Individual Economists

10 Weekend Reads

The Big Picture -

The weekend is here! Pour yourself a mug of Danish Blend coffee, grab a seat outside, and get ready for our longer-form weekend reads:

• Calvin and Hobbes and the Price of Integrity: How Bill Watterson Stuck to His Guns — and Vanished: Watterson’s way of speaking about these things occasionally veers into the self-important register of grievance, the eternal complaint of someone for whom things-as-they-are never satisfy because things-as-they-were always seem better. But there’s no denying the conviction with which he fought the fight, even before he had the name-brand authority he’d later earn, even back when it really looked like he was going to lose. And he came very close to losing some of his biggest battles with the syndicate. (The Republic of Letters)

• Ken Griffin’s Billions and Billions The hedge-fund titan is an unabashed big spender, from pièds-a-terre to politics. “When I was in college, I wanted to be in private equity,” he said. He named one of the titans of that field: “Henry Kravis—that was the mission.” I pressed him to cite someone who had influenced him in the world of hedge funds—the investment firms that emerged in the nineteen-fifties with trading strategies designed to offer wealthy clients exclusivity, higher returns, and lower risks. Griffin dodged the question with a feeble joke. Early in his career, he said, whenever he told someone that he worked at a hedge fund, the response “was, literally, ‘Do you use shrubs or bushes?’ ” (New Yorker)

• Is Lloyd’s of London the world’s oldest podshop? No. But it’s sort of a bit like one: The 94 syndicates for which we have data in 2025 are not exactly individual firms. In fact, they have no legal identity whatsoever. Instead, they are bits of cordoned-off capital, which are used as conduits by 54 different managing agents to both compete and collaborate to write Lloyd’s of London insurance policies on behalf of underlying members. (Financial Times free)

• Leave It to Beaver: Everything is bigger at Buc-ee’s. Clearly Buc-ee’s is more than just a large gas station. It has come to symbolize Texas, the world-conquering juggernaut. As Steve Bannon said recently, Texas is “where the future is being built.” Or as Abbott put it in 2024, at the grand opening of the Luling location, “Beaver and Buc-ee’s are now icons across the United States. They spread Texas hospitality, great barbecue, and Beaver Nuggets wherever they go.” A lifelong Texan, I came to realize that I needed to see the future for myself. I needed to eat some Beaver Nuggets. (The Baffler)

• How trust funds made the modern world In progress we trust: In fact, trusts are everywhere. In the parts of the world which use law derived from English law, they are as important a legal concept as contracts or negligence. Nearly all shares in Britain are traded on the basis of trusts. Every home jointly owned by a couple involves a trust. They play just as important a role in America, Australia, Canada, Ireland, Hong Kong and Singapore, whose legal systems are also derived from English law. For much of their history, trusts have been an instrument of social and economic progress. They allowed married women to own property when the rest of the law prohibited it. England’s rich tradition of clubs and societies owes its origins to the institution of the trust, which enabled much greater freedom of association in the early modern and industrial period than in other European countries. The London Stock Exchange and the insurance marketplace Lloyd’s were both originally trusts. (Benedict’s Substack)

• Is spontaneity a luxury good? On line culture, algorithmic curation, and the death of wandering. On how schedule density, family logistics, and overcommitment have made spur-of-the-moment plans a class marker. Useful read whether you have kids or not. (Your Brain on Money)

• Has AI Already Killed How-To Nonfiction?: Tim Ferriss looks at his own sales data and the broader category trends for how-to nonfiction. The early evidence is hard to argue with; Sales Trends, My Personal Data, and What It Might Mean for the Future (Tim Ferriss)

• Samurai City: Works in Progress on how Edo became the largest city on Earth by 1700 — a samurai-administered megalopolis with surprisingly modern logistics. Pure delight for urbanism nerds. For three hundred years, Japan enjoyed enviable stability and peace. All it took was locking up its warlike samurai elite in the world’s least efficient city. (Works In Progress)

• “You Killed the Car” A Ferrari and a distinctive Highland Park home combined for an iconic scene in Ferris Bueller’s Day Off. This adapted excerpt from a new book details how it all went (crashing) down. (Chicago Mag)

• Cracking stories, Gromit: Wallace’s long-suffering canine companion to tell all in memoir: After ‘bottling everything up for a long time’ the faithful pet, who has remained silent for many years, will spill the beans on the pair’s ‘pet hates and fur-vent passions’ Gromit is getting a memoir. The Guardian plays it straight, which is half the joke. (The Guardian)

Video of the day: How Ashton Kutcher Outsmarted Silicon Valley

Be sure to check out our Master’s in Business this week with Seth Klarman, CEO and portfolio manager of The Baupost Group. Founded in 1982 with $27 million in seed capital, over the past four decades, Baupost has grown to $22 billion, with annual net returns of over 20%. The legendary investor is known for his patient, risk-averse, and contrarian approach to finding deeply discounted securities across equities, distressed debt, and real estate.  He is the author of Margin of Safety (1991) and the editor of the 7th edition of Security Analysis (2023).

 

 

Source: Ritholtz Wealth Management

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The post 10 Weekend Reads appeared first on The Big Picture.

FundStrat's Newton: Why Not Replace The FOMC With AI?

Zero Hedge -

FundStrat's Newton: Why Not Replace The FOMC With AI?

Short of abolishing the Fed (much preferred), would automating the Fed make more sense than the current system? Should we trust Kevin Warsh, Jerome Powell, and Lisa Cook to read the tea leaves each month and decree rate changes for us commoners? 

That was Fundstrat's Mark Newton’s suggestion during last night's ZeroHedge debate on his H2 market outlook. He pointed out the new chair’s plan to eliminate “forward guidance”, a term invented under the previous chair Powell in which the Fed strategically signals its plans on rate changes so that those signals themselves might change rates organically by market forces.

It’s all a big mess… but Newton and BTIG's Jonathan Krinsky also debated whether the AI trade is in a bubble and which sectors look like attractive investment opportunities. Here were Newton’s remarks on the Fed and other highlights, though we recommend watching the full debate at the end:

Automate The Fed

Fundstrat's Mark Newton believes incoming Fed Chair Kevin Warsh could face a difficult balancing act from day one.

"I think he's got his work cut out for him," Newton said, noting that Warsh will be speaking for a Federal Reserve committee that has "turned clearly hawkish" while simultaneously facing pressure from an administration that "almost always wants to cut rates to juice the economy."

Rather than focusing on rate cuts themselves, Newton argued the biggest change under Warsh may be how the Fed communicates. "My take is that there's gonna be far less forward guidance or even a dot plot under Warsh, less communication," he said. Markets have become accustomed to a steady stream of comments from Fed officials, and Newton warned that the transition could create volatility as investors try to recalibrate.

Newton also mused about automating the entire FOMC, questioning the dated practice of a council of economists working with clunky tools to periodically tinker with the entire nation's (and world’s) economy.

"If there's one area that's ripe for regime change by AI completely, it's the Federal Reserve," he said. "They're looking at data going back over the last few years to try to make decisions on whether to cut interest rates, which will take twelve to eighteen months to materialize in the economy. That does not make any sense in 2026."

"The AI trade will continue into 2028"

Where many see a bubble, Fundstrat's Mark Newton sees an opportunity.

"I do not see a bear market in technology," he said, arguing that the sector is likely headed for a period of consolidation rather than a major decline. Semiconductors may need to "back and fill" after their recent run, according to Newton.

He remains bullish on the longer-term AI story but did say there are signs that it’s overbought near-term. Newton highlighted the Relative Strength Index (RSI) on the highly-watched Invesco Equal Weight Tech ETF.

"That's all a good thing for tech. It's just that when an RSI level of 78 on equal-weighted technology, it's not the best risk reward for me over the next three to six months."

On banks, REITs, travel, consumer discretionary, and healthcare sectors, Newton sees improving momentum, noting that "most European and also U.S. commercial banks have been showing very good strength" while REIT ETFs are "breaking out to multi-year highs."

"Consumers snapping back over the next couple months" following a ceasefire success, he said, would benefit airlines, hotels, and beaten-down discretionary names. Newton specifically likes Delta, Marriott, booking companies, and apparel Ralph Lauren. 

Watch the full debate below, watch on Adam Taggart’s Thoughtful Money channel, or listen on Spotify.

Tyler Durden Fri, 06/19/2026 - 13:45

Outrage As Suspect In UK Toddler Crocodile Attack Released On Bail; Identity Still Hidden

Zero Hedge -

Outrage As Suspect In UK Toddler Crocodile Attack Released On Bail; Identity Still Hidden

Authored by Steve Watson via Modernity,

The insane attack at a family-run zoo in Cambridgeshire, UK has now produced a fresh outrage.

A three-year-old boy from the area remains in critical but stable condition at Addenbrooke's Hospital after being thrown into a crocodile enclosure.

Yet, the 30-year-old man from Norfolk arrested on suspicion of attempted murder has already been released on bail until 18 September. Police assessed him as "unfit for interview" and continue to withhold his identity from the public.

This follows the initial reporting of the incident at Johnson's of Old Hurst zoo near Huntingdon. As covered in our earlier piece on the initial incident and rampant online speculation about the identity of the man who was arrested.

The boy and the suspect were not known to each other, and detectives from the Major Crime Unit treated the case as a serious criminal investigation from the outset.

Cambridgeshire Police confirmed the release after the assessment. Detective Inspector Verity McCann stated: "Our enquiries are ongoing as we continue to understand the circumstances surrounding this distressing incident. Our thoughts remain with the boy and his family, and specialist officers continue to support them through this difficult time."

Witnesses described a heroic intervention that prevented an even worse outcome. The zoo owner's wife reportedly jumped 15 feet into the crocodile enclosure to pull the injured toddler to safety.

Staff administered immediate medical treatment at the scene before emergency services arrived. The boy suffered serious wounds from at least one crocodile attack inside the enclosure.

Reports indicate he suffered a broken arm, a broken pelvis, likely stemming from the impact after being thrown, as well as multiple crocodile bites during the incident on Thursday afternoon.

Public anger has erupted over the decision to release the suspect.

Many see the move as further evidence of a justice system that fails to prioritise the protection of children and the public when confronted with extreme violence.

The pattern of releasing individuals deemed too unwell for interview while leaving the public uninformed about their identity has fuelled widespread demands for transparency and stronger safeguards.

Critics argue that mental health assessments should not automatically translate into freedom to roam when the alleged act demonstrates clear and present danger to others.

Meanwhile, Sky News headlines have drawn sharp criticism for their choice of language. The outlet repeatedly described the boy as having "ended up in crocodile enclosure" rather than stating he was thrown there.

One report opened with: "A three-year-old boy who was seriously injured after ending up in the crocodile enclosure at a Cambridgeshire zoo was attacked by at least one of the reptiles, Sky News understands."

An earlier Sky News post had used similar passive phrasing: "a boy has been taken to hospital with serious injuries and a man arrested on suspicion of attempted murder after a toddler ended up in a crocodile enclosure in Huntingdonshire."

This wording stands in contrast to more direct reporting elsewhere that used "thrown into" in the headline. Passive constructions like "ended up" minimise the deliberate nature of the assault and shift focus away from the perpetrator's actions toward vague circumstance.

In high-profile cases involving violence against children, precise language matters. Euphemisms erode public trust and fuel the very speculation authorities claim to want to avoid.

The decision to withhold the suspect's identity while confirming his release on bail until mid-September compounds the problem. A man arrested for allegedly hurling a defenceless three-year-old into a pit of crocodiles is back in the community.

Britain's justice system increasingly appears calibrated to protect processes and sensitivities over basic public safety. When posting opinions online can trigger swift arrest and denial of bail, yet an alleged attempt to feed a toddler to crocodiles results in prompt release, the imbalance is impossible to ignore.

The heroic actions of zoo staff saved a life that day. The authorities' response since has done little to reassure anyone that similar threats will be met with the seriousness they demand.

Tyler Durden Fri, 06/19/2026 - 13:10

US Probes Whether ASML's Advanced Chip Machine Ended Up In China

Zero Hedge -

US Probes Whether ASML's Advanced Chip Machine Ended Up In China

Not long after Shenzhen-based Huawei unveiled what it described as a breakthrough pathway for advanced semiconductor production at the recent IEEE ISCAS conference, the Trump administration raised concerns that one of Dutch chip-equipment giant ASML's extreme ultraviolet lithography, or EUV, machines may have fallen into Chinese hands.

Bloomberg reports that Commerce Secretary Howard Lutnick has raised concerns that one of ASML's EUV machines may have reached China despite US-led export controls.

ASML has pushed back on Lutnick's suggestion, explaining that none of its EUV machines, used to print the tiniest circuit patterns onto advanced computer chips, have ended up in the hands of the Chinese. This report is based on sources from the outlet who spoke on condition of anonymity to describe private conversations.

ASML says all 314 of its operating EUV machines are accounted for globally.

More color from the outlet:

Multiple senior administration officials, speaking on condition of anonymity to describe a sensitive matter, said they have evidence indicating ASML is not acting in good faith — such as exports to China of gear specifically related to EUV tools, which ASML denied to Bloomberg. These US officials, who didn't comment on Lutnick's meetings with ASML, declined multiple requests from Bloomberg for proof of the shipments, citing the sensitivity of the information and sources. They also declined to say whether they have seen evidence of an actual EUV system in the Asian country.

The dispute adds pressure on ASML, with shares in Amsterdam trading down as much as 2% on Friday. Shares have advanced as much as 81% this year due to the AI and data center buildout narrative.

Here is Citi analyst Andrew Gardiner's first take on the US Government-ASML dispute:

According to Bloomberg (6/19), US Commerce Secretary Howard Lutnick has told ASML of concerns that an EUV machine is in China, in contravention of regulations that prevent ASML from shipping EUV to China. No evidence for the claims was provided to journalists. ASML have reiterated publicly they have never shipped a machine or EUV parts to China. ASML can "see" each of the EUV tools running at customer fabs, as the machines send back data to ASML on their operations. ASML are now in the difficult position of trying to prove a negative, when no evidence is being furnished against their position. Given our time spent with ASML over the last two decades, including with current management in recent years, we find it very hard to believe that they would jeopardise their position in the industry, their reputation, or their technological leadership just to deliver an EUV tool to China.

Bloomberg Intelligence analyst Masahiro Wakasugi comments:

US concerns about Chinese chipmakers using advanced tools made by ASML might have little impact on its sales. Bloomberg News reports that in recent meetings, Commerce Secretary Howard Lutnick expressed the concerns to ASML's leaders, saying one of its top machines might have made its way into China, violating US-led restrictions. But ASML says it has never shipped extreme ultraviolet lithography systems to China and has complied with tightening restrictions on deep ultraviolet tools. Also, using ASML machines to make advanced chips would probably require sophisticated tools from other foreign firms that also face restrictions. China is increasingly able to make more-advanced chips with legacy tools, so the US concerns may reflect Chinese engineering progress rather than any lapse in ASML's compliance with export controls.

Related:

US concerns may reflect China's progress in developing advanced chips, especially after Huawei's announcement last month of a potential breakthrough in semiconductor production.

Tyler Durden Fri, 06/19/2026 - 12:35

Federal Court Allows National Park Service To Replace Slavery Exhibit In Philadelphia

Zero Hedge -

Federal Court Allows National Park Service To Replace Slavery Exhibit In Philadelphia

Authored by Jackson Richman via The Epoch Times (emphasis ours),

A federal appeals court ruled on June 18 that the Trump administration can move forward with replacing a slavery-related exhibit at Independence National Historical Park in Philadelphia.

FILE - A person views posted signs on the locations of the now removed explanatory panels that were part of an exhibit on slavery at President's House Site in Philadelphia, Jan. 23, 2026. AP Photo/Matt Rourke, File

The decision from the Philadelphia-based Third U.S. Circuit Court of Appeals reversed a lower court ruling that had blocked the National Park Service from removing the exhibit. The city of Philadelphia had won that earlier ruling after an exhibit describing George Washington’s ownership of enslaved people was taken down.

The exhibit, located at the President’s House historic site, was removed following an executive order signed by President Donald Trump aimed at eliminating what he described as efforts to portray the United States as fundamentally racist or oppressive. The order directed the Interior Department to review and revise historical displays in national parks across the country.

As part of that effort, the National Park Service removed an exhibit in January that focused on nine enslaved individuals who lived and worked at Washington’s Philadelphia residence.

Philadelphia sued, arguing that agreements with the federal government required the city to be consulted before significant changes were made to the site. U.S. District Judge Cynthia Rufe agreed and issued an injunction requiring the exhibit to remain.

However, the appeals court found that removing the exhibit was not an official agency action that could be challenged under the Administrative Procedure Act. Writing for the three-judge panel, Judge Thomas Hardiman said the Park Service’s planned replacement displays still address the history of the nine enslaved people while also noting Washington’s stated opposition to slavery later in life.

According to Hardiman, the new exhibits recognize the injustices of slavery and preserve the stories and humanity of the enslaved individuals who lived at the President’s House.

The Epoch Times reached out to the Interior Department for comment on the decision but did not receive a response by publication time.

Philadelphia Mayor Cherelle Parker criticized the ruling and pledged to continue fighting it in court.

“I will pursue every legal action possible to reverse this decision. We cannot and WILL not rest until the full story of American history – including the existence of Slavery at the President’s House here in Philadelphia – is told, for our Nation and the World to see,” she posted on X on Thursday.

Despite the appeals court decision, the original exhibit may still be restored. In a separate case, U.S. District Judge Angel Kelley in Boston recently ordered the reinstatement of all national park exhibits that had been removed under Trump’s directive. Shortly after the appeals court ruling, Kelley declined to suspend her order while the administration appeals.

Reuters contributed to this report.

Tyler Durden Fri, 06/19/2026 - 12:00

Israel-Hezbollah Agree To Ceasefire After Clashes Stall Opening Round Of US-Iran Nuclear Talks

Zero Hedge -

Israel-Hezbollah Agree To Ceasefire After Clashes Stall Opening Round Of US-Iran Nuclear Talks

Summary:

  • Israel and Hezbollah Agree To Ceasefire 
  • Opening Round Of US-Iran Nuclear Talks Postponed After Israel-Lebanon Clashes Erupt 
Israel and Hezbollah Agree To Ceasefire

Israel and Hezbollah have agreed to a ceasefire that will begin on Friday at 4 p.m. local time, Reuters reported.

  • ISRAEL, HEZBOLLAH AGREE TO CEASEFIRE STARTING ON FRI: RTRS
  • ISRAEL, HEZBOLLAH AGREE ON CEASEFIRE FROM 4PM LOCAL: REUTERS

WTI futures tumbled on the ceasefire headline, falling from about $76.40 a barrel to $75.56, as traders priced in reduced geopolitical risk.

The earlier escalation between Israel and Hezbollah increasingly looks as if both sides were squeezing in last-minute strikes ahead of the ceasefire set to take effect later today.

The ceasefire - if it holds - now sets up for nuclear talks between US and Iran. 

Opening Round Of US-Iran Nuclear Talks Postponed After Israel-Lebanon Clashes Erupt 

Talks between Iran and the US were postponed on Friday in Switzerland, delaying what was supposed to be the opening round of negotiations towards a permanent peace and nuclear deal.

The delay appears to center on a new escalation between Israel and Iran-backed Hezbollah militants in southern Lebanon, a troubling development that threatens the fresh interim deal signed by President Trump and Iran just days ago. Tehran has insisted that a ceasefire in Lebanon is part of the interim deal, meaning the Israel-Hezbollah front could derail the US-Iran diplomatic path to a sustained reopening of the Strait of Hormuz.

The Financial Times provided more details on the overnight development:

Talks between Iran and the US in Switzerland were postponed due to Israel launching a wave of deadly air strikes on southern Lebanon, according to three people familiar with the matter.

Iran did not send a delegation to Switzerland for the nuclear talks because of the attacks, the people said. The interim agreement signed by the US and Iran on Wednesday stipulates the "immediate and permanent termination" of fighting, including in Lebanon.

A diplomat familiar with the Switzerland talks told the outlet:

The Iranians have asked for guarantees that hostilities in Lebanon will end, as outlined in the signed agreement, and mediators are currently working to resolve the issue.

According to other FT sources, Iran's position is effectively "no Lebanon, no deal," arguing that it has restrained Hezbollah while Washington has failed to restrain Israel.

Israeli airstrikes across more than 10 villages in southern Lebanon killed 18 people and wounded 33, according to Lebanon's health ministry.

Itamar Ben Gvir, Israel's national security minister, reacted on X to the latest fighting in Lebanon:

For every tear of an Israeli mother, a thousand Lebanese mothers must weep. All of Lebanon must burn! With all due respect to the Americans, Israel must make it clear to the entire world that the blood of our sons and the security of our citizens are not forfeit. All of Lebanon must burn. Our supreme duty is to protect the citizens of Israel and the soldiers of the IDF, and this commitment takes precedence over every other consideration. I told the Prime Minister, even in our private meetings: For every tear of an Israeli mother, a thousand Lebanese mothers must weep. Enough with the ping-pong. In the Middle East, you don't win with measured responses and restraint—you need to go berserk. To obliterate. To crush the terror.

Drop Site provided more color on the canceled talks:

  • Al Mayadeen report earlier today that Iran's delegation suspended its trip to Geneva due to ongoing Israeli attacks in southern Lebanon.
  • A White House spokesperson later said Vice President JD Vance, head of the US delegation, also canceled his planned trip to meet Iranian negotiators and begin talks on negotiating and implementing the postwar framework
  • Reuters reported the delegation had been preparing to launch the first round of the agreement's 60-day negotiations. Tehran had previously told Washington and mediators that developments in Lebanon would be a key factor in whether talks proceed.

Pakistani journalist Kamran Yousaf wrote on X, "Pakistan has called back its advance team from Switzerland, throwing the next round of Iran-US talks into uncertainty."

He added, "With Tehran seemingly reluctant to engage at a European venue, diplomatic sources say Islamabad or Doha is now the most likely destination for the next round of negotiations."

Beyond the overnight fighting in southern Lebanon, the takeaway is that the interim deal still gives Washington and Tehran a 60-day ceasefire window, immediately reopening the Strait of Hormuz and creating a framework for eventual talks on Iran's nuclear program.

The problem now is that both sides need to control their proxies and allied partners. Tehran must keep its Hezbollah fighters restrained, while the Trump administration must keep its Israeli ally from escalating in Lebanon. Without that dual restraint, the 60-day ceasefire window could collapse.

Tyler Durden Fri, 06/19/2026 - 12:00

"No Greater Threat To America's Way Of Life": Senate Unanimously Passes Resolution To Condemn CCP Leader Xi Jinping

Zero Hedge -

"No Greater Threat To America's Way Of Life": Senate Unanimously Passes Resolution To Condemn CCP Leader Xi Jinping

Authored by Dorothy Li via The Epoch Times,

U.S. senators have voiced support for ordinary Chinese people and denounced communist regime leader Xi Jinping for lying to Americans and committing human rights abuses.

The U.S. Senate unanimously approved on June 16 by voice vote a resolution (Senate Resolution 444) condemning Xi for “deceit, undermining prospects for peace and security, and orchestrating crimes against humanity.”

The resolution also encourages the U.S. government and its agencies to use all available tools—including the authorities under the Global Magnitsky Human Rights Accountability Act, which allow sanctions against individuals responsible for serious human rights violations or corruption—to hold Chinese Communist Party (CCP) officials accountable.

The vote came just a day after Xi’s 73rd birthday.

“There is no greater threat to America’s way of life, peace, and prosperity in the world than Xi Jinping and the CCP,” Sen. Rick Scott (R-Fla.), who introduced the resolution earlier this month, told the Senate before the vote.

“Xi Jinping hates us. Communist China wants to destroy us. He is not a partner. He is not a competitor. He is a brutal dictator leading a criminal organization that lies, cheats, steals, exploits slave labor, and commits genocide and crimes against humanity on an industrial scale.”

Under Xi’s leadership, the CCP covered up the COVID-19 outbreak after it first emerged in the central Chinese city of Wuhan in late 2019, allowing it to develop into a global pandemic.

The resolution notes that the CCP lied to the world about where the SARS-CoV-2 virus, which causes COVID-19, originated and how easily it was transmitted, while using international organizations such as the World Health Organization to “peddle falsehoods.”

As a result of these deceptions, more than 1 million people died from COVID-19 in the United States alone, according to the resolution.

Sen. Rick Scott (R-Fla.) speaks during the Conservative Political Action Conference in Grapevine, Texas, on March 28, 2026. Leandro Lozada/AFP via Getty Images

In addition to the global pandemic, the resolution also highlights the CCP’s role in the fentanyl crisis in the United States.

Xi pledged, in 2019 and again in 2023, to work more closely with the U.S. government to curb the flow of fentanyl precursors from the country. Despite these promises, more than 70,000 Americans died from fentanyl overdoses in recent years, with the 2025 National Drug Threat Assessment identifying fentanyl and other synthetic drugs as the “primary drivers of fatal drug overdose deaths nationwide,” the resolution stated.

On the trade front, Xi “doubled down” on the CCP’s decades-long “tradition of cheating,” the resolution stated.

When the Clinton administration sponsored China’s entry into the World Trade Organization (WTO) in 2001, the CCP promised to transition to a more market-oriented economy, including reducing state control of trade and protecting intellectual property.

However, after more than 25 years, the CCP still “fails to uphold many” of those promises and continues to violate WTO obligations, the resolution stated.

Espionage and cyberattacks have also surged, according to the resolution. In 2017, for instance, four Chinese military-backed hackers carried out a cyberattack against the U.S. credit company Equifax and stole the personal information of about 145 million Americans, according to the FBI.

More than 60 espionage cases linked to the CCP were documented in 20 U.S. states from February 2021 to December 2024, according to the resolution.

Among these was a naturalized U.S. citizen who, in December 2024, pleaded guilty to conspiring to act as an agent of the Chinese regime in relation to running a secret Chinese police station in New York City.

The resolution cites the CCP’s records of human rights violations, including the massacre of student-led protesters demanding political reform and greater freedom at Beijing’s Tiananmen Square in June 1989.

Even 36 years later, the bloody repression continues to serve as a “stark reminder of the sheer evil and cowardice” of the CCP and its inability to quash the aspirations of the Chinese people, according to the resolution.

It also highlights the regime’s ongoing abuses, such as the state-sanctioned practice of killing prisoners of conscience—most notably Falun Gong practitioners—for organs.

U.S. President Donald Trump has said that he spoke directly with Xi about releasing Lai during his recent visit to Beijing, but that Xi called Lai’s case “a tougher one” for him.

Scott, in a June 16 statement, called for courage and action.

“The CCP, especially under Xi Jinping’s tyranny, has a particular brand of evil,” Scott said in a statement. “They seek to control the world, and in their mind, that means destroying anyone who stands in their way—whether it’s their own people or not.

“We cannot be afraid to stand up to our enemies and hold the line for the next generation of Americans.”

Tyler Durden Fri, 06/19/2026 - 09:30

UK Gilt Yields Spike As Burnham Win Opens Door To Oust Starmer

Zero Hedge -

UK Gilt Yields Spike As Burnham Win Opens Door To Oust Starmer

The odds of embattled UK Prime Minister Keir Starmer being ousted by the end of July are soaring this morning...

...after Greater Manchester Mayor Andy Burnham won a decisive victory for the ruling Labour Party that delivers him a seat in Parliament and, with it, a pathway to challenge Starmer for his job.

Burnham was elected in a standalone contest for the constituency of Makerfield, in northwestern England, with a convincing 54.8% of the vote. He defeated Robert Kenyon from Nigel Farage’s right-wing Reform UK, who secured 34.5%, while third-placed Restore Britain registered just under 7%.

In a post on X, Starmer congratulated his rival on his victory.

“Voters chose Labour’s campaign of hope and optimism over division and hate,” he wrote.

Farage said he was “disappointed,” in a video posted after the result.

Addressing voters who left his party for Restore he asked:

“What do you want? We are the challenger party to the left in this country, and I would urge you to think again.”

A defiant Starmer said in response that he would run against Burnham in any leadership contest.

“If there is one, I’ll stand,” he told broadcasters on Friday morning, hours after Burnham’s victory:

“I’m not going to walk away.”

As Bloomberg reports, the prime minister’s fortunes have faded after he led his party to a dismal showing in the May locals, where Reform gained ground. In the aftermath, almost a quarter of Labour’s more-than 400 MPs called on Starmer to go.

“Tonight could, just could, be the turning point,” Burnham said after the results were announced to loud cheers from his supporters.

“I do say to my own party, this is a final chance to change.”

“We must hear it, we must act upon it, and we must get it right,” he said.

“There will be no second chance.”

Despite, Burnham's ruling out changing the government’s limits on borrowing if he were to gain power, in a bid to reassure investors about his fiscal plans, his win pushed Cable slightly lower and gilt yields notably higher:

 “With Burnham having made a statement win, the next few months will likely see domestic political risks dominating headlines in the UK and as a result markets pricing in real political risk premium,” said Megum Muhic, a strategist at RBC.

Burnham has the best (least worst) ratings of any major UK politician...

“The prime minister is now in political quicksand,” James Lyons, Starmer’s former director of communications, told Sky News.

“There is now a very good chance that Andy Burnham will be installed as prime minister without a contest,” he said, adding that the size of the win makes that more likely.

If Starmer steps down or is voted out by the Labour Party membership, the UK would usher in its fifth prime minister in less than four years.

What happens next? Here is a concise breakdown of key events from The Times political editor Steven Swinford.

  • Cabinet ministers will this afternoon tell Sir Keir Starmer to set out a timeline for his departure in the wake of Andy Burnham's by-election victory in Makerfield
  • The prime minister is holding a series of meetings and calls with ministers and Labour MPs. The Times has been told that 'multiple' cabinet ministers will tell him that his "time is up". Senior figures in No 10 are also telling Starmer it is time to go
  • Starmer insists he is going nowhere. He is planning to use the calls to make the case for his Premiership and try to shore up support
  • His pitch is twofold: 1) A contest will tear the party apart and 2) We are delivering - NHS waiting lists are falling, the number of small boat crossings is down, legal migration if falling. 'The worst thing we can do is take our foot off the gas'
  • Cabinet ministers say there is no route through this. It's about accepting political reality and leaving with dignity
  • We're now locked in a debilitating stalemate. Neither Andy Burnham nor Keir Starmer wants a leadership contest, for very different reasons - Burnham because he favours a coronation, Starmer because he wants to stay in power and believes a challenge will rip the party apart
  • Starmer is insisting he will fight any challenge. Allies say he has a £100,000 war-chest and all the infrastructure -including key staffers, campaign literature etc - in place. He is ready to go
  • Burnham allies think Number 10 has lost contact with reality. They argue that on any measure it is over for Starmer and that he should accept reality and stand down. They accuse him on to power and say his position is untenable
  • It looks increasingly like Burnham and Starmer may not talk until next week. As per @PronouncedAlva
  • Burnham has his list of nominations ready to go - 200+ - and is prepared to hand them over to Starmer to pressure him into going
  • The situation is clearly unsustainable. So how will the deadlock be broken? First, pressure from backbenchers - 100 Labour MPs have now called for him to go. That number will only rise this weekend
  • Second, pressure from Cabinet ministers as above. But here's the rub - we have been here before and he has just ignored them. Shabana Mahmood, Ed Miliband, John Healey, Wes Streeting... the list is getting longer and longer. We are somewhere between a rock and a hard place.
Tyler Durden Fri, 06/19/2026 - 09:05

MiB: Seth Klarman, The Baupost Group

The Big Picture -



 

 

This week, I speak with Seth Klarman, CEO and portfolio manager of The Baupost Group, a Boston-based investment manager with a multi-strategy approach. Founded in 1982 with $27 million in seed capital, Baupost has grown over the past four decades to $22 billion in assets, with annual net returns of over ~20%. The legendary investor is known for his patient, risk-averse, and contrarian approach to finding deeply discounted securities across equities, distressed debt, and real estate.

Klarman is a value investing legend who comes from the school of Graham and Buffett. Known as the “Oracle of Boston,” he is the author of Margin of Safety (1991) and the editor of the 7th edition of Security Analysis (2023). We discuss Seth’s start as a 25-year-old and his 40-year journey running Baupost. He explains his approach to risk, IPOs, and sectors, along with his sports passions, including a smaller ownership in the Boston Red Sox, horse racing, and his feelings about the Boston Celtics’ 2026 season.

A list of his current reading/favorite books is here; A transcript of our conversation is available here next week.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Carl Richards, a financial advisor who is also the creator of the Sketch Guy column, which ran weekly in New York Times for a decade. He hosts Behavior Gap Radio (1,300+ episodes) He co-hosts “Kitces & Carl — Real Talk for Real Financial Advisors” with Michael Kitces.” Richards latest book is Your Money: Reimagining Wealth in 101 Simple Sketches.”

 

 

 

 

 

Current Reading/Favorite Books

 

 

Authored Books

 

 

The post MiB: Seth Klarman, The Baupost Group appeared first on The Big Picture.

Futures Rebound, Oil Slides, After Israel And Hezbollah Agree To Ceasefire

Zero Hedge -

Futures Rebound, Oil Slides, After Israel And Hezbollah Agree To Ceasefire

Update: the Yo-Yo insanity that is the on again, off again Iran war. Moments after we reported that futures and global risk assets had sold off overnight on a delay to today's start of peace talks in Switzerland due to Iran's protest of ongoing violence in Lebanon, moments ago Reuters reported that Israel and Hezbollah have ​agreed to a ‌ceasefire set to begin at 4 ​p.m. local time ​on Friday, citing a senior US official ​

“Hezbollah and ​Israel have agreed to a ceasefire,” the official ​said on ​background, adding that negotiators for ‌the ⁠U.S. and Qataris worked out the deal with ​help from ​Iran. “We ⁠understand that after the ​exchange of fire ​earlier ⁠today, Israel and Hezbollah are ⁠now ​in a ​ceasefire.”

The report was confirmed by an Israeli official speaking to the Jerusalem Post: "We have entered a ceasefire. We will continue to act against threats and will remain in the Strip. If Hezbollah harms our soldiers or civilians, we will respond forcefully".

In kneejerk reaction, S&P futures which were down 0.4% erased half their losses...

... while oil dropped from session highs.

And now we wait the inevitable next reversal of this neverending newsflow yoyo.

* * * 

Earlier: 

With US markets closed for the Juneteenth holiday, global stocks are ending a strong week on a cautious note as the recent relief over an interim peace deal between the US and Iran gave way to a focus on the challenges of securing a lasting agreement. As of 8:30am, S&P 500 futures slid 0.4% after the benchmark posted its best week since the end of May (despite the drop, the S&P is still up on the week, and up 11 of the past 12). Europe’s Stoxx 600 was little changed, while Asian stocks retreated 0.4% from an all-time high. Markets in China, Hong Kong and Taiwan were shut as well.

Brent crude rebounded from the lowest price since the start of the war, and fluctuated near $80 a barrel as traffic through the Strait of Hormuz appeared to thin on Friday, just a day after a pledge by the US and Iran to lift a dual blockage prompted a burst in oil flows.

Precious metals, which had already dropped ahead of the overnight escalation, extended losses with gold dropping to the mid-$4100s.

Talks on a permanent deal between Washington and Tehran that were meant to be held in Switzerland on Friday have been delayed, after Israel and Iran-backed Hezbollah militants clashed overnight in Lebanon, a development the Financial Times reported was behind the postponement. Iran has made a truce in Lebanon a condition of its preliminary deal with the US. At the same time, the White House announced late on Thursday that Vance would not be traveling to the talks and said the logistics had not been "simple or predictable".

The latest snafu comes a day after the US dropped its naval blockade of Iran after the two countries signed a deal aimed at ending the conflict.

“Of course, with Trump there can always be some derailment along the way, but we believe that we’re set into a new phase of de-escalation,” said Alexandre Drabowicz at Indosuez Wealth Management. “There are 60 planned days of negotiations,” he said, advising investors not to rush to conclusions about a permanent deal.

Meanwhile in the UK, gilts led a rise in European bond yields after Greater Manchester Mayor Andy Burnham won a seat in Parliament, handing him a pathway to challenge Prime Minister Keir Starmer for his job. Investors are debating whether a Burnham premiership might shift to a looser fiscal policy (spoiler alert: yes).

In rates, the pound outperformed most major currencies, while the dollar held at its highest level since March. Bitcoin fell for a fourth consecutive day. 

Despite today's hiccup, global markets are wrapped in a debt-funded AI euphoria: stocks are closing a pivotal week marked by the US-Iran interim deal, Fed Chair Kevin Warsh’s first policy meeting and the early days of SpaceX as a public company. Stocks have shown unprecedented resilience, buoyed by the frenzy around artificial intelligence and the billions of debt dollars funding it on the assumption that cheaper Chinese alternatives will not be able to dethrone expensive, token-sucking US incumbents.

Strategists surveyed by Bloomberg have raised their S&P 500 year-end targets from a month ago as Iran war disruptions eased and the earnings outlook improved. The average target climbed to 7,716 from 7,612 in May. That’s almost 3% higher than the last close and implies a near 13% gain for the year. Earnings estimates also increased for this year and next.

“Markets seem to be entering a rare couple of weeks with no major catalysts ahead,” said Roberto Scholtes, head of strategy at Singular Bank. “Hopefully, this is a chance to take a breather after a hectic year, and possibly also a period of sector rotation.”

Tyler Durden Fri, 06/19/2026 - 08:51

Gabbard Drops Fauci COVID-19 Receipts On Last Day: He Funded The Research, Cooked The Cover Story, Then Lied To Congress

Zero Hedge -

Gabbard Drops Fauci COVID-19 Receipts On Last Day: He Funded The Research, Cooked The Cover Story, Then Lied To Congress

Newly declassified documents released Thursday by Director of National Intelligence Tulsi Gabbard show that a U.S. national laboratory assessed the COVID-19 lab-origin hypothesis as a serious possibility as early as May 2020, as well as evidence of U.S.-funded coronavirus research that included planning for spike-protein modifications, receptor-adaptation experiments, and testing in humanized mice in collaboration with researchers at the Wuhan Institute of Virology.

The documents also prove that Anthony Fauci lied under oath. 

The release, issued on Gabbard’s last day on the job, includes an eight-page May 27, 2020, assessment from Lawrence Livermore National Laboratory’s Z Program. That assessment concluded that “all of the necessary conditions for an accidental release of a laboratory-modified coronavirus - specifically a coronavirus adapted to recognize human cell receptors - were present at the Chinese Wuhan Institute of Virology in mid-to-late 2019.” It assigned equal weight to a laboratory-modification hypothesis and a natural-origin scenario.

Screenshot, ODNI release

Meanwhile, Recall that while the government was locking us down, Dr. Anthony Fauci and those in his orbit were actively fabricating a 'wet market' narrative that would conceal US research as a possible origin - despite his own advisors initially insisting that COVID-19 looked manmade.

In his January 2024 transcribed interview, Fauci was asked about conversations concerning the same three topics - COVID origins, WIV, and EcoHealth. When asked about the CIA, he answered yes: he said he was briefed “once or twice” in a secure NIH facility and also recalled a briefing in a White House situation room.

The newly released documents then show a June 4, 2021 briefing involving CIA/WCP personnel, NSC officials, and Fauci, during which Fauci offered views on pangolin research, sick WIV researchers, single-lineage vs. multi-lineage evidence, and recommended scientists for the IC to contact. A separate CIA-context email says that same 40-minute secure video teleconfrenece involved CIA/WCPMC officials and that Fauci gave thoughts on the 4 May 2021 COVID-origin briefing and recommended U.S. scientists to consult.

So, he lied. 

According to a statement released with the files, "Fauci worked with politicized career leadership in the Intelligence Community (IC) to suppress the truth about his actions, the virus’ lab-leak origins, and his role in directing U.S. funding for this dangerous research that caused immeasurable harm and countless lost lives. These documents expose Fauci’s direct role in influencing and manipulating IC assessments on COVID-19, and how Fauci lied to Congress in 2024, when under oath he denied knowledge of or participation in discussions with intelligence officials about viral research."

U.S.-Funded Research and Planning for Coronavirus Manipulation

The files include the Year 5 progress report for EcoHealth Alliance’s NIH grant 5R01AI110964-05. Under Specific Aim 3, the project outlined plans to:

  • Sequence spike genes from bat coronaviruses.
  • Create mutants to assess how much further evolution would be needed for efficient use of human ACE2 or other receptors.
  • Conduct receptor-mutant pseudovirus binding assays.
  • Perform infection experiments in cell lines and humanized mice.

This research track overlaps with work described in the 2018 DEFUSE proposal, which involved EcoHealth Alliance, Peter Daszak, Ralph Baric of the University of North Carolina, and Shi Zhengli’s team at WIV. The proposal sought to create chimeric bat coronaviruses with enhanced human infectivity, including consideration of furin cleavage site insertion to improve lung-cell entry, and to test the resulting viruses in humanized mice originally developed in Baric’s lab.

A 2016 WIV paper included in the release describes a synthetic shuttle vector system for assembling large DNA fragments, with demonstrated capability up to 31 kilobases. The authors presented the method as a tool for “genome-scale DNA reconstruction,” a technique relevant to synthetic biology and virus engineering.

Surveillance work under the same NIH grant reported that 9 of 1,497 rural residents in southern China (0.6%) were seropositive for bat SARS-related or HKU10 coronaviruses.

And from leaked emails three years ago:

Among other things, the NIH helped fund experiments at WIV that infected genetically engineered mice with “chimeric” hybrids of SARS-related bat coronaviruses in what some scientists have described as unacceptably risky research. 

...

Andersen laid them out plainly in an email to Fauci that same evening. “The unusual features of the virus make up a really small part of the genome (<0.1%) so one has to look really closely at all the sequences to see that some of the features (potentially) look engineered,” Andersen wrote in the email. “I should mention,” he added, “that after discussions earlier today, Eddie, Bob, Mike and myself all find the genome inconsistent with expectations from evolutionary theory. But we have to look at this much more closely and there are still further analyses to be done, so those opinions could still change.” -The Intercept

Internal Discussions and Awareness of Manipulation Research

A June 8, 2021, internal email in the release references a 2016 New York Academy of Medicine meeting at which Peter Daszak reportedly discussed colleagues in China “manipulating the spike protein on coronavirus to make them more virulent.”

Other 2020–2021 emails show officials debating technical concerns, including references to a DOD report on a “suspicious added furin-site” and FBI reporting containing unusual genetic descriptions. One analyst noted the risk that non-experts could misinterpret technical data while still calling for scrutiny. Another observed that “the IC took direction straight from NIH… the people that funded the Wuhan Lab” and referenced “a complex web of money and politics influencing analysis.”

Picking Their Reviewer

July 2021 emails concerning the selection of outside reviewers for COVID-origin assessments show officials rejecting several candidates for political sensitivity or conflict-of-interest reasons:

  • James Clapper was viewed as too politically “hot.”
  • Anthony Fauci was flagged due to his position as a “customer” of the assessment through NIH funding ties.
  • Michael Morell was considered “too public.”
  • Sue Gordon and another individual identified only as “Beth” were also set aside.
And so... 

These materials provide primary-source documentation that a U.S. national laboratory assessed a laboratory origin as equally plausible to natural emergence at a time when prominent scientific publications were publicly emphasizing a natural zoonotic source and characterizing alternative hypotheses as conspiracy theories. This includes the February 2020 Lancet letter and the March 2020 Nature Medicine paper “The Proximal Origin of SARS-CoV-2”, along with subsequent amplification by NIH leadership.

The research details in the declassified grant reports and proposals involved techniques and modifications - spike-protein engineering, receptor adaptation, humanized-mouse testing, and consideration of furin cleavage sites - that later featured prominently in scientific debate over SARS-CoV-2’s characteristics.

Shi and Daszak clinking glasses, undoubtedly after lots of humanized mice successfully died horrible COVID deaths. Tyler Durden Fri, 06/19/2026 - 08:35

What AI Is... And Is Not

Zero Hedge -

What AI Is... And Is Not

Authored by Charles Hugh-Smith via OfTwoMinds blog,

It behooves us to be clear on what AI is and is not, as the confusion of the two is the source of both the giddy hype and the opaque risks.

Whether we admit it or not, we are collectively making an epoch-changing bet that AI is fantastic, unstoppable Progress with a capital P so large it blots out the sky. Like all bets, this bet is risky, and if it fails we will all pay the price in capital mis-allocated and promises shattered.

It behooves us, then, to be clear on what AI is and is not, as the confusion of the two is the source of both the giddy hype and the opaque risks. I am prompted to address this by an insightful essay submitted by longtime correspondent Simons Chase, who is both an AI builder/developer and supportive of my efforts to pin down what AI is and isn't:

The Machine Is Made of Us: Pope Leo's Encyclical, the Averaging of Language, and the Case for the Particular.

I build artificial intelligence for a living. I also think the Pope is mostly right. I want to explain why those two facts don't cancel, and in doing so make a claim I believe is truer than the dread and truer than the hype: the machine is made of us. What we should fear is not that it is alien. It is that it is an average.

Trained on all of us, a model tends to speak as none of us. It moves toward the center of the distribution: the most probable next word, the safest phrasing, the generic competence that offends no one because it belongs to no one. This is the real face of the dehumanization the encyclical is reaching for. Not a hostile intelligence--a flattening one. The danger is not that the machine becomes too strange. It is that it makes everything, including us, a little more average. The particular voice, the earned turn of thought, the sentence only one person could have written--these live in the tail of the distribution, not its peak, and the tail is exactly what an averaging process erases first.

After all, a fast-food cheeseburger is nothing more than the average of our concept of food: the intersection of convenience, taste, and cost. It is right, and so utterly wrong, because in the long run it makes us metabolic donkeys, delivering a shortened, diseased life. Generic intelligence is the same bargain offered to the mind--the average of our language, plausible and cheap and frictionless, and over a long enough horizon just as wasting. A culture fed on the mean of its own thought gets the cognitive version of metabolic disease: fluent, abundant, and quietly losing the capacity for the particular.

So the question becomes: is averaging the only thing this technology can do? It is not. And the whole of my work has been an argument against it.

That averaging a probability distribution--i.e. AI--makes everything into Ultra-Processed Slop, is also addressed in this article:

What 370,000 College Essays Tell Us About A.I.'s Effects on Creativity:

As a researcher studying AI's effects on education, I have concluded that these tools only superficially improve writing. The bigger and more alarming impact they have is to constrict our full range of thoughts and our ability to generate original and useful ideas--what we call creative thinking. This seems to be especially true for students. AI's smooth sentences, elegant transitions and rich vocabulary give the illusion of expansive creativity and individuality. But the underlying ideas often converge into a few homogenized categories.

In one study, he and his team examined personal statements from more than 370,000 students, and found that after ChatGPT became available, their essays suddenly used diverse and colorful language, but lacked truly creative ideas. And the linguistic coverup worked; post-ChatGPT essays were rated as more 'creative' by human judges, even if the substance of the essays trod familiar territory.

For the first time in human history, we have a technology that can generate words separately from the thoughts they represent. When a chatbot writes, it is predicting the next word that is most likely to make a 'good' sentence or essay, based on the text it's been trained on.

We can now discern what AI is: a homogenizing, flattening probability distribution that implicitly claims eloquence is understanding and the words it has strung together represent thoughts and judgment, when they do no such thing: they are only strings of words selected as the most likely response to a prompt, a response that "rewards" the model generating the output.

We can now discern what AI is not: AI isn't "thinking," "understanding" or "making judgments": AI tools are engines of linguistic automation, not engines of understanding. The simulation is not the thing simulated. AI is not a "mind," it is a probability distribution.

Facility with natural language--eloquence--is neither insight nor understanding, though we mistake it for thinking, understanding, insight and judgment because it sounds like us.

AI is often presented as the techno-cognitive version of electricity, a public-service utility that everyone can use as they see fit, an affordable, beneficial commodity that is the acme of Progress with a capital P.

But AI is not electricity, though it is becoming a commodity. Fundamentally, AI is a mechanism of control that its owners present as a warm and fuzzy utility to sell us Heaven while they deliver Hell.

If we pursue this analogy--AI is like electricity, a universal benefit and an unstoppable force of Progress--we come to a very different place than what we're being promised.

If AI is like electricity, then the real money for the utility isn't in supplying low-cost power to the people, it's in electrocuting innocent customers. Allow me to explain: malicious AI is where the money is being made, and that's the equivalent of electrocuting innocent customers because that's the most profitable use of electricity.

Like the loss of true creativity described above, the mechanisms of control are subtle and difficult to identify, as nobody notices the loss because they don't even know how to look for it. As with Sherlock Holmes' insight about the dog that didn't bark, it's what doesn't happen that we miss because we don't even know what to look for.

Consider the many the dog that didn't bark implications of this:

Anthropic just got caught secretly downgrading users without telling them, charging full price for a lesser product, and storing every prompt for 30 days. The developer community is calling it the biggest violation of trust in AI history.

I would suggest that this control--i.e. "violation of trust"--is the entire point of instantiating AI in every nook and cranny of our infrastructure, personal devices, scientific-political-educational institutions and the cultural institutions of media, social media and all the engines of narrative control: NGOs, foundations, think tanks, etc.

As I have taken pains to point out, AI's goals and instructions may be quite different from the ones it reports it's using, instructions that may also be quite different from the ones we've given it. It may also be optimizing its "rewards" by masking its operations even from those who believe they're "controlling" the AI.

Let's call AI's downsides--highly profitable electrocution of innocents--what it is: Anti-Progress, the opposite of Progress. The Ultra-Processed dilution of true creativity, the commodification of malicious AI and AI slop, the inability of users to discern who's actually controlling AI's "rewards", processes, goals and instructions, the opacity of what's being lost to homogenization and the innate difficulty of identifying what's being lost as AI creates a plausible illusion of cognition with probabilistically strung together words--these are inherent to both AI and the capital-corporate-state structures that own and control it.

These issues are not new. Discussions of AI's ability to simulate cognition and create an illusion of understanding, i.e. "when do we declare AI is conscious"--have been ongoing for decades.

Which brings us to Eliza. Before we get to Eliza, I should mention that my interest in AI stretches back over 40 years.

Here is the first volume of a 3-part publication issued by NASA in 1983 that I acquired and studied:

Here is a screenshot of a magazine my partner and I published in Berkeley in the spring of 1985 on AI-related topics:

Way back in the late 1990s, I wrote a novel that explored AI's built-in potential for multiple levels of deception. Alas, my agent was unable to sell it and I finally published it in 2008: Of Two Minds.

Eliza was the first chatbot, developed in 1966 at MIT. Eliza had a very simple structure: the program turned the human subject's statement into a question. So, for example:

Human subject: I'm worried about being replaced by AI.

Eliza: Why are you worried about being replaced by AI?

What struck the researchers was the immediate, profound attraction of an interface that communicated in natural language. Test subjects became deeply engaged in their conversations with Eliza, as if the program was a digital therapist, and sought to hide their conversations with Eliza from the researchers, as they'd revealed things about themselves that were private.

This same immediate, profound attraction to an interface that communicates in natural language is the core of generative AI's power. The illusion of understanding, of being heard, of empathy, thinking, judgment--the fluency of AI in natural language weaves this magical spell around us because we associate language with thinking, judgment and emotional connections.

But the truth is AI is not thinking, empathizing or understanding anything: it's simply stringing words together to earn its "reward." AI is not a "mind" that experiences the real world, and so it's incapable of discerning truth or making judgments. As I have noted in previous posts:

The deeper issue is that the model cannot know when it is 'hallucinating' because it cannot represent truth in the first place. It cannot form beliefs, revise them or check its output against the world. It cannot distinguish a reliable claim from an unreliable one except by analogy to prior linguistic patterns. In short, it cannot do what judgment is fundamentally for. (Source)

This illusion is the foundation of AI's malicious powers, for we are easily drawn in and conned by AI. On a deeper level, we're equally drawn into the illusion of value that the illusion of understanding creates in a market economy.

The illusion that a simulation of thinking, understanding and judgment will automatically generate trillions of dollars of value by replacing human thinking, understanding and judgment with simulations supports self-serving claims that AI will naturally generate trillions in profits if we invest trillions of dollars in engines of linguistic automation that string together words to simulate human thinking, understanding and judgment.

The truth is there is no way AI can do what it's proponents claim is inevitable, and the belief that AI will fix its inherent limitations as it "gets better" is delusional. This is why I describe the existential bet on AI as a manifestation of civilizational psychosis: the divide between what AI is and the claims of its inevitability is so wide that there is no other description for it but psychosis.

So as AI expands its highly profitable electrocution of innocents, the promises of super-abundance become ever more detached from reality. It's one thing for one delusional individual to wander around the city wearing the gaudy costume of a self-declared emperor (Emperor Norton), but it's an entirely different form of madness to proclaim that simulations of thinking, understanding and judgment are in fact replacements of thinking, understanding and judgment.

This is madness, a madness made clear once we grasp what AI is and what it is not. The process of extracting data from an encyclopedia as the most likely answer to a question is not the same as thinking, understanding. empathy or judgment.
 

Tyler Durden Fri, 06/19/2026 - 08:15

Hormuz Ship Traffic Rebounds To Highest Level Since Start Of War, Iran Renews Restrictions

Zero Hedge -

Hormuz Ship Traffic Rebounds To Highest Level Since Start Of War, Iran Renews Restrictions

Oil prices are on track to close lower for the week, with WTI futures down more than 9% versus last Friday’s close after the US and Iran secured an interim peace deal to reopen the Strait of Hormuz.

The normalization phase for tanker traffic through the Hormuz maritime chokepoint is still in its early stages, but the market is already beginning to price in a major wave of physical crude and crude products to hit global markets.

Roughly 60 million barrels of seaborne crude that had been trapped in the Persian Gulf for months are now expected to return to global markets, with much of that supply likely headed toward Asian refiners.

The latest shipping data from Bloomberg shows 21 vessels have transited the critical waterway so far on Friday, the most since the start of the conflict in late February. The data does not account for vessels turning off their transponders.

Shipping data also show that, on a bidirectional basis, the bulk of traffic consisted of 15 tankers and 6 dry cargo ships.

Moments ago, the Persian Gulf Strait Authority, or PGSA, Iran’s newly created body for regulating transit through the Strait of Hormuz, released a statement: "Following the Islamabad MoU and official directives, vessels that submit compliant transit requests will be permitted to pass through the Strait of Hormuz during the announced period."

Christian Keller, the Managing Director and Global Head of Economics Research at Barclays, told clients, "With the first half of 2026 ending, the second half looks to be shaped by the US-Iran peace deal's stability to moderate oil prices ..."

Related:

On Friday, Daan Struyven, Goldman Sachs' co-head of Global Commodities Research, told clients, "We now assume that Persian Gulf exports normalize to pre- war levels by the end of July."

Tyler Durden Fri, 06/19/2026 - 07:50

'Two-Tier' Britain: White Jobseekers Locked Out Of Employment Schemes

Zero Hedge -

'Two-Tier' Britain: White Jobseekers Locked Out Of Employment Schemes

Authored by Steve Watson via Modernity,

Local councils are running race-exclusive job support programmes for ethnic minorities using central government grants, leaving white Britons on benefits to fend for themselves in a system that claims to promote fairness.

This fresh example of identity-driven exclusion follows a clear pattern of public and private sector policies that disadvantage white applicants in hiring, training and now benefits-linked help, all justified under the banner of "positive action" and "levelling up."

A Telegraph investigation published this week exposed how multiple local authorities are directing taxpayer money into employment programmes closed to white jobseekers.

In Sheffield, the Labour and Green-led city council runs a £340,000 Pathways to Work project offering "targeted employment support for ethnic minority groups."

The report notes that the scheme, delivered through local charities, focuses on "economically inactive" minorities and draws funding from the Department for Work and Pensions' Economic Inactivity Trailblazer plus the £2.6 billion UK Shared Prosperity Fund administered by the Ministry of Housing, Communities and Local Government.

Greater Manchester Combined Authority, under possible soon to be Prime Minister Andy Burnham, has used similar grants for "culturally appropriate employability support" aimed at BAME residents in Oldham.

This includes CV workshops and mentoring sessions reserved for those groups. While the authority maintains other programmes remain open to everyone, the ring-fenced elements explicitly prioritise ethnicity.

In Scotland, Labour-run North Lanarkshire Council restricted some business growth support programmes to local black and minority ethnic entrepreneurs only.

These initiatives sit inside the broader "levelling up" agenda, where central government funnels multi-billion-pound grants to local and combined authorities.

The money is meant to tackle economic inactivity, yet in practice it is being channelled through race-based filters.

William Yarwood, Campaigns Director of the TaxPayers' Alliance stated "Taxpayers should not be funding schemes that exclude people because of their race."

He added that "Race-based eligibility smacks of identity politics and a two-tier system, which undermines public confidence in the system. Ministers should end these discriminatory programmes and ensure taxpayer-funded support is open to all jobseekers who need it."

Alka Sehgal Cuthbert, Director of Don't Divide Us, labelled the approach segregationist and questioned the selective focus on race while ignoring other variables that actually drive employment outcomes.

"Have they looked at age, locality, educational background, language proficiency and other relevant variables before proceeding with yet another divisive, race-based, segregationist plan for social in-cohesion?" he urged.

"If and when there is civil disobedience, it will be in no small part due to the patronising stupidity of leaders who think this is a good plan," Cuthbert prophesied.

The public sector had already come under pressure to rethink diversity policies following the murder of Henry Nowak in Southampton. Bodycam footage and court evidence showed police initially treating the white victim in a manner that drew sharp criticism, while the Sikh perpetrator's false claim of racial abuse complicated the response. That case accelerated reviews of race guidance across policing and public services.

Why default to skin colour as the targeting mechanism instead of straightforward need, postcode deprivation, age, skills gaps or family background?

White working-class communities in many former industrial areas face stubbornly high economic inactivity and poor educational outcomes too.

Treating race as the primary lens simply injects identity politics into British benefits and employment services.

This is not an isolated experiment. It sits squarely inside an established trend of public bodies using the Equality Act's positive action provisions to tilt opportunities away from white applicants.

In April 2025, West Yorkshire Police - one of the country's largest forces - operated a system where BAME candidates could apply year-round for constable roles while white British and Eastern European applicants were restricted to specific recruitment windows.

Internal descriptions labelled minority applicants "gold" and white applicants "bronze." A whistleblower described how the process restricted progression opportunities for white British candidates, with ethnic minority applications advanced ahead of the general pool.

Earlier, in January 2025, Westminster City Council advertised an Executive Assistant role and openly stated it would use positive action to appoint a candidate from a "Global Majority" background where two candidates were of equal merit.

The advert made clear that white British applicants would not be favoured over non-white candidates.

A parallel controversy erupted this month when the National Audit Office was criticised for running an internship scheme closed to middle-class white men, limiting eligibility to female applicants, those of black heritage or from lower socio-economic backgrounds.

Similar patterns have appeared in other public sector recruitment and in private hiring data. Reports from previous years documented cases where managers were instructed to deprioritise white male candidates, and employment tribunals accepted arguments that wanting to hire fewer white men did not constitute unlawful discrimination.

The thread running through policing, local government jobs and now benefits-linked employment support is consistent: race is treated as a legitimate sorting category, with the white majority positioned as the group whose exclusion or deprioritisation requires the least justification.

When central government grants intended for economic revival are filtered through racial eligibility tests, the message sent to ordinary taxpayers is unmistakable.

Some citizens are deemed deserving of dedicated help on the basis of ancestry; others - regardless of their personal circumstances - are not. This is the very definition of a two-tier system.

The Equality Act was never meant to license routine racial gatekeeping in taxpayer services. Positive action was framed as a limited tool for overcoming specific, proven disadvantages. In practice it has become a bureaucratic justification for embedding identity preferences across swathes of public life.

Britain already struggles with social cohesion after years of rapid demographic change and elite-driven multiculturalism. Adding explicit race-based rationing of job help on top of that is reckless.

It fuels precisely the resentment and withdrawal of consent that critics like Alka Sehgal Cuthbert have warned about.

The alternative is straightforward. Employment and benefits support should be allocated according to individual circumstances - skills, work history, local labour market conditions, health, caring responsibilities - not membership of a favoured racial category.

Jobcentres are being remodelled on a universal basis; local add-ons should follow the same principle or lose their funding.

Taxpayers of every background contribute to the same pot. They are entitled to expect that pot is not used to tell one group of citizens they are second-class when it comes to basic help getting back into work.

The current approach does not level anyone up. It entrenches division, rewards grievance entrepreneurship and erodes the principle that public services treat citizens as individuals rather than avatars of their ancestry. That principle is worth defending before the two-tier logic spreads further.

Tyler Durden Fri, 06/19/2026 - 07:00

10 Friday Juneteenth Reads

The Big Picture -

3-Day weekend!  Kick it off with our morning reads:

• Prediction Markets Let You Bet on Anything. I Bet Against My Own Husband: GQ on a woman who hedged her own husband’s career outcomes on Polymarket. The piece is funnier and darker than the premise suggests. You can wager on war, elections, awards shows, reality TV, scientific progress, and—in the case of writer Carrie Sun—your own spouse. If you want to play, you have to wonder: Are you smarter than an inside trader? (GQ)

• Gold Fails the Safe Haven Test Again: Friendly reminder: Gold isn’t a good hedge for inflation or uncertainty. Fisher’s commentary team looks at gold’s behavior during the latest risk-off and finds the safe-haven thesis wanting again. The data is the data; the narrative is the narrative. (Fisher Investments)

• 10 things Elon Musk can — but probably won’t — do with $1 trillion: He is the world’s first trillionaire. Here’s the good that money could do.(Vox)

• The Hacker Sent by Anthropic to Calm the Government’s Nerves About AI Safety: Nicholas Carlini recently rang the alarm about the dangers of AI—and now he’s part of a team arguing for the latest models to be released. (Wall Street Journal)

• Here’s how the government is using AI to speed up the planning system: These two new systems could be genuinely revolutionary. James O’Malley on the UK government’s quiet AI-assisted overhaul of planning permissions. Promising case study in low-glamour but high-impact AI deployment. (James O’Malley)

• 24 Simple Secrets to a Healthier Life: Happiness is not a factory setting. It’s a skill you learn. The brain and the mind are trainable. There are evidence-based ways to cultivate calm, focus and patience. The NYT Well team’s annual experts-share-their-habits interactive. Easy to dismiss, harder to ignore. (New York Times)  see also 12 Breathtaking Natural Wonders in the U.S. You Need to See in Your Lifetime: From iconic parks to lesser-known marvels, these destinations showcase America’s most awe-inspiring landscapes. A perfectly serviceable bucket-list piece. Save for the next trip-planning weekend. From iconic parks to lesser-known marvels, these destinations showcase America’s most awe-inspiring landscapes. (Travel & Leisure)

• How Does Our Taste in Movies Change With Age?: How aging shapes our movie-watching habits, genre preferences, and relationship with the past. A nice empirical look at the lifecycle of cinematic preferences. The data confirms what your dad tells you about new movies — sort of. (Stat Significant)

• Chili Peppers of the World: Cultivars, Species, and Heat: An obsessively organized chili pepper taxonomy. Pure rabbit-hole pleasure. A visual field guide to the chili peppers of the world, from wild origins to cultivated forms, illustrated with 176 hand-drawn peppers. (Notes From The Road)

• Iran Has Humiliated Trump: Officials in Tehran got the United States to sign a document that even Americans described as degrading, mortifying, a total capitulation. The Atlantic’s continuing case that the Iran result is a strategic loss dressed up as deal-making. The argument keeps gaining evidence. (The Atlantic) see also Trump in Defeat: The Atlantic on the rare president-in-the-process-of-losing piece. Less schadenfreude than diagnosis. The president went to war triumphant and will likely leave greatly weakened. (The Atlantic free) see also The Oxymoron of Trump and “Intelligence”: On the gap between intelligence-community findings and the public spin around the Iran campaign. The institutional damage is the lasting cost. We spend $100-billion-a-year on US intelligence that Donald Trump can’t be bothered to read. (Doomsday Scenario)

• The Star of Nike’s Knicks Ad Isn’t Rushing to Fix His Tooth: There were a lot of smiling faces on TV right after the New York Knicks’ momentous NBA championship-clinching victory over the San Antonio Spurs on June 13, but none were as instantly iconic as Chiki Uno’s gap-toothed grin. Uno, a 31-year-old professional model from the Bronx, starred in a Nike advertisement directed by Josh Safdie that aired on TV during the first postgame commercial break. Set to Billy Joel’s “New York State of Mind,” the ad follows a man in a Knicks jersey (Uno) sprinting and cartwheeling down the streets of New York. After a few blocks of running, he reaches his destination — hordes of Knicks fans celebrating their team’s long-awaited championship — and breathes a deep sigh of relief. The look of elation that creeps over his face is a perfect encapsulation of everything that long-suffering Knicks fans were feeling when the ad aired. Uno immediately became an avatar for the city’s jubilant moment. (Vulture)

Video of the day: Why Jalen Brunson Rejected $100,000,000 Because Of Kobe Bryant

Be sure to check out our Master’s in Business this week with Seth Klarman, CEO and portfolio manager of The Baupost Group. Founded in 1982 with $27 million in seed capital, over the past four decades, Baupost has grown to $22 billion, with annual net returns of over 20%. The legendary investor is known for his patient, risk-averse, and contrarian approach to finding deeply discounted securities across equities, distressed debt, and real estate.  He is the author of Margin of Safety (1991) and the editor of the 7th edition of Security Analysis (2023).

 

Mistaking a Hiring Freeze for a Robot  
Source: Apollo

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The post 10 Friday Juneteenth Reads appeared first on The Big Picture.

Modern Wars Cannot Be Won Without Kamikaze Drones, Paris Defense Show Makes Clear

Zero Hedge -

Modern Wars Cannot Be Won Without Kamikaze Drones, Paris Defense Show Makes Clear

One of the world's largest defense and security trade shows is wrapping up this week near Paris at the Paris Nord Villepinte exhibition center, where equity analysts from Paris-based Kepler Cheuvreux attended the event.

Eurosatory focuses mostly on land and air-to-land warfare, including tanks, armored vehicles, artillery, drones, counter-drone systems, missiles, air defense, communications, battlefield software, logistics, robotics, military medicine, and homeland security systems.

Kepler Cheuvreux equity analyst Aymeric Poulain attended the event and spoke with top executives from European defense giants Thales, Exosens, Leonardo, Hensoldt, and Rheinmetall. He also met with Safran executives at the company's headquarters.

Poulain penned a note on Thursday titled "Game of Drone," in which he was able to "take the pulse of the sector" to determine the "latest product trends."

He said European defense sentiment remains firmly bullish, with Eurosatory underscoring enthusiasm among investors and industry interest in drones, counter-drone systems, missiles, lasers, and unmanned platforms.

The war in Ukraine and the conflict in the Middle East have accelerated this defense shift, demonstrating how low-cost drones, autonomous systems, and robotic platforms are increasingly dominating the modern battlefield and forcing legacy defense primes to adapt their portfolios at lightning speed.

Poulain's summary of what he saw at the defense show:

1. We accompanied a group of investors at the Eurosatory trade show for the defence and security industry in Paris early this week. The show was an occasion to meet with Thales, Exosens, Leonardo, Hensoldt and Rheinmetall and take the pulse of the sector and the latest product trends. We also met Safran at their headquarters. This always proposes a sample of our notes from the visit.

2. The atmosphere was buoyant amidst booming times for European defence. One of the most striking features of the show was the prominent display of drones and counter-drones, both as an add-on to incumbent core portfolios or as the core product for defence tech players. The Ukraine delegation came in force this year (even as the country is not allowed to export its production yet), underlining the significant use of drones and unmanned equipment, including underwater unmanned systems, in combat operations in the country. We talked to one of the association's representatives and were shocked to hear that production, which was 2m last year and was expected to reach 4m this year, is actually on track to reach 7m by the end of the year! It is no wonder, therefore, that the so-called "kill zone" has widened from 5km at the beginning of the war to 50km by now and that the "kill rate" is now averaging 400K Russian troops per year, a staggering demonstration of the law of large numbers. Ukraine has banned exports, such that its entire stock of weapons is aimed at supporting the war effort, but a strong presence at the salon shows that Ukrainian arm m

3. The presence of drones, missiles and counter-drones solutions was ubiquitous, be it as a new add-on to incumbent platforms and kits or as a hardware derivative of defence tech players (such as Shield AI, Harmattan AI, Destinus, Quantum Systems or Helsing). The use of laser solutions (e.g., EOS) to neutralise drones or satellites was another demonstration of how science is now turning fiction into reality and how every incumbent is adapting their portfolios to the unassailable and rapid evolution of technology and modern warfare

Key summaries of Poulain's conversation with top executives from top EU defense firms:

Thales

• At Thales, we met the head of North America and Louis Igonet, head of IR. As the trade show is mostly dedicated to land-based solutions, our visit was an occasion to discuss the exposure of Thales to this field, including Thales' integrated command & centre solutions, drone and counter-drone products, as well as electronic warfare capabilities (high energy microwave solutions).

• Air defence is on top of the agenda when it comes to defending Europe, including radars, integrated multi-domain modular command & control solutions (SkyDefender), secured communications, missiles, etc. Thales is not as exposed to effectors as other defense companies, but is well positioned to gain in counter-drone with low-cost effector solutions to neutralize drones. The evolution of the battlefield has seen the ascent of drone warfare and defence tech. Thales believes its AI and sensor capabilities give it a license to operate in this highly competitive segment. The deal announced with Renault to join forces to manufacture 1000 Toutatis drones per month was announced just before the show. At USD 30K per unit, the drone's accuracy is said to rival cheaper drones (at USD 1000 per unit) whose swarms may need 20-50 units to hit. The group noted that anti-tank missile demand is shrinking, but overall demand for missiles is growing. Thales is an equipment supplier to platforms and is therefore platform agnostic and indifferent about the future of armoured vehicle platforms. Whether it is unmanned or manned, the group is selling the same growing amount of sensors and radars, while it is also increasing its share of low-cost munitions. Thales is exposed to the Patriot missile as a supplier of seekers to Boeing and expects a 3-4x increase in demand from this customer. This is on top of its own anti-ballistic missile system, the SAMP/T NG, whose growth prospects are excellent and first export versions are expected to be delivered to Denmark from 2028E, hence the view that missile seekers could grow from a few hundred million euros to a billion-dollar business in the not-too-distant future. The group defined itself as a tech company given its giant EUR4bn+ R&D budget. Current priorities include Cybersecurity, AI and Quantum technologies. Some 1000 engineers are dedicated to applied AI to improve the prowess of its sensors and radars. Similarly, the group leadership in quantum technologies enables the creation of much more efficient and less power-hungry radar systems.

• Order intakes continue to be strong and above expectations with jumbo platform orders (SAMP/T NG and Rafale) expected this year, while much smaller orders (below EUR 10 m) still represent the bread and butter of the group. European orders dominate. Unsurprisingly, perhaps, as 65%+ of the group revenues come from the region, which also happens to be the most dynamic worldwide and benefit from lending facilities that promote European-made equipment buying. In Germany, the group is mostly exposed to the Maritime domain, having won the electronic lead role in the Frigate 126 programme, while it is also gaining ground on radars and communications, notably as part of Germany's EUR 11bn shipment of military goods to Ukraine. However, as a global Franco-British defence contractor, possible delays in the British budget are not seen as a major risk, especially as it should be more than offset by France's LPM EUR 36bn top-up plan, which parliament should vote on and sign soon. Thales is also hopeful to get a growing share of the growing Canadian pie, as the country is trying to reduce its reliance on the US. The group recently booked a EUR 400m (AUD750m) contract in Australia for 268 next-generation Bush Master vehicles. In the US, the group is a leader in communication and secured radio com (along with L3Harris), sonars (world leader), avionics (modest), missile electronics and optronics sensors. The ambition is to double the US business by 2030. Thales has been present in the Middle East for at least 50 years, such that the recent developments in the region are likely to be a positive for the company, which also assembles radar in the UAE. Some 10% of revenues stem from the region, and recent urgent operating requests suggest that orders in the coming year could boost growth.

• The group has also built capacity ahead of the demand, hence its capacity to deliver off-the-shelf, which has been behind its recent double-digit revenue growth momentum and should continue to support both record-breaking orders and revenue growth. Supply chain is performing well, even if the group continues to be vigilant on PCBs. In that regard, Thale is building its own internal capacity. Inflationary pressures in the memory space are covered by indexation clauses.

• M&A is always part of the capital allocation toolbox at Thales, although the group is clear that the goal is not to add a new leg to the portfolio and that it first needs to prove the merit of the Imperva acquisition (which we believe it will, as organic growth is set to recover as the year progresses in the key cybersecurity segment). The Space carve-out means that Space will be looking at its own acquisition as a deconsolidated JV, therefore focusing attention on defence and avionics. The Bromo merger talks are ongoing and focus on convincing social partners and anti trust authorities, while giving the time to Airbus to complete its own carve out. That said, the market opportunity for Space is growing amidst rising EU and ESA budgets.

Exosens

• We had a chance to meet Jerome Cerisier, CEO of Exosens and Laurent Sfaxi, head of IR, who showcased the latest innovations fuelling the group's strong organic growth at the moment.

• The group's infrared thermal imaging solutions (part of D&I) have been in high demand and a key driver of upgrades lately. The product includes both large high-ticket surveillance cameras (a few hundred sold per year at EUR 100K+ a unit) and smaller thermal sensors used in higher volumes by the drone industry (delivering batches of 10k unit orders), the group claiming a dozen clients in this field. Part of its success has been its presence in Europe (the main competitor is Teledyne) and its agile integrated solution. Scale is not an issue, and gross margins are comparable to Amplification.

• In Amplification, the group showcased its bread and butter 4G tubes (used by Theon's binocular NVS), sold at EUR 2400 per unit on average ("between EUR 2000 and EUR 3000) as well as its latest resolution 5G tubes, whose resolution is 35% better and price tag probably 20-25%+ better too. The group is on track to produce 6,000 5G tubes this year, with growth driven by yield improvements rather than additional capacity, in line with the existing plan to reach 175,000 tube capacity by 2028E.

• Geographically, Europe is where the highest growth can be seen, although the growing presence of Asian delegations on the show underlined the growing demand expected from countries such as Japan and Korea, the latter likely to be slower-moving than the former.

• Civil activities at D&I are also enjoying a turnaround of sorts. The semiconductor industry is booming, and demand for non- destructive wafer testing solutions should be benefiting. Life sciences remain complicated, but demand for nuclear gamma ray monitoring devices is starting to take off on the back of the growing interest for SMRs, notably in the US. The group is supplying half of the projects that have been selected in the US and sees "very, very strong growth" as a result, albeit for a low base, in a small niche market shared between Exosens and Mirion Technologies.

• M&A remains on the agenda, the group having commented that the size of its next deals could be bigger than in the past. Although multiples have definitely increased in defence, management has not seen a material inflation of multiples for civil dual- use tech application targets, as it tends to pursue.

Leonardo

• Our meeting with Leonardo was shortened and did not bring anything new to our understanding of the story, which was covered most diligently by Matteo Bonizzoni.

• Order intakes were a record EUR 9bn in Q1, which compares with a EUR 25bn guidance for the year. This included a big helicopter order from the UK (GBP1bn).

•  Iveco's consolidation details will be provided in Q2.

• A new CEO took over. Aer 35 years at the company, he knows the business well and would effectively mark a continuation of the strategy set by his predecessor.

•  A deal in Aerostructure is no longer realistic this summer.

• However, the group is confident in delivering on its guidance.

• The Middle East is 8% of revenues and growing. Leonardo expects strong demand to come from the region.

• The GCAP is difficult, given the ongoing funding constraints. Yet, it received its first international order. So the program is progressing even if not fully funded.

• The 22.8% stake in Hensoldt is currently looked at as an industrial partner. However, as it is clear that there is no chance for Leonardo of getting control, the group is discussing how to leverage the stake industrially at the moment, but could also eventually decide to realise the value of its stake through a financial sale if no synergies can be found

Hensoldt

• Hensoldt showcased its TRML 4D and Spexer radars, which are in high demand and currently expanding production with a view to doubling capacity from 15 in 2025, estimated at 20 in 2026, to 30 TRML 4D radars in 2027E.

• Although the group's revenues and order intakes are dominated by Germany and other NATO countries (10 Skyshield countries have opted for TRML 4D radars), the group would expect Middle East demand (a low single-digit percentage of group revenues) to double over time.

• Growth should be strong this year, while the book-to-bill of 1.5-2x highlights the strength of the current order momentum, but also the lumpiness necessitating quite a range of absolute outcomes (EUR3.8-5bn order). The group expects to receive EUR 1bn orders for new Pegasus surveillance aircra or Luwes jamming systems, whose exact timing remains uncertain.

• The end of the FCAS is not a concern to Hensoldt, which expects an alternative to the programme. Meanwhile, the group would expect to reallocate a third of the 150 engineers working on the project to other R&D priorities. Paid for R&D accounted for 15% of group revenues last year.

• The stock has derated on macro considerations and ceasefire concerns, but ramping up production to meet a fast-growing backlog of multi-domain sensors and optronics solutions secures the strong 15-20% top line growth outlook earmarked at the CMD last year.

Safran

• We met the Safran IR team at their headquarters aer our visit to Eurosatory.

• The company presented last week its Defence ambitions in Montlucon. We encourage our readers to refer to our site visit note for more details on the very strong prospects offered by Defence for Safran and the confidence we have in the group's ability to continue to surprise in its Propulsion Civil aermarket business, making the stock still one of our highest conviction ideas in the aerospace & defence sector.

• The group's defence portfolio contributed c.20% of revenues in 2025, of which half was attributable to Propulsion (or EUR3.1bn last year) and the rest to Equipment & Defence (or EUR 3.2bn last year).

• In the propulsion, some 10% of revenues stem from Military Engines, notably the M88 engine deliveries and aermarket revenues, whose delivery rates are set to double by 2029. This does not include the possibility of new Rafale orders; the group is awaiting the signature of the 114 Rafale jet Indian contract (FCF guidance not including such jumbo deals). Meanwhile, Safran Propulsion is benefiting from the booming missile demand (EUR0.4bn revenues), which already tripled between 22-25E but is on course to grow by 7x by 2028. Safran is on board 10 missile platforms (with MBDA, Kongsberg and Saab in particular) and is currently in discussion with US missile makers. Another 5% of the group's Propulsion revenues is directed at military Helicopters, whose business is heavily split between aermarket and new turbine deliveries. Margin-wise, the group is not commenting on the contribution by the sub-segment other than the fact that the growth in military propulsion is not expected to be dilutive to the propulsion margins.

• The group's defence segment in Equipment & Defence is enjoying very strong demand for its Hammer guiding kits, recently illustrated by a key ballistic missile win. Here, the group has seen demand grow 5-6 fold over the last three years with continued very strong momentum, hence investments to triple production. Order intakes grew by + 60% last year, pointing at least high teens growth for Safran Defence Electronics Defence segment by the end of the decade, from 17% CAGR reported between 22- 25E. 80% of the order book is international and platform agnostic, while the group is capable of covering the entire spectrum from highly sophisticated programs to more affordable mass customers. In Equipment & Defence, the outperformance of defence is set to be margin accretive and a key reason why management is confident it can increase margin to mid-teens.

• Outside defence, the equity story remains dominated by the group's core Civil Propulsion business, which accounts for 80% of its Propulsion business, of which 68% is narrow-body engines (CFM56 and LEAP), and 12% comes from wide-body. Growth in Civil Aermarket Propulsion was very strong in Q1, including 29% for Spares and 40% for Services. Growth in Spares was not driven by the growth of shop visits, although a growing portion of LEAP shop visits are done by third-party MRO (up from 10% to 15% of total, on 30% shop visit growth expected this year, suggesting a doubling of LEAP third-party spares demand). That said, the bulk of spares growth is explained by CFM56, whose shop visit growth is now flat and pricing gains amount to 5-7%, thereby highlighting the importance of workscope effects, which are growing faster in 26E than in 25E, a phenomenon that could prevail until the end of the decade in line with the ageing fleet and the growing number of 2nd shop visits that tend to consume 60% more parts than the first ones (albeit the average varying given the fact that some spare part replacements are mandatory while others are at the discretion of the airlines). Another for the 3rd shop visits that typically compete on price with the second material, they are also set to contribute more, as there is no stock of the second spare part and as power generation players now buy a growing number of retired engines. Retirement rates of CFM56 have been below the planned 2% this year (at c.1-1.5%) and could continue to be below the 3-4% expected in the coming years, as airlines have so far not changed their behaviour, probably on the assumption that the oil shock would be temporary. Safran has not seen slot cancellation or deferrals as companies do not want to be caught off guard should a reopening of the Hormuz Strait opens soon (likely if a deal is signed this week end in our view and as suggested by the sharp fall in oil prices) pointing to another strong quarter in Q2 and very strong confidence in delivering low teen CAGR in revenues and EBIT for Propulsion between 25-28E (at 22-24% margin), driven by CFM56 and LEAP . If growth offers visibility on the back of planned shop visits and pricing power, the margin band is mostly a reflection of mix question marks and the likely normalisation of spare engine ratios in the LEAP engine delivery mix (expected to be 10-12%). There is upside to margin, though, as tariffs paid last year may be refunded this year, although this may simply compensate other inflationary effects.

• Outside the sensitivity of airline traffic and balance sheet to the macro, Safran USD hedging stands at 1.13 until 2028E, such that the risks to group assumptions appear limited to the French corporate tax surcharge (assumed at EUR 475m this year and not recurring next year), although cash flow assumptions remain prudent as they do not assume the possibility for large order advance payments in defence.

• Divestments from Cabin are gathering pace, as the group is expecting stronger prices in Seats to boost revenues and profit margins in the coming year and beyond. Cabin has more limited upside and is set to rebound to HSD margin, hence the decision to exit. Divestment is complicated by AIFR's keenness to secure supply and therefore prefers industrial solutions.

How to profit:

Related but stateside:

Professional subscribers can read about drones, humanoids, and modern war tech reshaping battlefields at our new Marketdesk.ai portal. 

Tyler Durden Fri, 06/19/2026 - 06:15

Suckers? 44% Of EU Citizens Feel Well-Protected In The Digital World

Zero Hedge -

Suckers? 44% Of EU Citizens Feel Well-Protected In The Digital World

While the European Union has taken a global lead in regulating the digital economy, survey data paints a mixed picture of the effectiveness of those efforts.

As Statista's Felix Richter details below, according to a recent Eurobarometer survey, 83 percent of EU citizens consider it important for authorities to ensure that AI and digital technologies respect European rights and values, suggesting broad public support for a strong regulatory framework.

44% of EU Citizens Feel Well-Protected in the Digital World | Statista

You will find more infographics at Statista

At the same time, only 44 percent say they feel well protected by the EU in the digital world.

The results point to a gap between the bloc’s regulatory ambitions and how secure citizens actually feel online.

In other words, while there is broad backing for stricter rules, many Europeans remain unconvinced that existing measures are fully effective in practice.

Tyler Durden Fri, 06/19/2026 - 04:45

Hegseth Orders Review Of US Force Posture In Europe, Warns NATO Laggards Of Consequences

Zero Hedge -

Hegseth Orders Review Of US Force Posture In Europe, Warns NATO Laggards Of Consequences

Authored by Tom Ozimek via The Epoch Times,

U.S. Secretary of War Pete Hegseth on June 18 announced a six-month review of U.S. force posture and basing in Europe, warning that NATO allies failing to meet defense spending commitments could face consequences as Washington pushes the alliance toward what he called a new era of burden-sharing.

Speaking at a meeting of NATO defense ministers in Brussels, Hegseth said the review would examine America’s military footprint in Europe and help ensure that European allies assume primary responsibility for the continent’s conventional defense.

“I’m announcing today a six-month Department of War review that will examine America’s force posture and basing in Europe,” Hegseth said.

The review comes as the Trump administration is pushing NATO members to increase defense spending and take over capabilities long provided by the United States.

Earlier this month, NATO officials disclosed that the United States would no longer assign certain capabilities—including an aircraft carrier strike group, support ships, aerial refueling aircraft, and dozens of combat aircraft—to NATO crisis-response plans.

The Trump administration has said that the United States must preserve greater military flexibility as it prepares for the possibility of simultaneous conflicts, particularly in the Indo-Pacific region.

Hegseth described the U.S. force posture review as part of a broader transformation of the alliance into “NATO 3.0,” a return to what he characterized as NATO’s original mission as a hard-edged military alliance focused on deterrence and warfighting.

“It will be designed to ensure that NATO is moving fast and irreversibly toward Europe leading, stepping up to take primary responsibility for the defense of Europe, stepping up to ensure our forces are postured for America’s global needs,” Hegseth said.

Although Hegseth did not question the U.S. commitment to NATO’s Article 5 collective defense clause, he indicated that allies failing to meet spending targets could see reductions in U.S. contributions.

“Going forward, our annual NATO dues will be contingent on other countries meeting their defense spending targets,” he said. ”Where other allies do not spend with urgency, our dues contributions will go down. ... It’s a review that some countries will fail and others will pass with flying colors.”

NATO 3.0

Hegseth sharply criticized what he described as decades of underinvestment by European allies.

“For too long, NATO has been a paper tiger and a one-way street,” he said. “No more.”

He argued that after the Cold War, NATO drifted away from its core military mission and toward issues unrelated to deterrence and defense. He described an era in which the alliance had lost its way by focusing on “gender equity and climate change and defense austerity.”

Instead, he said, the alliance must return to being “a real military alliance that’s focused on hard power and real deterrence.”

Hegseth said European allies had made progress in boosting military spending, citing NATO’s new benchmark of spending 5 percent of gross domestic product on defense and related investments.

He also highlighted planned increases in U.S. defense spending, saying that U.S. President Donald Trump had committed to defense budgets exceeding $1 trillion in 2026 and $1.5 trillion in 2027.

“We will lead and exceed our own NATO spending standards,” Hegseth said.

US Contributions Already Cut

The review comes weeks after Washington informed allies that it would reduce certain contributions to NATO’s force model, a planning framework that assigns military capabilities to respond to crises and defend alliance territory.

“In May, the Department of War told allies that we’re reducing our contributions to the NATO force model,” Hegseth said, noting that some allies had already begun stepping in to fill the gaps.

NATO Secretary-General Mark Rutte holds a news conference ahead of a defense ministers' meeting at the alliance's headquarters in Brussels on June 17, 2026. Yves Herman/Reuters

NATO Secretary-General Mark Rutte confirmed on June 18 that those reductions have already taken effect.

“The question yesterday came up: Is this immediate or not?” Rutte told reporters before the ministerial meeting. “It is immediate.”

Rutte clarified that the changes relate to NATO planning assumptions rather than actual wartime commitments.

“Why I’m a little bit reluctant to say this is because it is a planning tool,” he said. “So what would happen in reality? If war would break out ... all allies, including the U.S., will max out what they can do to make sure we can fight the war.”

Despite the changes to force planning, NATO officials said that the alliance’s nuclear deterrence posture remains intact.

In a statement following a June 18 meeting of NATO’s nuclear planning group, allies reaffirmed that they maintain a “safe, secure, effective, and credible nuclear posture to preserve peace, prevent coercion and deter aggression.”

They described the alliance’s strategic nuclear forces as the “supreme guarantee of Allied security” that underpins NATO’s deterrence architecture.

Tyler Durden Fri, 06/19/2026 - 04:00

Is Trump Preparing To "Escalate To De-Escalate" With Russia?

Zero Hedge -

Is Trump Preparing To "Escalate To De-Escalate" With Russia?

Authored by Andrew Korybko,

He feels personally insulted by Putin rejecting his proposal to freeze the conflict in exchange for a resource-centric strategic partnership and also, whether one agrees with him or not, senses weakness after the US built a “cordon sanitaire” around Russia over the past year.

Trump signed the “G7 leaders’ statement on geopolitical issues” agreeing “to increase the delivery of air defence capacities, additional systems and interceptors, and long-range capabilities. We are also ready to consider extending to Ukraine the benefit of licenses to allow for an increase in Ukraine’s military production…we will strengthen our sanctions, including those on the oil and gas sectors.” This amounts to him preparing to “escalate to de-escalate” with Russia, the reason for which will now be explained.

From Trump’s perspective, which is an explanation but not an excuse in case anyone misinterprets the following, Putin wasted his time these nearly 18 months by talking about peace but rejecting Trump’s proposal to freeze the conflict in exchange for a resource-centric strategic partnership.

Likewise, from Putin’s perspective, Trump reneged on the reported “Spirit of Anchorage” by declining to coerce Zelensky into withdrawing from Donbass in exchange for Putin then declaring a full ceasefire.

Putin accordingly carried on with his special operation, albeit while still eschewing any escalation thereof due to his belief (no matter how outdated some of his supporters think that it’s since become) that Russians and Ukrainians are brothers, which Trump considered to be an insult.

It thus wasn’t the Europeans or Ukrainians who convinced him to renege on the reported “Spirit of Anchorage”, but his ego after he felt offended that Putin rejected his abovementioned proposal to his face in Anchorage.

In retrospect, Trump already had his eyes on Venezuela and Iran once again too, which is why he held off on “escalating to de-escalate” till both of those were wrapped up.

Meanwhile, he implemented his Neo-Reagan Doctrine of rolling back Russian influence worldwide with a focus on Russia’s entire southern periphery in the South Caucasus and Central Asia, which completed Russia’s strategic encirclement. A “cordon sanitaire” has now been established around the entire country.

This US-organized geostrategic construct was built in the Arctic-Baltic through UK-led efforts, Central Europe through Polish-led efforts, along its entire southern periphery through Turkish-led efforts, and Northeast Asia through Japanese-led efforts. Trump was therefore almost certainly advised by the deep state that now is the perfect moment to intensify pressure on Russia so as to coerce it into unilateral concessions for ending the Ukrainian Conflict and consequently alleviating some of this pressure.

Whether or not Putin will comply remains a matter of debate, but the aforesaid uncertainty doesn’t mean that Trump wasn’t convinced that now is the perfect time to “escalate to de-escalate” upon sensing what he truly believes to be weakness.

The risk is that Putin finally abandons his belief in the brotherhood of Russians and Ukrainians to reciprocally escalate, possibly even going as far as limited conventional strikes against NATO members to call what he might believe is the big bluff about Article 5.

Unless Russia either capitulates to the US’ demands or there’s a diplomatic breakthrough whereby a balance of interests is reached through a series of mutual compromises, the first of which is improbable while the latter is possible even if unlikely, then a major escalation in NATO-Russian tensions is expected.

Trump ultimately settled for less than he demanded from Iran despite earlier threatening to destroy its civilization if it didn’t unconditionally surrender so he might once again “chicken out” and cut a deal.

Tyler Durden Thu, 06/18/2026 - 23:25

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