Baltic Dry Index. 2083 -12 Brent Crude 67.75
Spot
Gold 5064 Spot Silver 77.27
U
S 2 Year Yield 3.50 +0.03
US
Federal Debt. 38.684 trillion US GDP 31.152 trillion
What
economic calculation requires is a monetary system whose functioning is not
sabotaged by government interference.
Ludwig von Mises
With the Shanghai
silver market closed for a week, can the London Billion Market Association and
NY Crimex Comex resist the temptation to try to rig the silver price
lower?
With US markets
closed on Monday for Presidents Day, no not named for President Trump, we focus
this weekend on AI and tariff disruption increasingly hitting the US economy.
AI
disruption could spark a ‘shock to the system’ in credit markets, UBS analyst
says
Published
Fri, Feb 13 2026 12:34 PM EST Updated Fri, Feb 13 2026 1:19 PM EST
The stock
market has been quick to punish software firms and other perceived
losers from the artificial intelligence boom in recent weeks, but credit
markets are likely to be the next place where AI disruption risk shows up,
according to UBS analyst Matthew
Mish.
Tens
of billions of dollars in corporate loans are likely to default over the next
year as companies, especially software and data services firms owned by private
equity, get squeezed by the AI threat, Mish said in a Wednesday research note.
“We’re
pricing in part of what we call a rapid, aggressive disruption scenario,” Mish,
UBS head of credit strategy, told CNBC in an interview.
The
UBS analyst said he and his colleagues have rushed to update their forecasts
for this year and beyond because the latest models from Anthropic and OpenAI have
sped up expectations of the arrival of AI disruption.
“The
market has been slow to react because they didn’t really think it was going to
happen this fast,” Mish said. “People are having to recalibrate the whole way
that they look at evaluating credit for this disruption risk, because it’s not
a ’27 or ’28 issue.”
Investor
concerns around AI boiled over this month as the market shifted from viewing
the technology as a rising tide story for technology companies to more of a
winner-take-all dynamic where Anthropic, OpenAI and others threaten incumbents.
Software firms were hit first and hardest, but a rolling
series of sell-offs hit sectors as disparate as finance, real estate
and trucking.
In
his note, Mish and other UBS analysts lay out a baseline scenario in which
borrowers of leveraged loans and private credit see a combined $75 billion to
$120 billion in fresh defaults by the end of this year.
CNBC
calculated those figures by using Mish’s estimates for increases of up to 2.5%
and up to 4% in defaults for leveraged loans and private credit, respectively,
by late 2026. Those are markets which he estimates to be $1.5 trillion and $2
trillion in size.
‘Credit
crunch’?
But
Mish also highlighted the possibility of a more sudden, painful AI transition
in which defaults jump by twice the estimates for his base assumption, cutting
off funding for many companies, he said. The scenario is what’s known in Wall
Street jargon as a “tail risk.”
“The
knock-on effect will be that you will have a credit crunch in loan markets,” he
said. “You will have a broad repricing of leveraged credit, and you will have a
shock to the system coming from credit.”
More
AI disruption
could hit credit markets next, UBS analyst says
US
business, consumers bore 90 percent of Trump tariff costs: NY Fed
by Fiona Bork - 02/13/26
10:31 AM ET
U.S. businesses and consumers bore about 90 percent
of the cost of President Trump’s sweeping tariffs, according to a recent report
by the Federal Reserve Bank of New York.
The study,
published Thursday, found that the majority of costs that came from tariffs
were passed onto the American public in the first 11 months of 2025, contradicting
Trump’s promises that foreign companies would pay the import
taxes.
In the first eight months of the year, consumers and
businesses were shouldering 94 percent of the economic burden associated with
tariffs. The New York Fed noted that tariffs’ pass-through into import prices
declined in the latter half of the year, meaning that foreign exporters were
taking on a larger share of the tariff incidence.
The average tariff rate throughout 2025 increased
from 2.6 percent to 13 percent with few dips and spikes midway through the
year, according to the report.
“U.S. firms and consumers continue to bear the bulk
of the economic burden of the high tariffs imposed in 2025,” the study’s
researchers wrote in a blog posted Thursday.
The report comes as Trump’s tariff regime has
received criticism from foreign adversaries and bipartisan U.S. lawmakers.
In recent weeks, Trump has threatened tariffs on
Canada and a number of countries in Europe before later pulling back on the
threats. On Wednesday, half a dozen House Republicans were part of the effort
to block tariffs Trump promised on Canada. Trump
threatened “consequences” on these GOP individuals who voted against
him.
“Any Republican, in the House or the Senate, that
votes against TARIFFS will seriously suffer the consequences come Election
time, and that includes Primaries!” the president wrote in a
Truth Social post Wednesday evening.
The New York Fed’s study corroborates the findings of other recent studies which
found U.S. businesses and consumers were shouldering more than 90 percent of
the economic burden of tariffs.
New
York Fed study: Trump tariffs burden U.S. public
Trump
tariffs leave importers with record-breaking $3.5 billion U.S. Customs bond
funding shortfall
Published
Thu, Feb 12 2026 11:23 AM EST Updated Fri, Feb 13 2026 1:17 PM EST
A
record-breaking number of companies shipping products into the United States
are coming up short on a federal government requirement to financially
guarantee they can cover the import trade duties triggered by President Donald Trump’s tariff
policies.
And
this is leading to a record amount of money paid to the U.S. to cover the
shortfalls.
U.S.
Customs and Border Protection data shared with CNBC shows that what are
called customs
bond “insufficiencies” reached a total of 27,479 in fiscal 2025, with
the combined value soaring to almost $3.6 billion. It is the highest number of
bond insufficiencies and the highest total value across insufficiencies ever
recorded. In fact, it doubles the 2019 level when tariffs enacted by Trump
under Section 301 of the Trade Act of 1974 also fueled bond shortfalls.
“Bonds
are the primary tool used by U.S. Customs and Border Protection to safeguard
the revenue of the United States and ensure compliance with applicable laws and
regulations,” said a U.S. Customs and Border Protection spokesperson.
Under CBP guidelines, the agency continuously reviews bond
adequacy, and a bond is flagged as being insufficient when an importer’s
duty/tax liability exceeds 100% of their current bond capacity. The shortfall
comes at a time of record
tariff revenue for the U.S. government, with tariff collections surging in
January to $30 billion and reaching a year-to-date total of $124 billion. That
is up 304% from the same period in 2025.
“In
totality, it makes sense that insufficiencies are more than double,” said
Jennifer Diaz, attorney at Diaz Trade Law. “Many companies take it for granted
that a $50,000 bond should be able to cover you for a one-year period,” she
said. “But it might not. They are not utilizing set calculations, and don’t
have anyone in their corner telling them that their bond obligation is higher.”
International
trade experts told CNBC that with some tariffs increasing from 10%-25% or more
for certain products, importers are facing customs bond amounts that now range
from the minimum bond amount by regulation of $50,000 to as high as $450
million.
Importers
buy customs bonds, also known as surety bonds, through
specialized insurance companies known as surety companies. The bonds are issued
approximately 30 days before imports arrive in the U.S. to ensure that Customs
collects the requisite tariffs in the event an importer does not pay its
obligation. The bonds are held for 314 days by CBP in accounts that bear
no interest. During this time, duties that were paid can be reviewed and
receive final government sign-off.
U.S.
importers pay a premium to insure their bonds. The premium is typically 1% of
the bond limit, with the price of the bonds covering 10% of the duties and
taxes paid over a rolling 12-month period. If tariffs and taxes go up, the
customs bond requirement goes up as well.
Surety
companies have told CNBC they have seen bond increases upward of 200%. “In one
unusual case, a large auto manufacturing client saw its custom bond amount
increase by 550%,” Vincent Moy, international surety leader for Marsh Risk,
recently told CNBC.
If
the bond is insufficient, the importer can’t get the freight, and it is held by
CBP until the bond meets requirements. To address the shortfall, importers need
to have another bond issued and that can take at least 10 days.
In
addition to the bonds, companies rely on related collateral to guarantee trade
duty coverage. “If companies do not increase their collateral, the goods will
be stopped at the port,” Moy said.
More
Tariff-linked
Customs bond funding gap hits record $3.5 billion
Next, commodities. Mr.
Bessent, if it’s to hot for you, stay out of the kitchen. Mr. Bessent though,
was the Soros man in London who took the UK Treasury for a ride in September
1992. How the mighty get humbled.
After holding a series of financial positions, he
was hired by Soros Fund Management in 1991, eventually becoming the head of
its London office. While
serving in the role in September 1992, he was a leading member of the SFM
group, which profited by $1 billion on Black Wednesday, the British pound sterling crisis.
How
China’s ‘unruly’ speculators might be fueling the frenzy in gold market
Published
Fri, Feb 13 2026 1:51 AM EST
Gold’s
wild price swings in recent weeks are increasingly being linked to speculative
trading in China by some analysts, with U.S. Treasury Secretary Scott Bessent
attributing the heightened volatility to “unruly” Chinese activity.
Gold prices jumped to a
record high of $5,594 per ounce on Jan. 29 only to plummet nearly 10% the next
day in its sharpest drop in decades. Since then, the yellow metal has struggled
to consistently stay above the 5,000 level.
While
broader factors such as U.S. interest-rate expectations and geopolitical
tensions continuing to drive bullion demand, some analysts believe Chinese
retail and institutional investors are playing an outsized role in driving
volatility.
Bessent,
who spoke on Fox News’ Sunday Morning Futures, described the move bluntly. “The
gold move thing, things have gotten a little unruly in China … They are having
to tighten margin requirements. So gold looks to me kind of like a classical,
speculative blowoff.”
Surging
activity in gold futures and exchange-traded funds, rising use of leverage
despite repeated margin hikes appear be behind gold’s choppy trade, market
watchers echoed.
China
has been the “dominant driver” impacting prices of precious metals this time,
said Nicky Shiels, head of research and metals strategy at MKS Pamp.
“That’s
been driven by a mix of speculative inflows, retail and institutional, through
a mix of ETFs, physical bars and futures positioning,” she told CNBC.
Chinese
gold-backed ETF holdings have more than doubled since the start of 2025,
according to data provided by Capital Economics, while gold futures trading
activity has picked up sharply in recent months.
“This
[volaitilty] is partly because of growing access to gold-linked financial
products like futures contracts and exchange-traded funds (ETFs) in China,”
said Hamad Hussain, economist at Capital Economics. “What’s more, there are
signs of increasing amounts of leverage in China’s gold market too, which can
lead to significant gold price volatility.”
Volumes
on the Shanghai Futures Exchange have surged, with year-to-date average
approaching 540 tons per day, Ray Jia, research head APAC ex‑India and trade
engagement deputy head China at World Gold Council, told CNBC. That rise builds
on the record trading volume in 2025 at 457 tons a day on average.
Regulators
have taken notice, with the Shanghai Gold Exchange repeatedly raising margin
requirements to curb heightened volatility.
“The
growing use of futures contracts and leverage to invest in gold is not typical
of investors seeking a safe haven asset,” Hussain said, warning that the recent
buying “implies that there may be a speculative bubble inflating.”
From
safe haven to speculative trade?
The
surge in participation reflects both structural anxieties and tactical
positioning.
“Chinese
people have limited access to the financial market. They have to invest in
property, deposits etc. Gold is a good alternative when housing prices fall and
deposit rate low at 1%,” said Zhaopeng Xing, senior China strategist at ANZ
Research.
Currently
gold accounts for about 1% of Chinese household assets, according to data from
ANZ Research. Xing expects that to rise to 5% in the near future, especially
amid depressed real estate prices and deposit rates hovering near historic
lows. “People believe gold can play a role of insurance.”
For
Beijing, the motive is also strategic amid a wider push away from the dollar,
he noted.
“The
government is pushing de-dollarization to protect themselves from economic
coercion from the U.S., said Shaun Rein, founder and managing director at the
China Market Research Group.
More
How China's
'unruly' speculators might be fueling the frenzy in gold market
In other news.
Mercedes
hit by $1.2 billion in tariff costs as full-year earnings more than halve
Published
Thu, Feb 12 2026 3:17 AM EST
German
luxury car manufacturer Mercedes-Benz Group on
Thursday reported a steep drop
in full-year profit and warned of challenging times ahead, following a year
marred by intense competition from Chinese rivals and global tariff costs.
The
automaker posted full-year operating profit of 5.8 billion euros ($6.9 billion)
in 2025, reflecting a 57% drop from a year ago. The result was significantly
lower than analyst expectations of 6.6 billion euros.
Mercedes-Benz
Group said its earnings were shaped by foreign exchange headwinds and
competition in China, alongside a reported 1 billion euro ($1.2 billion) hit in
tariff costs.
“Amid
a dynamic market environment, our financial results remained within our
guidance, thanks to our sharp focus on efficiency, speed, and flexibility,” Ola
Källenius, chairman of the board of management at Mercedes-Benz Group, said in
a statement.
The
results come as European car giants face a multitude of challenges, from rising
production costs and supply chain disruptions to regulatory pressures and a
bumpy electric vehicle transition.
Shares
of the Munich-listed company were off around 2% during morning deals, paring
some of its earlier losses. The stock is down roughly 7% so far this year.
Looking
ahead, Mercedes-Benz Group said it planned further cost cuts in 2026 as well as
a flurry of product launches, targeting an adjusted return on sales for
Mercedes-Benz Cars of 3% to 5%, down from the 5% growth it reported in 2025.
The
company also said it expects revenues to come in at the prior-year level, after
reporting revenues of 132.2 billion euros in 2025, while group earnings before
interest and taxes (EBIT) is expected to be “significantly above” the previous
year’s level.
Group
free cash flow of the firm’s industrial business is seen slightly below the
2025 level of 5.4 billion euros.
Autos: Mercedes
hit by tariff costs as 2025 earnings more than halve
Global Inflation/Stagflation/Recession
Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
Consumer
prices rose 2.4% annually in January, less than expected
Published
Fri, Feb 13 2026 8:32 AM EST
The
cost of goods and services rose at a slower annual rate than expected in
January, providing hope that the nagging U.S. inflation problem could be
starting to ease.
The
consumer price index for January accelerated 2.4% from the same time a year
ago, down 0.3 percentage point from the prior month, the Bureau of Labor
Statistics reported Friday. That pulled the inflation rate down to where it was
the month after President Donald Trump in April 2025 announced aggressive
tariffs on U.S. imports.
Excluding
food and energy, core CPI also was up 2.5%. Economists surveyed by Dow Jones
had been looking for an annual rate of 2.5% for both readings.
On
a monthly basis, the all-items index was up a seasonally adjusted 0.2% while
core gained 0.3%. The forecast had been 0.3% for both.
Though
the category accounted for much of the CPI gain, shelter costs rose just 0.2%
for the month, bringing the annual increase down to 3%.
Elsewhere,
food prices increased 0.2% as five of the six major grocery group categories
posted gains. Energy fell 1.5% while vehicle prices also were muted, with new
vehicles up just 0.1% and used cars and trucks falling 1.8%.
Stock
market futures were little changed after the report while Treasury yields moved
lower.
CPI inflation
report January 2026:
Why Alphabet’s 100-year sterling bond is raising
new fears over debt-fuelled AI arms race
Published Thu, Feb 12 2026 5:09 AM EST
Alphabet’s rare 100-year sterling bond is the latest sign
of late-cycle exuberance in credit markets, strategists say, as tech
hyperscalers ramp up borrowing to historic levels to fund vast data center and
AI infrastructure buildouts.
The century bond — the Google-owner’s debut
issuance in sterling — is part of a broader multi-tranche, multi-currency
borrowing drive totaling some $20 billion. The offering spans
maturities across dollars, euros and sterling, and includes a debut bond in
Swiss francs.
Century bonds remain rare, and are more commonly
associated with governments than corporate borrowers. Demand typically comes
from large institutional investors such as pension funds and insurers seeking
to match long-term liabilities.
Alphabet joins a small group of
sterling-denominated century bond issuers, including the University of Oxford,
the Wellcome Trust, EDF Energy and the government of Mexico.
The 100-year bond attracted almost 10 times orders
for the £1 billion ($1.37 billion) sale on Tuesday, with the coupon reaching
120 basis points above 10-year gilts, according to a report from Bloomberg,
which cites anonymous sources.
‘Off-the-historical scale’
Bill Blain, CEO of Wind Shift Capital, said the
deal is reflective of the “off-the-historical scale” levels of debt now being
raised in both public and private markets to finance AI expansion.
Alphabet said last week that its capex spend is expected to hit
$185 billion this year.
“I give them full credit for taking advantage of
the opportunity that existed to sell a moderately high coupon 100-year bond,”
Blain told CNBC in an interview. “They clearly identified demand… that this was
what U.K. insurance and pension funds wanted to cover their liabilities.”
But with credit spreads at historically tight
levels, long-term data center demand uncertain, and rapid technological change
set to create winners and losers in the sector, Blain said the deal offers
further proof of market froth around AI.
“Firms that have spotted the opportunity and been
able to fill it — they’ve spotted the opportunity because there is froth there
that’s getting people excited about being involved in that,” he said.
“I think the fact that a 100-year bond comes out,
you can’t get much more frothy than that. If you’re looking for a signal of a
top — even if it’s a brilliantly-executed deal — it does look a bit like a
signal of a top, absolutely.”
More
Google-owner Alphabet’s century bond flags new AI arms race debt fears
Technology
Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Record amount of UK solar power approved after clean energy
auction
Tue, 10th Feb 2026 09:17
(Alliance News) - A record amount of
solar power in the UK is among more than 200 new renewables projects which have
been awarded contracts to generate electricity.
The UK government has announced the
results of the latest "contracts for difference" auction for clean
energy technologies including onshore wind and solar farms.
Successful projects include the largest
solar farm to win a contract in Britain and the largest onshore wind farm in a
decade, the Department for Energy Security & Net Zero has said.
Under the contracts, renewables
generators bid to receive an agreed rate for the power they produce.
If the price of electricity drops below
the agreed rate, they are paid a top-up subsidy from consumer bills and if it
exceeds it, the generators have to pay back the difference to consumers.
The latest auction has secured a record
4.9 gigawatts of solar power, including West Burton solar farm, a Nationally
Significant Infrastructure Project and the largest solar farm to win a
government renewables contract, on the site of a former coal-fired power
station in Nottinghamshire.
Onshore solar schemes have been agreed
at a price of GBP65.23 per megawatt hour while new onshore wind has been
secured at GBP72.24 per megawatt hour.
The government said the prices were
under half the GBP147 per megawatt hour that analysis shows building and
operating new gas power stations would cost.
Contracts have been awarded to 1.3
gigawatts of onshore wind, including Imerys Wind Farm in Cornwall, which is the
largest onshore wind project to be successful in England in a decade, after a
de facto ban on the technology was lifted by the Labour government.
Taken together with last month's
contracts for offshore wind, the government said it had secured a record 14.7GW
of clean, homegrown power from 201 schemes, enough to power the equivalent of
16 million homes, and keeping it on track to meet its "clean power by
2030" mission to source almost all the UK's electricity from low carbon
sources.
Energy Secretary Ed Miliband said:
"These results show once again that clean British power is the right
choice for our country, agreeing a price for new onshore wind and solar that is
over 50% cheaper than the cost of building and operating new gas.
"By backing solar and onshore wind
at scale, we're driving bills down for good and protecting families,
businesses, and our country from the fossil fuel rollercoaster controlled by
petrostates and dictators. This is how we take back control of our energy and
deliver a new era of energy abundance and independence."
Chris Stark, the head of the Energy
Department's "mission control" to deliver the clean power pledge,
said: "Today's record results are another boost for Britain's 2030 clean
power mission. They mean more homegrown power, greater energy security, at a
good price for the consumer."
"With each new solar and onshore
wind project we reduce Britain's reliance on gas power plants, insulating
families from the next spike in global gas prices."
By Emily Beament, Press Association
Environment Correspondent
Record amount of UK solar power approved after clean energy auction |
Financial News
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt Clocks
(usdebtclock.org)
Exponent
Calculator
Enter
values into any two of the input fields to solve for the third.
This
weekend’s music diversion. The genius “Red Priest” Vivaldi goes off the Venice
reservation and how. Approx. 12 unusual minutes.
Antonio
Lucio VİVALDİ: Concerto Grosso à 10 Stromenti İn D Major RV.562
Antonio Lucio
VİVALDİ: Concerto Grosso à 10 Stromenti İn D Major RV.562
Next,
more fun with numbers. Approx. 11 minutes.
A
Number Sequence with Everything - Numberphile
A Number Sequence
with Everything - Numberphile
Finally, some of Ireland’ many castles. Approx.
30 minutes.
24 Beautiful Castles in Ireland 🇮🇪 | The Most Amazing Places in Ireland | Ireland Travel
Video
24 Beautiful
Castles in Ireland 🇮🇪 | The Most
Amazing Places in Ireland | Ireland Travel Video
Capitalism gave the world what it needed, a higher standard of
living for a steadily increasing number of people.
Ludwig von Mises
