***** denotes well-worth reading in full at source (even if excerpted extensively here)
given the evolving situation in the Middle East, updating periodically through the weekend with updates
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:
Bubble Fare:
A.I. Fare:
We need to give models knowledge that anchors their behavior to the realities of our world.
Quotes of the Week:
Charts:
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(not just) for the ESG crowd:
(not just) for the ESG crowd:
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.
Sci Fare:
U.S. B.S.:
War Fare:
***** Greenwald: Trump Starts a Major Regime-Change War with Iran, Serving Neoconservatism and Israel
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.
Eisenstein: The Iran War: Power and Blowback
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. ........
Rachman, FT: Trump has no realistic plan for Iran’s future
The US president has not understood the lessons of past wars for regime change in Iraq and Afghanistan
Curtin: Time Teaches Nothing
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. .........
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:
