two and a half years. U.S. Attorney Ellis Boyle even mentioned the Minnesota fraud in response to these sentences.

"This is shocking Minnesota-Somali-style fraud right here in North Carolina. For too long, government has allowed grifters to steal taxpayer dollars with impunity. Here, these vultures exploited particularly susceptible drug abusers trying to recover their lives and dignity. Shameful abuse, no remorse. They better learn, and everyone should get the message. Cheaters. Never. Win." 

The math is simple and damning.

In North Carolina, fraud leaders who stole $12.7 million each were sentenced to six years.

In Minnesota, a fraudster who stole $5.6 million got six months, and another who ran a $3 million scheme got just over a year.

The deterrent value of the Minnesota sentences is approximately zero.

The question that hangs over all of this is whether the judiciary in Minnesota has become the final link in a chain of institutional permissiveness. Walz's administration looked the other way while $250 million vanished. Minnesota Democrats who depend on Somali-American voter turnout had every political incentive to keep the issue quiet. And now a federal judge is handing out sentences so light they barely register as consequences. The message sent to anyone considering the next fraud scheme is that Minnesota is still open for business.

* * *

Tyler Durden Wed, 04/01/2026 - 19:15

Expect Electricity Prices To Rise Further, Analysts Warn

Zero Hedge -

Expect Electricity Prices To Rise Further, Analysts Warn

By Robert Walton of UtilityDive,

U.S. electricity prices have risen significantly in recent years, though “national trends mask stark differences” in state prices, according to an April 1 analysis by Lawrence Berkeley National Laboratory and The Brattle Group.

Whether you take a “crisis” or “more nuanced view” of the increases - the analysis offers both - one thing is likely, according to the report: “Record levels of [investor-owned utility] rate increase requests & regulatory approvals suggest additional near-term price increases absent policy/market actions.”

There were $18 billion in rate increases proposed last year, according to the analysis, and about two-thirds of utility rate proposals were approved from 2021-2025.

IOU revenue increase requests in 2025 “exceeded any point since the mid-1980s, suggesting continued price increases in near term as regulators consider the requests,” the analysis said.

In the “crisis view” of electricity price drivers, national prices have surged since 2019 through 2025, up 33%. There are larger increases in California, the Northeast and parts of the Mid-Atlantic. A third of U.S. households spend more than 5% of their income on electricity, according the report.

The “nuanced” view notes that price increases have largely tracked inflation, and 29 states saw a decline in inflation-adjusted prices from 2019-2025. In most areas, electricity burdens are lower than they were in 2019.

Residential customers “have faced larger recent retail electricity price increases than have commercial and industrial customers,” the analysis said. 

From 2019 to 2025 the nominal price of a kilowatt-hour rose 33% for residential customers, 26% for commercial and 27% for industrial. All-sector average retail electricity prices increased 5.3% in 2025 compared to 2024, they said.

“Residential retail electricity price increases have been significant: broadly in line with some other household expenditures but higher than others,” researchers said. 

The average U.S. residential price of electricity, in nominal dollars, went from 13 cents/kWh in 2019 to 17.3 cents/kWh in 2025. Commercial customers saw prices increase from 10.7 cents/kWh to 13.4 cents/kWh. And industrial prices went from 6.8 cents/kWh to 8.6 cents/kWh.

The primary drivers of recent price increases include fuel and wholesale supply, distribution costs, the cost of new generation, transmission costs, storm recovery and capacity prices, the report said.

LBNL and Brattle’s analysis is a data update to 2025 work they did on factors driving electricity prices. 

Tyler Durden Wed, 04/01/2026 - 18:50

Pentagon Prepares A-10 Warthog Surge As Mideast Fleet Set To Double

Zero Hedge -

Pentagon Prepares A-10 Warthog Surge As Mideast Fleet Set To Double

The Department of War is preparing to double its fleet of Fairchild Republic A-10 Thunderbolt IIs, better known in the aviation community as "Warthogs," in the Middle East in the very near term, The New York Times reported Wednesday.

The surge of additional Warthogs, as many as 18, on top of the roughly dozen A-10s already operating in the region, has already been used to sink Iranian boats in the Hormuz chokepoint and strike Iran-backed militias in Iraq, according to the NYT, citing DoW officials. The expanded fleet suggests a broader aviation campaign in and around Hormuz and could even play a critical role in supporting a potential seizure of Kharg Island, Iran's main oil hub in the northern Persian Gulf.

As of early 2026, the US Air Force had 162 A-10s remaining in its inventory. Air & Space Forces Magazine reported the service had 219 A-10s as of late 2024, then cut 57 aircraft in fiscal 2025, leaving 162 going into fiscal 2026.

The surge in A-10s suggests that as many as 30 could soon be operating in the Gulf region, representing about 18.5% of the USAF's fleet.

The A-10's most fearsome weapon is the 30mm GAU-8/A seven-barrel Gatling gun, which fires at an astonishing 3,900 rounds per minute. Typical A-10 armament also includes:

  • AGM-65 Maverick missiles

  • Laser- and GPS-guided bombs Mk-82 500-lb and Mk-84 2,000-lb bombs

  • Unguided and laser-guided 2.75-inch rockets

  • AIM-9 Sidewinder missiles

  • Chaff, flares, and jammer pods for self-protection

The NYT cited flight-tracking data indicating that US-based A-10s heading to the region have been stopping at Royal Air Force Lakenheath, a base in England, before continuing on to the Gulf region.

"The planes could be used to help U.S. ground forces seize territory near the Strait of Hormuz, the crucial waterway Iran has effectively closed, or Kharg Island, Iran's main oil hub in the northern Persian Gulf," the outlet said. 

Earlier this month, Zoltan Pozsar of Ex Uno Plures noted that the Trump administration is "methodically building a portfolio of assets" from Venezuela to the Panama Canal to Iran's oil flows and the Strait of Hormuz, a strategy aimed at reasserting American dominance, securing the empire for years to come, and tightening the screws on Beijing after last year's rare earths stunt.

"Iran and Kharg Island are next. Iran is a Chinese vassal and so Kharg Island is basically a Chinese asset. Iran and Kharg Island will soon be a U.S. asset. The same with the SoH - it will soon be a U.S. asset," Pozsar noted.

And this. 

The surge in A-10s suggests the US is preparing for a dirtier, more prolonged campaign centered on Hormuz, coastal targets, and possibly a seizure or raid of Kharg Island or others.  

Tyler Durden Wed, 04/01/2026 - 18:25

Watch Live: NASA's Artemis II Rocket On Way To Moon

Zero Hedge -

Watch Live: NASA's Artemis II Rocket On Way To Moon

Watch Live (successful launch at 6:35 p.m. EST):

NASA's Artemis II mission is finally set to launch three Americans and one Canadian atop the Space Launch System rocket on a lunar mission not seen in more than 50 years. 

The Artemis II mission is scheduled for launch at 6:24 p.m. EST on Wednesday from Kennedy Space Center in Florida.

The crew of four, including NASA astronauts Reid Wiseman (commander), Victor Glover (pilot), and Christina Koch (mission specialist), along with Canadian Space Agency astronaut Jeremy Hansen (mission specialist), will circumnavigate the moon in a 10-day flight aboard the new Orion spacecraft. 

Artemis II is a critical test of the Orion capsule and marks another step toward future lunar landings, which SpaceX is likely to support as early as 2028.

Three hours and 30 minutes after liftoff, if everything goes to plan, the Orion spacecraft and its service module will separate from the second stage of the rocket, perform a manual flight test high in Earth orbit, and prepare for a translunar injection, in other words, a trip to the moon, during which Orion's service module will fire its engines and catapult the four astronauts to 25,000 mph on a three-day journey into lunar orbit. 

Artemis II will enter the moon's gravitational field about four days into the mission and then begin its U-turn, enabling a flyby around the far side more than 12 hours later. If today's launch goes according to plan, that flyby of the moon will take place next Monday. 

"No one has ever seen this full crater on the far side of the moon, and so this would be really neat," Hansen said. "I'm excited to have a look at it. It's just enormous, super complex, and you could probably stare at it for hours."

The flyby will set the astronauts up on a "free-return trajectory" that will essentially slingshot them around the far side and back to Earth without burning additional fuel. 

By April 10, Artemis II is forecast to re-enter Earth's atmosphere, nine days and one hour after liftoff, and splash down off the coast of Southern California.

A successful mission sets NASA up for a crewed 2028 lunar surface mission. 

NASA Administrator Jared Isaacman has recently stated that his agency plans to build a nuclear reactor on the moon. 

Tyler Durden Wed, 04/01/2026 - 18:21

America's Half-Trillion-Dollar Sewage Problem

Zero Hedge -

America's Half-Trillion-Dollar Sewage Problem

Authored by Autumn Spredemann via The Epoch Times (emphasis ours),

Beneath city streets and suburban neighborhoods, a vast network of pipes and wastewater treatment systems is reaching the end of its life. This subterranean infrastructure is already suffering tens of thousands of failures per year, while exposing millions of Americans to contamination risks.

Utilities, plumbing experts, and environmentalists warn that the scope of the problem has expanded rapidly in recent years. As of 2024, the Environmental Protection Agency (EPA) estimated that $630 billion in wastewater infrastructure investment would be needed to repair and replace deteriorating systems. At the same time, extreme weather events and growing populations were putting additional strain on America’s aging pipes.

The American Society of Civil Engineers (ASCE), in its 2025 report card, gave U.S. wastewater infrastructure a D-plus, which the group largely attributed to a lack of funding to meet the needs of communities with failing systems.

Meanwhile, average utility prices for wastewater consumers increased from $35 per month to nearly $65 per month between 2010 and 2020, ASCE researchers found. Even still, they said, rising utility prices aren’t “keeping pace with the growing costs for utilities to provide routine operation and maintenance.”

Paradoxically, as household water and sewer bills increased more than 24 percent between 2020 and 2025, wastewater infrastructure renewal and replacement rates for large-scale projects actually decreased over the past decade, from 3 percent to 2 percent, according to the ASCE analysis.

The scope of the problem becomes clearer when considering the sheer volume of sanitary sewer overflows. As of April 2025, the EPA estimated there were between 23,000 and 75,000 overflow incidents per year, and that didn’t include sewage that backed up into buildings or residential homes.

Some of the reasons for these spills included blockages, line breaks, design defects, and overloaded treatment systems.

A spokesperson for the EPA told The Epoch Times that the agency is “committed to accelerating investments in water infrastructure by stewarding federal funding appropriated by Congress.”

Recent funding highlights from 2025 include the Clean Water State Revolving Fund and Water Infrastructure Finance and Innovation Act, which committed $13 billion for infrastructure improvements in communities across the nation, according to the EPA spokesperson.

A worker uses a vacuum truck to remove sewer water after a sewer main break in Fort Lauderdale, Fla., on Feb. 24, 2020. Much of the nation’s aging wastewater infrastructure is nearing the end of its lifespan, with thousands of spills each year exposing millions to contamination risks. Joe Raedle/Getty Images

When asked about the staggering volume of sewer overflows per year, the agency representative emphasized the value and importance of this network.

“EPA estimates that our nation’s sewers are worth a total of more than $1 trillion,“ the representative said. ”The collection system of a single large municipality is an asset worth billions of dollars and that of a smaller city could cost many millions to replace.

“Ongoing maintenance and rehabilitation can add value to the original investment by maintaining the system’s capacity and extending its life. The costs of rehabilitation and other measures to correct [sanitary sewer overflows] can vary widely by community size and sewer system type.”

The United States’ wastewater pipe network is a part of the national infrastructure that has been neglected for years and suffers “chronic underinvestment,” according to the Association of State Floodplain Managers.

The country has roughly 800,000 miles of sewer pipes, according to ASCE’s 2021 report card. For perspective, the National Highway System only covers an estimated 164,000 miles, according to the Department of Transportation.

Within that sprawling web, the average age of sewer pipes is around 45 years, ASCE’s 2021 report found. But in some American cities, sewer systems date back a century or more: in the city of St. Louis, for example, some sewer lines were built in Civil War days. And parts of Philadelphia’s working sewer system date back to 1800, Municipal Sewer and Water reported in 2025.

“Wastewater treatment systems are meant to act as a barrier to disease both for public health and environment,“ Laura Underwood, director of digital water solutions for Locus Technologies, told The Epoch Times. ”If you have overflows or failures, these events can release pathogens into waterways and increase the risk of gastrointestinal illnesses, skin infections, and contamination of recreational or drinking waters.”

A huge tank full of wastewater is seen at DC Water’s Blue Plains plant in Washington on Nov. 23, 2015. In its 2025 report card, the American Society of Civil Engineers gave U.S. wastewater infrastructure a D+, which the group largely attributed to funding gaps that don't meet the needs of expanding usage and failing systems. Nicholas Kamm/AFP via Getty Images Close to Home

Underwood has worked within the utility space as a compliance director for water and wastewater treatment operations. She didn’t sugarcoat the reality of what further delays in upgrades will cost Americans.

“You will continue to see more frequent overflows and plant bypasses. These spills and untreated discharge events can lead to degraded waterways with increased contamination risks to the public and environment,” she said.

This isn’t some speculative future problem. In January, more than 250 million gallons of sewage entered the Potomac River near Washington. The event marked one of the worst incidents of its kind in U.S. history; President Donald Trump called it a “massive ecological disaster.”

In an account published on the American Rivers website,  a witness to the Potomac River disaster, Gary Belan, recalled arriving at the site of the sewage overflow and seeing “several massive pumps” diverting raw waste into the C&O canal area, which runs parallel with the river.

Belan said the area is a “popular spot to walk, bike, and access the river for fishing and boating.” He said he’s been taking his kids there since they were toddlers.

Pumps and pipes divert raw sewage into the C&O Canal and around a broken section of the Potomac Interceptor in Cabin John, Md., on Feb. 16, 2026. A section of the six-foot-wide sewage pipe collapsed on Jan. 19, causing more than 250 million gallons of raw sewage to be poured into the Potomac River.

“There is a literal river of sewage flowing open along the towpath that parallels the canal,” he wrote. “The estimated repair time is going to be 9 [to] 10 months, disrupting the communities nearby. This doesn’t include time for the environmental remediation.”

Some industry insiders say surface water contamination is far from the only hazard of aging sewer system failures.

“The biggest challenge I see on the ground is aging pipes, specifically the catastrophic failure of cast iron and clay sewer laterals that connect individual properties to the main municipal line,” master plumber Steven Morgan told The Epoch Times. “These pipes were installed 50 [to] 80 years ago and are now collapsing, cracking, and being invaded by tree roots.”

Morgan is the head of technical training and development at 24hr Supply and deals with the ugly truth of America’s antiquated wastewater network regularly. He said a lot of people don’t understand how aging sewer infrastructure can cost them directly and dearly.

“Homeowners don’t realize they’re responsible for the section from their house to the street, and when it fails, they’re looking at $8,000 [to] $25,000 in emergency repairs,” he said.

Old rusty utility pipes sit on the ground where workers with East Bay Municipal Utility District are installing a new water pipe in Oakland, Calif., on April 22, 2021. Leaky pipes take on a whole new dimension when toxic sludge enters rivers and other water resources. Justin Sullivan/Getty Images

Morgan believes the real problem is that these failures create blockages and backups that force raw sewage into basements during heavy rains.

“Multiply that across an entire neighborhood with aging infrastructure, and you’ve got a public health crisis waiting to happen,” he said.

“The pipes aren’t just old, they’re fundamentally incompatible with modern water usage patterns and climate realities like increasingly intense storms.”

Direct contact with contaminated water spills in places such as basements, lawns, streets, or recreational areas can cause serious health concerns. Contaminated water can contain bacteria, viruses, parasites, worms, and industrial chemicals such as per- and polyfluoroalkyl substances, commonly known as PFAS or “forever chemicals.”

Official data put the number of Americans affected by waterborne pathogens annually at 7.15 million, according to the Centers for Disease Control and Prevention. Within that group, about 118,000 are hospitalized and 6,630 die from related illnesses.

A plumber turns the water back on after repairing a burst pipe in a home in Houston on Feb. 21, 2021. Bland Warren said that as weather patterns shift, wastewater systems and storage infrastructure are often required to manage more variable conditions. Justin Sullivan/Getty Images Long Range Impacts

Leaky pipes take on a whole new dimension when it’s toxic sludge entering rivers and other water resources. Groundwater contamination is prevalent at 85 percent of EPA Superfund project cleanup sites.

“Failing sewer lines or poorly maintained [wastewater] lagoons can allow untreated sewage to seep into groundwater. However, this is typically a smaller-scale localized contamination,” Underwood said.

“I would say there is a larger contamination risk with [treatment] plant bypasses where a portion of untreated wastewater is discharged to a surface water outfall.”

A 2023 study from the University of Parma observed that leaky sewers negatively impacted not only surface and groundwater but also subsurface aquifers.

“Sewer pipeline ruptures are a severe risk to groundwater quality. When sewerage deterioration conditions occur, aquifers can be contaminated by contaminants contained within sewer water,” the study said.

Read the rest here...

Tyler Durden Wed, 04/01/2026 - 18:00

America's Half-Trillion-Dollar Sewage Problem

Zero Hedge -

America's Half-Trillion-Dollar Sewage Problem

Authored by Autumn Spredemann via The Epoch Times (emphasis ours),

Beneath city streets and suburban neighborhoods, a vast network of pipes and wastewater treatment systems is reaching the end of its life. This subterranean infrastructure is already suffering tens of thousands of failures per year, while exposing millions of Americans to contamination risks.

Utilities, plumbing experts, and environmentalists warn that the scope of the problem has expanded rapidly in recent years. As of 2024, the Environmental Protection Agency (EPA) estimated that $630 billion in wastewater infrastructure investment would be needed to repair and replace deteriorating systems. At the same time, extreme weather events and growing populations were putting additional strain on America’s aging pipes.

The American Society of Civil Engineers (ASCE), in its 2025 report card, gave U.S. wastewater infrastructure a D-plus, which the group largely attributed to a lack of funding to meet the needs of communities with failing systems.

Meanwhile, average utility prices for wastewater consumers increased from $35 per month to nearly $65 per month between 2010 and 2020, ASCE researchers found. Even still, they said, rising utility prices aren’t “keeping pace with the growing costs for utilities to provide routine operation and maintenance.”

Paradoxically, as household water and sewer bills increased more than 24 percent between 2020 and 2025, wastewater infrastructure renewal and replacement rates for large-scale projects actually decreased over the past decade, from 3 percent to 2 percent, according to the ASCE analysis.

The scope of the problem becomes clearer when considering the sheer volume of sanitary sewer overflows. As of April 2025, the EPA estimated there were between 23,000 and 75,000 overflow incidents per year, and that didn’t include sewage that backed up into buildings or residential homes.

Some of the reasons for these spills included blockages, line breaks, design defects, and overloaded treatment systems.

A spokesperson for the EPA told The Epoch Times that the agency is “committed to accelerating investments in water infrastructure by stewarding federal funding appropriated by Congress.”

Recent funding highlights from 2025 include the Clean Water State Revolving Fund and Water Infrastructure Finance and Innovation Act, which committed $13 billion for infrastructure improvements in communities across the nation, according to the EPA spokesperson.

A worker uses a vacuum truck to remove sewer water after a sewer main break in Fort Lauderdale, Fla., on Feb. 24, 2020. Much of the nation’s aging wastewater infrastructure is nearing the end of its lifespan, with thousands of spills each year exposing millions to contamination risks. Joe Raedle/Getty Images

When asked about the staggering volume of sewer overflows per year, the agency representative emphasized the value and importance of this network.

“EPA estimates that our nation’s sewers are worth a total of more than $1 trillion,“ the representative said. ”The collection system of a single large municipality is an asset worth billions of dollars and that of a smaller city could cost many millions to replace.

“Ongoing maintenance and rehabilitation can add value to the original investment by maintaining the system’s capacity and extending its life. The costs of rehabilitation and other measures to correct [sanitary sewer overflows] can vary widely by community size and sewer system type.”

The United States’ wastewater pipe network is a part of the national infrastructure that has been neglected for years and suffers “chronic underinvestment,” according to the Association of State Floodplain Managers.

The country has roughly 800,000 miles of sewer pipes, according to ASCE’s 2021 report card. For perspective, the National Highway System only covers an estimated 164,000 miles, according to the Department of Transportation.

Within that sprawling web, the average age of sewer pipes is around 45 years, ASCE’s 2021 report found. But in some American cities, sewer systems date back a century or more: in the city of St. Louis, for example, some sewer lines were built in Civil War days. And parts of Philadelphia’s working sewer system date back to 1800, Municipal Sewer and Water reported in 2025.

“Wastewater treatment systems are meant to act as a barrier to disease both for public health and environment,“ Laura Underwood, director of digital water solutions for Locus Technologies, told The Epoch Times. ”If you have overflows or failures, these events can release pathogens into waterways and increase the risk of gastrointestinal illnesses, skin infections, and contamination of recreational or drinking waters.”

A huge tank full of wastewater is seen at DC Water’s Blue Plains plant in Washington on Nov. 23, 2015. In its 2025 report card, the American Society of Civil Engineers gave U.S. wastewater infrastructure a D+, which the group largely attributed to funding gaps that don't meet the needs of expanding usage and failing systems. Nicholas Kamm/AFP via Getty Images Close to Home

Underwood has worked within the utility space as a compliance director for water and wastewater treatment operations. She didn’t sugarcoat the reality of what further delays in upgrades will cost Americans.

“You will continue to see more frequent overflows and plant bypasses. These spills and untreated discharge events can lead to degraded waterways with increased contamination risks to the public and environment,” she said.

This isn’t some speculative future problem. In January, more than 250 million gallons of sewage entered the Potomac River near Washington. The event marked one of the worst incidents of its kind in U.S. history; President Donald Trump called it a “massive ecological disaster.”

In an account published on the American Rivers website,  a witness to the Potomac River disaster, Gary Belan, recalled arriving at the site of the sewage overflow and seeing “several massive pumps” diverting raw waste into the C&O canal area, which runs parallel with the river.

Belan said the area is a “popular spot to walk, bike, and access the river for fishing and boating.” He said he’s been taking his kids there since they were toddlers.

Pumps and pipes divert raw sewage into the C&O Canal and around a broken section of the Potomac Interceptor in Cabin John, Md., on Feb. 16, 2026. A section of the six-foot-wide sewage pipe collapsed on Jan. 19, causing more than 250 million gallons of raw sewage to be poured into the Potomac River.

“There is a literal river of sewage flowing open along the towpath that parallels the canal,” he wrote. “The estimated repair time is going to be 9 [to] 10 months, disrupting the communities nearby. This doesn’t include time for the environmental remediation.”

Some industry insiders say surface water contamination is far from the only hazard of aging sewer system failures.

“The biggest challenge I see on the ground is aging pipes, specifically the catastrophic failure of cast iron and clay sewer laterals that connect individual properties to the main municipal line,” master plumber Steven Morgan told The Epoch Times. “These pipes were installed 50 [to] 80 years ago and are now collapsing, cracking, and being invaded by tree roots.”

Morgan is the head of technical training and development at 24hr Supply and deals with the ugly truth of America’s antiquated wastewater network regularly. He said a lot of people don’t understand how aging sewer infrastructure can cost them directly and dearly.

“Homeowners don’t realize they’re responsible for the section from their house to the street, and when it fails, they’re looking at $8,000 [to] $25,000 in emergency repairs,” he said.

Old rusty utility pipes sit on the ground where workers with East Bay Municipal Utility District are installing a new water pipe in Oakland, Calif., on April 22, 2021. Leaky pipes take on a whole new dimension when toxic sludge enters rivers and other water resources. Justin Sullivan/Getty Images

Morgan believes the real problem is that these failures create blockages and backups that force raw sewage into basements during heavy rains.

“Multiply that across an entire neighborhood with aging infrastructure, and you’ve got a public health crisis waiting to happen,” he said.

“The pipes aren’t just old, they’re fundamentally incompatible with modern water usage patterns and climate realities like increasingly intense storms.”

Direct contact with contaminated water spills in places such as basements, lawns, streets, or recreational areas can cause serious health concerns. Contaminated water can contain bacteria, viruses, parasites, worms, and industrial chemicals such as per- and polyfluoroalkyl substances, commonly known as PFAS or “forever chemicals.”

Official data put the number of Americans affected by waterborne pathogens annually at 7.15 million, according to the Centers for Disease Control and Prevention. Within that group, about 118,000 are hospitalized and 6,630 die from related illnesses.

A plumber turns the water back on after repairing a burst pipe in a home in Houston on Feb. 21, 2021. Bland Warren said that as weather patterns shift, wastewater systems and storage infrastructure are often required to manage more variable conditions. Justin Sullivan/Getty Images Long Range Impacts

Leaky pipes take on a whole new dimension when it’s toxic sludge entering rivers and other water resources. Groundwater contamination is prevalent at 85 percent of EPA Superfund project cleanup sites.

“Failing sewer lines or poorly maintained [wastewater] lagoons can allow untreated sewage to seep into groundwater. However, this is typically a smaller-scale localized contamination,” Underwood said.

“I would say there is a larger contamination risk with [treatment] plant bypasses where a portion of untreated wastewater is discharged to a surface water outfall.”

A 2023 study from the University of Parma observed that leaky sewers negatively impacted not only surface and groundwater but also subsurface aquifers.

“Sewer pipeline ruptures are a severe risk to groundwater quality. When sewerage deterioration conditions occur, aquifers can be contaminated by contaminants contained within sewer water,” the study said.

Read the rest here...

Tyler Durden Wed, 04/01/2026 - 18:00

The Actual Problem With America's Energy Security Is Starting To Reveal Itself...

Zero Hedge -

The Actual Problem With America's Energy Security Is Starting To Reveal Itself...

Constellation Energy’s high-profile effort to revive one of the Three Mile Island reactor plants, now renamed the Crane Clean Energy Center, has run into a four-year-tall roadblock: the grid itself.

The company had targeted a restart in the second half of 2027 to deliver roughly 835 megawatts of nuclear power to Microsoft data centers under a long-term agreement.

Yet PJM Interconnection, the regional grid operator, reports full deliverability could take until 2031.

The holdup stems from needed transmission upgrades.

The $1 billion loan secured by Constellation has only been followed by delays...

Constellation pushed back quickly, insisting the plant remains on schedule for 2027 operations and that it is actively negotiating with PJM and local utilities to shorten the timeline. The 2031 date, the company said, reflects only the point of complete certainty around upgrades rather than an outright bar to earlier partial output.

The real culprit is not the data centers driving the demand. Tech giants and hyperscalers are not conjuring the problem out of thin air. Decades of underinvestment in transmission lines, permitting bottlenecks, and overloaded interconnection queues have left the grid ill-equipped for any surge, whether from nuclear restarts, renewables, or new industrial loads. PJM’s own studies show the system has evolved since Three Mile Island’s 2019 closure, yet the backlog of projects, both generation and demand, continues to grow. Utilities and operators face the same squeeze whether the request comes from a reactor or a server farm.

Less than a year ago, Bloomberg reported Constellation Energy moved the restart date up one year from the original 2028 completion date to 2027. The reactor owner noted the connection to the PJM grid would take another year, to 2028. Yet, here we are nine months later and that grid connection timeline has already moved out an additional three years. 

Just last month, the IEA warned electricity demand is rising fast while over 2,500 GW of projects worldwide sit stalled in connection queues, with the U.S. portion especially strained. We also noted transmission projects routinely face five-to-seven-year delays from permitting and interconnection hurdles.

The pattern is clear. Data centers expose the weakness; they do not create it.

Until transmission spending and permitting catch up with the real-world need for reliable power, even the cleanest, most reliable plants will sit idle longer than planned.

The Three Mile Island delay is simply the latest symptom of a system that has been neglected for far too long.

* * * Grab it here

Tyler Durden Wed, 04/01/2026 - 17:40

US Firm Takes Control Of One Of The "World's Largest" Cobalt Producers

Zero Hedge -

US Firm Takes Control Of One Of The "World's Largest" Cobalt Producers

An American company has secured control of one of the largest cobalt producers outside Chinese ownership, delivering a strategic boost to U.S. efforts to compete with Beijing over critical minerals, according to the Wall Street Journal.

The buyer, Virtus Minerals, completed its acquisition of Congo-based Chemaf for $30 million, along with a pledge to invest roughly $720 million. The deal caps a years-long push, spanning both the Biden and Trump administrations, to ensure U.S. access to cobalt resources in the Democratic Republic of Congo.

Chemaf’s mines can supply about 5% of global cobalt output—a key material used in fighter jets, smartphones, and electric vehicle batteries. Virtus says future production will be directed toward American and allied buyers.

Despite its value, Chemaf proved difficult to sell. U.S. companies were wary of its heavy debt—around $1 billion—along with reputational concerns and the challenges of operating in Congo, including weak infrastructure, corruption risks, and labor issues.

The company has a controversial history. Its Mutoshi mine has faced repeated problems with unsafe working conditions and incursions by informal miners. In earlier years, child labor and bribery allegations also surfaced. Although some reforms were attempted, informal and hazardous mining has since returned.

WSJ writes that Virtus itself is a small, eight-person firm founded in 2022 by Phil Braun, a former Green Beret, and Andrew Powch, a Naval Academy and Harvard Business School graduate. Backed by U.S. government support, the company positions the deal as part of a broader national security effort to rebuild supply chains.

Financing for the acquisition includes $200 million from Virtus and its operating partner, India’s Lloyds Metals and Energy, along with $475 million from Orion Resource Partners and additional funding. The firm has also reached an agreement with Trafigura, Chemaf’s largest creditor.

Chemaf was put up for sale after cobalt prices fell sharply in 2023. Significant additional investment—estimated at up to $300 million—is still required to upgrade facilities and increase production capacity.

The deal faced competition from China. In 2024, Chemaf had agreed to sell to Norin Mining, a subsidiary of a Chinese state-owned defense company, for $920 million. That agreement collapsed after failing to gain approval from Congolese authorities, opening the door for Virtus.

The acquisition highlights the broader geopolitical contest over Congo’s vast mineral wealth. The country produces nearly three-quarters of the world’s cobalt, and Chinese firms have already invested heavily in its mining sector.

Still, questions remain about whether Virtus can successfully operate the assets. The company has a previous investment in Congo that remains stalled due to a legal dispute, and its partner’s experience is largely outside cobalt. Even so, Lloyds expects to begin work soon and complete upgrades within about a year.

*  *  * Only 2 more in stock

Tyler Durden Wed, 04/01/2026 - 15:25

Trump's Jan. 6 Speech Not Covered By Immunity: Judge

Zero Hedge -

Trump's Jan. 6 Speech Not Covered By Immunity: Judge

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

President Donald Trump’s speech in Washington on Jan. 6, 2021, was not an official act and is thus not covered by immunity, a federal judge said in a March 31 decision.

President Donald Trump at a rally in Washington on Jan. 6, 2021. Jenny Jing/The Epoch Times

“President Trump has not shown that the Speech reasonably can be understood as falling within the outer perimeter of his Presidential duties,” U.S. District Judge Amit Mehta ruled.

Trump’s speech on Jan. 6, 2021, was given to a rally at The Ellipse, about 1 mile from the U.S. Capitol.

Lawmakers and others sued Trump, claiming his speech incited the crowd to go to the Capitol and riot.

Trump had sought a dismissal of the lawsuits, arguing he is entitled to immunity for official acts as president and that the speech was an official act.

Supreme Court justices ruled in 2024 that presidents enjoy immunity for core official acts, and presumptive immunity for acts within the outer perimeter of duties, but that unofficial acts are not covered.

Mehta said that contextual facts, such as that White House personnel were not involved in planning the Jan. 6 rally, besides securing an exception for the placement of the stage, supported the position that Trump’s speech fell outside his presidential duties.

The speech was made as then-Vice President Mike Pence and members of Congress met in a joint session to certify the results of the 2020 election and featured Trump urging them to consider alternate slates of electors and saying he, not Joe Biden, had actually won the election.

Mehta said the speech was focused on promoting his alleged 2020 victory, rather than on carrying out official duties, such as ensuring the faithful execution of laws.

“The content of the Ellipse Speech confirms that it is not covered by official-acts immunity,” he wrote.

Damon Hewitt, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, which is representing some of the plaintiffs in the consolidated case, said in a statement that “today’s ruling affirming that Donald Trump is not immune from civil liability is a monumental victory for the rule of law, affirming that no one, including the president of the United States, is above it.”

He added, “The court rightly recognizes that President Trump’s actions leading to the January 6 insurrection fell outside the scope of presidential duties.”

Lawyers for Trump did not respond to a request for comment by publication time.

The ruling denied Trump’s motion to dismiss the case and means the litigation will proceed, although the judge did agree to a request from the president’s lawyers to certify certain issues for appeal, including the new decision.

Tyler Durden Wed, 04/01/2026 - 15:05

Amazon's Cloud Unit In Bahrain "Disrupted" By Iranian Strike

Zero Hedge -

Amazon's Cloud Unit In Bahrain "Disrupted" By Iranian Strike

Just one day after the Islamic Revolutionary Guard Corps threatened U.S. companies across the Middle East, the Financial Times reported late Tuesday morning that an IRGC strike had damaged Amazon's cloud computing infrastructure in Bahrain. 

The FT cited Bahrain's interior ministry, which said civil defense teams were "extinguishing a fire in a facility of a company as a result of the Iranian aggression."

Local authorities did not identify the company, disclose the type of air-delivered munition used, and/or provide further operational details about the strike.

But according to a person familiar with the incident cited by the FT reporters, the damaged site was part of Amazon's cloud computing operation, a reminder that civilian infrastructure, such as data centers and other digital infrastructure, is increasingly exposed to cheap one-way attack unmanned aerial systems. 

Amazon's Service Health page on its website shows that AWS is "Disrupted" in the Bahrain operating area. 

The IRGC strike on the Amazon facility in Bahrain comes one day after Sepah News, the IRGC's official news outlet, named 18 U.S. companies with operations in the Middle East that are now considered "legitimate targets."

"From now on, for every assassination, an American company will be destroyed," an IRGC-affiliated news outlet said.

The list of companies also included Cisco, HP, Intel, Oracle, IBM, Dell, Palantir, JPMorgan, Tesla, GE, Spire Solutions, Boeing, and UAE-based artificial intelligence company G42.

Let's not forget that IRGC forces struck AWS data centers in the Middle East in early March, causing outages in a number of apps and digital services across the United Arab Emirates.

The U.S.-Iran conflict has taught the world that civilian infrastructure, more importantly, data centers, has become a target, and as we warned even before the conflict erupted, there will be a push for counter-UAS technology at these facilities, as well as other high-value assets. Just this week, we learned that the U.S. military is preparing to deploy laser weapons against drones in Washington, D.C.

Tyler Durden Wed, 04/01/2026 - 14:10

More Than Half Of Americans Believe AI Will Do More Harm Than Good: Poll

Zero Hedge -

More Than Half Of Americans Believe AI Will Do More Harm Than Good: Poll

Authored by Mary Prenon via The Epoch Times,

About 55 percent of Americans surveyed in a 2026 Quinnipiac poll said artificial intelligence (AI) will be more harmful than helpful.

The survey, released on March 30, was conducted in collaboration with the Quinnipiac University School of Computing & Engineering and the Quinnipiac University School of Business.

In April 2025, only 44 percent believed AI would do more harm than good in their daily lives.

In the 2026 poll, 21 percent answered that AI affects their lives a lot, while 29 percent said only somewhat, and 30 percent believed AI impacts are minimal. Only 17 percent said they are not impacted at all.

Regarding education, 64 percent of survey respondents said AI is more harmful, compared with just 27 percent who believe it will help. For health care issues, 45 percent of those surveyed believed AI will do more harm, while 43 percent said AI will be more helpful.

The employment outlook showed the greatest percentage of people worried about the future of AI, as 75 percent said continuous advancements in AI will most likely lead to a decline of job opportunities for people. While 18 percent said AI will not have much of an impact on jobs, only 7 percent said jobs for humans will increase as a result of AI.

In just one year, the fear of possible job losses due to AI increased by nearly 20 points. In April 2025, 56 percent of respondents said AI would be detrimental to human jobs.

All generations surveyed remain pessimistic about the job outlook as a result of AI’s rapid growth, with Gen Z—including ages 18 to 29—exhibiting the highest percentage at 81 percent. For millennials, aged 30 to 45, 71 percent said jobs are likely to decrease as AI grows, and 67 percent of Gen Z, aged 46 to 61, agree. Of the baby boomer generation, aged 62 to 80, 66 percent indicated that human jobs will decline.

“Younger Americans report the highest familiarity with AI tools, but they are also the least optimistic about the labor market,” Tamilla Triantoro, associate professor of business analytics and information systems at Quinnipiac University School of Business, said in the report.

“AI fluency and optimism here are moving in opposite directions.”

Among those currently employed, 30 percent reported being very or somewhat concerned about AI rendering their jobs obsolete, but 69 percent said they are not very worried about it. Compared with last year’s survey, only 21 percent of employed Americans expressed fear of losing their jobs to AI.

“Americans are more worried about what AI may do to the labor market than about what it may do to their own jobs,” Triantoro said.

“People seem more willing to predict a tougher market than to picture themselves on the losing end of that disruption—a pattern worth watching as the technology moves deeper into the workplace.”

An overwhelming 85 percent of Americans said they would be unwilling to work a job where their direct supervisor was an AI program that assigned their tasks and schedules.

When asked how much they trust AI, 76 percent of respondents said that they hardly ever trust it, while just 21 percent admitted they do trust AI. Still, 51 percent said they often use AI for researching topics. Only 20 percent said they relied on AI for medical advice, and just 15 percent for personal advice.

Tyler Durden Wed, 04/01/2026 - 13:50

Beta: A Powerful But Faulty Tool For Managing Risk

Zero Hedge -

Beta: A Powerful But Faulty Tool For Managing Risk

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

When investors want to reduce risk, one commonly used tool is beta. For instance, an investor may sell higher-beta stocks and replace them with lower-beta ones to cushion against an expected market decline. Such a strategy is intuitive and widely used; however, it can be greatly flawed.

We recently received a question from a client about how we use beta to manage our portfolios. Given recent volatility and declining prices, the timing could not be better to explore both the power of beta and its important constraints.  

What Is Beta

In simplistic terms, beta answers one question: when the market moves, how much does a stock tend to move with it? To wit, a stock with a beta of 0.50 should move roughly half as much as the market in either direction. A stock with a beta of 2.0 should move roughly twice as much.

In statistics, beta is the slope of the best-fit line through a scatter plot comparing a stock’s weekly returns to the market’s returns.  The steeper the line, the higher the beta, and vice versa.

To clarify, consider the graph below. Each dot on the scatter chart shows the intersection of the weekly returns of Exxon (XOM) and the S&P 500 over the last five years. The beta of XOM, or the slope, quantifies the angle of the best-fit line (orange line). XOM has a beta of 0.43. Thus, for every 1.00% increase or decrease in the S&P 500, the orange line will rise or fall by 0.43%. The yellow circle shows that an approximate 5.00% increase in the S&P 500 equates to an expected 2.15% (0.43% * 5%) increase in XOM.

If an investor fears a market drawdown, they might want to replace higher-beta stocks with lower-beta ones like XOM. Conversely, they might do the opposite if they think the market will move higher.

If only portfolio management were that easy!

Correlation Matters- Analyzing XOM

Let’s stick with the XOM analysis to demonstrate how misleading beta can be. As noted above, the beta of XOM over the last five years, using weekly data, is 0.43. But that figure doesn’t address how much we should trust it.

To quantify our confidence, we calculate the relationship’s R-squared. R-squared measures how closely the dots cluster around the trend line on a scale of zero to one. A reading near one means beta is highly reliable. A reading near zero means the relationship between the stock and the market is essentially random. The R-squared for the XOM graph we showed above is statistically insignificant at 0.0645, indicating a weak correlation between XOM and the market.

Beyond the R-squared, it’s also important to understand that beta is not static. It changes with new data and with changes to the time frame used to calculate it. As shown in the table below, XOM’s five-year beta differs markedly from the most recent 3 and 6-month calculations.  

Correlation Matters- Nvidia

We shift our focus to Nvidia (NVDA), a stock with a higher beta, to further illustrate why correlation (R-squared) is critical to understanding the efficacy of a stock’s beta. As shown below, NVDA has a five-year beta of 2.07; however, like XOM, it has been declining, with its three-month beta sitting at 1.10. This is not surprising given that Nvidia’s contribution to the S&P 500 has surged from about 1% to nearly 8% over the last five years. Its short-term beta implies that NVDA behaves similarly to the market, not twice the market as its longer-term beta claims.

The graph below shows that NVDA’s best-fit trend line has a steeper slope than XOM’s. Moreover, we can see that the dots are more closely clustered around the trend line than XOM’s are. The relationship between NVDA returns and the market, as measured by R-squared, is 0.4785 compared to XOM’s insignificant 0.0645.

Idiosyncratic Risk

Some describe beta as if it were like a volume control on a stereo, simply tune it up or down, and your risks change accordingly. The dispersion of weekly returns around the trend line indicates that factors beyond market returns drive individual stock returns. While there are many factors driving returns, they can largely be classified as systematic or idiosyncratic.

Beta only helps explain the fraction of a stock’s return attributable to systematic (market) risks. These are market risks that affect all investments simultaneously and include factors such as recessions, interest rate changes, and geopolitical events.

Idiosyncratic risk, on the other hand, is the company-specific risk. It includes unique factors such as management decisions, product sales, and competitive positioning. It also includes non-company-specific factors, such as investor preferences.

Together, systematic and idiosyncratic risks help us fully quantify risk.

As we discussed, XOM had a very low R-squared because many of the data points were randomly scattered across the graph. We can deduce from the low correlation (low R-squared) that changes driven by idiosyncratic factors greatly outweigh those driven by movements in the S&P 500.

Using Beta On A Portfolio

So far, we have only discussed the beta of an individual stock. Given the idiosyncratic risks and low correlation (R-squared) of many stocks, and the fact that beta shifts with the selected time frame, beta can be an inadequate tool.

However, when managing a portfolio, beta’s usefulness as a portfolio management tool increases. In the extreme, think of it this way: if you bought all 500 S&P stocks in the same percentages as the index, the portfolio’s beta would equal one, R-squared would be one, thus you would have zero idiosyncratic risk. The idiosyncratic risks associated with all 500 stocks would cancel each other out. The graph below plots this scenario.

In more realistic terms, the more diversified your portfolio, the more idiosyncratic risk you remove from your portfolio. To highlight this, we created a simple three-stock portfolio containing equal amounts of XOM, NVDA, and Duke Energy (DUK).

As shown below, the beta of our portfolio is 0.9994, and the R-squared is 0.5855. Below the graph is the summary of market and idiosyncratic risks for the three stocks and the portfolio.

Even with three stocks and minimal diversification in our portfolio, we have substantially reduced the idiosyncratic risk relative to that implied by the individual stocks.  

Summary

Beta is useful but imperfect. And, unfortunately, its imperfections tend to matter most when the need to manage risk is most critical. As the age-old saying goes: “In the midst of a crisis, all betas go to one.”  Simply, beta can be a broken compass when you need it most.

For individual stocks with low R-squared values and high idiosyncratic risk, such as XOM, beta can be a poor predictor of actual price behavior, particularly during periods of sector- or company-specific volatility.

For well-diversified portfolios, however, it is considerably more reliable, as idiosyncratic risks of the underlying stocks cancel out and systematic market risk dominates.

Tyler Durden Wed, 04/01/2026 - 13:20

SpaceX Files Confidentially For IPO, Setting Up Record-Breaking Offering

Zero Hedge -

SpaceX Files Confidentially For IPO, Setting Up Record-Breaking Offering

SpaceX has confidentially filed for an IPO, potentially setting up a June listing on U.S. stock exchanges that could become the largest public offering ever. The offering could value the rocket, satellite, and AI company at more than $1.75 trillion and raise as much as $75 billion, far exceeding Saudi Aramco's 2019 IPO record.

Bloomberg states that SpaceX has just submitted a draft IPO registration to the SEC for nonpublic review. That allows SEC staff to review the filing, ask questions, and require any changes before the company reveals all of its financials and offering details to the public.

"The filing puts it on track for a June listing, which would make SpaceX the first of what could be a trio of mega-IPOs, ahead of OpenAI and Anthropic PBC," the outlet noted.

A listing for SpaceX would raise $75 billion for the rocket company and dwarf Saudi Aramco's $29 billion debut in 2019. The money raised would be used to fund an "insane flight rate" for the Starship rocket and to push ahead with deploying orbital data centers in low Earth orbit.

Sources familiar with the listing say that SpaceX has lined up Bank of America, Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley for senior roles on the IPO.

A report last week from The Wall Street Journal said that Musk wants to allocate upwards of 30% of the IPO stock to retail investors, far beyond the typical allocation. He is also exploring giving priority access to loyal supporters, such as Tesla shareholders and individuals who have backed his other ventures, reinforcing his pattern of rewarding his existing base.

Last month, Morningstar released a note estimating that SpaceX generated nearly $16 billion in revenue in 2025 and $7.5 billion in EBITDA, driven "almost entirely by explosive subscriber growth" from its Starlink satellite internet unit, which had 10 million active customers as of March. The company forecasts revenue of $150 billion in 2040, with EBITDA of $95 billion.

After the SEC review process for a possible IPO is complete, the question then becomes: What will SpaceX's ticker symbol be?

Polymarket bets show that "X" is in the running at 44% ...

There is no fixed SEC timetable from a confidential IPO filing to an actual public debut. That process can take anywhere from several weeks to several months.

Tyler Durden Wed, 04/01/2026 - 13:00

Swalwell Demands FBI Not Release His Files As Epstein Hypocrisy Surfaces

Zero Hedge -

Swalwell Demands FBI Not Release His Files As Epstein Hypocrisy Surfaces

Authored by Luis Cornelio via Headline USA,

Embattled Rep. Eric Swalwell, D-Calif., who has long demanded that President Donald Trump release the Epstein files, now faces scrutiny as the FBI prepares to release documents tied to its investigation into his alleged ties to a Chinese intelligence operative.

The scrutiny comes after Swalwell demanded Monday that FBI Director Kash Patel refrain from declassifying the potentially damaging files, which could shed light on his relationship with Christine Fang, the suspected Chinese spy also known as “Fang Fang.”

On X, critics highlighted what they called blatant hypocrisy, pointing to Swalwell’s prior demands that Trump release the Epstein files.

One widely shared X post from July 2025 read, “Trump has the files. Why won’t HE release them,” in reference to the Epstein files.

On Sept. 25, Swalwell himself replied to a post from Patel, writing, “Blah blah blah. Where are the Epstein Files?”

On Oct. 7, Swalwell again pressed Patel, adding, “Where are the Epstein Files?”

Just 10 days later, Swalwell escalated further, branding House Speaker Mike Johnson the “pro-pedophile Speaker” and again demanding the Epstein files be released.

Swalwell conveyed his opposition in a cease-and-desist letter to Patel, urging that his own FBI files are not released.

“The congressman has never been accused of wrongdoing in that matter and your attempt to release the file is a transparent attempt to smear him and undermine his campaign for governor of California,” the letter said, as quoted by the leftist Washington Post.

It added, “Your actions threaten to expose you, others at the FBI, and the FBI itself to significant legal liability.”

The Post reported over the weekend that Patel had deployed agents to California to review the documents ahead of a potential public release.

The forthcoming release of the files could provide clarity on the FBI’s investigation into Swalwell’s early political career. He joined Congress in 2013 after serving three years on the Dublin City Council.

The probe centered on Fang’s alleged efforts to act as a Chinese intelligence operative by cultivating relationships with up-and-coming politicians.

Swalwell has not definitively denied having a sexual relationship with Fang. He purportedly cut off contact with her after being briefed by the FBI.

What Swalwell knew about Fang, and what he told the FBI, has largely remained speculative, but that could change if the files were released.

* * * Sink your fengs into these

Tyler Durden Wed, 04/01/2026 - 12:40

Trump May Pull Out Of 'Paper Tiger' NATO After Starmer Stiffs Strait Support

Zero Hedge -

Trump May Pull Out Of 'Paper Tiger' NATO After Starmer Stiffs Strait Support

In a blistering exclusive interview with The Telegraph, President Trump has declared he is "strongly considering" pulling the United States out of NATO, branding the 77-year-old alliance a "paper tiger" after European allies - including the UK under Prime Minister Sir Keir Starmer - refused to join America’s military campaign against Iran or help reopen the Strait of Hormuz.

Trump told the newspaper the decision was now “beyond reconsideration,” adding: “I was never swayed by Nato. I always knew they were a paper tiger, and Putin knows that too, by the way.” He singled out Britain, mocking its naval capabilities and Starmer’s green-energy focus: “You don’t even have a navy. You’re too old and had aircraft carriers that didn’t work… All Starmer wants is costly windmills that are driving your energy prices through the roof.”

The row erupted after Iran effectively closed the Strait of Hormuz - through which 20 per cent of the world’s oil flows - in response to US-Israeli strikes launched on February 28. Allies have been reluctant to deploy warships, prompting Trump to accuse NATO of operating a “one-way street.”

Secretary of State Marco Rubio echoed the president on Fox News, warning that America would have to “re-examine” its NATO membership once the Iran conflict ends. “If Nato is just about us defending Europe if they’re attacked, but them denying us basing rights when we need them, that’s not a very good arrangement,” Rubio said. Trump later told The Telegraph he was “glad” Rubio had spoken out.

Starmer Fires Back: “This Is Not Our War”

Starmer moved quickly to reaffirm Britain’s commitment to NATO while drawing a firm line on the Iran conflict. “This is not our war, and we’re not going to get dragged into it,” he told The Telegraph, describing the alliance as “the single most effective military alliance the world has ever seen.” He signalled a pivot toward closer European cooperation “whatever the noise” from Washington.

The UK’s military vulnerabilities have only added fuel to the fire. On Tuesday, the First Sea Lord admitted the Royal Navy was not ready for war. Four of Britain’s six destroyers were out of service at the conflict’s start, forcing London to borrow a German warship to meet NATO obligations in the North Atlantic.

Any formal US withdrawal would require Congressional approval under 2023 legislation co-sponsored by Rubio himself. However, experts note Trump could still gut American participation by pulling troops, bases, and command support - effectively hollowing out the alliance without a full exit.

Trump is expected to deliver a national address on Wednesday evening outlining the Iran war’s status and, according to Reuters sources, to voice further disgust at NATO’s lack of reciprocity.

As oil prices spiral and recession fears mount, the standoff over the Strait of Hormuz has exposed raw fractures in the Western alliance. Whether Trump’s latest broadside is negotiation theatre or the beginning of America’s strategic retreat from Europe remains to be seen — but the “paper tiger” label has already left its mark.

Tyler Durden Wed, 04/01/2026 - 12:20

"Finish This Thing, Finish It Right": JPM CEO Jamie Dimon Weighs In On Iran War

Zero Hedge -

"Finish This Thing, Finish It Right": JPM CEO Jamie Dimon Weighs In On Iran War

JPMorgan CEO Jamie Dimon appeared on Fox & Friends on Tuesday, covering everything from artificial intelligence to the economy to the continuing exodus from radical-left blue states. More notably, he offered his views on the U.S.-Iran war, which this week entered its fifth week and has remained at the center of the news cycle.

Dimon was first asked about the energy shock from the US-Iran conflict and whether surging fuel prices would impact the American economy.

"Look the markets are unpredictable and it's hard to for me to tell you exactly what," Dimon said of a potential impact.

"But I think they're just looking at, is there a chance something can go wrong now? We should all hope nothing goes wrong. We should all hope that … we win this thing and clean up the straits and that Iran is no longer a threat to everybody. The markets will be concerned until it's over."

Dimon added, "It's much more important that this be successfully completed than what the market does."

He noted, "Yes, I hear people say they were not an imminent threat. But these people have been engaged in violent acts for 47 years, killing people, killing Americans, and funding Hamas. Several Americans were killed on October 7. They have fought proxy wars and threatened people. A ballistic missile can travel 3,000 miles. These are bad people who needed to be stopped. I do not know what the military and the president know, but we have to finish this thing and finish it right." 

Layered on top of Dimon's comments yesterday is a broader geopolitical framework laid out earlier this month by Zoltan Pozsar of Ex Uno Plures.

In Pozsar's view, the Trump administration is "methodically building a portfolio of assets" from Venezuela to the Panama Canal to Iran's oil flows and the Strait of Hormuz, a strategy aimed at reasserting American dominance, securing the empire for years to come, and tightening the screws on Beijing after last year's rare earths stunt.

Tyler Durden Wed, 04/01/2026 - 12:00

Aluminum Supply Shock: Top Gulf Producer Halts Operations After Iran Strike, Price To Spike

Zero Hedge -

Aluminum Supply Shock: Top Gulf Producer Halts Operations After Iran Strike, Price To Spike

Over the weekend, both Emirates Global Aluminum (EGA) - the largest aluminum producers in the Gulf - and Aluminium Bahrain (ALBA) reported drone attacks damaging smelting facilities after hits on Iranian steel infrastructure last week.

Neither company (at the time) confirmed whether supply will be impacted, but this morning the worst case appears to be confirmed with Reuters reporting that according to a Wednesday note by consultancy Wood Mackenzie "EGA's Al Taweelah facility in the United Arab Emirates halted operations after an Iranian missile and drone attack on Saturday damaged a power plant." A subsequent report from Bloomberg confirmed the report, writing that "Emirates Global Aluminium, the Middle East’s top producer of the metal, halted operations at its Al Taweelah smelter after the site was struck by Iranian missiles and drones over the weekend, according to a person familiar with the matter."

At the same time, the smelter belonging to Aluminium Bahrain – Alba – which was also targeted on Saturday, “sustained significant damages and is expected to operate at an estimated utilisation of 30 percent”, Wood Mackenzie said.

“The ongoing Middle East conflict is triggering a critical supply crisis in the global aluminium market, with disruptions potentially removing 3 to 3.5 million tonnes of output in 2026,” Wood Mackenzie said. For context, the world produced just under 74 million tonnes of primary aluminum last year.

Wood Mackenzie’s press office said its information was sourced from the consultancy’s contacts in the Middle East, but declined to provide further details. 

As a reminder, the aluminum smelter in Al Taweelah, in the emirate of Abu Dhabi, has a capacity of roughly 1.5 million metric tonnes per year, and an alumina refinery. Alba’s capacity of 1.6 million tonnes per year in Bahrain makes it the world’s biggest single-site aluminium smelter. The Middle East as a whole produces about 9% of global supply, with EGA and others playing a key role in supplying manufacturers across Europe, Asia and the US. Even before the industry was directly targeted, the effective closure of the Strait of Hormuz had already left the region’s major producers short of critical inputs, with the sector anticipating a cascading wave of production cuts unless the strait reopens soon.

As Goldman commodity specialist James McGeoch writes, it's "hard to think of a bigger metal supply shock: High degree of expectation this was where it was heading, but the initial reaction was to fade the uncertainty yesterday, that should be replaced by fresh length if history is a guide."

This is how the Goldman trader does the math on lost output:

Lost ALBA 1mm + EGA 1.6mm + Qatalam 0.3mm  + Mozal 0.6mm = 3.5m on a 74mt mkt = 4.7% impact to supply, and 7.7% of ex china supply

Balance this with Oil price demand destruction ~1mm, assume China overproduce and ship 500k - need to price demand destruction to balance ~2mt (inventory we see at ~1.5mt but majority of that is China link).

McGeoch says that in light of the shut downs, some traders have been eyeballing a significant surge in the aluminum price to $4500 (15% premium to LME for China is a clear starting point).

  • The Goldman trader also writes that if the report is accurate, the market will first draw LME stocks, which is hard as not everyone can take Russian units, both regionally and financially.
  • Second, market needs to solve for the China export tax.
  • Third, it will be important to see China ramp supply, which means you have to convince them its a good use of power allocations.  

Aluminum futures on the London Metal Exchange have surged since the strikes, with LME Aluminum trading up 50% from a year ago, and if production remains shuttered, it will likely move notably higher.

Tyler Durden Wed, 04/01/2026 - 11:52

The Kohn Solution For An Uncertain Fed

Zero Hedge -

The Kohn Solution For An Uncertain Fed

Via RealInvestmentAdvice.com,

Dario Perkins of TS Lombard wrote a piece titled “How to Respond to Oil Shocks.”

His analysis draws on the Fed’s history to address how it should respond to today’s oil shock.

While researching Fed transcripts from the 1990 Gulf War, he discovered a proposal by Don Kohn, senior Fed staffer, that offers a solution to the central bank’s oil shock problem: nominal GDP targeting.

Kohn’s logic is straightforward and makes sense in the current environment where the Fed is contemplating monetary policy as oil prices spike, simultaneously boosting inflation and reducing economic growth. Per Kohn, if those two forces balance out, the Fed should hold rates steady. But if one dominates, the Fed should respond: “hike if nominal GDP growth rises” and “cut if nominal GDP growth falls.”

In other words, a demand shock calls for higher rates, while a supply-side shock calls for lower rates.

Historically, as he shares in the table below, nominal GDP almost always falls after a supply-driven oil shock.

Today’s spike, driven by the Iranian conflict and “the Iranian weaponization of the Strait of Hormuz,” is unambiguously a supply shock. By the Kohn framework, the Fed should be cutting the Fed Funds rate, not considering hiking it.

The current counterargument is the high-inflation era of the 1970s, when central banks were allegedly too dovish on inflation and allowed inflation expectations to spiral out of control.

Perkins dismisses this comparison directly. To wit:

The 1973-74 recession “was one of the worst in history” and “in terms of its impact on unemployment, it was only slightly better than the GFC.”

Importantly, he notes that the 1970s featured widespread union membership and inflation-indexed wage contracts that caused wages to “accelerate even as the economy sank.”

That wage-price spiral is nonexistent today.

Thus, the inflationary danger of easing into an oil shock is considerably lower than the popular 1970s narrative suggests.

His conclusion: Central banks don’t need to hike today. In fact, if they follow the advice of Don Kohn, they will probably need to ease policy.

Tyler Durden Wed, 04/01/2026 - 11:40

Pages