London Irvine Report: Special Update 14/02/2026 Chinese New Year. US CPI Tame.

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.”

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.

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.

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.”

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.

Exponent Calculator

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