Opportunity Is Everywhere

Two From the Hegemon substack. First up the complete "How to monetize the rise of Medieval Peasant Brain," December 15, 2025: 

A short guide for the downwardly mobile elite 

Do you have the cultural capital of elite education, yet are now scraping by on gig economy scraps? Think of it as an arbitrage opportunity! As we leave the Gutenberg Parenthesis and enter a techno-feudal oral culture, their epistemic decay becomes your revenue stream.

• Stop writing immediately. Writing is for losers. Pivot entirely to oral/visual formats. Your voice and face are the artifacts of authority, not your citations.

• Do not fall into the trap of irony. The peasant brain cannot process irony; it reads it as vague malice. You must be post-ironic. You must inhabit the role so fully even you aren’t sure if you’re serious anymore.

• The peasant brain is terrified of a cold, godless universe. You can redirect that terror to more legible targets like immigrants or Jews, or sell them solutions that fit into a bottle. (the good news is you don’t have to choose)

• The peasantry feels sick and low-energy because they eat seed oils and doomscroll. But do they know that vitamins are an Ancestral Vitality Stack? Leverage your elite vocabulary to write that TikTok script. Remember it’s not magnesium it’s Mineral of the Stoics. This is the highest margin vertical for the downwardly mobile elite.

• The Court Jester Strategy. Instead of enchanting the peasants, you could entertain the new feudal lords. Becoming the intelligent pet of a tech billionaire is a wonderful sinecure. Use your humanities education to provide philosophical cover for their sociopathy. Quote Marcus Aurelius to justify intrusive surveillance, cite Machiavelli to explain a failed startup. They will pay handsomely to feel like philosopher kings instead of boring money-grubbers.

• The Trad Turn Strategy. The peasant fantasy is the Cottage. Monetize the aesthetic of a life you cannot afford. Champion the return to tradition for an audience trapped in daily squalor. Critique modernity (which is easy, because we can all see the ugliness) and curate images of past beauty (also easy, because all the ugliness disappears).

• Remember, you possess forbidden knowledge. You have read the scary books so they don’t have to. Allow yourself to be the conduit that brings the truth forward. Good luck, and happy holidays!

Possibly also of interest:

UPDATED--Are You a Recent Graduate Who Hasn't Found a Job? Consider Becoming a Charlatan 

And back to Hegemon, February 2, 2026:

The Epstein Files and Russiagate are the Same Thing

Wall Street Reactions To The Supreme Court IEEPA Tariff Decision

From Bloomberg, February 20:

It wasn’t a complete shock for markets. Yet the Supreme Court’s ruling striking down the cornerstone of President Donald Trump’s economic policy did create ripples across asset classes.

Treasuries and a Bloomberg gauge of the dollar fell, while stocks rallied, after the court struck down Trump’s sweeping global tariffs. The court said Trump exceeded his authority by invoking a federal emergency-powers law to impose his “reciprocal” tariffs across the globe as well as targeted import taxes the administration says address fentanyl trafficking.

One reason why market reactions were somewhat muted: Trading in predictions markets had been leaning toward this outcome at some point this year after justices asked critical questions about the legality of the tariffs in a hearing last year.

At the same time, many traders expected Friday’s market reactions to potentially be short-lived, since officials in the Trump administration have said that the White House had other legal options at its disposal to implement tariffs should the high court rule against the president. Shortly after the decision, Trump told attendees at a breakfast with governors that he had a backup plan, according to CNN....

*** 

....Here’s what investors and strategists across Wall Street are saying:

Ian Lyngen, Head of US Rates Strategy at BMO Capital Markets Corp

“The SCOTUS decision was widely anticipated by market participants and therefore it wasn’t surprising to see a limited response in US rates.”

James Athey, a Portfolio Manager at Marlborough Investment Management

“Pretty mild reaction so far. Market is not really sure what to do. The big issue would have been any notion of refunds.”

“I think this news is bearish UST at the margin. It’s a short term negative for the budget so should be bearish Treasuries. But it’s really hard to see how it would actually work - very complicated.”

Jane Foley, Head of FX Strategy at Rabobank

“Although the White House is expected to find another way to push on with tariffs, there will be concerns about refunds in the meantime and this could worry the Treasury market which could unsettle the USD given the US’s already weak fiscal position.”

Aroop Chatterjee, Managing Director at Wells Fargo Securities

“We expect relief from the SCOTUS ruling to be temporarily risk positive mostly via lower uncertainty. The administration retains significant tariff making authority via other statutes but some of these are untested and others will take time. We continue to think the administration will replace most tariffs via other means but this is over the medium-term.”

“Separately, we think the refund process will be very complicated and is unlikely to meaningfully boost growth/consumption near-term. Its hard to see this leading to trend shift in the USD in either direction. The market will likely refocus on incoming data that continues to point to an economy and labor market that is recovering. This keeps the Fed firmly on the sidelines and limits further USD weakness in our view.”

Dave Mazza, Chief Executive Officer at Roundhill Financial

“Markets will treat the tariff rollback as a near-term positive, because it takes an immediate tax off the supply chain and removes one headline overhang. But it’s not the end of the tariff story, it’s the start of the next chapter, and the path from here likely means more legal and policy whiplash, not less.”

Matt Maley, Chief Market Strategist at Miller Tabak + Co LLC

“A lot of investors have been expecting the Supreme Court to rule this way, so it seems like they are more focused on the situation in the Middle East going into this weekend. But yes, I do think it removes some uncertainty. What we’re seeing in the markets is more of a ‘buy the news’ reaction.”

....MUCH MORE, including Marc Chandler and:

Chris Murphy, Co-Head of Derivatives Strategy at Susquehanna International Group

“This ruling appears to have created more questions and we are not seeing a lot of convicted trades in the immediate aftermath. I do expect an epic truth social post coming soon, however.”

"EU Demands Russian Troop Withdrawal From Belarus, Georgia, Armenia and Transnistria in Ukraine Peace Framework"

 I don't think Russia is going to agree to that.

But maybe the EU is adopting Trumpian negotiating tactics: Ask for the moon and stars and accept the moon as an improvement on your current position.

The other interpretation is that the EU doesn't actually want peace in Ukraine which will lead to a lot more blood and treasure needed to feed the beast. 

From the Kyiv Post, February 19:

An internal EU paper circulated by Kaja Kallas calls for a ban on Russian military deployments in Belarus, Georgia, Armenia and Moldova’s Transnistria as part of any comprehensive Ukraine settlement. 

Content

• Ban on Russian military presence
• EU seeks seat at the table
• Reparations and accountability
• Ukraine’s EU path

The European Union is demanding that Russia withdraw its troops not only from Ukraine but also from Belarus, Georgia, Armenia and Moldova’s breakaway Transnistria region as part of any comprehensive peace deal.

The proposal is outlined in an internal discussion paper distributed to EU member states by the bloc’s top diplomat, Kaja Kallas, and seen by RFE/RL. The document is set to be discussed by EU ambassadors on Tuesday, Feb. 17, and may be debated further by foreign ministers on Feb. 23. 

The document sets out what Brussels believes Moscow must concede in ongoing US-mediated negotiations to end the war in Ukraine.

Ban on Russian military presence
The paper calls for a “ban of Russian military presence and deployments in Belarus, Ukraine, Republic of Moldova, Georgia and Armenia,” as well as the removal of any nuclear weapons from Belarus.

Russian forces have long been stationed in Georgia’s breakaway regions of Abkhazia and South Ossetia, in Moldova’s Transnistria, at bases in Armenia, and in Belarus, which served as a launchpad for the 2022 invasion.

The document argues that if Ukraine is asked in negotiations to limit troop levels or demilitarize certain areas, Russia should face comparable obligations.

It also rejects any “de jure” recognition of occupied Ukrainian territories and calls for their demilitarization.

EU seeks seat at the table
Neither the EU nor its member states are formally represented in the US-led negotiations....

....MUCH MORE 

The EU could have bought a seat at the table had they supplied Ukraine back in 2022. Or 2023. Or 2024. 

Instead we got the half-a-loaf/permawar approach we were decrying as early as April 2022. Here are a couple posts from those days:

May 25, 2022
Maybe We Should Just Declare War On Russia And Take Their Stuff: Zoltan Pozsar on Russia As A "Global Systemically Important Bank" Of Commodities

None of the electorate in the NATO countries voted for another of these inconclusive, forever wars, so profitable for a select few and so costly in life and treasure for regular people. Surely no one in the developing nations signed on to pay for sanctions with their food budget. It is time to figure out a) What our goals are and b) What the hell we are doing, period and in furtherance of those goals. This isn't some game of RISK with let's try this, or let's try that and no consequences at the end of the night. Since the Maidan coup in 2014 the West has had eight years to plan for this.

Do it or don't do it; because trying to finesse a halfway reaction is nuts.

As the philosopher asked the generals and armaments producers some time ago: 

"When was the last time you b****es won a war?"

August 1, 2022
"No holidays for Ukraine: Financial needs increase"

The EU has to either go all-in or call a halt to what they are currently doing.

This halfway stuff does not work for anyone but the arms merchants and is just plain evil in terms of lives lost and livelihoods ruined. As the BSD's used to say: "Go big or go home."....

December 21, 2023
Industrial Disease: "The U.S. Can Afford a Bigger Military. We Just Can’t Build It"
For at least six months after it became apparent the Western strategy for Ukraine was to dribble enough armaments into the battle to slow the Russian takeover of the eastern third of Ukraine, but not enough for Ukraine to win, we were posting on this weird approach to war....

 

And the inevitable result:

June 5, 2023
Oh My God, What Are The Ukrainian Generals Doing?
They are ordering their men to attack defense-in-depth without air cover and 1/10th the artillery the troops need.... 

*We've mentioned the RAND study a few times including before the Russian invasion of Ukraine. Here's March 25, 2022: 

The U.S. Is Implementing The RAND Corporation Strategy To Cripple Russia

First up, a refresher, from February 8, 2022 (pre-invasion): 

The RAND Corporation Blueprint For Forcing Putin To Over-Extend Himself

I hope that the U.S. or NATO or whoever commissioned this study didn't pay a lot for it, it's basically the strategy that Pope John Paul II, Margaret Thatcher and Ronald Reagan came up with in the early 1980's although the details do differ. The tactical components of the RAND plan are:

 1. Arming Ukraine ;
 2. Increase support for jihadists in Syria;
 3. Promoting regime change in Belarus;
 4. Exploiting tensions in the South Caucasus;
 5. Reducing Russian influence in Central Asia;
 6. Rivaling the Russian presence in Transnistria.

....MUCH MORE

The study is from 2019, its basic idea is to get Russia to overextend itself both militarily and more especially financially. 

On January 12, 2022 Victoria Nuland showed this approach is top-of-mind in the Biden Administration. From Interfax Ukraine:

Nuland: I'm going to let Russians speak for themselves how long they can financially back placement of troops near Ukraine

U.S. Undersecretary of State Victoria Nuland did not make assumptions about how long the Russian Federation can afford to keep a large grouping of forces near Ukraine.

"I am going to let the Russians speak for themselves," she said, answering a question at a State Department briefing about "how long you think Russia can financially back the placement of troops along the Russia-Ukrainian border."

Nuland also said the transfer of a large group of forces to the border with Ukraine was not a cheap operation.

"These kind of deployments, hundred thousand troops out of barracks and on the Ukrainian border are extremely expensive, as is the deployment of this kind of weaponry in the cold winter," she said.

The U.S. goal is not peace in Ukraine.

The U.S. goal is regime change in Moscow, and in furtherance of that objective the U.S. is ready to fight to the last Ukrainian.

"Supreme Court Strikes Down Trump Tariffs"

Only the dead have seen the end of tariffs.*  

Lifted in toto from ZeroHedge, February 20: 

The Supreme Court on Tuesday struck down Trump's tariffs. In a 170-page decision and a 6-3 vote, the court ruled that Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) - which constitute about half of the tariffs we've seen under Trump - was not lawful.

"IEEPA does not authorize the President to impose tariffs," wrote the court. 

The ruling stems from a consolidated challenge brought by small businesses and multiple states, who argued that the statute - originally intended to authorize sanctions and asset freezes during national emergencies - does not grant the executive branch the power to levy taxes on imports. Writing for the majority, the Court emphasized that the Constitution vests Congress alone with the authority to impose duties and tariffs, and found that IEEPA’s authorization to “regulate … importation” cannot be interpreted to include the distinct taxing power required to enact broad-based tariffs. As a result, the Court affirmed lower-court rulings blocking the challenged measures, concluding that the administration’s emergency-based tariff framework exceeded the limits of the statute.

Trump invoked IEEPA to impose his 'reciprocal' tariffs on nearly every foreign trade partner to address what he called a national emergency over US trade deficits. He invoked it again to impose tariffs on China, Canada and Mexico over fentanyl trafficking into the United States. 

During arguments on Nov. 5, the court seemed skeptical over Trump's authority to use IEEPA, leading most observers observers, including betting markets, to conclude a high probability they're struck down at least in part. The Trump administration is appealing lower court rulings that he overstepped his authority, while Trump himself said a Supreme Court ruling against the tariffs would be a "terrible blow" to the United States.

Other Options

That said, even if that happens, the Trump administration has several other legal avenues they can pursue. As Deutsche Bank noted last month; 

For instance, the sectoral tariffs (e.g. on steel and aluminum) aren’t covered by the court ruling, whilst another option would be to use Section 122 of the 1974 Trade Act, which permits temporary 15% tariffs for 150 days. 

 And Goldman:

This won’t be the end of tariffs… the administration will almost certainly roll out alternative legal frameworks. Net result is probably slightly fewer tariffs, materially more trade uncertainty, and some incremental deficit concerns. Net-net, that’s mildly supportive for equities and mildly negative for bonds… but largely priced for both.

The cases under consideration by the Supremes were brought by businesses affected by the tariffs and 12 mostly blue US states. 

*Once again repurposing Santayana's pithy little aphorism: "Only the dead have seen the end of war." 

"Only the dead have seen the end of war".

attributed to Plato from the 1930s on, especially following a speech by General Douglas MacArthur at West Point, 12 May 1962 crediting him, but not found in Plato's works; Santayana is the earliest known source

Soliloquies in England and Later Soliloquies (1922) ‘Tipperary’

—Oxford Essential Quotations

"Nvidia is moving in on Intel and AMD's home turf" (NVDA; INTC; AMD; META)

The market may not have fully absorbed this news when it crossed the tape a couple days ago.*

From Yahoo Finance, February 20: 

Nvidia (NVDA) has sealed an expanded, multiyear data center agreement with Meta (META) that will see the chipmaker supply the social media giant with millions of its Blackwell and Rubin GPUs.

And while that was certainly the splashiest part of Tuesday's news, the companies said the agreement will also see Meta roll out Nvidia Grace CPU-only servers in its data centers, the first large-scale deployment of the chips.

Grace is the processor that Nvidia pairs with two Blackwell or two Blackwell Ultra GPUs to form its GB200 and GB300 AI superchips.

The Grace-only servers come at a time when Nvidia is angling to capitalize on the growing demand for traditional CPUs as hyperscalers increasingly look to the chips to help power some AI inferencing and agentic AI applications.

That spells trouble for Intel (INTC), which has long dominated the data center CPU space, and Advanced Micro Devices (AMD), which is working to take market share from Intel.

"Nvidia has been on the path of providing more of the content in the data center for a while," Gil Luria, managing director and head of technology at D.A. Davidson, told Yahoo Finance.

"The addition of Mellanox [a networking company Nvidia acquired in 2020] put them into the networking category as well," he said. "So when they sell into the data center, they're actually selling almost a vast majority of the value. But it makes sense for them to increase that value even further by adding CPU capacity."

Nvidia's move couldn't come at a worse time for Intel, which is dealing with capacity constraints that are keeping it from producing enough CPUs to meet data center builders' demand....

....MUCH MORE
*February 18 - "Why Nvidia’s deal with Meta is an ‘Intel killer,’ according to this analyst" (NVDA; META; ARM; INTC; AVGO)

Here's the last month of INTC price action via TradingView: 

 

GDP Growth: First (Flash) Estimate - Q4 2025 Falls To 1.4%

The 43-day (almost half the quarter) government shutdown whacked the economy. 

From the Bureau of Economic Analysis, February 20: 

Real gross domestic product (GDP) increased at an annual rate of 1.4 percent in the fourth quarter of 2025 (October, November, and December), according to the advance estimate released today by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 4.4 percent.

The advance report for the fourth quarter of 2025, originally scheduled for January 29, 2026, was rescheduled due to the October–November 2025 government shutdown.

***

The contributors to the increase in real GDP in the fourth quarter were increases in consumer spending and investment. These movements were partly offset by decreases in government spending and exports. Imports, which are a subtraction in the calculation of GDP, decreased. For more information, refer to the "Technical Notes" below. 

 

Compared to the third quarter, the deceleration in real GDP in the fourth quarter reflected downturns in government spending and exports and a deceleration in consumer spending that were partly offset by an acceleration in investment. The decrease in imports was smaller than in the prior quarter.

Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased 2.4 percent in the fourth quarter, compared with an increase of 2.9 percent in the third quarter....

....MUCH MORE 

Inflation: Headline Personal Consumption Expenditures Price Index UP 0.4% (that's hot)

From Trading Economics (also on blogroll at right), February 20: 

The core PCE price index in the US, which is the Federal Reserve's preferred gauge of underlying inflation in the US economy, rose by 0.4% from the previous month in December of 2025. The rise surpassed market expectations of a softer 0.3% increase to reflect the sharpest increase since February, in line with the FOMC's warning that the disinflation process is slower than previously expected. From the previous year, the core PCE price index rose by 3%...

Capital Markets: "Tariff Decision Day?"

From Marc Chandler at Bannockburn Global Forex:

The US dollar is trading mostly firmer but quietly in what could be a volatile North American session. It is not just about the US data, of which there is plenty—including the PCE deflator and the first look at Q4 GDP, the preliminary February PMI and the University of Michigan’s final February reading on consumer confidence. The Supreme Court will hand down some decisions today and it possible that rules on the president’s use of emergency powers to impose widespread tariffs. The event markets suggest a strong majority expect the high court to rule against most of all of the tariffs that have justified by the International Economic Emergency Powers Act (IEEPA). Tensions between the US and Iran remain elevated but the threat of an imminent strike has relaxed a little and oil prices are a little softer ahead of the weekend. 

The dollar has risen against the G10 currencies this week. The yen has been the weakest, and it is off almost 1.65%. The Australian dollar has been the best performer, and it is off about 0.3% this week. Most emerging market currencies also declined this week. The Argentine peso (~0.6%), the Russian ruble (~0.2%), and the Brazilian real (0.15%) have been the best performer....

....MUCH MORE 

"Dow Jones Futures Fall Before Big Economic Data, Possible Trump Tariff Ruling; AI Leader Climbs, Cancer-Test Firm Crashes"

Yes, the Supremes are getting back together after weeks on hiatus and it's data day.

From Investor's Business Daily, February 20: 

Dow Jones futures fell slightly early Friday, along with S&P 500 futures and Nasdaq futures. Big economic data is due before the open while the Supreme Court could issue a Trump tariffs ruling.

AI infrastructure leader Comfort Systems (FIX) rose late on earnings. Akamai Technologies (AKAM) and Grail (GRAL) were big losers. Thursday night, Tesla (TSLA) introduced a new, $59,990 Cybertruck variant.

The stock market rally fell modestly on the major indexes Thursday while oil prices kept rising on U.S.-Iran saber rattling.

Walmart (WMT) declined slightly after guiding low. Cameco (CCJ), Planet Labs (PL), Pan-American Silver (PAAS) and GE Aerospace (GE) flashed buy signals.

Pan-American Silver, Comfort Systems are on the IBD 50. Comfort Systems and Newmont are on the IBD Big Cap 20. Comfort Systems stock is on IBD Sector Leaders.

The video embedded in the article reviews Thursday's market action and analyzes GE Aerospace stock, Planet Labs and Cameco.

Dow Jones Futures Today 
Dow Jones futures were 0.2% below fair value. S&P 500 futures and Nasdaq 100 futures fell 0.2%.

Crude oil futures edged lower after surging over the prior two days.

Investors will get the first reading for fourth-quarter GDP, along with the December PCE inflation data, at 8:30 a.m. ET. The Supreme Court could rule on Trump tariffs shortly after 10 a.m. ET.

Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session....

....MUCH MORE 

When Poland Has Nuclear Weapons: "Warsaw should base its security strategy around ‘nuclear potential,’ Polish president said"

From Politico.eu, February 15:

Poland should ‘begin work’ on nuclear defenses, Nawrocki says  

Polish President Karol Nawrocki thinks his country should start developing nuclear defenses, given the threat from Moscow.

In an interview with Polsat television on Sunday, Nawrocki described himself as "a great supporter of Poland joining the nuclear project" and argued that the country should develop its security strategy "based on nuclear potential."

He added: "This path, with respect for all international regulations, is the path we should take. ... We must work towards this goal so that we can begin the work. We are a country right on the border of an armed conflict. The aggressive, imperial attitude of Russia toward Poland is well known."

His comments come amid a growing debate in several European countries about developing their own nuclear weapons in the light of growing threats from Moscow and an erosion of trust in the United States.

Latvia’s Prime Minister Evika Siliņa, for example, said at the Munich Security Conference this weekend that “nuclear deterrence can give us new opportunities." Meanwhile, German Chancellor Friedrich Merz said talks were ongoing with France about a European deterrent.

Asked how Moscow might react to a Polish nuclear weapons program, Nawrocki was dismissive: "Russia can react aggressively to anything," he said....

....MUCH MORE 

As we saw in March 2022's "When the Ukraine war spreads to a NATO nation":

Should the war expand and, God forbid, go nuclear, Paris is the European capital that would suffer the worst effects from a single Russian 800 kiloton nuke launched on the Topol SS-25 missile:

Estimated fatalities: 1,606,610

Estimated injuries:   2,833,150

By comparison the same weapon used on London, again, a single, less-than-one-megaton bomb would result in:

Estimated fatalities: 947,080

Estimated injuries: 2,295,450 

Further east:

Berlin   

Estimated fatalities: 629,400

Estimated injuries: 1,281,850

Warsaw 

Estimated fatalities: 501,470

Estimated injuries:   792,920

 

Budapest

Estimated fatalities: 363,350

Estimated injuries:   770,220 

Prague 

Estimated fatalities: 359,720

Estimated injuries:   489,160

 

That is six bombs. Smaller ones.

We can't let things go nuclear. Period 

For comparison, the largest ICBM-launched U.S. nuke, 9 megatons, would result in:

 

Paris

Estimated fatalities: 3,940,720

Estimated injuries:   3,918,390

Moscow

Estimated fatalities: 4,200,750 

Estimated injuries:   4,916,950

The death toll at Hiroshima is estimated to have been between 66,000 and 120,000.

Fortunately should New York City come under attack, the powers-that-be have a plan.

You may recall that last summer the city of New York ran Public Service Announcements on what to do should the city be struck with nuclear weapons. From NBC4, New York:

‘So There's Been a Nuclear Attack'

...In the event of a nuclear incident, the PSA advises the following actions:

• Get inside: Move indoors and away from any windows.
• Stay inside: Close all doors and window, and move into the basement if you have one.
• Stay tuned and stay put: Follow media for latest details and watch for officials alerts when its safe to go outside....

....MUCH MORE 

The city's public health department also offers:

Emergencies Radiological Nuclear Incident - NYC Health - New York City
If there is a nuclear explosion affecting the city and you feel overwhelmed and unable to cope, or if you are concerned about someone else, you can find help by calling (888) NYC-Well (888-692-9355). NYC Well is a free, confidential helpline for New York City residents, available 24/7, with trained staff ready to take your calls and offer advice....

And nationwide. Regarding the Department of Homeland Security's Ready.gov website, we last visited in April 2022's:

Tips From The Government Should The Nukes Start Flying

From the Ready.gov nuclear explosion page:

An official website of the United States government Here's How You Know

Official websites use .gov
A .gov website belongs to an official government organization
in the United States.

Nuclear explosions can cause significant damage and casualties from blast, heat, and radiation but you can keep your family safe by knowing what to do and being prepared if it occurs....

...Go to the basement or middle of the building. Stay away from the outer walls and roof. Try to maintain a distance of at least six feet between yourself and people who are not part of your household. If possible, wear a mask if you’re sheltering with people who are not a part of your household. Children under two years old, people who have trouble breathing, and those who are unable to remove masks on their own should not wear them....

....MUCH MORE

Roger that, maintain masking and social distancing, over.

Quanta Services Q4 2025 Earnings Call Transcript - February 19, 2026 (PWR)

From Motley Fool Transcribing, February 19, 2026:

TAKEAWAYS

• Full-Year Revenue -- $28.5 billion, up 20% year over year, representing a new company record.
• Adjusted EBITDA -- $2.9 billion for the full year, another record, with 8 consecutive years of adjusted EBITDA records.
• Adjusted Diluted EPS -- $10.75 for the full year, increasing 20% from 2024 and marking 9 consecutive years of record performance.
• Cash Flow From Operations -- $2.0 billion for the year, setting a new all-time high.
• Free Cash Flow -- $1.7 billion for the full year, a company-best result.
• Year-End Backlog -- $44.0 billion, a record, driven by grid investment, power generation growth, and ongoing infrastructure needs.
• Fourth Quarter Revenue -- $7.8 billion, establishing a quarterly record.
• Fourth Quarter Adjusted EBITDA -- $845 million, the highest Q4 in company history.
• Fourth Quarter Adjusted Diluted EPS -- $3.16, highest Q4 EPS to date.
• Fourth Quarter Cash Flow From Operations -- $1.1 billion, setting a fourth quarter record.
• Fourth Quarter Free Cash Flow -- $946 million, highest Q4 figure achieved.
• 2025 Acquisitions -- Eight acquisitions completed, including Dynamic Systems, Tri City Group, Wilson Construction Company, and Billings Flying Service, adding around 11,100 employees and expanding capabilities in key markets.
• Aggregate Acquisition Consideration (Q4) -- $1.7 billion for Tri City Group, Wilson Construction Company, and Billings Flying Service, funded with cash and Quanta common stock.
• Post-Acquisition Leverage Ratio -- Maintained below 2.0x after material acquisition activity, reflecting ongoing balance sheet discipline.
• 2026 Financial Guidance -- Management expects continued double-digit growth in revenue, net income, and adjusted EBITDA, with potential for over 20% adjusted EPS growth and midpoint free cash flow of $1.8 billion.
• Expected 2026 Capital Expenditures -- $250 million to $350 million allocated for vertical supply chain initiatives in power transformer manufacturing.
• Data Center End Market -- Now represents approximately 10% of Quanta’s business and is the fastest growing backlog component.
• Electric Infrastructure Margins -- Midpoint guidance for 2026 margin set at 10.3%, consistent with recent years, with over 50% of business under regulated utility contracts.
• Major Project Commentary -- No significant 765 kV projects included in 2026 backlog; anticipated growth is broad-based and programmatic rather than driven by large discrete projects.
• Vertical Supply Chain Strategy -- Planned $500 million to $700 million investment over several years in high-voltage transformer manufacturing to derisk supply chain and enhance certainty for utility clients.
• Craft Labor Expansion -- Workforce increased to approximately 69,500 at year-end, with organic growth of 6,000 employees in addition to acquisition additions.
• Customer Engagement -- Shift toward negotiated, risk-adjusted, multi-year programmatic contracts with utilities and technology clients, increasing revenue visibility.
• Risk-Averse Contracting -- Stated unwillingness to engage in firm fixed price generation contracts, with all new power generation contracts to include risk adjustments.
• Renewables Pipeline -- Double-digit growth cited for renewable energy segment, with visibility through at least 2030 and ongoing "business as usual" despite market noise.
• Custom Fabrication Capacity -- Over 3 million square feet of fabrication and prefabrication facilities, including recently acquired Tri City Group capabilities.
• M&A Pipeline and Selectivity -- Management intends to remain selective in acquisitions, focusing on strategic fit and organic investment for vertical capabilities.

SUMMARY

Management conveyed that record backlog and a strengthening economic outlook underpin expectations for continued double-digit earnings growth and expanding supply chain initiatives. Energy infrastructure investment, particularly for data centers and electric grid modernization, is a primary driver of Quanta's expanding addressable market with a shift toward longer-term, programmatic contracts providing increasing revenue visibility. Acquisitions and organic investments have significantly scaled self-perform capabilities and workforce, while substantial capital allocation to vertical supply chain strategies aims to mitigate external procurement risks and secure execution certainty for customers.

• Earl C. Austin stated that Quanta’s backlog is "certainly growing" and described data center infrastructure as its "fastest growing piece of backlog."
• Chief Financial Officer Desai emphasized that "the strength of which is broad-based," citing grid reliability, generation growth, and rising electricity consumption as multiyear demand drivers.
• Chief Executive Officer Austin noted, There is no shortage of inbound calls wanting to build generation. with a pipeline of gas-fired and alternative projects not yet included in backlog but expected to be booked in future periods.
• Chief Executive Officer Austin said, regarding supply chain risk, "I mean, you know, the $300,000,000 to $500,000,000, probably up in the $700,000,000 over the next three years, is derisking us. If the transformers, breakers, the things that we are building do not show up, we have issues, significant issues. So I think, you know, part of that was a collaboration with the industry and our client AEP on building transformers to their spec. And that is something that we take very seriously, and we know that our clients want certainty. This company is built on certainty, and building transformers, all the things that you may not think, why are they doing that? We are doing that to derisk this company long term and allow us to be certain as we look at it while addressing affordability to our clients."
• Management indicated that the company is focusing capital deployment on both bolt-on and platform M&A as well as organic expansion in vertical supply chain capacity, positioning Quanta to serve multidecade infrastructure demand.
• Chief Executive Officer Austin stated, "We are already seeing ways to, you know, I think when we look at M&A, we are not looking at engineering anymore. Because I think AI is going to be significant there. And it is going to really affect the way we, we have 2,000 plus engineers. And we will definitely incorporate AI into it. And so I just think there is a lot of things that will change, and we are in front of that. It is something I am highly focused on both from cost and the way that we get more productive in the field." using AI, highlighting cost and efficiency potential but emphasizing a commitment to workforce development over displacement.

***

Full Conference Call Transcript

***

[safe harbor and housekeeping notes] 

Earl C. Austin: Good morning, everyone, and welcome to the Quanta Services, Inc. fourth quarter and full year 2025 earnings conference call. I would like to begin by thanking our exceptional employees for their continued absolute performance mindset, dedication to safety, operational excellence, and delivering mission-critical infrastructure solutions to our customers. Your commitment has once again driven outstanding results and positioned Quanta for sustained success. 2025 was another year of significant achievement and advancement for Quanta. We again delivered record results as we generated double-digit growth in revenues, adjusted EBITDA, and adjusted earnings per share along with record free cash flow and backlog....

....MUCH MORE 

The stock us changing hands at $551.66 up $32.35 (+6.23%) after printing a new all-time-high at $554.44.

It has been a good year to own PWR, up 93.4% over the twelve months: 

 

TradingView  

The 29% year-to-date run might be getting a little frothy but by owning the class-act of the industry we can take comfort in the fact that whatever the stock is doing, the company itself is going about their business. 

"Death isn't the end: Meta patented an AI that lets you keep posting from beyond the grave" (MuErTA; ZUCK; YUCK)

You can't spell muerta without meta. 

From Business Insider, February 11:

• If you could set your Instagram page to keep posting after you die, would you?
• Meta was granted a patent that would use AI to train a bot to keep post-mortem accounts active.
• A Meta spokesperson said the company has "no plans to move forward" with the tech.

Does Meta want to make our social media accounts immortal?

The company was granted a patent in late December that outlines how a large language model can "simulate" a person's social media activity, such as responding to content posted by real people.

"The language model may be used for simulating the user when the user is absent from the social networking system, for example, when the user takes a long break or if the user is deceased," the patent says.

Andrew Bosworth, Meta's CTO, is listed as the primary author of the patent, which was first filed in 2023.

"We have no plans to move forward with this example," a spokesperson for Meta told Business Insider.

In the patent, Meta lays out why it thinks people might need this.

If you're no longer posting online — whether that's because you need a break from social media or … you … die — your followers' user experience will be affected. In short, they'll miss you.

"The impact on the users is much more severe and permanent if that user is deceased and can never return to the social networking platform," the document says.

To fill that void, Meta would essentially create a digital clone of your social media presence, training a model on "user-specific" data — including historical platform activity, such as comments, likes, or content — to understand how you would (or rather, did) behave.

That clone can then respond to other people's content by liking and commenting, or responding to DMs. For influencers or creators who make their livelihoods on Meta's platforms and need to take a break from social media, such a tool could be useful....

....MUCH MORE 

If interested see also:

Coming To An Employer Near You: AI To Resurrect Departed Employees Using Their Work Product As Training Material

Earnings: Quanta Services Beats Top and Bottom Guides Higher Stock Jumps (PWR)

To quote Tomas Edison: There might be something to this electricity stuff. 
(JK, 'ol Tom didn't actually say that)

From Reuters, February 19:

Quanta Services forecasts 2026 profit above estimates on strong AI data center-led demand 

Quanta Services (PWR.N), on Thursday forecast 2026 profit above Wall Street estimates, as robust investments in AI-infrastructure boosts demand for the energy contractor's core electric segment.

Shares of the company rose 6% in premarket trading. 

The Houston, Texas-based company expects full-year adjusted profit per share between $12.65 and $13.35, above analysts' estimate of $12.44 per share, according to data compiled by LSEG.

 

"The convergence of utility, power generation, and large-load industries continues to create significant opportunities," Quanta Services CEO Duke Austin said.

 

The company said, during the previous quarter's earnings call, it was well-positioned to leverage its capabilities in addressing growing electricity and infrastructure demand from data centers, manufacturing and reshoring, industrialization, electrification and power grid expansion.

 

The company — which provides infrastructure services for utility, renewable energy, technology, communications, pipeline and energy industries — benefits from robust investments in AI data centers from hyperscalers....

....MORE

 

On a generally down day the stock is up  $27.77 (+5.34%) at $547.34 in late pre-market trading. 

Here's the press release from the company:

QUANTA SERVICES REPORTS FOURTH QUARTER AND FULL-YEAR 2025 RESULTS

The Dor Brothers Make Another AI Movie

No actors, no sets, just AI. 

From Germany's Dor Brothers:

We just made a $200,000,000 AI movie in just one day.

Yes, this is 100% AI. pic.twitter.com/TMotM7rguY

— The Dor Brothers (@thedorbrothers) February 16, 2026

 

Previously from the Dor Brothers, July 2025:

The State of The Art In Commercial AI Videos

Germany's Dor Brothers make AI videos that after a couple seconds require no suspension of disbelief. All the characters are AI generated, there are no actors. The Dor Brothers' technique leaves just a hint of uncanny valley, enough that you won't go completely bonkers, but it's a close-run thing.

They are obviously conversant with the sociology they are representing. 

In the first video are a few of the influencer types to be found on the internet:

 

 Influenders

We first posted that vid during the June 2025 Los Angeles riots: In Light Of Recent Events, Influencers Speak Out

The second video takes aim at the AI crowd itself. Again, no actors, it's all AI. And it is wickedly on the mark.

AIdeology 

Here's their YouTube site and here is their home page.

If interested, a December 2023 post on what was coming, though it didn't know it would be The Dor Brothers:

"Meet the New Influencers: Artificial Intelligence"
Jobs the robots will do.... 

"Why Nvidia’s deal with Meta is an ‘Intel killer,’ according to this analyst" (NVDA; META; ARM; INTC; AVGO)

From MarketWatch, February 18:

The use of Nvidia CPUs could signal a significant shift toward Arm-based chips in the data center 

Nvidia’s expanded partnership with Meta Platforms could be a bad omen for Intel.

Nvidia announced on Tuesday that it will deploy more of its Arm-based Grace central processing units in Meta’s data centers for what the chip maker called “the first large-scale Nvidia Grace-only deployment.” The CPUs are used for tasks such as running applications and agents.

To Richard Windsor, founder of research firm Radio Free Mobile, the expanded partnership is “a sign that the move towards Arm in the data center is accelerating.” For Intel, whose x86 CPU architecture competes with Arm’s eponymous architecture, that “is more terrible news,” he said in a Wednesday note, in which he called the deal an “Intel killer.” 

Intel has long dominated the server chip market, Windsor said, while Arm-based chips “have often floundered” due to incompatibility with legacy software systems in data centers. That’s likely becoming a thing of the past, Windsor noted, judging by Nvidia’s Meta deal....

....MUCH MORE 

MarketWatch's confreres at Barron's have more, though I still haven't seen anything more specific on the revenue to Nvidia beyond "tens of billions of dollars."

 Nvidia Wins Meta Deal. Its Gain Is Broadcom’s Loss.

WTF: California Is Importing Gasoline From The Bahamas

From Los Angeles Today, February 17: 

....Gasoline refined along the US Gulf Coast is first shipped roughly 1,100 to 1,300 nautical miles to Freeport in the Bahamas, where it is stored at large transshipment hubs before being re-exported. From there, tankers travel another 4,000 to 4,500 nautical miles through the Panama Canal and up the West Coast to Los Angeles or San Francisco. The added leg builds extra shipping, storage and handling costs into wholesale gasoline prices. While routing fuel through the Bahamas can still be cheaper than chartering scarce US-flagged tankers, the detour adds time and complexity.

• In November 2026, more than 40% of California's gasoline imports were routed through the Bahamas....

MUCH MORE

Now I'm a fairly open-minded person, open, let's say, to definitional nuance, but that does not seem very "green". On the other hand it adds new irony to this bit of 'definitional nuance' we reprised yesterday:

 Facing Possible Economic Collapse, California's Governor Newsom Backtracks On Oil Industry Attacks

He says he's not backtracking, just advancing in a new direction:

“That's not rolling back anything. That's actually marching forward in a way that is thoughtful and considered..."

—Governor Gavin Newsom via KCRA-3 Television, Sacramento, July 4, 2025

—California Gasoline Prices Jump 40 Cents Per Gallon, Flirting With $5.00 

"OpenAI, SpaceX and other IPOs could break the S&P 500, Jeremy Grantham says"

Ummm, yes.*

From Mark Hulbert at MarketWatch, February 17:

How an overheated IPO market this year could derail U.S. stocks 

     IPO excitement would be a challenge for the stock market.

Jeremy Grantham has a new and provocative argument for why the U.S. stock market will produce mediocre returns this year.

Grantham is the co-founder of GMO, the Boston-based investment firm. He has been bearish on the U.S. stock market for more than a decade and, so far at least, he’s been wrong.

Yet Grantham commands a wide following on Wall Street. Though early in forecasting both the bursting of the internet bubble and the bear market during the global financial crisis, Grantham had the last laugh. Most stock-market analysts would disagree with Grantham’s current bearishness, but worry that they dismiss his arguments at their peril. 

Grantham’s latest bearish case is that U.S. stocks could be sabotaged this year by an overheated IPO market. In a recent 2026 outlook event at GMO, Grantham said:

“My prediction is that 2026 is going to see a level of IPO excitement that we haven’t seen in a while. My guess is that at least two of the private giants (OpenAI, Anthropic, SpaceX) will go public, and this is likely to put pressure on the U.S. market later in the year. … Post-IPOs, initially, maybe the market rises, but longer term, as more stockholders are able to monetize, that will create a challenge for the U.S. market.”

How much of a challenge for the stock market would such IPO “excitement” cause? GMO calculates that, historically, a 1% increase in the stock market’s total market capitalization because of IPOs corresponds to a 7.5% decrease in the market’s subsequent 12-month return.

Since the U.S. stock market’s total market cap is currently around $50 trillion, a 1% increase would require an IPO from a company with a value of at least $500 billion. The AI companies Grantham mentions would come close to that threshold or exceed it, given their recent valuations in the private market....

....MUCH MORE
*Subjects near and dear: supply, demand, liquidity etc. 

October 2008 - IPOs Produce Smallest Gains Since 1995 as Offerings Increase

Supply and demand. The one effect I can guarantee is the sopping up of billions of dollars and yuan* that would otherwise go into currently trading issues. IPO exits are not only a sign of a top but actually help bring them on by removing some liquidity....

December 2018 - "Nasdaq, 'Tech,' & IPOs are in for Gut-Wrencher"

The Fed's interest rate moves are not that big a deal.
I know that runs counter to a lot of commentary but the upticks are not a problem. Yet.
The bigger headwind facing the market is the Fed's balance sheet unwind sucking up liquidity.
And next year's planned mega-IPOs threatening to do the same....

September 2025 - "US IPO Activity On Track For Best Quarter Since Q1 2022"

This is what we were referring to introducing August 6's "Blackstone prepares portfolio companies for IPOs":

One of the reasons markets trend higher is a lack of new shares coming on to the market.

Over the last few months the IPO window has been opening and the offerings absorb buying power that would otherwise go into issues already trading.

See also: supply/demand.

The Wall Street marketeers are nothing if not opportunistic.

And depending on how much stuff they are primping, packaging, and pushing, this is why stock offerings tend to mark the short/intermediate-term tops in markets.

Just something to be aware of, not a hard and fast rule.

Regarding Mr. Grantham, though he is historically early—keeping in mind that if you are too early, you're not early, you're wrong, I think he is right about the market direction later this year, if not the exact trigger we will point back to.

Anyhoo, we've been keeping track of the G-man's prognostications for a very long time. Here's the outro from a December 2022 post:

....Grantham's problem, shared by moi, is that just because one sees an anomaly, there really isn't any reason to think the market will act on it in the time frame that you think it might.

Way back in 2010 we were posting "Grantham’s ‘Horrifically Early’ Calls Challenge GMO".

Fast forward to June 2020 and Mr. G. was going short, which we dutifully noted. Followed by November 2020's: "Grantham's Short Call Cost His Hedge Fund Over $2 Billion".

One example of where Mr. Grantham isn't just early but wrong is seen in 2012's: 

Vaclav Smil Takes on Jeremy Grantham Over Peak Fertilizer

We posted the whole of Mr. Grantham's Nov. 15 Nature piece for fear it would go behind Nature's paywall.
To date it hasn't. Also to date I haven't come through on my assurance in Nov. 24ths "Jeremy Grantham "On the Road to Zero Growth" as His Co-head of Asset Allocation Does the Full Monty". I promise I'll get to it.

We have almost as many posts on Professor Smil as we do on Mr. Grantham. This is the first time they've been together. I feel very uncomfortable being on the opposite side of Mr. G on just about anything but in this case Smil is right.

From The American:
Jeremy Grantham, Starving for Facts....

Finally, as one commenter at Cowen's Marginal Revolution put it: 

Jeremy Grantham sells ideas for a living. He is and always will be primarily a salesman, and he is very good at his job. A salesman wants to persuade you by engaging you in any way possible, but in particular by engaging your emotions. He is not interested in a deep understanding of all sides of an issue; he only needs to know enough to engage you. A deeper understanding would in fact be harmful to his needs, as his certainty is part of the appeal; a deeper knowledge would lead to doubts and uncertainties that might un-nerve the buyer.

Mr. Grantham avoids a deeper understanding of the ideas he is peddling almost instinctively; he is not so much argumentative as dismissive; he does not concede that there is any doubt at all to dispute. He doesn't truly care about the long term; he is selling medium-term fear to short-term clients. He only needs (or wants) to know enough to complete the sale. Personally, I'm not buying, but I can see why he is successful as a salesman. As a font of wisdom, not so much. The interview was interesting only in so far as it made clear how people are profiting from promoting apocalyptic climate fear.

And from October 2019:

How Good (or bad) Are GMO and Jeremy Grantham's Market Calls?

Chinese Teacher Quits Her Job, Begins Selling Coffins To Europe, Ramps To $6 Million Revenue

From the South China Morning Post, February 16:

29-year-old whose hometown is known for its lightweight wood says she has no business fears because ‘people die every day’ 

In China, death is traditionally seen as a taboo and often tied to bad luck.

But in Heze, a city in eastern China’s Shandong province, this cultural barrier has given rise to a booming industry.

According to Personage magazine, Lisa Liu, 29, from Heze was once a teacher. Exhausted and hoarse from the pressure of work, Liu switched careers in July 2023.

After a chance interview, she went into coffin sales, focusing on the European market, particularly Italy.

Her boss took her on a tour of the factory, where she saw the entire coffin production process, from log cutting to carving and assembly.

To the workers, a coffin was just a wooden object. Some even used empty urns as storage boxes at home.

This helped Liu overcome her superstitions about coffins being “inauspicious”.

Unlike heavy, dark-coloured Chinese coffins, Italian ones are lighter and often feature religious carvings.

In China, cremation involves only the body, whereas in Italy, both the body and coffin are cremated together.

Heze is reportedly home to three million paulownia trees, known for being lightweight, having a low ignition point and featuring beautiful grain, therefore making them ideal for the Italian market.

According to the mainland Chinese media outlet Jimu News, Heze’s coffins, priced between US$90 and US$150, are more affordable than European coffins, which range from US$1,100 to US$2,100.

Liu’s factory reportedly exports around 40,000 coffins to Europe each year, generating an annual revenue of nearly 40 million yuan (US$6 million).....

 

 ....MUCH MORE

Fun fact: there are at least 50 million people surnamed Liu in China. 

As noted back in 2020:

....The other writer Nicolle Liu shares a surname with some 50 - 60 million other Liu's, including the Chinese Vice-Premier, Liu He.

I know some Liu's, from a rather noteworthy Beijing branch of the fam who informed me of this when I would ask if they were related to this Liu or that Liu. 

Electric Vehicles: "Ford Looks for Model-T Redux with UEV Plan" (F)

Will they all be painted black? 

From Counterpoint Research February 17:

• Even as Ford pushes back into a richer mix of ICE and hybrid vehicles better suited to its core North American market, it is talking about its new EV program – Universal Electric Vehicle (UEV), which bears zero relation to any previous Ford EV.
• Ford has assembled a small team of technologists and cloistered them in Long Beach, California, far from its Michigan heartland, and given them carte blanche to develop an EV platform true to the spirit of Ford.
• Ford is not trying to develop a flagship car with an aspirational price tag. It is cleaving to the idea originally espoused by Henry Ford in the Model-T over a hundred years ago.
• The first model based on the UEV is a mid-sized truck starting at $30,000. Its design is reckoned to be 15% more aerodynamically efficient than the best competing truck. 

Ford, along with several other Western automakers, has had a difficult time with EV development. The company’s Q4 2025 earnings were messy, with a net loss of over $11 billion on previously disclosed writedowns associated with its EV programs. However, the underlying business execution at Ford is improving as it pushes back into a richer mix of ICE and hybrid vehicles better suited to its core North American market, especially given the US government’s wavering commitment to the EV transition.

Against this background, it might seem strange that Ford is talking about its new EV program –Universal Electric Vehicle (UEV) (or, as someone cheekily put it, FUEV!). However, the UEV, first announced in August 2025, bears zero relation to any previous Ford EV; this is a 100% clean sheet development, and it has a lot of interesting details. There are still many question marks, but what it has revealed so far looks promising in a way that is encouraging, and encouragingly different for a Western automaker.

The A-Team

As a kid, I used to enjoy watching the ‘A-Team’ television series in which an unlikely assortment of characters would work innovatively against seemingly impossible odds to win the day. It might be stretching the analogy here, but Ford has assembled a small team of technologists and cloistered them in Long Beach, California, far from its Michigan heartland, and given them carte blanche to develop an EV platform true to the spirit of Ford.

The team is led by Alan Clarke, an ex-Tesla engineer who heads the Advanced Electric Vehicle Development unit. His tight-knit group of engineers, technologists and aerodynamicists – many of the latter drawn from Formula-1 backgrounds – is untainted by association with Ford’s previous EV programs.

Model-T roots

An EV true to the spirit of Ford needs to be understood. Ford is not trying to develop a flagship car with an aspirational price tag. It is cleaving to the idea originally espoused by Henry Ford in the Model-T over a hundred years ago. The Model-T was revolutionary because it was deliberately designed and priced as a mass product rather than a luxury good, and then built using radical new mass‑production methods that slashed costs and prices over time. By adopting a simple, durable and easy‑to‑repair platform design, Ford made car ownership realistic for ordinary middle‑class and even working‑class families. Now, it is trying to do that again, but for the EV era and one that’s fun to drive, a non-negotiable for the design team....

....MUCH MORE 

"Why investors are getting the US debasement trade all wrong"

A Reuters mini-essay from Joachim Klement whose substack tagline is:

Thoughts on financial markets by a grumpy, middle-aged German. What more do you want? Click to read Klement on Investing, by Joachim Klement, a Substack publication with tens of thousands of subscribers. 

From Reuters, February 15: 

Chatter about the “dollar debasement” trade has become omnipresent, but one measure of risk suggests that investors are getting it all wrong. They are overestimating the trouble the dollar faces while underestimating the threat to U.S. Treasuries.

 

The dollar has depreciated against all major currencies over the last 12 months, while gold and other precious metals have sky-rocketed, recently hitting all-time highs. Does that mean we’re seeing debasement in action? Not necessarily, or at least, it’s not that straightforward.

 

While the term “debasement trade” is ill-defined, it appears to consist of two elements. On one side, investors are worried about a devaluation of the U.S. dollar if discontent with U.S. policy – whether fiscal or foreign – makes money managers reduce their exposure to the greenback, meaning it might no longer act as a safe haven and could even lose its status as the world’s reserve currency.

 

From the other perspective, investors are concerned that the U.S.’s eroding fiscal situation may eventually trigger a sharp devaluation of U.S. Treasuries – or, in extreme scenarios, a default – and a corresponding devaluation of the U.S. dollar.

 

On the face of it, the case for both seems pretty weak. The dollar declined around 10% last year, but that was after it rose by roughly 50% in the prior decade, and it’s nowhere near losing its status as the world’s reserve currency.

 

Meanwhile, Treasury yields are hardly ringing alarm bells.

 

But there’s another way to measure whether investors are growing more skittish about holding dollars or Treasuries: their so-called “convenience yield”. This is essentially the difference in yield between holding the U.S. dollar or Treasuries outright and creating synthetic versions of these assets via a series of currency and options trades.

 

Investors may do the latter because they need Treasury exposure but either don’t want to take on the credit risk of the U.S. as a counterparty or own government bonds from other countries that they cannot sell.

 

Creating a synthetic dollar or Treasury is cumbersome, so the replications should offer higher yields.

 

If the investors conducting these trades – typically among the most sophisticated in the world such as hedge funds and central banks – were afraid of dollar debasement, we should observe a declining convenience yield.

 

And we’re not, at least not if we’re looking at the dollar. The convenience yield for the greenback against the euro has remained stable for the last ten years and has stayed in positive territory, meaning investors would rather hold dollars than replicate them....

....MUCH MORE 

Here's his substack:

https://klementoninvesting.substack.com/