Zero Hedge

Minnesota Sues Federal Government Over Medicaid Funding Freeze

Minnesota Sues Federal Government Over Medicaid Funding Freeze

Authored by Aldgra Fredly via The Epoch Times (emphasis ours),

Minnesota filed a lawsuit on March 2 to block the federal government from withholding $243 million in Medicaid funds, saying the freeze could lead to potential cuts in medical services for low-income individuals.

In a still from video, Minnesota Attorney General Keith Ellison talks to The Epoch Times in Chicago on Aug. 22, 2024. NTD

The Centers for Medicare and Medicaid Services (CMS) last month temporarily deferred $259 million in Medicaid funds to Minnesota over alleged fraud in the state’s program, according to the court filing.

The lawsuit, filed by Minnesota Attorney General Keith Ellison and the state’s Human Services Department, asked the court to block the withholding of $243 million of those funds that were tied to 14 services the government identified as “high-risk” and subject to “noncompliance action.”

“These cuts are the latest in a long series of efforts to go around the law to punish Minnesotans — but just as we fought back and won when they illegally tried to cut funding for childcare, hungry families, and our schools, we are suing them again today to make them follow the law,” Ellison said in a statement.

The suit called the funding freeze unlawful, alleging that the government used the program as “political punishment” against the state, citing its previous attempts to withhold other funding from the state, including funds tied to the Supplemental Nutrition Assistance Program (SNAP).

According to the lawsuit, the federal government announced in January that it would freeze more than $2 billion in annual Medicaid funding to Minnesota over allegations of noncompliance.

The state appealed but said the federal government has not clarified the alleged conduct it deemed noncompliant or how Minnesota can remedy the issue.

“Impatient that it cannot withhold the $2 billion until Minnesota is provided a hearing and other due process, the administration ‘deferred’ $243 million from the state on February 25, 2026,” it stated.

The lawsuit is seeking a temporary restraining order to block the funding freeze, saying the withholding of funds would affect more than 1 million Minnesota residents enrolled in Medicaid.

“Unless the deferral is quickly reversed, the state will be irreparably harmed. The administration has already stated that the deferral will recur every quarter, crippling the state budget,” it stated.

The lawsuit names the Department of Health and Human Services and the Centers for Medicare and Medicaid Services, as well as Dr. Mehmet Oz, in his official capacity as CMS administrator, and Robert F. Kennedy Jr., in his official capacity as health secretary.

CMS said it does not comment on litigation.

John Connolly, deputy commissioner of the Minnesota Department of Human Services and state Medicaid director, said the state has invested “massive effort and resources” to address fraud in the program.

Medicaid is known as Medical Assistance in Minnesota. A family of four may qualify for the program if their income does not exceed $42,759, according to the state attorney general’s office.

Vice President JD Vance said on Feb. 25 that the government halted Medicaid funds to Minnesota to ensure that the state “takes its obligations seriously to be good stewards of the American people’s tax money.”

“A lot of people are getting rich off the generosity of American taxpayers. But more fundamentally and more importantly than that, it means that there are kids in Minnesota who deserve these services, who need these services. And they’re not going to those kids; they’re going to fraudsters in Minneapolis,” he said.

“That is unacceptable. And that’s the sort of thing that we’re cutting off with this action today.”

The Associated Press contributed to this report.

Tyler Durden Wed, 03/04/2026 - 08:50

Futures Bounce, Oil Slides After Report Of Iran Backchannel Outreach

Futures Bounce, Oil Slides After Report Of Iran Backchannel Outreach

It was shaping up as a catastrophic, margin-call driven Wednesday session after Japan's Nikkei tumbled about 4% and Korea's Kospi suffered its biggest drop ever, plunging by a record 12%. But after initially plunging overnight, S&P futures rose as much as 0.4% after the New York Times reported that operatives from Iran’s Ministry of Intelligence used backchannels to contact the Central Intelligence Agency a day after US-Israeli attacks began. The report also stated that US officials are skeptical that either the Trump administration or Iran is ready for an offramp. Then futures faded modestly after Treasury Secretary Scott Bessent said a proposed 15% global tariff may take effect this week, bringing trade tensions back into focus as traders followed developments in the Middle East. As of 8:00am ET, futures for the S&P 500 - extremely illiquid and jittery - were little changed after rising as much as 0.4%, while Nasdaq futures were also modestly in the green with Mag7 and Semis leading in premarket trading, and Cyclicals outperforming Defensives. Asia’s benchmark index plunged the most in nearly a year, led by a record selloff in South Korean equities which crashed 12% in one session. The yield curve is bear steepening with yields +1-2bp and USD sees some profit-taking following its best 2-day gain since Apr 2025. In the commodity space, crude prices are higher by 1-2%, WTI and Brent, as natgas sees a slight pullback; precious & base metals are surging on the US pullback with Ags adding to gains. The Energy complex seems to be reflecting a view that markets need more information before finding a level as there are mechanical reasons why the US commerce guarantee will not reverse recent price gains.  Aside from US / Iran update, the macro data focus is on ADP, Mtge Applications, and ISM-Srvcs. 

In premarket trading, Mag 7 were  mixed: Nvidia rose 0.6% after billionaire Leo KoGuan said he bought 1 million shares of the semiconductor giant and that he is “convinced AI is NOT a bubble, it is only the beginning.” (Tesla +1.1%, Meta +0.05%, Microsoft -0.5%, Alphabet -0.4%, Amazon -0.3%, Apple -0.4%)

  • Cryptocurrency-linked stocks are rallying as Bitcoin rebounds after a selloff spurred by the escalating conflict in the Middle East.
  • Gitlab (GTLB) drops 8% after the software company’s forecast for fiscal 2027 adjusted EPS fell short of the average analyst estimate.
  • Latham Group (SWIM) jumps 20% after the swimming pool designer’s net sales forecast for the full year surpassed the average analyst estimate.
  • Moderna (MRNA) rises 11% after the biotechnology company agreed to pay Genevant, a subsidiary of Roivant Sciences, and Arbutus $950 million to settle litigation related to the delivery technology behind its Covid shot. Analysts note that the settlement value was better than feared and that this should lift some litigation overhang on the stock.
  • SSR Mining Inc. (SSRM) rises 8% after entering into an agreement to sell its 80% ownership stake in the Çöpler mine in Turkey to Cengiz for $1.5 billion in cash.
  • Staar Surgical (STAA) falls 10% after the health care supplies firm reported net sales for the fourth quarter that missed Wall Street’s estimates.
  • Webtoon (WBTN) declines 13% after the storytelling platform reported revenue for the fourth quarter that missed the average analyst estimate

In other corporate news, the architect of Alibaba’s AI model has surprisingly quit as tech lead for Qwen. Anthropic is on track to generate annual revenue of almost $20 billion, more than doubling it run rate from late last year. The CEOs of Nvidia and Microsoft deliver keynote speeches at the Morgan Stanley TMT conference later today in San Francisco. And a billionaire Tesla ‘whale’ says he bought shares in Nvidia, convinced AI is not a bubble. Novo Nordisk shares are higher after the FDA issued 30 warning letters to telehealth companies for “making false and misleading claims regarding compounded GLP-1 products offered on their websites.” Sinclair’s The Tennis Channel is added to Amazon as part of a broader push into the online TV market. Intel says Craig Barratt, a board member since November, to become chair following the annual shareholders meeting on May 13.

Markets have endured days of volatility after the US-Israeli attack on Iran destabilized the Middle East, curbing energy supplies and damaging infrastructure. The main focus remains on crude as traders weigh President Donald Trump’s plan to insure and escort tankers passing through the Strait of Hormuz, with traffic in the vital waterway all but halted.

“We’re in a headline market,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM. “Rapid movements with higher volatility will remain for a longer period until supply chains are secure again. It will take some time to calm markets.”

Trump on Tuesday said the US will ensure the free flow of energy through the Persian Gulf with insurance guarantees and even naval escorts. But the shipping industry sees it at best as only a partial solution to a historic crisis. Meanwhile, China may need to lean on US gas supplies to cover potential shortfalls. South Korea imports nearly all of its oil and gas, and Asia’s dependence on oil is illustrated in the table below.  Indeed, while the US is relatively immune as a “gigantic energy superpower,” according to Barclays’ global chairman of research Ajay Rajadhyaksha, Asian economies like China, India, South Korea and Japan are more dependent on oil flow through the Strait of Hormuz. 

Goldman’s David Solomon said he wasn’t surprised to see volatility measures climb. “It’s going to take a couple of weeks for markets to really digest the implications,” he said. Meanwhile, derivative strategists note a shift higher at the front end of the VIX futures curve signaling a market that is rapidly pricing short-term risk, without an escalation to full-on panic. Although risk assets face a “significant headwind” from rising geopolitical tensions and AI disruption, underlying growth and earnings growth mean the depth and extent of a correction will be limited, note Goldman strategists led by Peter Oppenheimer. 

Mohit Kumar, chief strategist for Jefferies in Europe, said the firm’s US clients are generally more optimistic than those in Europe and Asia. The gap reflects US investors’ greater focus on Trump’s actions, which could lead them to underestimate Iran’s response. For Aneeka Gupta, director of macro-economic research at Wisdomtree, the real test for markets will be whether oil and the dollar remain higher long enough to significantly change the behavior of central banks.

“If the shock is short-lived, energy settles, and dollar strength doesn’t become persistent, then the macro impact is mostly a risk premium event — volatility up, but growth intact,” she said.

In geopolitics, German Chancellor Merz says the EU won’t accept US trade deal on worse tariff terms. Several Chinese financial firms are scaling back exposure to Middle Eastern debt, while regulators are stepping up oversight as the conflict raises concerns over the nation’s extensive lending in the region.

In Europe, the Eurostoxx 50 is up some 1.6% posting a modest rebound from the worst two-day decline since April triggered by shocks from the Middle East conflict. Stocks turned green for the year following the NYT report that Iran is trying to backchannel with the US. Positive earnings news also buoys sentiment. The sector breakdown shows a preference for tech, industrial and financials.Here are some of the biggest movers on Wednesday:

  • ASM International shares rise as much as 5.8% after the chip equipment firm guided 1Q revenue ahead of expectations, driven both by strong demand from advanced chipmakers amid AI infrastructure rollout, and a rebound in sales from Chinese clients.
  • Scor shares gain as much as 4.8% following its fourth-quarter report, with net income coming in significantly ahead of expectations and analysts highlighting solvency “reassuringly ahead.”
  • Galliford Try shares rally as much as 6.8% after the UK construction firm beat expectations in the first half and raised its guidance for the full year, stating it has improved confidence from its high level of revenue visibility over the coming years.
  • Bayer shares drop as much as 4.2% after the German conglomerate forecast little change in profit and sales in 2026.
  • Adidas shares fall as much as 7.8% after the German sportswear maker’s 2026 operating profit forecast missed analysts estimates.
  • Continental shares fall as much as 3.2% with analysts disappointed by aspects of the German auto supplier’s 2026 guidance following a pre-release earlier in the year.
  • Aroundtown drops as much as 4.9% as Jefferies says the German real estate firm’s funds from operations “landed at the low end of guidance.”
  • Redcare Pharmacy shares slide as much as 17% after the online pharmacy reported earnings that missed expectations and gave cautious guidance for this year that disappointed across the board, according to analysts.
  • Vistry shares plunge as much as 25% to the lowest since 2016 as the UK homebuilder guides to a lower margin following increased sales incentives to generate cash in a challenging market.
  • Traton shares dive as much as 5.8% after the truck maker issued broad growth and margin targets for this year that fell significantly short of expectations at the midpoint.
  • Weir Group shares fall as much as 9% after the British engineering company reported adjusted operating profit for the full year that met the average analyst estimate.

Earlier in the session, Asia looked like a missile crater as stocks extended their selloff for a third straight day.  The MSCI Asia Pacific Index dropped as much as 4.5%, the most since April 7, driven by sharp losses in Korean equities and regional tech heavyweights including TSMC, Samsung Electronics and SK Hynix. Korea’s benchmark Kospi plunged 12%, its biggest drop ever, as the Iranian war triggered the biggest-ever selloff in what had been the world’s hottest stock market. The Kospi’s rout triggered a 20-minute trading halt early in the session. Benchmarks in Taiwan and Japan slid around 4% each, with virtually all major regional equity indexes in the red. China’s onshore CSI 300 Index wiped out its year-to-date gains.

Taking a quick look at earnings, Out of the 481 S&P 500 companies that have reported so far in the earnings season, 73% have managed to beat analyst forecasts, while 22% have missed. 

In FX, the improvement in sentiment has weighed on the greenback with the Bloomberg Dollar index down 0.2%, snapping a two-day run of gains. The yen gained during APAC trade amid intervention talk from Japan’s Katayama.

In rates, a selloff in global bonds eased, with the yield on 10-year Treasuries rising two basis points to 4.08%. 

In commodities,WTI crude trimmed gains after the New York Times reported that Iranian operatives made an offer to the US to discuss terms for ending the conflict a day after attacks began.

Treasuries are down a handful of ticks with yields up 1-2bps across the curve. Spot gold and silver are higher by 2% and 5.1%. Bitcoin has also marched higher, up 4.4%.  Brent crude retreated from an intraday high to trade near $82 a barrel. Bitcoin jumped to nearly $70,000, suggesting some return of risk appetite.

Looking at the day ahead, data releases include the final services and composite PMIs for February from the US and Europe. In the US there’s also the ISM services index and the ADP’s report of private payrolls for February, whilst in the Euro Area we’ll get the unemployment rate for January. From central banks, we’ll hear from ECB Vice President de Guindos, the ECB’s Muller, Cipollone and Villeroy, along with Bank of Canada Governor Macklem. Otherwise, the Fed will release their Beige Book.

Markets Snapshot

  • S&P 500 mini +0.1%
  • Nasdaq 100 mini +0.2%
  • Russell 2000 mini +0.3%
  • Stoxx Europe 600 +1.1%
  • MSCI Asia Pacific Index fell 4%
  • Japan’s Nikkei Index fell 3.6%
  • China’s CSI 300 Index fell 1.1%
  • Hong Kong’s Hang Seng Index fell 2%
  • Taiwan’s Taiex Index fell 4.4%
  • South Korea’s Kospi Index fell 12%
  • Australia’s S&P/ASX 200 Index fell 1.9%
  • New Zealand’s S&P/NZX 50 Gross Index fell 0.7%
  • India’s NSE Nifty 50 Index fell 1.8%
  • DAX +1.3%
  • CAC 40 +0.9%
  • 10-year Treasury yield +2 basis points at 4.08%
  • VIX -0.6 points at 23.02
  • Bloomberg Dollar Index -0.2% at 1200.93
  • euro +0.2% at $1.1636
  • WTI crude +1.6% at $75.79/barrel

Top Overnight News

  • A day after the attacks began, operatives from Iran’s Ministry of intelligence reached out indirectly to the CIA with an offer to discuss terms for ending the conflict. US officials are skeptical – at least in the short term – that either the Trump administration or Iran is really ready for an offramp. NYT
  • Oil edged higher near $83 a barrel, with traffic in the Strait of Hormuz all but halted. Donald Trump’s plan to protect vessels with insurance backstops and naval escorts is only a partial fix, shippers said. BBG
  • The CIA is working to arm Kurdish forces with the aim of fomenting a popular uprising in Iran. The Trump administration has been in active discussions with Iranian opposition groups and Kurdish leaders in Iraq about providing them with military support. CNN
  • The son of former Iranian Supreme Leader, Mojtaba Khamenei, has emerged as his most likely successor, suggesting the country is moving in a hardline direction. NYT
  • China’s legislature signaled a desire for steady relations with the US as the countries prepare for a planned summit between Xi Jinping and Trump in the coming weeks. BBG
  • US shale drillers cannot increase production quickly enough to solve an oil supply crisis caused by the war in Iran, industry bosses have warned, saying a big rise in output would take months to materialize. FT
  • Gauges of China’s manufacturing and services activity sent mixed signals about the economy, showing pockets of weakness alongside improvement as markets wait for the country’s leaders to set growth targets for the year ahead.
  • Bank of Japan Gov. Kazuo Ueda reaffirmed his commitment to further interest-rate increases amid deepening concerns over instability in the Middle East. WSJ
  • Anthropic is on track to generate annual revenue of almost $20 billion, more than doubling its run rate from late last year, people familiar said. Separately, OpenAI CEO Sam Altman told employees that the company has no say over what the Pentagon does with its AI software. BBG

Trade/Tariffs

  • Japan and the US are reportedly working to include nuclear power, copper smelting and refining facility projects in the second round of deals under the USD 500bln investment package.
  • Japanese Trade Minister Akazawa is to travel to the US on Thursday to discuss Japan-US investment and will meet with US Commerce Secretary Lutnick.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks extended losses with markets roiled by the widening conflict in the Middle East, with the UAE considering taking military action to stop Iranian missile and drone strikes on the country, while it was also estimated that Saudi Arabia could attack Iran soon. ASX 200 slumped with the index dragged lower by underperformance in the commodity-related sectors, while better-than-expected Australian GDP data for Q4 failed to inspire a turnaround. Nikkei 225 dipped beneath the 54,000 level with mining and materials the worst performers amid disruption concerns. KOSPI saw a double-digit percentage drop and had triggered a circuit breaker with declines led by shipbuilders and shipping firms, while large exporters such as Samsung, SK Hynix and Hyundai Motor also suffered. Hang Seng and Shanghai Comp conformed to the bloodbath in the region as participants digested mixed Chinese PMI data in which the official NBS Manufacturing and Non-Manufacturing PMIs disappointed, but the private sector RatingDog PMI accelerated to multi-year highs, while attention is also on the Two Sessions, which began today in Beijing, while the focus will be on the Work Report on Thursday.

Top Asian News

  • China NPC spokesperson said will continue to expand domestic demand this year. Will foster new growth points in services consumption. Will promote high-quality employment this year. To reduce residents’ concerns about expanding consumption. Will promote the allocation of more resources to areas related to people’s livelihood, enabling people to consume, dare to consume and be willing to consume.
  • Chinese banks reportedly halt Abu Dhabi loans as creditors cut Middle East, Bloomberg reported; most Asian banks are currently adopting a wait-and-see approach but there are early signs some are mulling pausing deals.
  • Abu Dhabi Ports confirms the continuation of all its operations in light of regional developments; expect a decrease in the number of arriving ships with the decline in shipping traffic in the Strait of Hormuz, Al Arabiya reported.
  • Cosco Shipping (1919 HK) suspends new bookings on relevant routes amid escalating Middle East conflict.

European bourses (STOXX 600 +1.2%) have broadly rebounded following this week's selloff, with the IBEX 35 (+1.6%) and DAX 40 (+1.6%) outperforming this morning, which was boosted following the New York Times report (see below). On the data front, EZ and UK final composite PMIs failed to move indices. In addition, Swiss inflation for February came in hotter-than-expected but the SMI didn’t react much to the data on the open. Sectors display a positive picture. Technology (+2.5%) sits clearly at the top after ASM International (+6.5%) beat Q4 revenue and Q1 revenue outlook estimates. Regarding China, the Co. also anticipates a rise in sales, showing notable improvement from the earlier forecast of a double-digit decline. Energy (-0.6%) is the worst-performing sector. Consumer Products and Services (+0.8%) was initially softer, after being on by Adidas (-6.9%), but reversed higher on the broader risk tone. Adidas reported Q4 revenue that missed expectations, while an operating profit of "around" EUR 2.3bln in 2026 fell short of analyst estimates.

Top European News

  • German VDMA Engineering Association said January orders -6% Y/Y (domestic -8% and foreign at -5%).
  • French Finance Minister said they will hold a meeting of G7 Finance Ministers and Central Bankers early next week.

FX

  • DXY is choppy within a 98.90-99.33 range and well within Tuesday's 98.44-99.68 parameters. Focus remains on the Middle Eastern conflict, which continues to expand across the region. Analysts at ING highlight that near-term drivers of risk will probably be whether energy prices can reverse lower if the Strait of Hormuz can somehow reopen, and also whether central banks will be able to cut rates to support activity, or at least not tighten policy. Elsewhere, the data calendar for the US is very light, although ISM Services is scheduled later, while there were recent Fed speakers, in which the main message was that policy was well-positioned, and it is too soon to gauge the impact of the war in Iran on inflation. USD eased on NYT reports that Iran reached out to the US a day after the war started, although US officials are reportedly sceptical that either the Trump administration or Iran is ready for an off-ramp in the short term at least.
  • EUR is flat against the USD and trades on either side of 1.1600, with the single currency not helped by President Trump threatening to halt all trade with Spain, citing the country's refusal to allow American military forces to use joint air bases for operations against Iran. Meanwhile, no EUR move was seen on the final PMIs, which are outdated amid the geopolitical developments since the survey period.
  • GBP holds above 1.3300 vs the USD following recent underperformance, not helped by President Trump publicly expressing frustration with UK PM Starmer, stating "I'm not happy with the UK" and "This is not Winston Churchill that we're dealing with," after Britain refused to join offensive strikes.
  • CHF is off best levels in choppy trade, with USD/CHF recouping from intraday lows of 0.7790 in the aftermath of hotter-than-expected Swiss CPI and ahead of the SNB meeting on March 19th. On that note, SNB Vice Chair said they are ready to intervene in the FX market - echoing similar commentary on Monday.
  • JPY outperforms amid the ongoing geopolitical woes. USD/JPY was choppy overnight amid a quiet calendar for Japan and ongoing uncertainty regarding the Iranian conflict and effects on inflation, as well as the ramifications for BoJ monetary policy. The pair is subdued within a 157.16-157.86 range vs yesterday's 157.15 low. USD/JPY saw some volatility following NYT reports that US officials are sceptical of either Iran's or the US' willingness to off-ramp in the short term, relating to Iran's Intelligence Ministry reportedly reaching out to the CIA indirectly a day after the conflict started with an offer to discuss terms.

Fixed Income

  • Mixed trade at the time of writing, with USTs bearish while peers are firmer but only modestly. Benchmarks recouped some ground late US and during the early APAC session. However, they then faded again as energy prices continued to climb.
  • USTs at the low end of 112-27 to 113-05+ parameters. Focus remains on the geopolitical front with the conflict still ongoing and showing no sign of letting up in the near-term at least. An event of focus is the funeral of Khamenei, after which we may get the formal appointment of his successor, widely expected to be Mojtaba Khamenei, the second eldest son. Elsewhere, the US day is headlined by ISM Services and then numerous mega-cap presentations at a Morgan Stanley conference.
  • Bunds were in line with USTs late-US and into the early APAC session. Thereafter, the benchmark waned from best but remains just about in the green. Specifics for the space have been light, aside from geopols. No move to Final PMIs. For the most part, Europe is waiting for further clarity on the energy situation, Trump's displeasure with Spain and the Hungarian opposition to Ukraine amid the Druzhba closure. Currently, the benchmark holds just below the 129.00 mark in a 128.80 to 129.32 band.
  • Gilts gapped higher by 37 ticks before climbing a handful more to a 91.91 peak. A bounce that wasn't too surprising, given the overnight moves in peers. However, one that leaves it shy of Tuesday's opening level/high of 92.47 and still a significant distance from the week’s 93.55 open. For the UK, focus is firmly on the above events. Note, Goldman Sachs has stuck to its BoE call of three 25bps cuts this year, but has pushed out the timing by one month; as such, they now expect the first move in April not March.
  • Upside was seen across benchmarks as energy prices (namely nat gas) fell on reports that Operatives from Iran’s Ministry of Intelligence reached out indirectly to the CIA a day after the conflict began, with an offer to discuss terms for ending the conflict, New York Times reports citing sources. US officials are reportedly sceptical that either the Trump administration or Iran is ready for an off-ramp in the short term at least.
  • Germany sold EUR 0.96bln vs exp. EUR 1.0bln 2.30% 2033 Green Bund: b/c 1.76x (prev. 3.57x), average yield 2.53% (prev. 2.39%), retention 4.0% (prev. 15.6%)
  • Australia sold AUD 900mln October 2037 bonds, b/c 3.74, avg. yield 4.8573%.

Commodities

  • Crude benchmarks are firmer this morning as geopolitical tension in the Middle East continues to underpin the complex, with WTI (+1.1%) and Brent (+1.6%) trading at the upper ranges of USD 74.37-77.23/bbl and USD 81.28-84.48/bbl, respectively. Saudi Arabia announced that there was an attempt to attack Ras Tanura refinery, however, there was no damage reported at the refinery.
  • European Nat Gas has slipped some 7% following reports that Iran's Ministry of Intelligence reached out to the CIA indirectly a day after the conflict began with an offer to discuss terms for ending the conflict, although US officials are reportedly sceptical that either the Trump administration or Iran is ready for an off-ramp in the short term at least. Crude futures dipped modestly on these reports.
  • Spot gold continued its rebound, shrugging off recent USD strength that hampered price action yesterday for the yellow metal, trading just below the USD 5,200/oz mark. Haven demand has underpinned gold prices as the conflict in the Middle East reaches its fifth day. Modest upside was seen on the aforementioned NYT reports as the USD eased.
  • Copper prices are trading higher thus far in the European session, tracking mild tailwinds following China’s manufacturing PMI data, which showed the greatest improvement in manufacturing conditions in more than five years. At the time of writing, 3M LME copper trades at the upper range of 12.94-13.1k/t.
  • Saudi Aramco's Ras Tanura refinery (550k BPD) was reportedly struck again by an unknown projectile, according to sources; no damage was reported.
  • UKMTO receives report of an incident 10NM east of UAE's Fujairah, according to an advisory note; an oil tanker in the Gulf suffered an explosion and the wreckage of an unknown projectile was found on its deck and all crew members are fine.
  • IRGC say they have complete control of the Strait of Hormuz, according to AFP.
  • Russia's Deputy PM Novak said we are ready to increase oil supplies to China and India in case of additional demand.
  • Shanghai Futures Exchange are to adjust price limits and margin ratios for FU2604 fuel oil futures contract.
  • Goldman Sachs said Brent could reach USD 100/bbl if the Strait of Hormuz remains closed for 5 more weeks.
  • Qatar Gulf International Services noted stoppage of certain operations and services related to energy sector activities.
  • US Private Energy Inventories (bbls): Crude +5.6mln (exp. +2.3mln), Distillate +0.5mln (exp. -2.6mln), Gasoline -3.3mln (exp. -0.8mln), Cushing +1.5mln.

Central Banks

  • Fed's Hammack (2026 voter) says it is too soon to determine the economic impact of the Middle East conflict, NY Times reports. Supports holding rates steady for "quite some time."
  • Fed's Kashkari (2026 voter) said Fed can sit tight as war clouds the outlook, via WSJ interview; 1 or 2 cuts later this year could be appropriate if inflation cools, but war in the Middle East could also create conditions that would justify extended pause.
  • BoJ Governor Ueda said wages are expected to rise for a broad range of sectors in this year's wage negotiations, and that annual real wages to gradually turn positive.
  • BoJ Governor Ueda said the central bank communicates closely with the government. Added that wages need to increase significantly for Japan to sustainably achieve BoJ’s price target. Mechanism in which wages and prices rise in tandem becoming embedded in Japan’s economy. Exchange rate fluctuations are now more likely to influence corporate behaviour. The impact of FX movements on prices is being closely watched. If economic activity and inflation align with forecasts, interest rate increases will continue. A rate hike would be appropriate if the economic outlook evolves as expected. General views on the economy were exchanged with Takaichi last month. The BoJ will carefully assess how Middle East developments affect domestic and global economic conditions. Persistently high oil prices could lift underlying inflation by pushing up medium- and long-term household and corporate inflation expectations. The BoJ will closely monitor the economic implications of the Middle East conflict. Developments in the Middle East could significantly affect both the global and Japanese economy through energy prices and market channels. Higher energy prices may also influence inflation expectations. Elevated oil prices worsen Japan’s terms of trade, weighing on the economy and underlying inflation dynamics. Oil prices have been rising sharply.
  • SNB Vice Chair said they are ready to intervene in the FX market.
  • CNB's Deputy Governor Frait said the development over the past week may lower space to reduce interest rates and cannot say today how he will vote at next meeting.
  • Bank of Korea Governor Rhee said to hold meeting to review markets, adds to closely monitor for excessive moves in FX and interest rates, will respond if needed on the forex market to prevent herd-like behaviour.
  • Goldman Sachs expects the BoE to cut by 25bps in April, July and November 2026 (prev. forecast March, June and September 2026).

Geopolitics: Middle East

  • US officials are sceptical of either Iran's or the US' willingness to off-ramp in the short term, relating to Iran's Intelligence Ministry reportedly reaching out to the CIA indirectly a day after the conflict started with an offer to discuss terms, NYT reports.
  • A number of Iranian media reported that an explosion was heard in Karaj, Iran International reported.
  • Former Iranian Supreme Leader's top aide said Iran has no intention of conducting negotiations with the US, Al Jazeera citing Iranian TV.
  • Iran launched over 40 missiles at Israeli and US targets a few hours ago, according to Iranian press.
  • Iran has hit more than 10 tankers that ignored warnings and warns ships against transiting the Strait of Hormuz, according to FARS.
  • Heavy explosions heard in east Tehran, Iran, local media reported.
  • Plume of smoke rising from the US Consulate in Dubai, Iran's IRNA reported.
  • US and Israeli forces have targeted Tehran, Urmia, Isfahan, and Karaj with heavy air strikes.
  • Israeli army advances further into Lebanese territory, Al Jazeera reported.
  • Israeli Defence Minister Katz said that any leader appointed in Iran will be an explicit target.
  • IDF identifies missiles fired by Iran towards Israel and is working to intercept them.
  • IDF said it has started a wave of attacks against missile launch sites, defence systems, and infrastructure belonging to the Iranian regime.
  • Defence executives are to meet at the White House on Friday as strikes on Iran reduce stockpiles, according to Reuters.
  • US Central Command said they destroyed 17 Iranian ships and no Iranian ships sailing in the Gulf or Strait of Hormuz or Gulf of Oman today.
  • CIA is working to arm Kurdish forces to spark uprising in Iran, according to sources cited by CNN.
  • US and Israel are seeking to foment an armed uprising inside Iran using an armed Kurdish fighting force, according to ITV News citing sources. ITV News understands since last year, weapons have been smuggled into Western Iran to arm thousands of Kurdish volunteers. They are expected to begin a ground operation within days. ITV have been told by Kurdish sources that American and Israeli forces have been asked to provide air cover when any such ground operation begins. ITV sources do not know if that request has been approved.
  • Iran's Assembly of Experts elected Ali Khamenei's son Mojtaba as the next Supreme Leader under pressure from the Revolutionary Guards, Iran International reported citing sources.
  • Two drone attacks targeted a US military base and a hotel in Iraq's Erbil early on Wednesday.
  • Suspected Iranian drone attack hits CIA station in Saudi, according to WaPo reporter.

Geopolitics: Ukraine

  • Russian President Putin will hold a call with Hungary's Foreign Minister later today to discuss Ukraine, according to Russia's Kremlin.
  • Russia's Deputy PM Novak said we are ready to increase oil supplies to China and India in case of additional demand.
  • Russian gas tanker reportedly attacked in Mediterranean Sea; Ukrainian naval drones attacked Russian gas tankers from Libya's coast, according to the Russian Transport Ministry.

US Event Calendar

  • 7:00 am: United States Feb 27 MBA Mortgage Applications, prior 0.4%
  • 8:15 am: United States Feb ADP Employment Change, est. 50k, prior 22k
  • 9:45 am: United States Feb F S&P Global US Services PMI, est. 52.3, prior 52.3
  • 9:45 am: United States Feb F S&P Global US Composite PMI, est. 52.3, prior 52.3
  • 10:00 am: United States Feb ISM Services Index, est. 53.5, prior 53.8

DB's Jim Reid concludes the overnight wrap

Timing is everything in financial markets and what I thought would be a fascinating pack and create a lot of interest when I finished it on Friday has been overtaken by events. However, I still had a few great meetings yesterday in New York on the "Innovation, Jobs and Inflation: Lessons from 250 Years of Disruption" pack. Lots of debate around it. See it here. Once the Iran situation calms (assuming it does) this will be the main topic in markets again. So feel free to delve in as you wait for the next Iran headlines.

Indeed, we are in the headline-watching business at the moment, with competing stories shifting market sentiment an hourly basis yesterday. Moreover, the selloff has yet to find a floor, as fears of a more protracted Middle East conflict have led to mounting concern about a serious energy shock. So overnight, South Korea’s KOSPI (-11.13%) is currently on track for its biggest one-day fall since 2001, and futures on the S&P 500 (-0.55%) are pointing to further declines as well. That all follows a highly volatile 24 hours in markets, with the VIX index up to a 3-month high of 23.57pts, whilst Europe’s STOXX 600 (-3.08%) saw its largest daily slump since the Liberation Day tariff turmoil last April. Elsewhere, an aggressive slump in bonds saw 10yr gilts post their worst 2-day move in two years, and the EM FX carry index (-1.64%) had its worst day since Russia’s February 2022 invasion of Ukraine.

Of course, oil prices have been the main focus given the direct impact, and yesterday saw Brent crude up another +4.71% to $81.40/bbl. So that now makes it the biggest 2-day jump for oil prices (+12.31%) since the pandemic recovery in 2020, and this morning they’re up another +1.51% to $82.63/bbl. However, prices did come off their intraday peak above $85/bbl in European hours, stabilising after Trump said that the US “will begin escorting tankers through the Strait of Hormuz, as soon as possible” if necessary and that it would provide political risk insurance for ships travelling through the Gulf to “ensure the FREE FLOW of ENERGY to the WORLD”.  That said, with little detail on the plan, the reversal in oil proved short-lived, with Brent falling back to $78.40/bbl before rising again, moving back above $82/bbl this morning. That came as Iran’s IRGC said in a statement that vessels sailing through the Strait of Hormuz “could be at risk from missiles or rogue drones”.

From a market perspective, the main issue is that there’s no sign of either side de-escalating, and if anything it looks as though things are still ratcheting up. For instance, the WSJ reported that Trump was open to supporting armed militias in Iran, although it said he hadn’t made a final decision. Meanwhile on the energy side, the supply issues continued to deteriorate, as Bloomberg reported that Iraq had started to shut down oil production that could halt 3mn barrels per day if the crisis persisted. And in addition to the renewed IRGC warning over the Strait of Hormuz, airstrikes have continued, with Israel carrying out a “broad wave of strikes” against Iran overnight, while we’ve seen reports of blasts in Doha and Dubai and missiles intercepted by Saudi Arabia.

This backdrop has meant energy prices have kept climbing across the board. In addition to the rise in oil, European natural gas futures soared yesterday, up another +21.98% to €54.29/MWh, building on their +39% gain on Monday. Interestingly though, if you look at the long-term history of oil prices, WTI is still a little below its 2024 average, and there’s still a long way to go before it compares to some of history’s bigger crises. So much as things are deteriorating, we’re still some distance from recessionary territory and a full-scale market correction. I looked at that in my chart of the day yesterday (link here), and Henry also put out a note (link here)  looking at the criteria that have traditionally led to meaningful selloffs when an oil shock happens, none of which have occurred yet. Indeed, for all the volatility, the S&P 500 is within 2.5% of its peak, and the STOXX 600 within 5%. So despite everything that’s happened, we haven’t got to correction territory yet, let alone a bear market.

For now at least, the most obvious impact has been in the rates space, where the conflict has led to growing concern about inflation and whether central banks will be forced back into rate hikes. So in Europe, investors have priced in a growing probability of an ECB hike this year, with the chance up to 34% by last night’s close. Similarly in the US, the amount of rate cuts priced by December came down another -5.4bps on the day to 46bps. So all that pushed sovereign bond yields higher on both sides of the Atlantic, with yields on 10yr bunds (+4.0bps), OATs (+8.5bps), BTPs (+10.1bps) all spiking, whilst 10yr Treasuries (+2.5bps) saw a smaller move up to 4.06%. That’s continued overnight too, with the 10yr Treasury yield up another +0.2bps.

Meanwhile for equities, the selloff accelerated yesterday, with the US and Europe seeing even deeper losses relative to Monday. So in the US, the S&P 500 (-0.94%) gave way after holding up on Monday, though it did partially recover from an intraday low of -2.49% shortly before Europe went home. Even so, all eleven major sector groups ended the day lower, including energy. Paradoxically, software & services stocks (+1.58%) were one of the few outperformers. Then in Europe, the STOXX 600 (-3.08%) posted its biggest daily decline since the Liberation Day turmoil last year, with even deeper losses for the DAX (-3.44%) and the CAC 40 (-3.46%). And unlike on Monday, even the energy and defence names weren’t immune, with the STOXX Aerospace & Defense index (-2.74%) posting its biggest decline so far this year.

One of the big themes in yesterday’s market turmoil were sharp reversals for several recent winning trades. For instance, 10yr gilts, which had rallied by -33bps in just over three weeks, have sold off by +24bps over the past two sessions (+9.7bps yesterday). Meanwhile, gold (-4.38%) and silver (-8.23%) plunged despite the risk-off mood. Indeed, the dollar (+0.68%) was one of very few assets other than oil that were in the green yesterday.

Likewise, another 2026 winner to see a sharp reversal has been the Kospi, which is down -11.13% this morning, which would be the index’s worst daily slump since markets returned after the 9/11 attacks in 2001. Indeed, trading was paused earlier after a circuit breaker was triggered, and only yesterday the index saw a -7.24% decline as well. It was only last Thursday that I’d noted in my CoTD (see here) how the Kospi had moved from cheap to expensive after a near +50% YTD gain. Remarkable how quickly things can turn in markets.

Those declines have been echoed across Asia, albeit not quite to the same extent. That said, the Nikkei (-3.76%) is currently on course for its biggest daily decline since the Liberation Day turmoil last April, right before Trump announced the 90-day tariff extension that sparked the market rebound. And other indices are also falling significantly, with declines for the Hang Seng (-2.90%), the CSI 300 (-1.16%) and the Shanghai Comp (-1.09%). The moves also come after the PMIs in China were a little weaker than expected, with the manufacturing PMI down to 49.0 (vs. 49.2 expected), whilst the non-manufacturing PMI only rose to 49.5 (vs. 49.7 expected).

Clearly the Middle East was totally dominating attention yesterday, but there were a few other stories to look out for. Notably in the Euro Area, the flash CPI print for February surprised on the upside, which exacerbated investors’ energy-driven inflation fears. So headline CPI was up to +1.9% (vs. +1.7% expected), whilst core CPI rose to +2.4% (vs. +2.2% expected), raising expectations that the ECB might still need to hike this year.

Separately in the UK, the government also announced their Spring Statement, including the OBR’s latest economic forecasts. According to those, it showed that the headroom against the fiscal rules now stood at £23.6bn, slightly higher than the November budget. However, the forecasts were made before the latest surge in energy prices, so clearly that will change the picture. See our UK economist’s recap here

Looking at the day ahead, data releases include the final services and composite PMIs for February from the US and Europe. In the US there’s also the ISM services index and the ADP’s report of private payrolls for February, whilst in the Euro Area we’ll get the unemployment rate for January. From central banks, we’ll hear from ECB Vice President de Guindos, the ECB’s Muller, Cipollone and Villeroy, along with Bank of Canada Governor Macklem. Otherwise, the Fed will release their Beige Book.

Tyler Durden Wed, 03/04/2026 - 08:45

ADP Private Payrolls Jump To 63K, Stronger Than Expected And Highest Since November

ADP Private Payrolls Jump To 63K, Stronger Than Expected And Highest Since November

Amid the ongoing double whammy of geopolitical and private credit shocks, with a little AI disruption thrown in every other days courtesy of Anthropic's human-displacing agents and smashing capex-lite sectors like a chatbot avalanche, the last thing the market needed is a negative job print signaling a recession has effectively arrived. It didn't get that, at least not yet, because while the February jobs report is still to come on Friday, moments ago ADP reported that private payrolls rose in February by 63K, up sharply from the 11K in January (downward revised from 22K) and above the 50K median forecast.

The solid report comes just two before the the DOL is set to report February payrolls which are expected to grow by 58K, a drop from last month's 130K.

A detailed breakdown of the job changes shows broad based job gains, with modest declines in mnaufacturing, trade/transportation and a bigger drop in professional/business services.

Pay growth for job-stayers was unchanged in February at 4.5% year-over-year. For job-changers, annualized pay growth slowed to 6.3% from 6.6% the previous month.

Commenting on the report, ADP chief economist Nela Richardson said that “we've seen an increase in hiring and pay gains remain solid, especially for job-stayers. But with hiring concentrated in only a few sectors, our data shows no widespread pay benefit from changing jobs. In fact, the pay premium for switching employers hit a record low in February.” 

The question now is whether ADP - which is notoriously uncorrelated with the BLS jobs report - is a leading indicator for a labor market recovery or if, as has been the case in recent years, we are about to see a very disappointing labor print in two days, restarting fears that the US economy is sliding into recession. 

Tyler Durden Wed, 03/04/2026 - 08:43

"Unknown Projectile" Strikes Container Ship In Strait Of Hormuz As Maritime Crisis Explodes

"Unknown Projectile" Strikes Container Ship In Strait Of Hormuz As Maritime Crisis Explodes

This morning has been very active on the maritime security front. The latest incident involves a container ship that was struck by a projectile while transiting the Strait of Hormuz.

United Kingdom Maritime Trade Operations reports that a container ship about two nautical miles off Oman, transiting eastbound through the critical and narrow waterway, was "hit by an unknown projectile just above the waterline, causing a fire in the engine room."

"The crew have now abandoned the vessel and all crew are accounted for with no reported injuries," the maritime security center wrote in an update on X.

UKMTO's alert did not identify the container ship by name, but there are currently three transiting the paralyzed waterway. We suspect that the vessel hit was "Safeen Prestige," though there is no official confirmation.

Latest maritime incidents we are tracking:  

UBS analyst Cristian Nedelcu provided clients with a clearer picture of the logistical nightmare unfolding due to disruptions in the Strait of Hormuz:

Rising uncertainty, however a potential prolonged disruption could push rates up

We note that since the end of November, the EU logistics and shipping sector share prices were up on average ~18%, outperforming Stoxx 600 by ~5%. We believe this mainly reflects expectations for an improvement in the European and US economies in 2H 2026. In the context of the escalation in the Middle East, a potential prolonged and significant increase in oil prices could represent a headwind to demand raising question marks around global freight volume growth going forward.

Nevertheless, we believe a potential prolonged disruption could also bring upwards pressure on ocean and air freight rates on some routes. We believe a scenario of continuous disruption in the Strait of Hormuz and Middle Eastern air space would bring upwards pressure to ocean and air freight rates touching Middle East and Asia-Europe, with potential for temporary incremental profits for ocean carriers, dedicated freighters operators (DHL Express), and increased complexity that could lead to some benefits for freight forwarders operating on these routes.

A potential prolonged disruption could lead to upwards pressure on ocean rates

According to CTS c.3.5% of global container capacity is using the Strait of Hormuz. In particular, the large transshipment hub Jebel Ali could be affected. In a scenario of prolonged closure of the Strait of Hormuz or capacity restrictions it is likely that cargo would be moved via alternative transhipment hubs leading to potential congestion in other major transhipment hubs. The few services passing through the Red Sea have been directed back to Cape of Good Hope leading to further small declines in effective container capacity to reflect longer voyages. Altogether we expect this could lead to upwards pressure on ocean rates, mainly on: i) routes touching Middle East/Indian subcontinent (c.13.8% of global container according to Linerlytica); ii) on Asia-Europe (c.24.5% of global container movements). According to Linerlytica, Maersk and Hapag Lloyd deploy circa 15% of total container capacity to routes touching Middle East/Indian subcontinent and ~25% of capacity on Asia - Europe routes. Zim deploys circa 3% of capacity on routes touching the Middle East and 15% on Asia - Europe.

Prolonged potential constraints at Middle Eastern airports could push rates up

Air space closure during this weekend for Middle Eastern airports also brings disruption for air freight touching the Middle East or air freight transiting from Asia to Europe. According to IATA, Middle Eastern carriers operate circa 13% of global air freight capacity while Asia - Middle East represents 7.4% of cargo tonne km transported globally and Middle East - Europe 5.7% (in 2024). In a scenario of prolonged disruption, we expect to see upwards pressure on air freight rates for routes touching Middle East and Asia-Europe. In a scenario of capacity constraints for passenger/cargo flights at Middle Eastern airports, we expect constraints related to freedom of the skies agreements and longer distance journeys to lead to a reduction in effective capacity.

In particular, we believe owners of dedicated freighter capacity (DHL Express) are likely to benefit as cargo flows are redirected. Air cargo will also become an alternative for some of the ocean cargo impacted by the disruptions. Increased complexity of moving cargo may bring benefits for large freight forwarders that have access to capacity. Looking at direct exposure to Middle East we note - DSV recognised 7% of 2025 Group EBIT from MEA region and 36%/42% of air /ocean volumes on Asia-Europe; DHL recognised 5.3% of FY24 revenues in Middle East/Africa.

The latest and most critical maritime incidents and developments over the last 24 hours:

Expect more maritime attacks. Also, supply chain snarls could materialize.

Tyler Durden Wed, 03/04/2026 - 08:30

Germany's Corporate Tax Collapse Signals Economic Crisis

Germany's Corporate Tax Collapse Signals Economic Crisis

By Thomas Kolbe

The ten-minute applause of delegates at the CDU party congress still echoed when the Federal Ministry of Finance spoiled the festive mood in Stuttgart. Finance Minister Lars Klingbeil’s (SPD) department reported a nationwide collapse of corporate tax revenue by 79 percent in January 2026 compared to last year.

At the same time, revenue from assessed income tax fell by 14.2 percent, while wage tax revenue rose by 9.1 percent.

VAT revenue grew by two percent — a reflection of persistent inflationary tendencies in the country, to which the state itself contributes significantly through its taxation policies. While price increases may be slowed by continued economic weakness, cumulative inflation continues to weigh on consumers even if the annual rate declines. Inflation is always good for the state, which is why it persists.

Corporate tax burdens corporate profits at 15 percent plus a solidarity surcharge. Last year, revenue totaled roughly €40 billion, less than one percent of GDP. Even in 2025, revenue had fallen six percent, showing a long-term negative trend.

Its temporary collapse in January will likely have no immediate fiscal consequences. Corporate tax revenue is split — 50 percent to the federal government, 42 percent to the states, and eight percent to municipalities, which appear at least partially shielded at this tax level.

However, municipalities already suffered a fiscal blow last year, especially in the centers of the industrial crisis. Cities such as Wolfsburg and Stuttgart saw sharp declines in their key tax base, the trade tax.

It is undeniable: the situation is becoming serious, and the damage from political mismanagement is now visible. For the first time, fiscal effects appear in a country where policy had long relied on ever-growing tax revenues, postponing social issues with generous spending.

January’s alarming figures allow a troubling diagnosis: the companies that generate corporate tax revenue are largely from manufacturing — the classic industrial sectors of Germany’s automotive and chemical industries. Here, in what was once the pulsing heart of the German economy — source of much of the nation’s value creation — there must have been a first economic infarction last year.

The tax revenue decline cannot be explained otherwise. Last year was suspiciously quiet amid 24,000 corporate insolvencies, hundreds of thousands of lost industrial jobs, and ongoing capital flight from Germany’s regulatory and energy nightmare toward better locations.

The government’s response to this self-inflicted problem is to expand state activity, spinning the intervention spiral faster with ever-new debt to stabilize an industry that largely no longer exists.

Friedrich Merz acted knowingly last year when he secured a special fund with credit for coming years to temporarily stabilize the collapsing economic model. The hour was understood.

Yet now, despite billions flowing into the defense sector and green transformation projects, tax revenue still collapses — highlighting the dramatic state of the private sector. An economy that is largely unviable without perpetual subsidies has now become a problem for politics itself.

No matter how high the federal government’s economic straw fire burns, the Ministry of Finance’s numbers speak clearly. Germany’s economy, after years of restructuring under green transformation and the energy crisis, has suffered such heavy damage that it is now visible at the state level — confirming what practical experience has warned for years. The shift toward a green socialism has gone too far, productive forces are overextended, bureaucracy and the ever-expanding welfare state overstretched.

Germany faces difficult years ahead. It must negotiate how to proceed amid ever-scarcer public funds. The state quota now exceeds 50 percent and continues to rise under federal policy. The bureaucracy and welfare system expand five to six percent annually, demanding ever-greater contributions from society, further weakening productive forces — the poverty spiral accelerates.

A recalibration of the welfare state to match economic realities will soon be unavoidable. Until then, the illusion of prosperity is kept alive by credit.

What is to be expected now? The state will increasingly draw on citizens’ resources to close the growing budget gaps. The corporate tax collapse was likely no anomaly, and it will become ever more expensive to use sectors like defense to mask the collapse of German industry and protect the labor market.

Debates over raising inheritance tax, reintroducing wealth tax, and potential special levies on the rich last year were preparatory. Now, it is serious.

The dead-end German politics has led this country down is brittle. Beneath it yawns an abyss, now revealed in its full depth in Ministry of Finance numbers.

* * * 

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

Tyler Durden Wed, 03/04/2026 - 02:00

Asian Refiners Mull Slashing Crude Processing As Iran War Threatens Supply

Asian Refiners Mull Slashing Crude Processing As Iran War Threatens Supply

By Michael Kern of OilPrice.com

Asian refiners, particularly state-held majors heavily dependent on Middle East oil supply, are considering slashing crude run rates by up to 30% amid the war in Iran that is holding up millions of barrels of Middle Eastern crude stuck near the Strait of Hormuz.  

The de facto halted shipments via the Strait of Hormuz threaten to delay key cargo deliveries that Asian refiners have contracted in recent weeks.

Just before the U.S.-Israel strikes on Iran this weekend, Asia, particularly China, planned for a major uptick in purchases of crude from the Middle East after Saudi Arabia, the world’s top crude exporter, slashed its official selling prices (OSPs) for Asia to the lowest level versus regional benchmarks in more than five years. Saudi Arabia set the price of its flagship Arab Light grade at parity versus the Oman/Dubai average, which is the lowest pricing versus the benchmark since December 2020, making its oil attractive for buyers in China and the wider Asian region.

However, the Strait of Hormuz is now effectively closed with companies and shippers diverting vessels or idling in waters near the vital oil and gas shipping lane. The logjam would delay, at best, the supply many refiners had planned to receive this month. 

As dozens of oil tankers are still stuck in the Persian Gulf without a way out of the Strait of Hormuz, for now, some of the big refiners in China and Japan are considering slashing crude processing rates by 20-30%, sources familiar with internal discussions at these refiners told Bloomberg on Tuesday. 

The immediate impact of the tanker traffic halt in the Middle East is high for crude oil supply, according to estimates by Kpler.  

Asian energy security would be affected as India and China are the dominant Asian buyers of Strait-transiting crude, the energy intelligence firm noted.

Refiners typically have at least two weeks of supply to cushion a short-lived disruption, but if the conflict and disarray near the Strait of Hormuz extend for more than three weeks, some Asian refiners could be indeed forced to slash processing rates, especially if they struggle to procure alternative supply quickly.  

Tyler Durden Tue, 03/03/2026 - 21:45

Senators Ask Treasury To Unilaterally Index Capital Gains, Bypassing Congress

Senators Ask Treasury To Unilaterally Index Capital Gains, Bypassing Congress

Senators Ted Cruz and Tim Scott are asking Treasury Secretary Scott Bessent to unilaterally implement a major capital gains tax cut -- by letting taxpayers adjust their cost basis to account for the effects of inflation. In a letter they intended to send on Tuesday, the pair will argue that it's within Bessent's authority to make such a move, without the need for legislation,

“Using your executive authority to … eliminate an unfair inflation tax on everyday Americans is the single most pro-growth economic action the administration can take unilaterally, and it would boost savings, spur investment, and create jobs nationwide,” Cruz and Scott wrote in the letter reviewed by the Washington Post.

To appreciate the injustice of the status quo, consider an investor who paid $10,000 for a stock in January 2010, and sold it for $15,000 in January 2026. On a CPI inflation-adjusted basis, the investment has only grown by $10.22 in real terms. However, the investor is forced to pay tax on a supposed gain of $5,000. By some estimates, a third of all unrealized capital gains represent the effects of inflation. 

"American families and job creators should not have to pay taxes on phantom income," said a group of more than 30 conservative organizations and individuals in a letter to President Trump last month. "Our tax brackets are indexed to inflation for a reason—we don't think a worker who gets a raise that barely keeps pace with inflation should face a tax increase. The same principle should apply to savings. 

In their letter to Bessent, the two senators also argue that capital gains tax relief can also help ease the woes of America's pricy housing market, pointing to people who have large unrealized gains on their homes, making them reluctant to sell. Note that owner-occupied properties can currently use an exclusion of up to $250,000 in gains for singles, and $500,000 for married couples filing jointly. 

Not everyone agrees about the legality of such a move by the Treasury Department. Last month, Americans for Tax Reform said, "The Treasury Department has the authority to redefine the calculation of capital gains taxes by excluding inflation from tax owed, based on several legal analyses going back several decades." Skeptics point to a 1992 conclusion of the Justice Department’s Office of Legal Counsel that said such a move would exceed the department's authority. 

As they are prone to do with most tax-cut proposals, leftists whine that most of the benefit of a capital gains indexing would accrue to the wealthiest taxpayers -- but that's because they're hardest hit by the current structure. For 2026, unmarried taxpayers with taxable income under $49,450, and married taxpayers with income under $98,900, have a 0% capital gains rate. The rate rises to 15% for those with taxable income under $545,500 for unmarrieds and $614,700 for married couples. Beyond that, the rate is 20%. Those with substantial net investment income are hit with another 3.8%.

Tyler Durden Tue, 03/03/2026 - 21:20

Nancy Mace And Ilhan Omar Go Full Jerry Springer Over Iran

Nancy Mace And Ilhan Omar Go Full Jerry Springer Over Iran

Authored by Steve Watson via Modernity.news,

Rep. Nancy Mace obliterated Ilhan Omar on X after the Somali-born Democrat raged about U.S. strikes on Iran during Ramadan, escalating calls to expose Omar’s alleged immigration fraud and boot her back to Somalia.

The feud erupted over the weekend when Mace trolled Omar and fellow Squad member Rashida Tlaib, sending them “thoughts and prayers” over the confirmed death of Iran’s Ayatollah in the U.S. strikes.

Omar fired back, accusing Mace of being drunk: “I hope you aren’t drunk and took your staff’s advice, Rashida and I don’t know this man and feel confident he didn’t care about us. Please restrain from drinking too much as you have been warned from your staff and stay off social media when you are drunk. I pray in his holy month you find peace and respect for your self.”

Mace then hit Omar with a direct reference to long-standing allegations of marrying her brother for immigration fraud.

Mace doubled down Sunday on NewsMax with Ed Henry, dismissing Omar’s complaints about the timing of the strikes. “I don’t give a damn if it’s Ramadan. I don’t care if Muslims are fasting right now,” Mace said, adding “This was the right time with the right Intel, the right President, to go in there and do this.”

She then called for action: “I’m ready to denaturalize and deport her to Somalia.”

This isn’t the first time Mace has targeted Omar over immigration fraud claims. Just last week, Mace pushed the House Oversight Committee to subpoena records related to Omar, her former spouses, and family, aiming to prove allegations of marriage fraud to evade U.S. immigration laws. Federal marriage fraud carries penalties including prison, fines, denaturalization, and deportation.

The two have sparred since last year when Mace attempted to censure Omar over vile comments she made following the assassination of Charlie Kirk.

The push follows a Justice Department probe into Omar’s finances and foreign ties that stalled under Biden but has been revived by Trump, who accused Omar of amassing up to $30 million in family wealth after arriving from Somalia with little.

Adding fuel, an investigation revealed Omar’s husband’s winery as a fake shell for alleged money laundering, with no license or operations despite revenue jumping to $5 million.

As Rashida Tlaib was caught chanting “KKK” during Republican “USA!” chants at Trump’s State of the Union, Omar also heckled Trump during the address, refusing to apologise and then bizarrely invoking racial slurs.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden Tue, 03/03/2026 - 20:55

Feds Told New Mexico To Back Off Epstein; Then They Did Nothing...

Feds Told New Mexico To Back Off Epstein; Then They Did Nothing...

Authored by José Niño via Headline USA,

In September 2019, federal prosecutors asked New Mexico to shut down its active investigation into Jeffrey Epstein’s desert compound.

The state complied. The feds never held up their end of the deal.

According to a report by The Albuquerque Journal, former New Mexico Attorney General Hector Balderas revealed recently that prosecutors from the Southern District of New York pressured his office to cease its probe into sex trafficking at Epstein’s Zorro Ranch, a 7,500 acre estate south of Santa Fe that Epstein purchased from former Governor Bruce King’s family in 1993. 

The stated reason was that parallel investigations could produce conflicting witness statements that defense lawyers might exploit.

In exchange, the feds promised to share their own findings. That promise was never fulfilled.

On September 8, 2019, assistant U.S. Attorney Maurene Comey, the daughter of former FBI Director James Comey, confirmed in an email that Balderas’s office had agreed to halt its work and turn over all materials, per a report by Time.

Epstein had died in federal custody less than a month earlier. By September 17, New Mexico’s Chief Deputy Attorney General Clara Moran had sent police reports, recorded witness testimony, and documents about Epstein’s use of state lands to the SDNY.

By July 2020, having received nothing in return, Balderas sent a letter urging federal prosecutors to seize the ranch through civil forfeiture.

“We believe that this ranch was utilized by Epstein and others to facilitate and conceal the ongoing trafficking of children,” the letter stated. The New York Times reported that he received no response. An internal federal email from December 2019 later confirmed that agents had “not searched the New Mexico property,” as the Times reported. 

When the DOJ released over three million pages of Epstein files on January 30, 2026, none of New Mexico’s investigative records appeared among them, according to NPR. 

The fallout has been swift. Reuters reported that Attorney General Raúl Torrez reopened the criminal investigation into Zorro Ranch on February 18.

The state House unanimously created a bipartisan truth commission with subpoena power and a budget exceeding $2 million, per a report by the Albuquerque Journal.

U.S. Rep. Melanie Stansbury, who has reviewed unredacted federal files, confirmed that multiple prominent New Mexicans are named in the investigation.

Separately, Reuters New Mexico is now probing allegations from a redacted email claiming two foreign girls who died at the ranch were buried nearby at Epstein’s direction.

Comey, the prosecutor who brokered the original deal, was fired by the Trump DOJ in July 2025 without explanation.

The ranch itself was sold in 2023 to a Texas developer planning to convert it into a Christian retreat.

“The inquiry should have been expanded, not restricted,” Balderas said.

Tyler Durden Tue, 03/03/2026 - 20:05

Los Angeles Superintendent Praised By Gavin Newsom Placed On Leave Following FBI Raid

Los Angeles Superintendent Praised By Gavin Newsom Placed On Leave Following FBI Raid

Los Angeles schools were thrown into chaos after the FBI raided the home and office of embattled Superintendent Alberto Carvalho in connection with a widening investigation into a $6 million deal between the nation's second-largest school system and an AI startup. Days later, the district’s board put him on paid administrative leave (he makes $440,000 a year). 

The F.B.I. raided the home of Alberto M. Carvalho, superintendent of the Los Angeles Unified School District, and the district offices on Wednesday. Credit...Philip Cheung for The New York Times

According to federal officials, the agency executed a series of search warrants which included Carvalho's home - during which they seized Carvalho’s work phone and other devices during Wednesday’s raid, according to district insiders. By Friday, the Board of Education voted unanimously to sideline him. Veteran administrator Andres Chait, the district’s chief of school operations, will step in as interim superintendent.

At the center of the FBI probe is a collapsed ed-tech startup called AllHere, which was given a $6 million LAUSD contract to build an artificial intelligence chatbot named “Ed,” pitched as a revolutionary tool to “democratize education.” Carvalho personally championed the project after arriving in Los Angeles in 2022, touting it at tech conferences as a game-changing way for students and parents to stay connected.

And of course, the bot was bullshit, and AllHere's founder - Joanna Smith-Griffin, now faces federal fraud charges for allegedly inflating revenues and exaggerating the company’s client base. The criminal case remains unresolved as both sides discuss a possible deal, court records show.

Sources familiar with the investigation say the federal probe appears to have expanded beyond AllHere’s collapse to examine Carvalho’s dealings with Debra Kerr, a consultant who helped connect the startup with school districts. Kerr, a longtime associate of Carvalho dating back to his tenure running Miami-Dade County Public Schools, also had her Florida home searched this week.

District officials insist LAUSD itself does not appear to be a target and say earlier internal reviews found no criminal wrongdoing by Carvalho. But as part of its cooperation with federal authorities, the district has now ordered an additional outside review of contracting decisions made under his leadership.

Carvalho’s paid leave is expected to last at least a month.

From Undocumented Migrant to Immigration Crusader

Carvalho spent 13 years leading Miami-Dade schools, and has been an outspoken advocate for immigrant students, frequently recounting his own story as an undocumented immigrant from Portugal who later became a U.S. citizen.

He's also had his own rough patches. In 2008, leaked emails suggested an inappropriate relationship with a reporter covering Miami schools - which he denied, though he acknowledged the emails themselves were inappropriate. 

In 2018, he famously accepted the top job running New York City’s massive school system - only to dramatically reverse course on live television and remain in Florida.

And of course, California governor Gavin Newsom loves him...

And in Los Angeles, he has faced criticism from multiple fronts. Within a year of his arrival, he dismantled programs championed by his predecessor, Austin Beutner. Last year, Beutner and several students sued the district, alleging more than $76 million in art and music education funds had been misused.

Tyler Durden Tue, 03/03/2026 - 19:40

Hormuz Freeze Sends Brent-Dubai Spread to Multi-Year High

Hormuz Freeze Sends Brent-Dubai Spread to Multi-Year High

By Julianne Geiger of OilPrice,

Brent’s premium to the Middle East’s Dubai benchmark has blown out to its widest level since 2022, confirmation that the global oil market is squarely trading on disruption.

As of Tuesday morning, Brent was trading around $83–$84 per barrel, up more than 7% on the day, while Dubai crude sat near $68, barely moving. The spread between Brent futures and Dubai swaps — known as the Exchange of Futures for Swaps (EFS) — surged above $6 per barrel, compared to less than $2 just last week before the Iran conflict erupted. It is the widest gap in years, according to a Bloomberg analysis.

Brent is the global pricing reference used for much of the world’s seaborne oil trade, while Dubai serves as the key marker for Middle Eastern crude flowing into Asia. When Brent trades at a large premium to Dubai, it signals tightness and risk in Atlantic Basin barrels relative to Gulf-linked supply.

The futures market, where traders buy and sell contracts for oil delivered at a future date, is reacting to risk in real time, pricing in potential shortages, often before physical flows are visibly curtailed.

The catalyst is easily identifiable. Tanker traffic through the Strait of Hormuz has effectively frozen amid Iran’s threats and ongoing military action. Even if the Strait is not formally “closed,” no shipper wants to test how many teeth Iran has to make good on their threats. With crude from the Gulf stranded and freight rates spiking as available tankers thin out, trading in Middle East benchmarks has become patchy and uncertain.

Brent, meanwhile, is absorbing the geopolitical premium.

This widening gap matters. If the Strait remains inactive for weeks rather than days, upstream shut-ins in the region become increasingly likely. Analysts warn that beyond roughly three weeks of disruption, producers may have no choice but to curb output.

The market is debating how long the supply risk will last, and whether $100 oil is a floor rather than a ceiling if Hormuz does not normalize.

Tyler Durden Tue, 03/03/2026 - 19:15

New Jersey Faces Structural Deficit Crisis And Democrats Blame Trump

New Jersey Faces Structural Deficit Crisis And Democrats Blame Trump

When all else fails, blame Trump.  It might be the only political strategy the Democrats have left but it doesn't work for everything.  

New Jersey Governor Mikie Sherrill, who took office this year, warns that the state faces a serious structural deficit (spending exceeding revenues annually) of roughly $3 billion, despite a projected surplus of $7.2 billion by the end of 2026. The notice comes as she prepares to unveil her first state budget on March 10th.  

Shockingly, Sherrill admits that Covid relief funds are drying up and that the stimulus helped to paper over the many budgetary problems within NJ (this is something alternative economists have been asserting for years).  However, she immediately launched into an attack on the Trump Administration, blaming federal cuts for the state's incoming fiscal crisis.

New Jersey's extreme deficit earns them a membership in an exclusive club of states, all of them run by Democrat governors.  California, New York, Illinois, Pennsylvania and Maryland all have deficits of $3 billion or more (California and New York are running deficits above $30 billion).  It would seem there is a discernible pattern here, and it has nothing to do with Trump.

New Jersey's total state government debt was roughly $213 billion as of late 2025, ranking among the highest in the nation.

Furthermore, in August 2023 the New Jersey Policy Perspective (NJPP) think tank issued an analysis citing "red flags" in the FY 2024 budget, including a structural deficit estimated at $1.5 billion for that year. They warned of a looming crisis with revenues projected to fall short by $3-4 billion annually in coming years if trends continued, citing declining year-over-year revenues in many states (including NJ) and unsustainable spending growth.

Phil Murphy, a Democrat, was governor of NJ in 2023.  Republicans accused him in 2025 of trying to hide the budget crisis and they threatened to report him to the SEC.  Sen. Declan O'Scanlon (R-Monmouth) reviewed financial disclosures from the New Jersey Department of the Treasury. What he found was a series of "grossly misleading" data shared with Wall Street credit rating agencies and the public.  

In other words, Democrats knew well before Trump returned to office that they were facing a fiscal shortfall and they relied on covid funds and rigged numbers to kick the can down the road.  Sherrill is carrying out a pre-planned agenda to dump these Biden era economic dysfunctions at Donald Trump's feet. 

“Washington isn’t coming to save us. Trump is only making things worse,” said Sherrill. “We have to stand up on our own two feet and make some tough choices. But that’s fine. I’ve been doing hard things for most of my life – and that’s what I was elected to do..."

Sherrill pledged not to raise taxes, instead directing departments to identify savings. She warned that failure to act could trigger credit downgrades, school funding cuts and other painful consequences under the state’s balanced budget requirement.  However, blue states inevitably revert to higher taxes on the middle class (as we are seeing under Mamdani in NYC), because Democrats rely on government handouts and subsidized programs as a way to buy votes. 

It is likely that New Jersey residents and businesses will be slapped with high taxes within the next year.   

Tyler Durden Tue, 03/03/2026 - 18:50

US Arranging Charter, Military Flights For Americans In The Middle East

US Arranging Charter, Military Flights For Americans In The Middle East

Authored by Savannah Hulsey Pointer via The Epoch Times,

The U.S. State Department is looking to help Americans in the Middle East find a way home.

The State Department said on March 3 it is working to charter aircraft to fly Americans home following the start of the U.S.–Israel military strikes on Iran.

“The State Department is actively securing military aircraft and charter flights for American citizens who wish to leave the Middle East,” said Dylan Johnson, assistant secretary of state for global public affairs.

The Middle East war has caused major disruption in commercial air travel in the region.

White House press secretary Karoline Leavitt said the State Department “is actively working on plans to help Americans in the Middle East return home.”

She said U.S. citizens in the region should register at step.state.gov.

Secretary of State Marco Rubio said in a March 3 presser that to date, 9,000 Americans have been able to leave the Middle East since the start of the war with Iran.

According to the diplomat, more U.S. citizens are still attempting to leave the area, and in addition to military and charter flights, the government is working to secure expanded commercial flight options to facilitate the repatriation.

“Here’s the message I want to deliver [to] Americans who are in the Middle East and in need of assistance,” Rubio said. “We need to know where you are. We need to have contact information for Americans that need assistance. They have to register with us, because as these options begin to open up, and as they open up, we have to be able to call you.”

Johnson said the department has been in touch with almost 3,000 Americans seeking information on how to leave the area.

Nearly 500 of those inquiries came from Americans in Israel alone. Thus far, the Department of State has helped about 130 of those citizens leave the country, and 100 more are expected to leave on March 3.

Additional resources and departure options for Americans abroad can be found by calling 1-202-501-4444.

While many nations are moving citizens away from the Middle East, Israel is preparing ways to bring its citizens home who are stranded abroad.

The country will reopen Ben-Gurion Airport for limited incoming flights early on March 5, according to Israeli Transportation Minister Miri Regev.

Ben-Gurion is Israel’s primary international airport, located a few miles southeast of Tel Aviv. Israel’s airspace has been closed for days, since the U.S.–Israeli war on Iran began.

According to Regev, one passenger flight will be allowed to enter per hour, for the first 24 hours. This will bring in about 5,000 individuals looking to return to the Middle East nation. More flights could be allowed in later, depending on security issues.

There will be no commercial departures from the airport, and it is unclear whether anyone other than Israelis will be permitted on the incoming flights.

 

British Foreign Secretary Yvette Cooper announced to the House of Commons on March 3 that their government is working to increase the capacity of flights from Muscat, Oman, to bring home British citizens.

British Airways said in a statement that it is still unable to operate flights from several Middle East destinations, including Abu Dhabi, Amman, Doha, Dubai, and Tel Aviv.

Cooper said 130,000 Britons have registered their presence in the Middle East.

“We ​are also working with airlines on increasing ‌capacity ⁠out of Muscat for British nationals, with priority for vulnerable nationals,” Cooper told parliamentarians.

“A government ​charter flight ​will ⁠fly from Muscat in the coming days, ​prioritising vulnerable nationals, but ​British ⁠nationals in Oman must wait to be contacted by the ⁠foreign ​office regarding these ​options.”

Tyler Durden Tue, 03/03/2026 - 18:25

"Account Temporarily Unavailable": Facebook Outages Reported In U.S.

"Account Temporarily Unavailable": Facebook Outages Reported In U.S.

Facebook appears to be suffering widespread outages, as login attempts on the social media site produce the error: "Account Temporarily Unavailable."

The full error reads: "Account Temporarily Unavailable. Your account is currently unavailable due to a site issue. We expect this to be resolved shortly. Please try again in a few minutes."

Users on the website-tracking site Downdetector started reporting Facebook outages shortly after 1600 ET.

Outage map:

Besides Facebook, Downdetector users report TikTok, Bluesky, Instagram, and Facebook Messenger are also experiencing outages or disruptions.

*Developing...

Tyler Durden Tue, 03/03/2026 - 17:44

Behind America's New Industrial Revolution

Behind America's New Industrial Revolution

Authored by Emel Akan via The Epoch Times (emphasis ours),

The U.S. economy grew faster than many predicted over the past year, outpacing other advanced economies, especially in Europe, where growth has nearly stalled.

The manufacturing facilities of the Independent Can Company in Belcamp, Md., on June 25, 2025. Ryan Collerd/AFP via Getty Images

Analysts say President Donald Trump’s pro-growth policies, combined with a surge in investment in artificial intelligence, have further strengthened the country’s economic momentum.

The United States is “at the doorstep of a new industrial revolution,” said Stoyan Panayotov, a financial adviser and founder of Babylon Wealth Management.

He said the country’s strong capital base, skilled workforce, and shareholder-friendly environment make it more attractive to investors than other markets.

Recently, S&P 500 companies have reported earnings that beat market expectations. More than 70 percent of companies recorded positive earnings surprises in the fourth quarter of 2025, according to FactSet data.

On Feb. 6, the Dow Jones Industrial Average surpassed 50,000 for the first time—after the S&P hit 7,000 on Jan. 28.

During his State of the Union address on Feb. 24, Trump credited these milestones to his economic policies, particularly tariffs.

In a Truth Social post on Feb. 6, the president also made a bold prediction: “I am predicting 100,000 on the Dow by the end of my term. Remember, Trump was right about everything!”

Strong corporate earnings, technological innovation, and a positive economic outlook all have contributed to the U.S. stock market’s appeal.

Despite the recent market volatility, entrepreneur and investor Kevin O’Leary believes the United States remains the “most trusted” investment hub for global investors.

Traders work on the floor of the New York Stock Exchange during morning trading in New York City on Feb. 24, 2026. Strong corporate earnings, technological innovation, and a positive economic outlook have contributed to the US stock market’s appeal. Michael M. Santiago/Getty Images

“You’ve got to realize, 52 cents of every dollar created on earth is invested in the American stock market,” O’Leary told The Epoch Times on Jan. 28 during a summit about “Trump Accounts” for newborns.

“It’s the most liquid and most successful economy on earth,” the “Shark Tank” star said. “It provides consistent returns.”

On Independence Day last year, Trump signed the One Big Beautiful Bill Act into law, which included pro-business measures aimed at boosting capital spending and encouraging the onshoring of factories.

Among its provisions was the permanent restoration of 100 percent bonus depreciation for qualified assets. The policy allows businesses to immediately deduct the full cost of new factories, factory improvements, capital investments such as machinery and equipment, and software, as well as domestic research and development. Many companies are leveraging bonus depreciation to reduce tax liability and reinvest in growth.

The manufacturing footprint is expanding, and the AI boom is increasing demand for energy, data centers, and commodities. Despite concerns about an AI bubble, U.S. technology giants Alphabet, Amazon, Meta, and Microsoft plan to invest collectively about $650 billion in 2026, mainly to expand their AI infrastructure.

These trends are driving renewed investor optimism, according to Panayotov.

A technician works at an Amazon Web Services AI data center in New Carlisle, Ind., on Oct. 2, 2025. The United States has outpaced many advanced economies in growth and productivity over the past year, with some analysts describing the momentum as the start of a new industrial revolution. Noah Berger/Getty Images via Amazon Web Services Growing Productivity Gap

Recent data show U.S. businesses are also becoming more efficient, with nonfarm productivity jumping by 4.9 percent in the third quarter of last year. Productivity measures how efficiently companies produce goods and services using given input such as labor and capital.

While U.S. productivity has increased rapidly since 2019, productivity growth in the UK and eurozone has remained mostly stagnant, according to data from the Organisation for Economic Co-operation and Development. The growing productivity gap between the United States and Europe is largely explained by the tech sector.

Economists note that most innovation over the past few decades has occurred in the United States, while Europe has lagged behind, primarily because of excessive regulation.

“The EU is weak in the emerging technologies that will drive future growth,” a 2024 report by the European Commission stated. “Only four of the world’s top 50 tech companies are European.”

The outlook also appears favorable for the United States. A recent Financial Times survey found that more than three-quarters of economists expect the United States to keep or increase its productivity lead over other countries. They point to AI, strong capital markets, and lower energy costs as the main reasons.

“Productivity growth is good for everyone and keeps inflation at bay,” Nancy Tengler, CEO of Laffer Tengler Investments, said in a recent note to clients.

European leaders take part in a meeting as they attend the Informal EU Leaders’ Retreat in Alden Biesen, Belgium, on Feb. 12, 2026. While US productivity has increased rapidly since 2019, productivity growth in the UK and eurozone has remained mostly stagnant, recent data shows. Ludovic Marin/AFP via Getty Images Cutting Red Tape

Reducing regulatory barriers is central to the Trump administration’s economic agenda. The administration aims to lower business compliance costs, thus allowing companies to reinvest capital, increase productivity, and create more jobs.

According to economist Daniel Lacalle, a contributor to The Epoch Times, deregulation has been a key driver of the U.S. economy’s strong performance in recent quarters relative to other advanced economies.

In his view, deregulation alongside lower taxes has delivered an “immediate boost to production, economic growth, and private investment.”

U.S. manufacturing activity expanded in January for the first time in 12 months. Typically, developed countries experience growth in services while manufacturing remains stagnant, Lacalle told The Epoch Times.

The United States is the only major economy implementing reforms, such as deregulation, tax cuts, and tariffs, to encourage manufacturing and investment, he said.

US Vice President JD Vance (3rd L) tours Hatch Stamping in Howell, Mich., on Sept. 17, 2025. US manufacturing activity expanded in January for the first time in 12 months. Jeff Kowalsky/AFP via Getty Images

Since returning to office, Trump has rolled back regulations across sectors including finance, energy, and technology.

In December 2025, the White House Office of Management and Budget announced that federal agencies eliminated 646 regulations while introducing only five new ones in fiscal year 2025. That amounts to 129 regulations removed for every new one issued, far exceeding the 10-to-one goal set by the president. The White House estimates that these efforts have generated $212 billion in savings, or more than $600 per American.

“Deregulation is unleashing innovation in every sector,” Cathie Wood, founder and CEO of Ark Invest, said in her 2026 outlook report.

More recently, Trump announced the repeal of an Obama-era rule that imposed greenhouse gas emissions restrictions on U.S. industries. The White House described the move as “the largest deregulatory action in American history,” estimating that it will save the American people $1.3 trillion.

The change is expected to benefit the fossil fuel and automotive sectors as well as energy-intensive manufacturers and power plants.

Read the rest here...

Tyler Durden Tue, 03/03/2026 - 17:40

From Whiskey To Weed: A Second Amendment Fight

From Whiskey To Weed: A Second Amendment Fight

Authored by John R. Lott Jr. & Laura Lott via RealClearPolitics,

Are regular marijuana users the modern equivalent of “habitual drunkards” at the Founding? What about someone who regularly takes a sleep gummy? In oral arguments before the Supreme Court today in United States v. Hemani, the federal government argues that they are the same.

In August 2022, FBI agents searched Ali Danial Hemani’s home and found a Glock 9mm pistol, 2.1 ounces of marijuana, and 1.7 ounces of cocaine. Hemani told agents that he used marijuana roughly every other day.

The case could have far-ranging implications as 40 states now allow medical marijuana and 24 states, the District of Columbia, and two territories allow recreational use, and it carries major practical consequences for millions of Americans – including many gun owners. In 2022, about 18 million Americans reported using marijuana daily or near-daily, and 62 million said they had used it at least once in the past year.

As of 2020, 3.5 million people are enrolled as medical cannabis patients to help with everything from chronic pain, chemotherapy-induced nausea and vomiting to multiple sclerosis and certain forms of epilepsy. The government classifies all “regular” marijuana users the same – regardless of why they use it – and bans them from owning guns, so the decision will also affect them.

“The Supreme Court must decide whether to strip even medical marijuana users of their right to protect themselves and their families or follow the government’s claim that anyone who regularly uses marijuana poses a danger to others,” David Mustard, a distinguished professor at the University of Georgia who extensively researches crime, told RealClearPolitics.

In its 2022 decision in New York State Rifle & Pistol Association, Inc. v. Bruen, the Supreme Court instructed lower courts that when the meaning of the Second Amendment isn’t clear, they must look to historical laws that were broadly in effect either in 1791, when the Second Amendment was adopted, or possibly in 1868, when the 14th Amendment made it applicable to the states. But there weren’t any laws during those periods that broadly barred people who regularly used alcohol from owning firearms.

The federal government points to historical restrictions on “habitual drunkards” as an analogue. The government argues that in early American history lawmakers barred people from carrying guns while they were intoxicated. It also cited what it called a “highly robust body of much harsher founding-era restrictions” on groups analogous to “habitual drug users,” specifically laws targeting “habitual drunkards” based on the belief that they were more likely to commit crimes or act violently.

According to the government, early American legislatures punished habitual drunkards far more severely than those who were drunk in public on isolated occasions: Habitual offenders faced jail time or confinement in a workhouse, while someone drunk in public typically received only a small fine or a few hours in the stocks. Authorities “committed drunkards to lunatic asylums, and subjected drunkards to surety laws backed by threat of jail.”

Hemani’s lawyers responded in their brief by rejecting that comparison as “far afield.” They argue that historical limits on the gun rights of habitual drunkards did not apply to people who merely consumed alcohol regularly, but instead “only those who habitually abused alcohol to the point of frequent intoxication.” These were people who engage in public disruption, disorderly conduct, or dangerous behavior (e.g., criminal negligence). Indeed, Hemani’s lawyers contend that labeling everyone who regularly drank alcohol a “drunkard” would have struck early Americans as anomalous and would have classified a significant share of the population as drunkards.

In 1790, drinking-age Americans consumed an average of about 5.8 gallons of pure (absolute) alcohol per year. That is the equivalent of drinking 3.4 twelve-ounces glasses of 5% alcohol beer every day. In terms of wine, it would be equal to 3.4 five-ounce glasses of 12% alcohol every day.

This is far higher than what Americans drink these days. The National Institute on Alcohol Abuse and Alcoholism estimates that the per capita pure alcohol consumption was about 2.5 gallons per person in 2022 – 57% less than in 1790.

The federal government argues in its brief that founding-era laws restricted the rights of “habitual drunkards,” in terms of vagrancy, through civil commitments, or with surety laws – laws that allowed magistrates to compel certain persons who posed a risk of future misbehavior to post bond.

Hemani lawyers respond that this argument has serious problems. None of the founding-era laws imposed an outright ban on gun possession. Authorities did not target people simply because they drank heavily – by modern standards, most people drank heavily at the time. Instead, courts required individuals to post bonds only when they became so intoxicated that they regularly posed a danger to others.

Alcohol also produces much stronger impairment than marijuana and can, in some cases, increase aggression. Marijuana, by contrast, typically reduces aggression. Regular marijuana users today certainly don’t pose more of a danger than regular alcohol users in the 1790s.

In addition, the Supreme Court’s Bruen decision noted that the historical tradition had to be widespread. But as Clayton Cramer, a historian whose work is frequently cited by both federal and state courts, told RealClearPolitics:

Massachusetts did not adopt the first Surety law (also known as a Peace Bonds law) until 1836—45 years after the ratification of the Second Amendment. And more importantly, only one state (Virginia) adopted a law in 1847 that applied bonds to “drunkards” who regularly were drunk and deemed dangerous if they possessed weapons.

Surety laws differed from today’s marijuana regulations in another important way: They required due process before forcing someone to post a bond. Under surety laws, a court determined whether an individual had to put up a bond. There was no requirement that people who were drinking a lot had to put up the bond before they had a judicial hearing. By contrast, under marijuana laws, no court decides whether someone is a “regular” user before requiring them to give up their guns. Instead, the law automatically bans all regular users from owning firearms.

Relatedly, Hemani’s lawyers argue that the statute is unconstitutionally vague. The law does not define how frequently someone must use marijuana to qualify as a “regular” user, nor does it specify how recent or substantial that use must be. The government contends that the regular use of marijuana presents sufficient risk to public safety to warrant disarmament under the Second Amendment and that this prohibition is consistent with historical analogues to disarming persons considered dangerous.

Supporters of the challenge argue that the Founding era did not categorically strip individuals of their right to self-defense based solely on alcohol consumption, and they contend that historical evidence does not support treating modern marijuana users – including those who use the drug legally for medical purposes under state law – as analogous to “habitual drunkards.” They say the government’s position would effectively transform otherwise lawful and widespread conduct into a basis for losing the ability to protect yourself and your family, even without individualized evidence of dangerousness.

John R. Lott Jr. is president of the Crime Prevention Research Center. He served as the senior advisor for research and statistics in the Office of Justice Programs and the Office of Legal Policy in the U.S. Department of Justice during 2020-21.

Tyler Durden Tue, 03/03/2026 - 17:00

Trump Floats Backing Anti-Tehran Insurgency As Alternative To US Boots On Ground

Trump Floats Backing Anti-Tehran Insurgency As Alternative To US Boots On Ground

It's only day four of the US-Israeli 'Operation Epic Fury' and there's already talks of a ground war and insurgency in Iran.

Of course, the White House is still saying it doesn't plan to send US boots on the ground (though is 'not ruling it out'), while also proclaiming the US wants regime change in Tehran, and the dismantling of the Islamic Republic as a state and system is a formal objective. 

But as the Bush Necons learned in Iraq, you can't have your cake and eat it too. An air war according to even the CIA and top defense officials won't be enough to effect regime change and state dismantling, so a ground operation is needed.

Cue death squads. Illustrative Fallujah fighting, via EPA

This dilemma is precisely what has led President Trump to float a new possible plan, per the Wall Street Journal:

President Trump is open to supporting groups in Iran willing to take up arms to dislodge the regime, U.S. officials said, as he continues to mull several options publicly and privately about who should succeed the country’s fallen leader.

Let the etho-sectarian nightmarish hellscape violence begin? Yes, Trump is already speaking in terms of peeling off ethnic minorities in Iran to create an insurgency targeting Tehran.

"Trump spoke Sunday with Kurdish leaders, officials said, and is continuing to engage other local officials who may leverage Tehran’s weakness to make gains," the report continues. "The Kurds have a sizable force along the Iraq-Iran border, and Israel has bombed positions in western Iran, leading to speculation that it is paving a path for a Kurdish advance."

Again, this is recipe for death squads and score-settling, given also the chance that Iranian authorities and loyalist paramilitaries - should they perceive the Kurds to be in rebellion - will then likely retaliate wholescale. 

“President Trump has spoken with many regional partners,” White House press secretary Karoline Leavitt said in a statement, though without revealing whether any plan has been confirmed. 

"Officials said Trump hasn’t made a final decision on the matter, including whether he would provide arms, training or intelligence support to antiregime groups," WSJ adds..

The report comes after Trump urged the Iranian people to rise up and "take over your government". He went on to claim that "America is backing you with overwhelming strength and devastating force."

But what groups would be willing to work with the US? It already appears clear that the White House lacks understanding of the internal dynamics of Iran, and has woefully underestimated how things would go after killing the Ayatollah. 

There's also historic Sunni minority populations along the southwest border regions of Iran. This would potentially mean the US once again backing Sunni Al Qaeda insurgents, as it did in Syria. Another top contender, probably already involved in the war via the Mossad and CIA, is the People's Mojahedin Organization of Iran (MEK) - based largely outside of Iran.

"Most of the people we had in mind are dead," Trump has admitted to reporters. "And now we have another group, they may be dead also. Pretty soon we’re not gonna know anybody."

Tyler Durden Tue, 03/03/2026 - 16:40

'Toxic Indoctrination': Dept Of War Cuts Fellowships At 13 'Elite' Universities

'Toxic Indoctrination': Dept Of War Cuts Fellowships At 13 'Elite' Universities

Authored by Gabrielle Temaat via The College Fix,

The U.S. Department of Defense announced the cancellation of its military education fellowships at 13 top universities on Friday, citing “toxic indoctrination.”

“We are eliminating certain Senior Service College (SSC) Fellowship programs for the 2026-2027 academic year and beyond. I am also directing the compilation of a revised list of elite institutions offering equivalent programs to replace those eliminated,” the agency wrote in a memo to Pentagon leadership. 

It said this change will give leaders “a more rigorous and relevant education.”

Further, in a video posted on X,  Secretary of War Pete Hegseth said, “For decades, the Ivy League and similar institutions have gorged themselves on a trust fund of American taxpayer dollars only to become factories of anti-American resentment and military disdain.”

“They’ve replaced the study of victory and pragmatic realism with the promotion of wokeness and weakness,” he said. 

“We cannot and will not continue to send our most capable officers, senior officers, into graduate programs that undermine the very values they have sworn to uphold,” Hegseth said. 

He also said “so-called elite universities” have “poisoned” the U.S. military education system and “abused their privilege and access to this department and utterly betrayed their purpose.”

The 13 universities include Tufts, Georgetown, Brown, Columbia, Princeton, The Massachusetts Institute of Technology, and Yale, among others, according to the memo. 

Department personnel currently attending these schools will be allowed to finish their studies. 

The department is also cutting ties with seven non-profit institutions, including the Center for Strategic and International Studies, The Brookings Institution, Center for a New American Security, and Council on Foreign Relations.

The memo names potential new partners such as Liberty University, Hillsdale College, Arizona State University, Pepperdine University, Baylor University, and The University of Tennessee.

Last month, Hegseth ordered evaluations of programs at all Ivy League schools and others with “significant adversary involvement,” according to another department memo.

“The goal is to determine whether or not they actually deliver cost-effective strategic education for future senior leaders when compared to, say, public universities and our military graduate programs,” Hegseth stated.  

This comes amid the Department of War’s recent decision to officially sever major ties with Harvard University, as previously reported by The College Fix.

Last month, it announced the military will no longer send active-duty officers to Harvard for fellowships, certificate programs, or graduate-level Professional Military Education.

“Harvard is woke. The War Department is not,” Hegseth stated on X.

Tyler Durden Tue, 03/03/2026 - 15:45

Trump Announces US To Cover Insurance For All Ships Traveling Through Gulf, Will Provide US Navy Escorts

Trump Announces US To Cover Insurance For All Ships Traveling Through Gulf, Will Provide US Navy Escorts

Update (1440ET): Moments ago President Trump announced that the United States will provide insurance for "ALL Maritime Trade" via the US Development Finance Corporation (DFC), and will provide Navy escorts, "if necessary."

Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf. This will be available to all Shipping Lines. If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.

And crude...

And stonks...

*  *  *

The price of crude instantly tumbled on Tuesday after the Trump administration is reportedly considering providing, or assisting in obtaining insurance for oil tankers crossing through the strait of Hormuz. 

According to Reuters, "U.S. President Donald Trump will review policy options on Tuesday aimed at controlling energy prices following recent attacks linked to Iran, including a proposal to help oil tankers transiting conflict zones to obtain insurance, according to two sources familiar with the matter." 

Ships have been frozen on either side of the strait after insurers instituted "war policies" that wouldn't pay out. 

Supertanker costs in the Middle East have hit ​all-time highs, according to shipping data and industry sources on Tuesday, as the U.S.-Iran conflict intensifies with Tehran attacking ships passing through the ‌Strait of Hormuz.

The immediate reaction was a plunge in crude prices...

And as we suggested earlier today...

The news comes after the commander of Iran's Revolutionary Guards said that the strait of Hormuz is closed and that Iran would target any ship trying to pass through. 

Carter Doctrine meets Trump Doctrine?

If President Trump were to provide U.S. Treasury-backed war-risk insurance or direct naval assistance to oil tankers transiting the Strait of Hormuz, it would amount to a modernized fusion of the Carter Doctrine with Trump-style economic statecraft. In 1980, Jimmy Carter declared the Persian Gulf a vital U.S. interest and pledged to use “any means necessary” - up to and including the use of military force - to prevent outside powers from controlling it. That doctrine institutionalized a permanent American security guarantee over Gulf energy flows, eventually embodied in the creation of United States Central Command and the U.S. naval presence that still patrols the region. Its core premise was simple: energy security is national security.

A Trump-era move to insure or financially backstop tanker traffic through Hormuz would preserve that core premise but update the mechanism. While the exact details of the insurance proposal are unknown - rather than relying solely on overt military escalation to reopen the strait, Washington could absorb shipping risk, stabilize insurance markets, and allow tankers to sail under U.S. guarantees - with naval force as a backstop rather than the opening move. In effect, it would convert a military red line into a market-stability red line. Iran’s leverage depends on panic: if oil spikes toward $100–$120 because traffic halts for weeks, global recession pressure mounts. But if the U.S. neutralizes that panic through financial guarantees and controlled deterrence, the chokepoint loses much of its coercive power.

The result would be a hybrid doctrine: Carter’s hard-power commitment to freedom of navigation combined with Trump’s preference for leverage, economic tools, and time-bound pressure rather than open-ended intervention. It would signal that the United States will not allow the weaponization of energy chokepoints - not just through force, but through balance-sheet power. 

Developing...

Tyler Durden Tue, 03/03/2026 - 15:40

Visualizing Data Center Power Surge Before White House Meets With Big Tech

Visualizing Data Center Power Surge Before White House Meets With Big Tech

Ahead of tomorrow's White House meeting, where representatives from Amazon, Google, Meta, Microsoft, xAI, Oracle, and OpenAI are expected to pledge that their data-center buildouts will not drive higher power bills for households near those facilities, UBS analyst Arend Kapteyn has published a new note featuring a chart of the day that visualizes the rapid growth in data center power demand on the grid.

After staying mostly flat for years, data center electricity demand has been surging since 2017, rising from about 70 TWh to more than 200 TWh, driven by cloud computing, social media, and AI workloads.

We outlined this theme a few years back in the piece "The Next AI Trade."

The IEA's 2025 Energy and AI report projects that U.S. data center power demand will double between 2025 and 2030, with a high-case scenario of a 160% increase to 582 TWh.

That would lift data centers' share of total U.S. electricity demand from about 4.5% today to around 10% by 2030.

Kapteyn explained:

The share of US data centre demand for electricity is set to rise from roughly 4½% to 10% of total US demand (with substantial risks to the upside given the speed of revisions in hyperscaler capex)

US electricity demand from data centres is set to rise sharply as AI scales, raising concern that energy constraints could slow AI capex. After all, energy infrastructure takes far longer to build than data centres (4–8 years for transmission versus 1-3 years for data centres), and grid bottlenecks are worsening as wait times for critical components have doubled over the past three years. After remaining broadly flat between 2007 and 2017 despite rapid digitalisation, data-centre electricity demand has surged since 2017 - roughly tripling from around 70 TWh to over 200 TWh - driven by cloud computing, social media use, and the rise of AI, with hyperscale AI training facilities being especially energy-intensive.

According to the IEA's 2025 Energy and AI report, US data-centre electricity demand is expected to double between 2025 and 2030 (and rise by around 160% in a high-case scenario of 582 TWh usage), lifting its share of US electricity consumption from 4½% to around 10%. That 2030 level of energy use is roughly equivalent to the total energy consumption of the UK or France at that stage, and implies roughly a 5% increase in overall US electricity demand over five years, after two decades of stagnation. The IEA estimates that about 20% of planned data-centre projects already face grid-related risks, although actual outcomes will depend on the pace and economic impact of AI adoption. While the implied demand increase is large, it remains smaller than the roughly 20pp rise in electricity generation over the past decade from gas, wind and solar that offset coal's decline - suggesting that sustained renewable growth could help mitigate the impact.

Next week's White House meeting with tech reps comes as the Trump administration is committed to rebuilding the power grid and lowering energy costs for all Americans after failed "green" policies collided with the data center boom and sparked a power crisis across the Mid-Atlantic region.

The chart above, showing that a greater share of U.S. electricity demand will come from data centers by the end of the decade, only reinforces our bullish stance on nuclear (explained here).

Tyler Durden Tue, 03/03/2026 - 15:25

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