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Sunday, March 8, 2026

2026-03-08

***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic Fare:


Historically, the party in power almost always loses seats in midterm elections. There are only two exceptions to this rule. In 1934, under Franklin D. Roosevelt, and then in 2002, under George W. Bush. Are there signs that 2026 could be another precedent-shattering year? A new Harvard CAPS/Harris Poll survey conducted late last month suggests it could be.


Strip out AI investment and the case for rate cuts becomes difficult to ignore. Key cyclical sectors are still struggling






Canada’s relationship with the US has fundamentally changed, and it’s showing up in the data.
Prime Minister Mark Carney likes to call it a “rupture,” suggesting a permanent break between the world’s greatest superpower and its longtime northern ally. But whichever word you choose, the two countries are experiencing a rift that’s both economic and political.
Canadians are now buying from and selling to the US less often. Exports to the US plummeted 5.8% last year, driven by lower volumes of vehicles, steel, aluminum and forestry products. The hit to exports dragged growth down, with real gross domestic product expanding by just 1.7% last year, the lowest rate since the economy shrank in 2020.

............. See the effects of the trade war in eight charts.



…In February 2026, BlackRock estimates the average funded status for the top 200 U.S. corporate pension plans* was




Market Fare:




In periods of economic, political and humanitarian stress, writing about the markets and how best to allocate financial capital can seem . . . well, a bit shallow. But it can also be cathartic. I can’t do anything about those external forces (certainly in the short-term and perhaps in the long-term as well). As an allocator of capital, I need to take those as given and choose the best course of action. Controlling what I can control (i.e. my actions) while the world seems to spin out of control can be grounding and empowering.

As such, we need to look through the news headlines of the day and set our course based on what is actually happening. What we are seeing right now is that the broad global strength that has supported stocks in the US and around the world over the past year-plus is being challenged.


...a dynamic worth paying attention to long before it becomes a problem.

for the last couple of years I’ve repeatedly warned about the “passive bid” in markets. By that I mean the constant, automatic buying of stocks driven by retirement plans, ETFs, and other systematic investment programs.

This bid isn’t discretionary. It doesn’t ask whether valuations are reasonable and it doesn’t care whether earnings justify prices. It simply asks one question: did money flow in? If the answer is yes, it buys. It buys regardless of valuation, regardless of timing, and regardless of fundamentals.

This dynamic has created a market that behaves very differently from the one investors grew up with. Instead of price discovery driven by valuation and earnings expectations, we increasingly have price formation driven by flows.

And now one recent data point hints that this dynamic may be changing. ................

In an interview last year, I pointed out how market analyst Mike Green laid out the mechanics of how a passive driven market could unwind. His thesis is simple but unsettling. Passive funds behave like systematic trading programs. When money flows in they buy. When money flows out they sell. Unlike traditional active managers, passive funds maintain almost no cash buffers. They are designed to remain fully invested. That means redemptions require selling into the market.

In a market where passive vehicles now represent more than half of US equity ownership, that dynamic could create structural fragility. Green’s broader point is that passive investing has fundamentally changed how markets behave.

Historically, stock markets were supposed to discount the future. Investors would anticipate recessions or slowdowns before they happened. But if flows dominate price formation, markets may no longer react to economic risks until the flows themselves change. And since those flows are tied to employment, the market may not respond to a downturn until jobs actually start disappearing.

At that point the feedback loop could become destabilizing.

Less employment means fewer contributions. Fewer contributions mean less passive buying. Withdrawals could mean forced selling. If the marginal buyer disappears at the same time sellers emerge, liquidity could vanish quickly. ...............



A.I. Fare:


You have a problem with that? That’s how it’s designed — to make profits for AI developers and their customers. In part by telling you what you want to hear.

Hank Green has a new, long video in which he summarizes all the things that scare him about AI:
  1. Dangerous and disruptive AI slop and inflammatory fake images and videos
  2. “Algorithmic cruelty”: opaque, biased, harmful decision-making without oversight
  3. Voracious and uncompensated use of human creative effort
  4. AI-induced psychosis and emotional dependence
  5. Use in enabling sabotage, extortion, rage-bait, propaganda, malware and other harmful attacks on innocent people and destruction of essential systems
  6. Vast, wasteful use of energy and natural resources
  7. The economic crash and damage that the bursting of the AI hype bubble will create
  8. Incapacitating loss of trust and not knowing what is true and what’s manipulation
  9. Concentration of power in AI companies’ hands, and resultant regulatory capture
  10. Disruption to job recruitment (AI job applications and AI application filtering, fake credentials)
  11. Elimination of apprenticeship and other entry-level learning opportunities
  12. Cognitive impairment: reduced practice in thinking, composing, reading, analysis
  13. Warfare: New weaponry, surveillance, targeting, automated killing
  14. Destruction of almost all jobs and the resultant massive inequality
  15. “Superintelligence” risks (when AI gains autonomous decision-making capacity)
What scares him the most?
  • That humans are easier to manipulate than we think, and that AI can easily exploit that tendency (and is already doing so), and
  • That humans like things simple and will readily cede agency if AI reduces the number of decisions they have to make
This is why I like Hank — he understands that it’s not the technology we have to worry about, but how it is used (and abused). And that the most severe consequences of new technologies are often unintentional.

This echoes what John Gray famously wrote about all new technologies:
If anything about the present century is certain, it is that the power conferred on ‘humanity’ by new technologies will be used to commit atrocious crimes against it. If it becomes possible to clone human beings, soldiers will be bred in whom normal human emotions are stunted or absent. Genetic engineering may enable centuries-old diseases to be eradicated. At the same time, it is likely to be the technology of choice in future genocides. Those who ignore the destructive potential of new technologies can only do so because they ignore history. Pogroms are as old as Christendom; but without railways, the telegraph and poison gas there could have been no Holocaust. There have always been tyrannies, but without modern means of transport and communication, Stalin and Mao could not have built their gulags. Humanity’s worst crimes were made possible only by modern technology. 
.....................





....... What was this AI trying to achieve, when it broke out of its sandbox and began mining cryptocurrency?

I’m hardly an expert, but it seems to me that if we ever were to get a “warning shot“, before a smarter-than-human AI system emerges that ends up as our enemy, this would be what it looks like. .................

Turing came up with the “Turing test” long ago, the idea being that if you can’t distinguish humans from AI, you might as well just consider the AI to be capable of thought. Well, by now these things don’t just pass the Turing test, they ace it. When we let humans compete with AI, 40% of the time, we think the AI is human. It’s basically a coin toss now. ....



Vid Fare:




Podcast:





Charts:
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(not just) for the ESG crowd:


According to Professor Kevin Anderson, one of the world’s most respected climate scientists, and based upon a 30-year uninterrupted trendline: “We are headed for 3°C-4°C of warming across this century, an absolute climate catastrophe for all species, including our own” ............

The level of misinformation in social media is so prevalent that it’s a wonder anybody believes climate change is a real threat to human existence. More to the point, who really wants to believe that anyway? Human extinction, on some level, balderdash! It’s preposterous! No, so sorry, the truth is: It’s not preposterous! It’s already a well-established trend. ...............

In the final analysis, we, as a species, are confronted with the collapse of modern society amid the collapse of key ecosystems. We (society) should be doing everything possible to avoid this certain outcome, but sadly “we’re doing nothing to avoid it.” There is plenty of talk but not nearly enough effective action. And the climate only responds to efficacious action. ...............








Putting silicate rocks from mine waste on fields could improve crops and limit global warming, but some researchers question where all that rock is going to come from



War Fare:


The US and Israel claim to have killed Khameini. Iran says they missed. Either way it doesn’t matter much, the Iranian response of hitting US bases and Israel hasn’t been effected. They’ve also declared the Straits of Hormuz closed. If Khameini was killed, he is far more likely to be replaced by hawk than a dove. It’s his refusal to fight, over and over again, and his willingness to let Iranian proxies like Syria and Hezbollah be defeated in detail that lead to Israel and the US thinking they could keep attacking whenever they wanted because Iran was run by people who weren’t really willing to fight.

That and his refusal to get nuclear weapons, which Iran could have had years ago. If Iran had nukes, a lot of Iranians would still be alive.

That said, Iran seems (seems) to have learned their lesson. Before this war they said that if attacked they would hit everywhere the US attacked from, and not let up. They’ve started doing that. ...

This is going to be a long slog, especially if Iran has finally learned its lesson. They should not quit until they’ve destroyed every US and Israeli base in the region. During the 12 day war they quit when Israel was about a week to ten days from running out of interceptors. Iran has more missiles and drones than the US and Israel have interceptor missiles. Keep attacking till they run out, then pound them into the dirt. ..............



Canadian Prime Minister Mark Carney issued a statement on the unprovoked and potentially catastrophic war of aggression Israel and the United States launched on Iran. And it is as mealymouthed and nauseating as one would expect.

Carney actually has the unmitigated gall to blame Iran for all of this. ............


Epic Fury for me, Epic Fubar for thee..

.......... We are talking about a no small war here, but a theater almost as large as the contiguous United States itself—ranging from Akrotiri, Cyprus to Dubai in the United Arab Emirates—involving states like Israel, Lebanon, Iraq, Kuwait, Turkiye, Azerbaijan, Saudi Arabia, Bahrain, Qatar and Oman1. Oh, and let’s not forget Pakistan and Afghanistan, who are also at war with each other




The America First president vows he will play a key role in approving Iran's new leaders; the U.S. and its allies will rebuild Iran; and the war goal is to 'Make Iran Great Again.'

Every new war that the U.S. wages — at least over the past six decades — is accompanied by a series of official lies, shifting and inconsistent claims about the war’s goals, and constant exaggerations about the grand progress toward glorious victory. Now, a full week into the Iran War started by Israeli Prime Minister Benjamin Netanyahu and his partner, the American President Donald Trump, this war already equals, if not surpasses, the brazen war propaganda that instigated and fueled those prior ones. .................


We must remember: Under international law, aggression is not just another war crime—it is the gravest crime of all. The judges at the Nuremberg Trials called aggression “the supreme international crime,” because it “contains within itself the accumulated evil of the whole.”


America Is Losing in the Middle East And Fast, Decades of Military Might, Gone in Days.

Strategic analysis of the war involving Iran, the United States, and Israel must begin with a clear understanding of the form such a war would take and the structural realities shaping it. Conventional comparisons of aircraft carriers, military spending, and technological sophistication encourage a superficial belief that the United States and its allies would inevitably prevail. Such reasoning assumes that modern war will unfold according to the logic of conventional battles between symmetrical powers. Strategic analysis grounded in classical military theory and modern studies of asymmetric warfare reaches a different conclusion. A weaker state that forces a stronger empire into a prolonged war of attrition can impose costs that gradually exceed the political and economic capacity of that empire to sustain the conflict. Scholars such as Carl von Clausewitz and Sun Tzu recognised that the side which controls the conditions of the struggle often determines the final outcome. Contemporary analysis by Jiang Xueqin argues that Iran has spent more than two decades preparing precisely such a war, constructing a military doctrine built around endurance, decentralised operations, and cost asymmetry rather than conventional confrontation. Jiang describes the emerging confrontation as a war of attrition in which Iran deliberately drags the conflict across multiple theatres while increasing the economic and political costs imposed upon the American empire, its regional allies, and its dependent Gulf monarchies.

Iranian planners view this conflict not as a short military campaign but as a generational struggle shaped by geography, ideology, and strategic patience. Their objective is not immediate battlefield dominance but the gradual exhaustion of an overextended imperial system whose power depends upon global economic stability, maritime trade routes, and vulnerable regional infrastructure. Once the conflict is understood through this framework of asymmetric warfare and systemic pressure, the central argument becomes clear. Iran intends to win not by matching the military strength of the United States but by turning that strength into a strategic liability through time, geography, and cost.  ....................

 Analysts including Anthony Cordesman have documented the extent to which Iranian missile forces, drone production, and underground logistical networks represent deliberate responses to anticipated air campaigns by Western forces, while strategic commentary from figures such as Glen Diesen and Pepe Escobar frequently highlights the manner in which these preparations aim to deny rapid decisive victory to technologically superior opponents. Hardened missile bases embedded within mountainous terrain, mobile launch systems concealed within civilian infrastructure, and dispersed command networks together create a military architecture designed for survivability under sustained aerial bombardment. 

Regional political geography introduces another layer of strategic complexity because the Arab monarchies surrounding the Persian Gulf maintain security arrangements with Washington while simultaneously possessing economic systems highly dependent upon concentrated energy infrastructure and maritime trade routes. States including Saudi Arabia, United Arab Emirates, Qatar, Bahrain, and Kuwait host American military facilities, logistics depots, and naval installations forming the backbone of United States regional force projection. However, the economic model sustaining these states depends upon a narrow band of export terminals, refineries, pipelines, and desalination facilities located primarily along exposed coastlines within range of missile systems deployed across the Gulf. Strategic vulnerability associated with this infrastructure has already been demonstrated in past incidents affecting the Abqaiq oil processing facility in Saudi Arabia, where relatively inexpensive drones temporarily interrupted a substantial portion of global oil processing capacity. Military planners recognise that similar disruptions targeting energy terminals, desalination plants supplying drinking water to coastal megacities, and LNG export facilities could generate severe domestic pressure within states whose populations rely heavily upon imported food supplies and uninterrupted electricity generation. ......................

Historical experience demonstrates that empires often collapse under the weight of prolonged wars fought far from their own territory, a pattern visible from classical Athens to more recent conflicts involving expeditionary powers. Iran’s strategy deliberately exploits this historical weakness. By extending the war in time and multiplying the number of pressure points across the region, Iran gradually raises the cost of empire beyond what the American political system and its allied states can sustain. Within that strategic framework the outcome becomes less mysterious. A disciplined regional power fighting a defensive asymmetric war on its own geographic terrain possesses structural advantages over a distant empire attempting to maintain dominance across an increasingly unstable system. Through endurance, cost asymmetry, and regional escalation, Iran’s strategy aims to convert apparent military inferiority into strategic victory. .........................



The Iranian strategy in the war has been fairly simple. They’re taking out all nearby American bases and prioritizing hitting all infrastructure, especially radar. While doing so they are running US and Israeli interceptor stocks into the ground, and driving up the price of oil, gas and potash (fertilizer.) ................

As for America’s strategy? It’s wasting vast amounts of time bombing civilians, while Iran dismantles its military infrastructure.

The oil shock is going to be much worse than most people realize. Kuwait is already reducing production, all the Gulf States have limited storage and when it runs out they have to stop producing. But if you stop an oil well mid-production, it takes a long time to get them going again, same with refineries, and stopping production can damage oil fields permanently. ..............

This is a complete fiasco for America and its alliance and satrapy system. ............

I remember reading some Chinese Christian Uncle’s theory that Trump was indeed chosen by God: to destroy the American empire. So far, true or not, that assumption has had very high predictive utility, almost everything Trump has done has made America weaker.

Maybe that’ll work out for the US, too, in the medium run. Losing its Empire and having nothing else to do but fix its own problems is what America needs.



....................... Even in the highly implausible extreme scenario where Iran cannot reconstitute any production sites and the US degrades them at the rate of 90% per month, Iran can still sustain a high rate of fire for four months.

What is the solution to this problem? If Iranian capabilities cannot be degraded for at least four months, the costs to the world economy and the United States would be intolerable. We will see a global inflation shock, global monetary tightening, a food crisis as the fertilizer shock cuts the next crop in half, and almost certainly a global recession. It will destroy the Trump presidency; it will destroy the GOP for a generation; and it would finally end the entrapment of the United States by its junior geopolitical ally.

Is there a military solution? What can the US do? John Warden’s decapitation idea was supposed to work. It did not. There is absolutely no sign of any political instability in Iran. “Zero” as a senior European official told the Washington Post. ......................

The Iranians are not just deploying hypersonic missiles that the US has been unable to develop. They don’t just have the largest missile arsenal in the Middle East. Recent military developments have revealed surprising Iranian reconnaissance-strike capabilities.

The Iranians have managed to hit every single American military base in the region. But that is not the half of it. THAAD is one of the most powerful ballistic missile defense system in the world. If anything should be invulnerable to attack, it is this system. The Iranians have managed to hit and likely disabled every single THAAD battery in the region; all five of them.

Any serious military analyst can tell you this is a big fucking deal. ...............



............... The independent military commenters are suggesting that Iran still has its arsenal of hypersonic missiles and is currently using lower-cost missiles to draw-in the US supply of anti-missile munitions with the goal of exhausting supplies. Now, tie this to the suggestion that Trump & Co. thought that this was going to be a two-day war. Recall that the US and Israel cannot defend against hypersonic missiles. Even if the US had enough anti-missile munitions, hypersonic missiles travel too fast to be intercepted.

It is therefore difficult to see how current events in Iran don’t represent a nightmare scenario for Israel and the Trump administration.  ...............





It’s not okay for grown adults to believe the United States wages wars to promote humanitarian interests and bring freedom and democracy to oppressed populations.

It’s not okay for grown adults to believe that US soldiers fight and die to protect their country and its citizens. ...................



.............. We’ve ended up here because of Gaza.

We’ve ended up here because for two years, the Israelis, with the support of the US and much of Europe, were allowed to cross every line, disregard every rule of war, and demonstrate utter contempt for international law as they slaughtered Palestinians on an industrial scale and turned Gaza to dust.

The barbarity now on show in Iran, is, as many of us warned, the inevitable consequence of the impunity granted to Israel to commit genocide. ...........



............ The US empire is the single most murderous and tyrannical power structure on earth, by an extremely massive margin. No one else comes anywhere remotely close. Not Iran. Not anybody. Every government in the world is morally superior to the most evil government, and the most evil government is the United States. ........


The president’s extremely online staff is posting ‘Grand Theft Auto’ memes and cracking jokes about his Iran war as energy prices explode.

...................... The White House is childishly pumping out these excruciatingly unfunny fascist memes to entertain its far-right staffers and acutely racist YouTubers at a time when the dead bodies are piling up on all sides, and as the financial carnage from Trump’s illegal war explodes – and threatens to plunge the global economy into a full-blown crisis, in an election year. ...............



......................... “Anti-Trump” is much too small a bucket for this movement. After all, the Iran war is just the most brazen, naked, and undisguised episode in a series of imperialist wars going back to Vietnam, waged by Democrats and Republicans alike. Earlier wars—Vietnam, Yugoslavia, Iraq, Libya, Syria, Ukraine—wore a fig leaf of “defending democracy.” The Iran war is just naked power. It shows in clear relief what we want to change. It shows in clear relief the depravity that has always hidden behind our reigning institutions. And so, this movement will not be satisfied by deposing Trump and replacing him with a Democrat who will re-affix the fig leaf to body of the rampaging monster our country has become. The attitudes on display in distilled form in the White House videos pervade our entire system.  .............



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Geopolitical Fare:

Can America's allies bypass the hegemon?

Eulogies for the rules-based international order have been piling up in 2026. Mark Carney’s speech at Davos in January was lauded for its open acknowledgment of the political “rupture” in the world order that has been long apparent, but which no world leader of the global North had as yet been willing to openly name. The US-led liberal order was as good as finished, Carney surmised, and it was incumbent on “middle powers” such as Canada and the Europeans to recognize that fact. In its place, “a system of intensifying great power rivalry where the most powerful pursue their interests using economic integration as a weapon of coercion” was emerging. He described a near-Hobbesian vision of geopolitical relations in which “the strong can do what they can and the weak must suffer what they must.” The task, he argued, was for middle powers to “act together” so as to increase their leverage. “If we’re not at the table,” he warned, “we’re on the menu.”

Carney’s speech was received at the time as not only a clarion call for what Finnish president Alexander Stubbs has called “values-based realism,” but as a viable alternative to the bullying treatment many US allies have received at the hands of the second Trump administration. The joint Israeli and US airstrikes on Iran last week brought with them the first test of Carney’s stated commitment to “sovereignty and territorial integrity,” as he had put it in his speech at Davos, and Carney was quick to voiced his support for his allies’ bombing campaign in the name of “international peace and security” ............

................................ Carney’s logic is that Trumpism is a paper tiger. His judgment is that the US cannot actually withstand pain and punishment from the blowback from its economic war on the world because American society is polarized, has a threadbare safety net and its elites lack popular legitimacy. It is American consumers and importers who are absorbing 90 percent of the cost from tariffs not foreigners, according to Federal Reserve research. Trump will likely face a brutal reckoning in the November midterm elections. 

For now, the new reordering of trade and diplomatic relations appears set to stumble onwards, as US allies reach out to Beijing and beyond in an attempt to insulate themselves against Trump. As American bombs continue to rain down on Iranian, and now Lebanese, cities and towns, the security alliance, however, appears to remain intact.


Interview for Die Weltwoche, February 27th, 2026

................. His 2002 book “After the Empire : the Breakdown of the American Order” became an international bestseller. Now he has granted us a third interview since the start of the war in Ukraine, in which he draws parallels between the decline of America and the collapse of the Soviet Union. And he asks the question: What will Germany do when the war is over?

Weltwoche: Mr Todd, the war in Ukraine is entering its fifth year. Looking back, are there any aspects that you misjudged?

Emmanuel Todd: I always have scruples and doubts. The prediction was correct: the West lost this war long ago. If the Americans had won, Joe Biden would have been re-elected. Donald Trump is the president of defeat. Today, there is another factor: the consequence of defeat is the disintegration of the West. This collapse of a civilisation – the Western civilisation – can be compared to the end of communism and the Soviet Union. It is still difficult to get a clear picture of how it will unfold. Its most spectacular symptom is a loss of touch with reality. ...............

Trump benefits from this. America – the Biden administration – is responsible for the war in Ukraine, but Trump was able to present himself as a moderate and peace-loving negotiator. He is portrayed by the media as an almighty ruler of the world, which he is reorganising according to his will and delusions. And this at the very moment when America is suffering its first strategic defeat against Russia. Venezuela, Cuba, Greenland – these are all diversionary tactics. The aim is always to divert attention away from Ukraine to other locations. That is also the intention behind the negotiations. They only serve to buy time for all parties involved. The decision will be made on the battlefield, and Trump has realised that he cannot prevent Putin’s victory. ................



Other Fare:

U.S. was only country in a worldwide survey to say most fellow citizens are bad people

........ At the opposite end of the spectrum is Canada, where Pew found that 92 percent of people say their fellow Canadians are good, while just 7 percent say they’re bad.


Pic of the Week:







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Monday, March 2, 2026

2026-03-02

 ***** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic Fare:

In our 2006 outlook, the only scenario where 10s would fall below 4% was much weaker than expected growth, cyclical stocks look offsides and the Fed is behind the curve, again
  • Markets flashing growth concerns: Despite strong year-to-date performance in non-tech cyclicals, earnings expectations for 1Q26 have been cut sharply, and the Treasury bull flattening (falling real rates, deeper curve inversion) signals markets are aggressively marking down the “run it hot” growth outlook.
  • Earnings narrowing to AI beneficiaries: S&P 500 earnings growth remains near historical mid-cycle averages overall, but most strength is concentrated in tech and communication services tied to AI, while broader 4Q25 cyclical earnings growth was tepid and 1Q26 expectations were revised lower.
  • Bond market signaling Fed easing: The drop in 10-year yields and deepening 3m–2y inversion suggest rising economic weakness and increasing policy restrictiveness, with markets implying the Fed needs to resume rate cuts.
  • Credit stress emerging but not systemic: Weakness in BDCs, CLO equity tranches, and high-yield duration points to strain among lower-quality, floating-rate borrowers; however, overall credit growth remains subdued, making risks more idiosyncratic than systemic.
  • Capex boom not yet broadening: Regional Fed manufacturing and services surveys show tentative stabilization in current orders, but capital expenditure plans have weakened. S&P 500 capex remains heavily concentrated in the technology and communication sectors, suggesting broad-based investment remains elusive despite the powerful tax incentives in the One Triple B Act.
  • Payroll Payback: We preview next Friday’s employment report, in short, we see little evidence demand for labor has strengthened. A weak report should put rate cuts back in play despite resistance from Biden appointees and the regional repo rate resistance.
  • Cautious but not bearish outlook: While equities are vulnerable to a cyclical “growth scare” correction—especially in midterm years—we are less bearish than a year ago but are maintaining elevated cash positions looking for a better entry point to capitalize on our expectation of broader capital investment beyond AI later in 2026.

Conflict has exposed how much growth depends on energy supplies through the Strait of Hormuz

 

......... The “textbook” response for central bankers facing a surge in oil prices is to “look through” the increase rather than reacting, given that the longer term impact can be disinflationary as consumer spending power is sapped by higher energy costs.



Market Fare:


............... For market technicians, the pattern is uncomfortably familiar. Market-topping processes throughout history, from 2000 to 2007 to 2021, have been preceded by precisely this kind of internal deterioration: narrowing leadership, defensive outperformance, and a growing divergence between price-weighted and breadth-based indicators. The question is whether history is rhyming again, or whether the analogy is misleading.

The most compelling argument that equities are in a market-topping process begins with the market’s internal structure. When investors rotate aggressively into utilities, staples, and healthcare sectors prized for their dividend yields and earnings stability rather than their growth prospects, it is typically a signal that institutional capital is seeking shelter. ...................

Lastly, credit markets, while not yet flashing red, are showing early signs of strain. Investment-grade and high-yield spreads have widened modestly from their tightest levels, and dispersion within the high-yield market, particularly in private credit, has increased. Historically, credit leads equities, and the subtle deterioration in risk appetite in fixed income is difficult for equity bulls to dismiss entirely. ..............

Markets rarely announce their intentions clearly, and the current environment is no exception. The bearish case rests on pattern recognition, the eerie similarity between today’s internal deterioration and the breadth collapses that preceded the last three major market topping processes, and on the arithmetic of valuation, which suggests that the margin of safety for equity investors is thinner than it has been in over two decades.

The bullish case rests on fundamentals that remain, for now, constructive: earnings are growing, the Fed is friendly, the labor market is intact, and sentiment is depressed enough to provide contrarian fuel. History shows that expensive markets with rising earnings can stay expensive far longer than value-oriented bears expect, and that defensive rotations within a secular uptrend are more often buying opportunities than exit signals.

The honest answer is that the market is at an inflection point where the evidence supports both interpretations. What will resolve the debate is not opinion, but price.






A.I. Fare:

We need to give models knowledge that anchors their behavior to the realities of our world.



Quotes of the Week:
“We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.”


Charts:
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(not just) for the ESG crowd:


.................................... The extreme fires, floods, “snownadoes“ and “firenadoes“ draw our attention, but yo ain’t seen nuttin yet.

At 1.5°C, a marker we passed in 2024, we’ve triggered tipping elements—self-reinforcing feedback from destabilized natural balances. Polar ice melts, darkening the reflective surface, absorbing more sunlight. Dissolving permafrost and shallow clathrates releasing methane that is 20 to 80 times more effective at warming the planet than carbon dioxide from fossil fuels. Coral reefs. The Amazon rainforest. The Indian Monsoon. Australia burning. Siberia burning. Each tipping element feeds upon others, adding more to the mix, sustaining the acceleration. ...........



What civilization needs to maintain complexity is a source of energy that has a high ratio of energy returned on energy invested (EROI). If it takes you one oil barrel to transport and refine a barrel of oil you extract from the ground, you can’t maintain a civilization. You can find estimates that the minimum EROI for economic growth to occur has to be at least 11.

The entire green energy transition we’re pursuing now, results in a low EROI. The consequences of this are not immediately obvious. Sure, you can add solar panels to the grid. Sure, you can ride electric vehicles. Sure, you can even store your solar energy using batteries. And then you can charge your electric vehicles using the energy stored in those batteries. But as you do all of this, the overall EROI of your infrastructure declines.

In Germany (and thus the Netherlands too), the EROI for solar panels is 3.9. If you want to store the solar energy, you’re left with an EROI of 1.9. With subsidies you can add such energy sources to the grid, but you can’t build a civilization on the back of such numbers. For stored wind energy, you’re looking at an EROI of 3.9. This is not immediately obvious when you begin your transition. It’s only with high saturation of the grid, that the EROI problem reveals itself, as until that time you’re just mixing it in with high EROI fossil fuels. ...............................

The EROI problem isn’t just a problem for renewable energy, it’s a problem for fossil fuels too. We extracted the best and easiest fossil fuels first, so now we’re left with the poor quality stuff ...........

This problem doesn’t reveal itself in the form of high oil prices, because the economy can not sustain those high oil prices, high oil prices are only temporary until they result in a collapse in demand and prices go down again as a result.

As the high EROI sources of energy are exhausted on our planet, with them gradually goes the ability of this planet to sustain a complex civilization like ours. ............

The reality is that we would be best off if we would try to conserve the scarce sources of energy this world has to offer. There is no magical source of abundant energy ahead of us. Unfortunately American elites tend to believe otherwise. The former CEO of Google thinks climate change goals should be abandoned to focus on AI, because AI will then solve climate change for us.

This won’t happen, because AI can not change the laws of physics for us. We live in a world of physical limits. If we don’t respect those limits we will suffer the consequences.


China's newest battery runs on salt, and powers vehicles in extreme cold climates
  • China is in mass production of a sodium-ion battery, which opens vast new markets for electric vehicles.
  • Lithium-ion batteries drive most electric vehicles, and lithium has a long and complex supply chain. The refining of lithium is expensive, and poses severe environmental challenges.
  • Sodium is abundant, everywhere, and sodium batteries perform far better in cold climates.


War Fare:


This is the definitive war of choice. It is the exact type of war that Trump and his movement spent a decade vowing to end. And the potential for destruction is infinite.

.............. In lieu of outlining any clear mission statement for this new war, let alone a cogent exit strategy, Trump offered a laundry list of flamboyantly violent vows. 

............... The false claims behind this new war with Iran are ones we have extensively documented. In Trump’s war announcement this morning, he claimed — as he did at Tuesday’s State of the Union address — that Iran refuses to promise that it will not obtain nuclear weapons. The exact opposite is true: Iran has stated this clearly, unequivocally and repeatedly, and did so as recently as this week.

........... It is hard to overstate what a massive fraud Donald Trump, his campaign and his political movement are. For more than a decade, Trump has ranted and raved against the evils of regime-change wars and neoconservative dogma, only to launch a new war that most perfectly encapsulates and aggressively advances both. He spent years falsely warning that former President Obama would start a war with Iran because of how weak and inept Obama supposedly was at negotiation and diplomacy, only to now do that himself

.......... In contrast to the lie-driven 18-month public campaign of Bush and Cheney to convince the American public to support an invasion of Iraq, there has been virtually no attempt made, as I documented this week, to even explain to the American public why a new war with Iran is necessary or desirable. There has been no Congressional approval sought let alone obtained, notwithstanding the U.S. Constitution’s exclusive assignment of war-making powers to the Congress.

In his novel 1984, George Orwell highlighted the dangerous insanity of war propaganda with this leading example: “WAR IR PEACE.” Yet that is precisely the rationale invoked by various Trump supporters to somehow depict this new war as aligned with Trump’s vows of peace



........... "In my view, if you’re going to do something there, you better well make it about getting new leadership and regime change," the leading Republican Senator said ...... 

A big problem with this viewpoint, which ensures Washington stays in the business of 'nation building' and democratizing foreign lands (akin to the Neocon Bush era), is that almost all regional analysts say regime change is next to impossible through a purely aerial mission. Instead, this would require US boots on the ground - something the American people surely would not stomach, and which the Trump administration has pledged not to do time and again.

........ In the meantime, House and Senate Democrats announced Thursday that they will force a vote next week on War Powers Resolutions to block President Trump from launching military action against Iran without congressional authorization, as required under the Constitution. .........



............ Time is a fucking circle.

Empire is going to empire. 

And so bombs from a 70-year old colony of thieves, and a 250-year old loutish experiment are raining down on a 2,500 year-old civilisation. On historic towns and cities. On some of the most beautiful architecture, modern and ancient, in the world. .............

If there is any lingering doubt about the nature of western empire, about its duplicity and depravity, and about the sub-human nature of our leaders, it should now be put to bed. Deceitful and deceptive, they are willing to tell any lie and undertake any action, no matter how illegal or murderous, to get what they want.

But this is not how western media will ever analyse or explain the behaviour of our leaders.

On the contrary, over the coming days and weeks, western media is going to try and convince us that two countries, one led by a wanted war criminal, the other led by a conman, fraudster and rapist, are liberators coming to save Iran. The men who committed an actual genocide, we’ll be told, are humanitarians. As the civilian deaths rise, the empire that has killed literally tens of millions of people in the last fifty years will be framed as essentially benign.

All the liberal outrage over Trump when the crosshairs of US empire were directed on Greenland is already dissipating in real time, like bomb smoke in the morning breeze. This morning Mark Carney, the man who not two months ago was being lauded by liberals as the guy to lead a new world order in defiance of US imperialism, backed Trump’s illegal war.

It’s not that liberals don’t care about seeing brown bodies blown apart and lands illegally attacked and invaded, it’s that they support it.

Liberals like Carney are utter frauds, motivated to speak out under very specific conditions and only when their narrow interests are under threat.  ..............


From Ethiopia to our times: The Eternal Folly of Demographic Expansion

........ It is still too early to understand what’s going on with the attack on Iran and how things will evolve. What I think can be said is that the Israeli leaders are locked in an obsolete overpopulation paradigm that leads them to dream of an impossible territorial expansion by military means.

There are two distinct uses of the term “Greater Israel,” one referring to Israel plus the West Bank and Gaza, and a second, much larger, stretching from the Nile to the Euphrates. Currently, these ideas seem to be gaining ground among Israeli far-right politicians. .................


After again pretending to engage in diplomacy with Tehran, the US and Israel launch a new catastrophe in West Asia.

............... “It’s going to be hard,” Rubio said during a visit to Hungary. “It’s been very difficult for anyone to do real deals with Iran because we’re dealing with radical Shia clerics who are making theological decisions, not geopolitical ones.”

President Trump’s own record with Iran shows his top diplomat’s claim to be false. The US reached a deal with Iran in 2015 that constrained its nuclear program in exchange for sanctions relief. After Trump took office, multiple US government bodies, including the State Department that Rubio now heads, certified that Iran “continued to adhere” to its commitments until Trump withdrew from the pact in 2018.

In his dismissive portrayal of a “radical” clerical government in Tehran unable to make agreements, Rubio was also projecting. Just days later, Trump’s Israel Ambassador Mike Huckabee declared that when it comes to stealing Middle Eastern territory, including that of Gulf allies, Israel is biblically entitled to “take it all.” Huckabee’s comments illustrated that the Trump administration contains radical, theological elements in lockstep with an even more openly extremist Israeli government. ................



................. What is unfolding with Iran is not just a regional flare-up. It is a stress test of the broader global order. Russia has condemned the strikes rhetorically while avoiding direct military intervention, underscoring the limits of its partnership with Tehran and the constraints of a fragmented world. China, heavily dependent on Middle Eastern energy but cushioned by diversified supply and strategic reserves, is critical in tone yet cautious in action. Both powers are balancing economic exposure against strategic positioning.

This is the reality of a more fractured system. Russia’s strategic alignment with Iran reflects an effort to counter U.S. dominance, yet it has stopped short of material military support. China’s relationship with Iran and Russia sits alongside deep trade ties with the United States and Europe. The multipolar narrative runs into hard economic interdependence.

That is why Hormuz matters beyond tanker counts.

This moment sits at the intersection of energy security, great-power rivalry, and global fragmentation. Higher oil and gas prices are the immediate signal. Insurance repricing and idled cargoes are the operational expression. But the deeper story is structural: a world in which supply chains are politicized, alliances are conditional, and shocks ripple across multiple theaters—from the Gulf to the Indo-Pacific.

In short, the Iran crisis is not just about chokepoints or missiles. It is a microcosm of a more brittle global system where energy, industrial capacity, and geopolitical competition are inseparable. Markets are pricing disruption. ............



...................... What the Gulf States, especially, are recognizing is that US bases don’t protect them, they make them a target and that the US doesn’t actually care about them and won’t bother to defend them. They’ve gone from satrapies under US protection (which they were, remember that Gulf 1 was to save Kuwait) to expendable meat shields for the Empire.

.................. If the US loses this war it is America’s last great hurrah. Everyone will move away from them: they can’t defend their allies, they can’t be trusted to negotiate or keep agreements, and their military will be defenseless for years against the signature weapons of modern warfare: drones and missiles.

Empires die ugly. But America’s empire is dying.

And finally, Iran is in the right here, morally. We all know it.



I just read that sixty girls died in a US or Israeli airstrike on a girls’ elementary school in southern Iran today, not counting those still buried under the rubble.

Who knows if the US/Israel intentionally bombed the school or if it was hit by accident. Maybe someone will claim it stood atop tunnels full of terrorists or an arms depot (the excuse for bombing nearly every school and hospital in Gaza), or that the Iranians blew it up themselves to generate sympathy. Maybe someone will explain that it is one of those unfortunate accidents of war, “collateral damage,” and therefore the fault of the Iranian government for failing to capitulate to the United States. Probably, most Americans will hear nothing about it at all. ........


The US president has not understood the lessons of past wars for regime change in Iraq and Afghanistan



So now the U.S.A., with the madman Trump at the helm, has started another criminal and evil war ....

Few Americans want to hear the truth about the U.S. They never have.

What has been obvious for a very long time is simply unacceptable. That the U.S. is a ruthless, murderous, imperialistic nation built on waging war all around the world is anathema. It is the American Way and simply can’t be accepted, for it would necessitate a real American revolution: A massive non-violent disconnect from the reigning political, economic, and commercial system. An abandonment of any hope in the politicians and their parties that serve the interests of the ultra-rich power elite who own the country. The facts have long been evident, from Hiroshima through Vietnam and September 11 and Iraq to Iran, etc.

Only the willfully blind still cling to their illusions. What do they think the 750 + U.S. military bases all around the world, supported by a bi-partisan consensus, are for? 



.......... I don’t even know what to write about this one, honestly.

What am I supposed to say? “Hey everybody, they’re lying to us about this war”? Everyone already knows that. Even the people who support this war know all the justifications for it are lies.

They know Iran isn’t building nukes.

They know Iran poses no threat to the United States. ............

Everyone already knows this, and it’s happening anyway. They’re just doing whatever evil things they want to do, without the slightest regard for public opinion or consent.

They’re just going right ahead with a military operation to topple Tehran, after decades of inertia for fear of the horrific consequences it would unleash. ..............

There’s an old Frank Zappa quote that’s been popping into my head more and more lately:
“The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”
We’re seeing a lot more bricks these days. .........



...... Only the United States could bomb a country, kill its leader, massacre its children, declare the intention to destroy its military and topple its government, and then call that country’s retaliation against US military bases “unprovoked”.

.......... It must be such a surreal experience to be a serious diplomat appearing on a foreign news show to speak to professional newscasters, and suddenly finding yourself having to explain to fully grown adults that your nation is fighting the US military because the US military attacked your nation.

The western press are a fucking joke.

❖

Imagine still being a Trump supporter in March 2026. Think about what a desolate wasteland of spirit you’d have to have inside you to keep supporting that ghoul after all this.

You’d have to stand for absolutely nothing. .... You can’t lie to yourself and pretend he’s anti-war anymore. You can’t lie to yourself and pretend he’s fighting the Deep State and sticking up for the little guy. You can’t lie to yourself and pretend he’s making the world a better, more peaceful place. ...........



The former and recently assassinated Supreme Leader of Iran, Khamenei, was anything but an evil man. Evil is a term better reserved for those who murder dozens and dozens of elementary schoolgirls, or who murder people in small boats without evidence and without any kind of due process; or for those who blockade entire countries even unto death; or for those who steal the wealth of formerly sovereign nations; or for those who call for a return to colonization of the global majority; or for those who aid and abet their allies’ genocides and their seizure of the territory of their victims; or for those who meddle in the affairs of other sovereign nations with a view to destabilizing them, perhaps splitting them up into smaller cantons with a view to manipulating them and expropriating them of their natural wealth; or for those who assassinate the leaders of other countries with whom they pretend to be negotiating; or those who would block evidence of crime and corruption on the part of elites; or for those who kill US citizens merely because they are protesting these and comparable evils; or those who abuse underage girls or cuddle up close to those who do.

No, Khomeini was not evil. He was an extremely brave and moral man whose sense of morality wrongly, if understandably, led him to stand in the way of Iran obtaining a nuclear weapon, which it is now bound to do ..............



Geopolitical Fare:

Archaeology, Identity, and the Politics of Origins in the Levant

................................. Let’s be blunt.

This debate is not purely academic.

The modern state of Israel invokes ancient Israelite continuity as part of its national narrative. Critics challenge that narrative by emphasizing Canaanite continuity and shared ancestry with Palestinians.

Both sides selectively emphasize parts of the historical record.

Ancient history does not grant modern moral legitimacy.

Political legitimacy emerges from contemporary ethical frameworks — international law, human rights, sovereignty, self-determination — not from Iron Age settlement patterns.

Weaponizing archaeology to justify present policy is ideological theater. ....................

If there is any honest conclusion, it is this:

No modern political project owns antiquity.

The past is not a deed to land. It is a record of human struggle, survival, and reinvention.

And if we’re serious about historical accuracy, we must resist the urge to turn archaeology into ammunition. 


China Fare:

Milanovic: The ideological implications of China’s economic success
Sinified Marxism and its future



Other Fare:

How we feel about a night’s sleep can have a bigger impact on mood and grogginess than actual hours of rest. Here’s how to change your mindset to feel more energised



Pics of the Week:




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