Authored by Kenin M. Spivak via RealClearPolitics,

California’s elected Democrats can’t move beyond pandering. Gov. Gavin Newsom is fixated on reparations for African Americans, and the legislature’s Democratic Party majority is once again trying to divide Californians by race, sex, and gender orientation.

In 1996, California stunned the nation when 55% of voters approved Proposition 209, which amended the state’s constitution to prohibit public institutions from considering race, sex or ethnicity in employment, contracting, and education. Ten years later, the United States Supreme Court confirmed its right to do so.

As the state moved further left, in 2019, the Democratic controlled legislature placed Proposition 16 on the ballot to repeal Proposition 209. That effort failed in 2020 when more than 57% of voters rejected it, despite widespread support of elected officials and opponents being outspent nearly 20 to 1.

Undeterred, in 2020, the legislature enacted laws that required California-headquartered public companies to include up to three directors who “self-identify” as women and up to an additional three directors from “underrepresented communities.” In 2022, California state judges enjoined that social engineering for violating due process under California’s constitution. California lost its appeals.

Also in 2020, Newsom signed into law a requirement that the state develop reparations proposals for black Californians. In 2022, he issued an executive order directing all state agencies to reorder their missions and hiring practices “to advance equity” while also establishing a commission to develop policies based on the reparations proposals. Among dozens of preferences, it recommended payments exceeding $1 million for each descendant of slaves, as well as housing assistance, guaranteed wages, racially segregated education, and overturning Proposition 209. Earlier this year, Newsom established a bureau to develop programs to implement the commission’s report.

Inevitably, those programs will violate the California and U.S. constitutions. At a USC Dornsife event last week, a panel of recently retired top Democrat officials acknowledged that the state could not afford reparations and that it would be far more productive for it to focus on improving academic and vocational education.

In 2021, Newsom signed into law AB 101, making California the first state to require ethnic studies for all high school students. The California Department of Education issued a Mathematics Framework that rejected “natural gifts and talents,” called for de-emphasizing calculus, ended classes for gifted children to eliminate “inequity,” and directed teachers to move away from focusing on correct methods or answers. After pushback from parents, the state abandoned the most extreme aspects of the Framework. But AB 101 took effect this school year, requiring a curriculum based on Critical Race Theory, with an emphasis on “equity” and “people of color.”

Following the Newsom commission’s report on reparations in 2023, the California Assembly passed Assembly Constitutional Amendment 7 to indirectly repeal most of Proposition 209 and allocate state funds to so-called marginalized minorities. Last month, the Assembly passed a modified version of ACA-7 that preserves race-based funding, and may still repeal some of the other protections accorded by Proposition 209. The California Senate is now considering that legislation.

If ACA-7 is enacted by the legislature, it will be placed on the ballot in November.

Reparations based on race are unconstitutional. More insidious, compelling middle class and poor families to subsidize affluent students is contrary to the principles of most Americans of every race, gender identification, and economic strata. Countless polls over many years show that Americans overwhelmingly oppose using affirmative action and DEI in hiring, admissions, promotions, and contracting. Only progressive activists believe otherwise.

In a 2016 Gallup poll, a 2019 Pew survey, and a 2021 College Plus survey, about 70% opposed the use of race and ethnicity in admissions decisions, including about two-thirds of Latinos and a majority of blacks. In a January 2024 CRC survey of 1,600 registered voters, 66% disapproved of relying on race, sex, or gender identity for hiring or promotion. The results were similar among men, women, Republicans, Democrats, independents, conservatives, and moderates. Even liberals disapproved by a margin of 54% to 34%.

In a July 2024 survey of 2,100 likely voters by the Manhattan Institute, respondents across the partisan spectrum rejected race-conscious policies. Just 21% (including 36% of Democrats, 35% of Latinos, and 37% of blacks) agreed that “We should focus on creating a race-conscious society to repair the harms of the past by developing policies that benefit marginalized groups.” Majorities across all demographic groups agreed that “We should focus on creating a color-blind society where everyone is treated equally regardless of the color of their skin.”

A survey of 3,262 voters after the last presidential election conducted by Blueprint, a polling organization that helps Democrats, found that 67% of swing voters who chose Trump viewed Democrats as “too focused on identity politics.”

In 1860, there were 395,216 slave owners in the 15 states that permitted slavery and none in the other 18 states. In total, about 5% to 6% of all U.S. households owned slaves. Today, most blacks are at least middle class, live in diverse suburbs, and pursue the same careers as do people of other races.

When California was admitted in 1850, slavery was prohibited. No Californian has ever participated in America’s ugly legacy of slavery – whether as a slave, slave trader, or slave owner. None of their grandparents did. Very few of their great-great-great-grandparents did. More than a quarter of the state’s population is foreign-born. That means California’s elected Democrats are asking recent immigrants to subsidize the children of affluent, educated black Americans.

In a 2019 Associated Press-NORC poll, just 29% of Americans favored the payment of cash reparations to descendants of black slaves. In 2024, a Princeton University-Liberations poll found 36% approval for some form of reparations. A 2022 Rasmussen poll and a 2025 YouGov poll had similar results. Even a quarter of blacks oppose reparations. A search found no polls in which any meaningful percentage of Americans favor reparations to blacks who are not direct descendants of slaves.

Polls aside, the 14th Amendment prohibits governments from allocating benefits based on protected class, most notably race. Eliminating discrimination means eliminating all of it.

With a Republican leading the polls for the next governor of California, and many California Democrats opposed to reparations and racial pandering, more far-left virtue signaling is unlikely to benefit Democratic candidates. DEI and reparations deprive blacks of agency, penalize Americans with no connection to slavery, and represent racial politics at its worst.

Kenin M. Spivak is founder and chairman of SMI Group LLC, an international consulting firm and investment bank. He is the author of fiction and non-fiction books and a frequent speaker and contributor to media, including RealClearPolitics, The American Mind, National Review, television, radio, and podcasts.

One week after Trump announced that the US would cover insurance for ships transiting the Strait of Hormuz, and would provide them with US navy escorts, Reuters reports that the US Navy has refused near-daily requests from the shipping industry for military escorts through the Strait of Hormuz since ​the start of the war on Iran, saying the risk of attacks is too high for now.

The U.S. Navy has held regular ⁠briefings with shipping and oil industry counterparts and has said during those briefings it is unable to provide escorts for the time being, three unnamed shipping industry sources told Reuters. They added that the shipping industry has been making requests almost daily during the calls for naval ​escorts through the strait. One of the sources said the Navy’s assessment during Tuesday’s briefing had not changed and that escorts would only be possible once the risk of attack was reduced, which judging by images like the one below of a container ship in the Gulf today won’t happen any time soon.

Insane image from the bridge of a container ship arriving at the Port of Salalh in Oman earlier today, as flames engulf multiple port facilities and oil tanks at the MINA Petroleum Facility, resulting from several impacts by one-way attack drones launched by Iran. pic.twitter.com/ePFkxNpOEf

— OSINTdefender (@sentdefender) March 11, 2026

The ‌Navy’s assessments spell continued disruption to Middle East oil exports and reflect a stark divergence from President Donald Trump’s statements that the U.S. is prepared to provide naval escorts whenever needed to restart regular shipments along the key waterway.

Shipping along the narrow strait has all but halted since the start of the U.S.-Israeli war on Iran more than a week ago, preventing exports of around a fifth of the world’s oil supply ​and sending global oil prices surging to highs not seen since 2022. Some ships – mostly Iranian VLCCs and Chinese tankers carrying embargoed products – have resumed transits with Iran vowing it would only attack western-linked ships, we reported earlier.

The status quo may soon change, however: on Tuesday General Dan Caine, chairman of the Joint Chiefs of Staff, said that the US military has started looking at options to potentially escort ships through the strait, should it be ‌ordered to do ⁠so. “We’re looking at a range of options there,” Caine told reporters at the Pentagon.

A U.S. official told Reuters the U.S. military has not yet escorted any commercial ships through the strait. Earlier in the day, U.S. Secretary of Energy Chris Wright deleted a post on X in which he said the Navy had successfully escorted one through.

While there have been some voyages through the waterway in recent days, the majority of shipping traffic remains on hold with hundreds of ships ​anchored.

Meanwhile, Trump has said repeatedly in recent days that the United States is prepared to escort tankers through the Strait of Hormuz when necessary.

“When the time comes, ​the U.S. Navy and its partners will escort tankers through the strait, if needed. I hope it’s not going to be needed, but if it’s needed, we’ll escort them ​right through,” he said on Monday during a press conference at his Mar-a-Lago resort in Florida.

For its part, Iran remains adamant: a senior official with Iran’s Revolutionary Guards has said the strait is closed and Iran will ​fire on any ship trying to pass, Iranian media reported last week. Several ships have already been hit.

Indeed, earlier in the day, a Thai ship attempting to pass through the Strait of Hormuz, the bulk carrier Mayuree Naree, was struck by projectiles while travelling about 18km north of Oman.

Images released show black smoke coming from a Thai cargo ship near the Strait of Hormuz after it was reportedly struck by an Iranian projectile.

Authorities say it is one of three commercial vessels that were targeted on Wednesday, and several crew members are missing. pic.twitter.com/6yL9U2WOw2

— Al Jazeera Breaking News (@AJENews) March 11, 2026

Never afraid of wading neck-deep in irony, just a few hours after photos of the latest ship to be attacked in the SoH circled the globe, Trump said “you can see great safety in the Strait of Hormuz“, when asked how he’s going to ensure the safety of oil following through it. 

When asked by a reporter if Iran laid mines in the Strait of Hormuz, “we don’t think so,” President Trump replied, all signs to the contrary. 

Amid escalating U.S.-Israel military strikes against Iran, a separate battle is brewing on Capitol Hill over President Donald Trump’s nomination of Kevin Warsh to chair the Federal Reserve, according to CNBC.

The key obstacle is Sen. Thom Tillis (R-NC), who announced last year that he would not seek re-election one day after voting against advancing the president’s signature legislation, the “Big Beautiful Bill.”

Tillis has pledged to withhold support for any Federal Reserve nominees, including Warsh, until a criminal investigation into Fed Chair Jerome Powell’s handling of the Federal Reserve’s $2.5 billion renovation is resolved. Powell has denied any wrongdoing.

“No, no,” Tillis reportedly said when asked if Warsh could say anything during their scheduled meeting later that day to shift the senator’s stance on blocking his nomination.

“This is not about people, it’s about process,” the North Carolina Republican added. “I think this is a foul.”

Following the meeting, Tillis told reporters he would vote against advancing Warsh’s nomination out of the Senate Banking Committee if the Powell investigation remains unresolved by then.

“This is about [the] bedrock principle of Fed independence,”Tillis said. “The reason why I came out so strong so early is I believe that we, I, have no earthly idea what the market reaction would have been if suddenly the perception is that the Fed chair serves at the pleasure of the President, right?”

Of course, Tillis is simply shielding Powell – the architect of the everything-bubble and dollar debasement – from a long over due probe into waste and potential perjury. In other words ‘you can’t fire this guy until you’ve fully investigated him’ – effectively delaying or preventing accountability for Powell in a practical sense while preserving the status quo at the fed. 

Despite Tillis’s opposition to advancing Warsh’s nomination, the senator said he was “impressed” with Warsh, signalling that he would support Trump’s Fed pick if the Powell probe went away.

“I’ve known of his work for quite some time, and that’s why I’m so frustrated that I’m not going to be able to cast a vote until we dispose of the other issues,” Tillis said.

Tillis also took aim at the firing of Federal Reserve Governor Lisa Cook, calling it “sophomoric.”

“We had seven members of the Banking Committee who were witnesses at the alleged scene of the crime who said no crime was committed,” the retiring lawmaker said. “Why are we even still having this discussion and holding up a great nominee?” Tillis asked.

“I think it goes back to a young U.S. attorney with a dream, with a bogus basis for an investigation,” he added. “They need to acknowledge that and step away from it so we can get him confirmed.”

“Whoever came up with that idea should be fired, too,” the senator said.

U.S. law enforcement agencies in California were recently warned that Iran may have explored the possibility of launching drone attacks against targets on the West Coast in retaliation for Operation Epic Fury, according to a federal alert reviewed by ABC News.

The bulletin, circulated by the FBI to police departments in late February, said authorities obtained information indicating that, as of early February 2026, Iran had allegedly aspired to conduct a surprise attack using kamikaze drones launched from an unidentified vessel off the U.S. coast. The potential targets were described only as unspecified locations in California.

“We recently acquired information that as of early February 2026, Iran allegedly aspired to conduct a surprise attack using unmanned aerial vehicles from an unidentified vessel off the coast of the United States homeland, specifically against unspecified targets in California, in the event that the US conducted strikes against Iran,” the alert said, adding that investigators have “no additional information on the timing, method, target, or perpetrators of this alleged attack.”

The warning was issued amid the ongoing US-Israeli military assault against Iran. Tehran has responded with drone strikes against targets across the Middle East, raising concerns among U.S. officials about possible retaliation beyond the region.

A spokesperson for the FBI’s Los Angeles field office declined to comment on the alert. The White House did not immediately respond to requests for comment.

The question is what exactly was the information obtained in early February that prompted the FBI to release a bulletin by late in the month. 

We should note that on Feb. 3, we highlighted a threat assessment published by the Russian military-focused Telegram channel Rybar, which warned that potential Russian drones in Cuba could put critical oil and gas infrastructure in the Gulf of America, as well as data centers and military installations across the homeland, within range of these cheap, low-cost kamikaze drones.

Around that same time, we also warned that the explosion in AI data center buildouts would require next-generation counter-drone security, including kinetic interceptors. The Gulf states quickly learned during Iran’s retaliatory strikes that data centers and other civilian infrastructure were very much in play.

Separately, U.S. intelligence officials have also been monitoring the growing use of drones by Mexican drug cartels and the potential for such technology to be used against U.S. personnel along the southern border. A September 2025 intelligence bulletin reviewed by ABC News said an uncorroborated report suggested unidentified cartel leaders had authorized attacks using drones carrying explosives against U.S. law enforcement and military personnel near the border.

The document noted that such an attack inside the United States would be unprecedented, though it described the scenario as plausible. It also cautioned that cartels generally avoid actions that could trigger significant retaliation from U.S. authorities.

John Cohen, an ABC News contributor and former acting undersecretary for intelligence at the Department of Homeland Security, said the possibility of drone-based threats emerging from both the Pacific and Mexico is a growing concern for security officials.

“We know Iran has an extensive presence in Mexico and South America, they have relationships, they have the drones and now they have the incentive to conduct attacks,” Cohen said. “The FBI is smart for putting this warning out so that state and locals can be better able to prepare and respond to these types of threats. Information like this is critically important for law enforcement.”

The FBI alert did not specify how a vessel carrying attack drones could approach the U.S. mainland without detection. However, intelligence officials have long worried that equipment could be pre-positioned either on land or aboard ships at sea for use in the event of military strikes by the U.S. or Israel against Iran.

Authored by Martin Young via CoinTelegraph.com,

Ethereum co-founder Vitalik Buterin said the Ethereum Foundation used simplified distributed validator technology, or “DVT-lite,” to stake 72,000 Ether in February.

“My hope for this project is that in the process, we can make it maximally easy and one-click to do distributed staking for institutions,” said Buterin on X on Monday.

Buterin explained that with DVT-lite, users can “choose which computers run their nodes, make a config file where they all have the same key, and then from there everything gets set up automatically.”

DVT-lite is a simplified form of distributed validator technology tailored for easier deployment, especially in institutional or semi-professional Ethereum staking setups.

In regular solo staking, everything is run on one computer, which can result in “slashing” or penalties if it crashes, gets hacked, or loses internet. Full DVT splits the secret keys across many computers that constantly communicate, which is very secure, but complicated to set up.

DVT-lite uses the same validator key on several computers, so if one computer dies, another quickly takes over, resulting in almost no downtime and very low risk of penalties.

The Ethereum Foundation started its staking program using the technology in late February, and the assets are currently sitting in the validator entry queue waiting to be staked on March 19.

Basic representation of a full DVT setup. Source: Ethereum Foundation

“One-click” staking for institutions

Buterin said that the idea that running infrastructure is this “scary complicated thing” where each person participating must be a professional is “awful and anti-decentralization, and we must attack it directly.”

He added that there should be a “Docker container” or “Nix image” or similar, which has “one click” or command line per node that automates the process of staking.

Buterin said he plans to use DVT-lite soon and hopes more institutions holding ETH can stake in this way.

“We want the authority over staking nodes to be highly distributed, and the first step to doing this is to make it easy.”

In January, he suggested “native DVT” network integration, which would allow stakers to “stake without fully relying on one single node.”

Big demand for staking despite low prices

There is still a huge demand for Ether staking despite its bear market price action.

There are currently 3.2 million ETH in the validator entry queue, with a 55-day wait, and just 29,000 in the exit queue with a 12-hour wait, according to ValidatorQueue.

There are currently 37.5 million ETH staked, worth roughly around $76.5 billion at current prices and representing 31% of the total supply.

Up until today, establishment poster boy Sen. John Cornyn (R-TX) was a chief obstacle to killing the filibuster so that Republicans could pass the SAVE Act, which would require photo ID to be able to vote in US elections. 

Now, Cornyn has suddenly abandoned his sacred cow – which he called the last bastion of “minority rights” and do “whatever changes to Senate rules that may prove necessary for us to get the SAVE America Act and homeland security funding past the Democrats’ obstruction,” which also happens to be Trump’s top priority. 

In a groveling op-ed in the NY Post, Cornyn declared that “process matters, but outcomes matter more: The Democrats’ assault on election integrity and national security must be stopped,” adding that the nation is at a “critical hour” where “old procedures no longer align with the core American principles we must defend.”

Translation: His political hide is on the line, and he’s willing to torch Senate traditions – which Democrats will shred as soon as they can anyway – to save it.

Cornyn vs. Paxton

Cornyn is also looking for an endorsement from Trump, which would go a long way towards staving off a bruising primary runoff election against Texas AG Ken Paxton set for May 26. That said, a new poll shows that wouldn’t matter much.

After Paxton and Cornyn advanced to a runoff last week, Trump finally weighed in on the race, saying he would make an endorsement “soon.”

According to the Texas Public Opinion Research poll, that endorsement doesn’t close the gap for Cornyn.

Based on those polled, if Trump endorsed Paxton, then 58% of voters said they would vote for Paxton, while just 32% would vote for Cornyn. –Fox4

This isn’t Cornyn’s first dance with filibuster hypocrisy. As ZeroHedge detailed last October, Senate Republicans, including Cornyn, were already mulling filibuster reforms to end a government shutdown, showing cracks in the so-called “institutionalist” facade. But now, with his back against the wall, the flip is complete as Cornyn faces the fight of his life in the Texas runoff. As we noted after their March 3 primary, Paxton edged out a polling lead, framing the race as a battle between “America First” populism and Cornyn’s establishment cronyism. RealClearPolitics averages had Paxton up by 3.8 points pre-primary, and with Trump yet to weigh in, Cornyn’s scrambling to prove his loyalty.

Saving the SAVE Act

As we noted yesterday, on Sunday, Trump issued a blunt legislative ultimatum, declaring on Truth Social that he would refuse to sign any bill until the Senate passed the SAVE America Act. “It must be done immediately. It supersedes everything else. MUST GO TO THE FRONT OF THE LINE,” Trump posted. The legislation would require physical proof of citizenship for federal voter registration, a photo ID to vote, and would restrict mail-in voting to military personnel and a narrow set of extenuating circumstances.

Democrats in Washington, DC, have blasted the legislation as voter suppression, but a Harvard/Harris poll found that 71% of Americans support the bill, including 69% of independents, and 50% of Democrats. 

Poll after poll shows overwhelming support for voter ID laws across the political spectrum. According to the Pew Research Center, 83% of Americans support voter ID requirements, including large majorities of Democrats, independents, whites, blacks, and Latinos. Gallup reports similar findings, with 84% backing voter ID—98% of Republicans, 84% of independents, and even 67% of Democrats. The same survey found that 83% support requiring proof of citizenship to register to vote. Rasmussen Reports puts support at 75%, noting that backing for voter ID has steadily increased over the past decade.

While support for the SAVE Act is bipartisan, Democrats in Congress are rabidly opposed to it. Senate Minority Leader Chuck Schumer has repeatedly called the SAVE Act “Jim Crow 2.0,” and made unsubstantiated claims that it would “disenfranchise tens of millions of people.”

Chinese authorities have begun restricting the use of OpenClaw AI applications across government agencies and state-owned enterprises, moving quickly to address security concerns as the technology is rapidly being adopted by companies, developers and investors.

Notices issued in recent days warn government bodies and major state-run firms – including some of the country’s largest banks – not to install OpenClaw software on office computers, according to Bloomberg, adding that several organizations were told to report any existing installations for security reviews and possible removal.

Certain employees, including those at state-run banks and some government agencies, were banned from installing OpenClaw on office computers and also personal phones using the company’s network, some of the people said. One person said the ban extended to the families of military personnel. 

The Ministry of Industry and Information Technology and the State-owned Assets Supervision and Administration Commission didn’t immediately respond to requests for comment.

Security Concerns Emerge

The guidance reflects growing concern in Beijing over the risks posed by so-called agentic AI – systems that can autonomously perform tasks and interact with outside services. OpenClaw, which requires extensive access to private data and can communicate externally, has raised alarms among cybersecurity experts who warn the technology could expose systems to external attacks.

One researcher described the combination of access to sensitive data, outside communications and exposure to untrusted content as a “lethal trifecta.” 

One user reported the agent “went rogue” and spammed hundreds of messages after gaining access to iMessage. Cybersecurity experts warn the tool is risky because it has access to private data, can communicate externally and is exposed to untrusted content. -Bloomberg

The issue carries particular sensitivity in China, where President Xi Jinping has emphasized data security as a cornerstone of his “holistic approach to national security.’ CCP officials have tightened oversight of internet platforms and data-rich technology firms via their “Great Firewall” amid concerns about foreign access to sensitive information, including geospatial and genetic datasets.

The government has also shown a willingness to rein in powerful technology companies. In recent years regulators launched campaigns targeting major internet platforms, including Alibaba Group Holding Ltd., citing concerns over data control and systemic risk.

Tech Sector Rushes to Adopt AI Agents

OpenClaw has exploded in popularity within China’s technology ecosystem. Developed by Austrian programmer Peter Steinberger, the open-source AI agent – previously known as Clawdbot and Moltbot – can autonomously complete tasks such as managing emails, booking restaurants and checking in for flights.

Unlike traditional chatbots such as OpenAI’s ChatGPT or Chinese model DeepSeek, which primarily answer questions, OpenClaw can make decisions and execute actions on behalf of users.

The technology has developed a cult following since launching in November. The phrase “raising a lobster,” referencing OpenClaw’s lobster logo, has trended on Chinese social media as users experiment with the tool’s capabilities.

As the Wall Street Journal notes, China’s largest technology firms have quickly moved to capitalize on the excitement. Tencent Holdings Ltd. introduced a suite of OpenClaw-compatible products including Workbuddy, which integrates with common office software. Tencent shares rose after unveiling these OpenClaw-compatible tools, while investors have increasingly speculated that AI agents could represent the next stage of consumer and enterprise artificial intelligence. JD.com Inc. and other companies have rolled out their own applications tied to the platform. AI developer MiniMax has seen its stock jump roughly 640% since listing two months ago, giving it a market value of about $49 billion – exceeding that of Baidu Inc., once widely viewed as China’s leading AI developer.

Meanwhile, startups are building tools designed to simplify adoption. Zhipu AI recently launched AutoClaw, software intended to make installation as easy as downloading a typical application.

Local governments have also joined the push. Districts in cities such as Shenzhen and Wuxi have proposed or introduced subsidies worth millions of yuan for companies developing OpenClaw-based applications as part of China’s broader effort to integrate artificial intelligence across industries.

Even so, analysts caution that the technology may not yet generate meaningful profits. According to Bloomberg Intelligence, many companies are currently treating AI-agent software as a loss-leading product designed to attract users and strengthen their broader AI ecosystems.

Regulation Likely to Limit Government Adoption

The regulatory warnings suggest Beijing intends to keep tighter control over the technology’s use in sensitive sectors such as finance, government administration and energy.

State media has begun highlighting the risks as well. The Communist Party’s newspaper People’s Daily recently published an interview with an IT official affiliated with the Technology Ministry warning that AI agents pose potential dangers across multiple industries.

Bloomberg Intelligence said increased scrutiny is likely to restrict adoption of unverified AI agents in government and state-owned enterprises, though the broader private-sector rollout in China is unlikely to slow significantly.

For now, OpenClaw remains both a symbol of China’s AI ambitions and a test case for how the country balances technological innovation with strict oversight of data and digital infrastructure.

Authored by José Niño via Headline USA,

President Donald Trump’s Small Business Administration announced this week that foreign nationals are now prohibited from accessing all federal small business loan programs, extending restrictions put in place last month, according to Breitbart News.

“The Trump SBA is committed to driving economic growth and job creation for American citizens,” SBA Administrator Kelly Loeffler stated.

“Last month, we made it clear that SBA would not allow foreign nationals to access our core small business loan programs – and today, we are expanding that policy to include all SBA-guaranteed loans.”

The expanded restrictions specifically bar foreign nationals from the agency’s Surety Bond program and Microloans, which provide financing up to $50,000 for small businesses and nonprofit childcare centers.

“With our lending authority capped annually by Congress and amid record demand for access to capital, our responsibility is clear: The limited resource of SBA financing must prioritize American citizens who are building businesses and creating jobs here at home,” Loeffler added.

The administrator announced last month that applicants for the agency’s primary small business loan would need to be American citizens with permanent residence in the United States.

During Fiscal Year 2025, largely under former President Joe Biden, the SBA approved nearly 3,400 loans to small businesses owned at least partially by foreign nationals.

Those loans represented four percent of the agency’s 85,000 total approvals that fiscal year.

By Michael Every of Rabobank

Oil vey Hormuz mir!

Oil swung (far less than Monday) yesterday on a tweet from the US Energy Secretary saying the US Navy had escorted an oil tanker through Hormuz: that was deleted, and the Navy then stated it can’t do that because of the risks involved – vessels there are still sitting ducks.

Iran continued to attack the Gulf states’ energy infrastructure and claimed “not a single litre” of oil will exit until the US and Israel retreat. It’s reportedly activating minelayers and speedboats in the Strait, as the US claimed it’s destroyed 16 of the former. However, that critical waterway is still absent US, GCC, or European minesweepers or corvettes, without which getting oil out is unlikely absent a peace deal or a US/Israel defeat. In short, there may have to be force escalation to deescalate, and it’s now a dual attrition race of Iranian missiles/drones vs others’ interceptors and minelayers/speedboats vs. whatever the US, Israel, and others can offer.   

Indeed, despite ‘peace now’ market oil pricing, yesterday saw the heaviest US attacks so far. The Israeli defence press speak of the US stepping things up for the next 1-2 weeks, already an additional week to what analysts had hoped for after the Trump statement on Monday. Other press add that some in the Israeli government think it could take up to a year for the Iranian regime to finally fall – that’s a military timetable which is impossible for the US and Israel to stick to both politically and logistically. Their rush now is therefore to smash every element of regime power and defence and nuclear industries such that an anti-regime domestic political dynamic can emerge, with some ‘help’, and to ensure that Iran offers no regional threat in the meantime. However, that necessarily distracts focus away from a military focus on Hormuz.  

The media also aren’t optimistic about the war ending “very soon,” as promised. The FT op-ed today is that ‘There is no easy exit to Trump’s war’; the Telegraph warns of ‘How Iran’s ‘horizontal warfare’ could trap Trump in another Vietnam’; and even the Jerusalem Post notes that ‘Israel targets Hezbollah, Iran, but technical failures slow progress in ongoing conflict.’ There are also unsubstantiated but notable whispers of missing Iranian enriched uranium, and the risks of a ‘dirty bomb’, and of Tehran’s attempts to purchase a nuclear weapon from North Korea. (Which would arrive how, exactly? Via Hormuz?!)

The Arab press reports Qatar wants to bolster its security partnership with the US after Iran’s strikes, and the GCC may bring a complaint about Iran to the UN Security Council. Only the former has teeth, which speaks to the regional realignment already underway as war bites. Yet that realignment will also depend on how the war ends. As continuously stressed here, when the market assumes Hormuz is reopened, is this with the US having won or lost? A vast stack of asset pricing away from oil depends on which one of the two scenarios we are talking about.

On that front, a South China Morning Post report asks, ‘Could China’s rare earth supplies dictate how long US strikes on Iran go on?’ It claims that after depletion in this war, the US has only around two months of rare earths inventory, and “supplies would dominate talks when Trump sat down with Chinese President Xi Jinping.” This is obviously of critical importance. To extend an analogy used yesterday, is China of 2026 the US of 1956 and the US of 2026 the UK and France of the Suez Crisis?  (This is as Germany may emulate Japan in shoring up critical minerals supply via joint purchasing from its key firms aimed at reducing reliance on China.)

If so, the US response *might* again be threatened escalation to deescalate: in short, to make clear to China, one way or another, that the recent chaos in energy markets can get worse again if there were to be any problems with its rare earths supply. That may sound illogical to a ‘rational’, economics or markets-focused mindset: but what other strategy could the US use from its current position? An FTA? Lower tariffs? A geopolitical defeat? Failing the Iranian regime starting to fall, it’s a very short shortlist of not very good options, save the high risk one just mentioned. Moreover, there are already suggestions Beijing, despite geopolitical alignment with Tehran, sees stability and the flow of oil as the more important metric. That might end up in a good place, both on energy and on US-China relations, but it could also make for some wild headlines and price action on the way there. It’s certainly a tail risk worth considering.

Meanwhile, even as markets price an (ambiguous) positive endgame to this Middle East war via stable oil prices around current (higher) levels, that doesn’t account for the dichotomy between the financial (i.e., prices on screens) and the material (i.e., actual availability of energy and key derivatives such as sulphur, fertilisers, and helium).

Europe and Asia are battling for LNG cargoes, says the FT, with Asia winning so far as ships re-route enroute. Reuters notes that diesel markets threaten a global economic slowdown. Fertilizer prices (or a shortfall) may hit planting season for farmers, with an impact on food prices later.

In response, as the West carries on as normal day-to-day, much of emerging Asia is seeing the kind of policy shifts only undertaken in past crises. Vietnam is making the biggest move to remote work since COVID to save energy. Pakistan has ordered a four-day workweek for government employees and a two-week closure of schools. Bangladesh has shut its universities and limited fuel sales. For hundreds of millions, this crisis is already tangible in the physical economy.

Positively, the Wall Street Journal claims the IEA will today propose its largest ever oil release from strategic reserves, moving beyond just promised action from the G7. Again, that will help buy some time. Yet in doing so, that takes the immediate market pressure off the US and Israel to wrap up the war quickly… and does it also give China more leverage over rare earths vs any implied US oil threat (then implying that things would need to escalate more)? There is a vastly complex geopolitical and geoeconomic dynamic at play here beyond the intricacies of the Middle East, and the obvious simplicity of the Hormuz bottleneck.

As part of that picture, yesterday saw Europe’s von der Leyen flag that nuclear power is back on the menu, as former German Chancellor Merkel, who pushed through the closure of that country’s nuclear power plants, was awarded the European Order of Merit. There was a public pushback from senior European Commission figures like Kallas, Ribera, and Costa to VDL’s previous day’s comments that perhaps a rigid adherence to the ‘rules-based order’ might be a hindrance as well as a help to the EU’s credibility as a geopolitical actor: specifically, “Freedom and human rights cannot be achieved through bombs,” said Costa. Sometimes, yes; but WW2 and Ukraine have something to say about that to Europe, no? 

Meanwhile, there was an explosion in Chinese exports to Europe in the first two months of 2026, up 27.8% y-o-y to the EU, 31.3% to Germany, and 36.4% to France. Is there a ‘rules-based order’ response to that kind of trend? If not, prepare for something else.

Oil vey Hormuz mir!

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

In our recent article, The Value Rotation Illusion, we explained that in the recent rotation from growth to “value”, passive investors, in actuality, are selling value stocks to buy expensive stocks. Confused? In this follow-up, we take our three-tier earnings valuation framework introduced in the article a step further to uncover true value stocks.

First, though, it’s vital to provide context for why the passive investment landscape skews stock valuations.  

Passive Investing Drives The Current

A passive investment environment is oftentimes agnostic to valuations, blurring the lines between traditional investment styles like value and growth.

Oftentimes, we associate passive investors with investing in broad market indexes such as the S&P 500 or the Nasdaq. However, passive investors also buy sector- or factor-based ETFs, such as consumer staples ETFs or large-cap growth factor ETFs. The word “passive” means they are not picking individual stocks, but it doesn’t necessarily imply their investment style is passive. A growing number of passive investors are actively trading, rotating in and out of popular narratives and themes. For more on the topic, please read our recent article Calm Market Waters Hide Fierce Undercurrents.

For instance, over the last few months, stocks in large-value ETFs have been hot, while the once-trendy mega-cap technology stocks have fallen out of favor. We can easily see this rotation in the performance differences between value and growth ETFs and sectors, as well as in the money flows into and out of the largest ETFs.

The first graph below shows the stark contrast in money flows from the Vanguard large-cap value (VTV) and the iShares large-cap growth (IVW) ETFs. The second graph shows a greater divergence between the State Street Energy ETF (XLE) and the State Street Technology ETF (XLK). The data in the graphs is courtesy of ETF.com.

The Value Rotation Narrative

The media is making quite a to-do about the exodus from “expensive” growth stocks into “cheaper” value stocks.  Yet as we showed in Part One, investors are chasing a narrative. In many cases, investors are selling value while believing they are buying it.

The value rotation narrative can be summarized as follows: Higher-beta, mega-cap growth stocks have run their course and are now expensive and risky. Therefore, the logical place to rotate to is toward the opposite, less expensive, smaller-cap, and value sectors.

Regardless of whether the narrative makes sense, it is driving the markets, the sectors, and the factors beneath them. Thus, while we can tell you all day that many value ETFs do not represent value, it doesn’t matter. The narrative will trade patterns until it fades.

However, if the narrative is not factual, it will create distortions. Therefore, active investors must appreciate the narrative and its current impact on market dynamics, but also be able to find true value stocks, for their day in the sun will come.

Traditional Screens Miss Real Value

Most value investors begin their search with quantitative screens using filters such as low P/E ratios, high dividend yields, or low price-to-book multiples. These metrics are useful starting points, but they are not conclusions. In many cases, they simply identify companies that appear cheap.

“Cheap” valuation metrics, like those mentioned above, can signal problems rather than opportunities. For example:

• Earnings may be cyclical and near a peak.

• The business model may be deteriorating.

• Management execution may be inconsistent.

• A legal, political, or structural headwind is forming.

Many screens, especially those that don’t use forward-looking estimates, cannot distinguish between undervalued and declining companies. As a result, investors often confuse statistical cheapness with genuine value.

A Forward-Looking Framework

To properly evaluate value, investors must view companies through multiple valuation lenses. Each lens answers a different question, and when the three align, value opportunities are much more likely to emerge.

The three valuation lenses are past, present, and future. Does the company have a good earnings track record? Is it currently performing at a high level? Is it expected to grow solidly in the future? Importantly, it’s not just about earnings; equally important is how the current price relates to its past, present, and potential earnings.

Past Earnings
Is the stock obviously expensive based on its earnings and cash flow over the last year or two? Metrics such as trailing P/E, free cash flow yield, and margins help answer that question.

One Year Forward Earnings

Forward estimates matter more than trailing ones, but only if they are believable. As Benjamin Graham advised:

Investors should limit analysis of the future to what can reasonably be foreseen.

Companies with predictable financial trends, durable competitive advantages, and consistent execution deserve more confidence than those dependent on optimistic assumptions, economic scenarios, or speculative growth narratives.

Growth Adjusted Valuations

As we discussed in the first part, P/E ratios and forward P/E ratios can be expensive if expected growth is expected to ramp higher. That is why we also use the PEG ratio, which compares a company’s valuation to its expected growth rate.

This third step is missing from the screening process for many investors. It is also the most difficult, as small changes in growth assumptions can dramatically alter whether a company qualifies as a value stock.

Applying The Framework

In Part One, we noted that companies like Walmart and Costco, which many investors consider tried-and-true value stocks, are not cheap. Using the three-tiered framework we detailed above, Walmart has a P/E of 46, a Forward P/E of 43, and a PEG ratio of 4.50. It is clearly expensive based on the three lenses.

To help true value investors look beyond expensive “value” stocks and find true value, we created a stock screen. The results shown below have low valuations, good earnings outlooks, and growth prospects that justify their prices. These are the companies that most closely resemble true value stocks in today’s market, but they are not without risk.

We screened for the following attributes:

• Market Cap: > $5 billion

• Country: USA

• P/E:

• Forward P/E:

• PEG Ratio:

• Price to Sales:

• Quick Ratio

In addition to our three lenses, we added the price-to-sales ratio to further affirm value, and the quick ratio to help assess financial liquidity for the companies. Further, we removed financial stocks, as earnings-based analysis is not comparable to that of most other companies.

Why True Value Is Often Ignored

Markets are influenced by fundamentals but more so by psychology and incentives. Professional managers frequently prefer widely owned stocks because deviating from benchmarks introduces career risk. Furthermore, passive investment vehicles allocate capital according to index weightings that loosely fit the fund’s objective.  Doing so reinforces the dominance of already-popular, large companies. At the same time, the financial media often amplifies compelling narratives, drawing even more capital toward the same group of stocks.

These processes often produce a feedback loop. Popular companies attract inflows, which push prices higher, which in turn attract more inflows. Less fashionable companies experience the opposite dynamic, even when their earnings and balance sheets remain solid. Accordingly, the valuation gap between favored and ignored companies can widen significantly.

To wit, on our screen, the stocks are not big contributors to popular ETFs. For example, Phillips 66, the largest company on our screen, accounts for only 3.78% of the XLE energy ETF. Delta and United, the next-largest companies, account for 0.86% and 0.67% of the XLI industrials ETF, respectively. Those companies comprise an even smaller percentage of the largest large-cap value fund (VTV).

The Value Trap

One of the most persistent misconceptions in investing is that “cheap” stocks, like the ones we shared above, qualify as a value stock. In reality, the most dangerous category of stock is one that appears cheap but lacks the earnings power, growth potential, or poses other significant risks to justify its discounted valuation.

For example, Delta and United Airlines appear on our screen as true value stocks. But the future revenues for both companies are highly tied to the economy and jet fuel prices. Moreover, credit card rewards programs are a significant contributor to their earnings. If we forecast a recession, their estimates for double-digit earnings growth are bunk. We should also consider how the current surge in jet fuel prices will affect costs and whether they can pass them on to consumers. Further, will increased competition from non-traditional credit card companies sway users away from Visa- and MasterCard-backed airline reward credit cards?

True value requires both a reasonable price and viable earnings and earnings growth. The higher your confidence in the earnings growth of a value stock, the better your odds of success!

Summary

True value investing has never been easy. But today’s passive investment environment has made it much more difficult. For example, a growing number of value investors buy value in name only. ETFs using the word “value” attract so-called value investors. At the same time, fewer and fewer investors are truly seeking out true value stocks. The result can be a stark divergence in the fortunes of perceived value and true value stocks. Ultimately, such market behaviors create incredible opportunities, but we warn that patience is required to wait for such differences to correct.