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.

The barrage of negative private credit news, now that the $1.8 trillion bubble has burst, is coming hot and heavy. 

Following last night’s report that Cliffwater, a private credit interval fund which according to Rubric Capital “is the canary in the coal mine and will be the first domino in the bank run” was the latest fund to be hit with 7% in investor redemptions (and unlike BlackRock, interval funds can not gate investors), this morning the FT reported that JPMorgan has “clamped down on its lending to private credit groups, with bankers looking to cut risk as concerns mount over the credit quality of companies in their stables.”

According to the report, the bank informed private credit lenders that it had marked down the value of certain loans in their portfolios, which serve as the collateral the funds use to borrow from the bank. The loans that have been devalued are to software companies, which are seen as particularly vulnerable to the onset of AI and which account for the bulk of private credit loans made in recent years.

The news, which hit just around 1am ET, hit S&P futures which until that point were trading at session highs.

JPMorgan’s decision will limit how much money the bank lends to private credit groups against those loans going forward, a sign traditional Wall Street banks are becoming increasingly nervous about the $1.8 trillion industry that has grown rapidly as non-bank lenders became top creditors to higher-risk borrowers. 

The move was to be expected: JPM CEO Jamie Dimon has expressed an increasingly negative view of the private credit space, and told investors at the bank’s leveraged finance conference last week that it was being more prudent in lending against software assets. Troy Rohrbaugh, co-chief executive of JPMorgan’s commercial and investment business, told analysts at a February company update that the bank was becoming more conservative compared to its peers on the risks in private credit. 

“As the world gets more volatile . . . this outcome should be expected,” he said, adding: “I’m shocked that people are shocked.”

One person briefed on the bank’s decision said the valuation haircuts did not trigger margin calls at funds but were done to pre-emptively reduce the amount of credit available to the funds.

 “They have been more difficult the past three months,” the head of one fund said of JPMorgan’s willingness to provide back leverage. He added JPMorgan rarely got “rattled and this is the first time we’ve had a little issue”.

As we explained at the start of February, investors are concerned AI will heavily disrupt enterprise software businesses, with scrutiny centred on the companies and their private capital financiers who poured hundreds of billions of dollars into the space. Publicly traded software stocks and debt have all  plummeted this year. Private credit lenders, by contrast, tend to hold loans for the entire term and have not marked down their portfolios in lockstep. Private lenders have said enterprise software companies are still growing and expect their loans to continue performing, as investors backstop the borrowers. 

The growth of the private credit industry has been supplemented by leverage from regulated banks, debt that is critical in bolstering returns above high-yield bond or leveraged loan funds.  Banks including JPMorgan, Wells Fargo and Bank of America have all lent heavily to the industry, in part because regulations allow them to reserve less capital than if they were lending to borrowers directly. 

As the FT notes, the fundraising ability of private credit firms, which took in $400BN from wealthy individuals and hundreds of billions more from institutions since the end of 2020, has allowed the funds to provide larger loans and compete directly with banks on multibillion-dollar leveraged buyouts.

That included financing mega takeovers when software businesses were fetching high valuations given work-from-home trends, including Thoma Bravo’s $6.4bn takeover of customer service software company Medallia, and Permira and Hellman & Friedman’s $10.2bn buyout of Zendesk. 

The problem is that much of the new issuance was rubberstamped by captured rating agencies at artificially inflated ratings, and as the new reality of reduced cash flows emerges, some banks are repricing their loans – carried until now at par – sharply lower and in some cases all the way to zero. 

Additionally, that debt is maturing in the coming years and much of it faces a dramatically different outlook.

JPMorgan is an outlier in the private credit financing business as it reserves the right to revalue assets at any time. Most other banks require triggers such as missed interest payments. Private credit funds can dispute the marks, according to a sample credit financing agreement reviewed by the FT. That could take months and require a third-party valuation. In the meantime, the bank’s determination remains. 

The FT writes that  the bank considers individual analysis and macroeconomic factors when valuing loans, according to another person familiar with the bank’s thinking. It also looks to public proxies, such as investment vehicles that buy private credit loans, and occasional private trades it can evaluate.

“The point is to do it as needed, not only when there’s a crisis,” one person said

The good news for now is that private credit executives said they had not seen other banks take a similar view as JPMorgan. However, once more sources of funding to the private credit industry read the apocalyptic report by Rubric Capital, (available here to pro subscribers) we are confident that will change.

Yesterday we pointed out that contrary to conventional wisdom of a full Gulf blockade, more ships are now transiting the Strait of Hormuz…

Strait ship traffic starting to move (chart GS) pic.twitter.com/VJ0M9ET3yi

— zerohedge (@zerohedge) March 10, 2026

… with the caveat that most are turning off their transponders not to attract undue attention, whether by Iran or the US.

Strait ship traffic starting to move (chart GS) pic.twitter.com/VJ0M9ET3yi

— zerohedge (@zerohedge) March 10, 2026

This morning, Bloomberg confirms that while mainstream Western shipping remains largely suspended through the Strait of Hormuz, recent 24-hour observations reveal a jump in Iran-linked traffic, specifically involving two sanctioned (read China-focused) VLCCs.

There were eight commercial transits on Tuesday and four more were identified early Wednesday, most of which have ties to Iran or have Chinese commercial links, according to vessel-tracking data compiled by Bloomberg. 

Two sanctioned Iranian VLCCs, were seen exiting the Persian Gulf for Asia early Wednesday. Their drafts suggest both supertankers are fully laden, and since they saw no pushback from Iran, are headed toward China. As much as 13.7 million barrels of Iranian crude has been shipped through the strait since the war began on Feb. 28, according to Tankertrackers.com, a company that specializes in the use of satellite imagery to track vessels.

According to Bloomberg, one Iran-affiliated container-ships entered the Persian Gulf on Tuesday and another on Wednesday. In addition, a bulk carrier also entered the Gulf Wednesday signaling ‘China Owner All Chinese.’

This increase in activity comes amid an escalation in hostilities in the region. The cargo ship Mayuree Naree was hit by an unknown projectile, while transiting the Strait of Hormuz.

BREAKING:

Iran strikes a Thai ship attempting to pass through the Strait of Hormuz.

Thai authorities said the bulk carrier Mayuree Naree, sailing under the Thailand flag, was struck by projectiles while travelling about 18km north of Oman.

🇹🇭 pic.twitter.com/O30tgDoYRe

— Visegrád 24 (@visegrad24) March 11, 2026

Another bulk carrier signaling ‘China Owner&Crew’ u-turned away from the strait following the incident, underscoring the heightened security risks.

As we reported previously, widespread electronic warfare tactics, including spoofing and signal jamming, have made real-time monitoring of traffic increasingly difficult. With several vessels opting to deactivate AIS transponders in high-risk areas, data accuracy is expected to lag, leading to an eventual upward revision of historical transit numbers.

Still, despite the occasional successful crossing, the bulk of the industry’s tonnage remains stuck on either side of the strait until maritime security is restored. Traffic through the channel was effectively halted following several attacks on merchant ships as Iran retaliated against US and Israeli strikes. Missile and drone activity continues to pose a critical risk to all vessels in the vicinity.

America-Israel’s Operation Epic Fury entered its 12th day, with U.S. Defense Secretary Pete Hegseth indicating that the most intense phase of U.S. strikes is expected on Wednesday. Tehran responded with retaliatory strikes against Gulf neighbors, as Goldman’s foreign affairs chief warned of a growing risk of regional spillover (read here). Overnight, market attention centered on energy, with the IEA reportedly proposing its largest-ever emergency crude release to combat Brent and WTI prices, which have reached triple-digit territory. 

“The most fighters, the most bombers, the most strikes. Intelligence more refined and better than ever. So that’s on one hand,” Hegseth said. “On the other hand, the last 24 hours have seen Iran fire the lowest number of missiles they’ve been capable of firing yet.”

Around 0900 ET, the IEA is expected to announce plans for a massive crude release into the market to cap Brent and WTI prices, which surged near $120 per barrel at the start of the week. In a note to premium subscribers, we outlined several problems that could arise and why any such release would only offer temporary relief.

Read the note:

• IEA Proposes Largest Ever Oil Stockpile Release… There Is Just One Big Problem

Beyond the panic among G-7 leaders and the IEA over crude prices, the Trump administration has also pushed its own headlines on Tuesday in an effort to jawbone energy prices lower, as we explained here.

Jawboning headlines from G-7 and the Trump administration on Tuesday were shortly followed by headlines that Iran had begun mining the Strait of Hormuz. That came after President Trump warned Tehran not to “put out any mines” in the narrow waterway. Shortly afterward, the U.S. military said 16 Iranian mine-laying naval vessels had been eliminated. 

Overnight reports described heavy U.S. and Israeli strikes on IRGC targets, with damage reported to oil facilities, civilian sites, and a hospital in Bushehr taken out of service. Iran has claimed that nearly 10,000 sites have been hit overall.

There are currently no signs of de-escalation from either side, with IRGC spokesman Ebrahim Zolfighari warning the Trump administration at the start of the week: “If they can afford the price of oil at $200 per barrel, let them keep playing this game.”

The latest casualty report states that more than 1,200 people have been killed by U.S. and Israeli strikes in Iran, according to the Iranian Red Crescent Society, and 13 have died in Israel as Iran retaliated with missiles and drones.

Chief Pentagon spokesperson Sean Parnell said that 140 U.S. service members have been wounded in the conflict so far.

“The vast majority of these injuries have been minor, and 108 service members have already returned to duty,” Parnell said. “Eight service members remain listed as severely injured and are receiving the highest level of medical care.”

The latest and most critical overnight headlines (courtesy of Bloomberg):

Military Attacks

• The US and Israel are conducting strikes against Iran, hitting thousands of targets across the country and degrading missile launchers and command networks

• B-52 bombers have been used to strike Iranian ballistic missile and command-and-control sites

• More than 1,000 civilians have been killed according to a preliminary count by Human Rights Activists News Agency

• Israel struck Iranian drone launch squads, though the White House cannot confirm reports of 150 US troops injured

• A drone strike in Iraq’s Kurdistan region killed a member of an Iranian Kurdish armed opposition group, with the group blaming Iran for the attack

Regional Impact

• The UAE’s air defenses are intercepting missile and drone attacks from Iran, with loud bangs heard in Dubai

• Two drones fell near Dubai International Airport, injuring four people including two Ghanaian nationals and one Bangladeshi national

• Turkish President Erdogan warned the war must be stopped before it engulfs the region in flames

• The UAE President wrote a patriotic poem performed by the national orchestra honoring those protecting the nation

Energy Market

• The International Energy Agency is considering releasing emergency oil reserves of 300-400 million barrels, potentially the largest in its history

• The IEA is recommending a release of oil from strategic reserves exceeding 100 million barrels over the first month, according to sources

• Brent crude futures rose 5% to $92.47 a barrel while West Texas Intermediate climbed 5.8% to $88.27 early Wednesday

• Wood Mackenzie consultancy warns of oil prices potentially reaching $150+ per barrel due to the supply shock

• Brent crude briefly surged to $119.5 per barrel late Sunday in one of the most dramatic spikes in recent oil-market history

Strait of Hormuz

• President Trump threatened Iran in a Truth Social post with “military consequences” at a level “never seen before” if they were to place mines in the Strait.

• Iran unleashes naval mines across the critical waterway, followed by US military announcing 16 IRGC mine-laying ships in the area were “eliminated”

• Reuters says the US naval fleet is not ready for convoys through Strait

• US Secretary Wright deleted the tweet on US Navy escorted oil tanker through Strait – WH says premature

• IRGC Commander slams Wright for fake news

• Three vessels hit by projectiles in Strait of Hormuz

Diplomatic Developments 

• Russia is constantly in touch with Iranian leadership and willing to contribute to efforts to stabilize the region, according to the Kremlin

• Russian media argues that negotiations with the US always end with missiles hitting capitals, questioning Trump’s peace deal efforts

• President Trump warned Iran against laying mines in the Strait of Hormuz, threatening military consequences at a level never seen before

Top energy stories by outlet:

• Pipelines by-passing Strait of Hormuz (WSJ)

• IEA proposes record release from strategic oil reserves (WSJ)

• IEA proposes release of 300-400 million barrels (Bloomberg)

• United States not ready for convoys through Strait (Reuters)

• China’s oil refiners relatively insulated from war (Bloomberg)

• Qatar’s LNG shutdown tightens global gas supply (Bloomberg)

• UAE shuts down refinery after damage from drone (Reuters)

• ADNOC presses oil partners to transit the Strait (Bloomberg)

• Pakistan reiterates support for Saudi Arabia (Bloomberg)

• U.S. diesel prices in record weekly increase (WSJ)

• Iran war and shadowy short wave broadcasts (FT)

• Europe’s shift from nuclear was “strategic mistake” (Reuters)

Polymarket odds for a US-Iran ceasefire are sliding:

Commenting on energy markets, UBS analyst Nana Antiedu cited Henri Patricot’s note on three scenarios in the conflict and potential oil/gas implications:

If there is a quick de-escalation of the US-Iran conflict by mid-March with no damage to critical oil infrastructure and flows via Hormuz resume, Henri Patricot sees Brent averaging $80/bbl in March, before dropping to the mid-$70s.

TTF gas prices would hold €50/MWh, before falling to the high-€30s in 2Q26. In the case where Hormuz disruptions persist for a month, both oil and gas markets would further tighten, increasing the pace of inventory drawdowns and supply shut from GCC countries.

Here, he expects oil prices to rise above $100/bbl in the second half of March, averaging $100/bbl in March and $78/bbl for 1Q26, before coming down to $90/bbl in 2Q26 as disruptions ease.

For gas, LNG supply would be reduced for longer, requiring more demand reduction, especially as spare capacity and storage are limited.

He would expect TTF to rise towards €80/MWh by end-March, averaging €65/MWh in March and €46/bbl for 1Q26, before coming down to €50/MWh in 2Q26.

In the final scenario, where there is extended disruption (longer than a month), Brent prices could average $110/bbl in March and might climb towards $150+ by 2Q26. On the gas side, TTF could average €73/MWh in March and rise to €80/MWh in 2Q26.

What’s clear is that the Middle East conflict has sent macroeconomic uncertainty soaring across the world, despite the White House saying the surge in energy prices is temporary.

The big headline this morning will be around 0900 ET from the IEA on crude inventory releases.

Submitted by Thomas Kolbe

War is raging in Iran. Amid the fog of propaganda, it is increasingly difficult to separate fact from fiction, to distinguish AI-generated material from actual bomb strikes, and to see behind the carefully woven veil of media spin and national interests. Yet, we attempt here to make sense of the latest moves on the geopolitical chessboard.

One immediate consequence of the Strait of Hormuz blockade is a fatal ripple effect in the energy sector. Companies such as QatarEnergy are forced to reduce gas and oil production. Refineries are shutting down, and tankers can no longer transport output. The physical logistics of the energy market are faltering – with consequences far beyond the region.

Markets are responding nervously. Both spot and futures prices continue to climb. At the close of New York trading, WTI crude stood at around $93 per barrel, nearly a twenty percent increase since the U.S.-Israeli intervention against Iran’s Ayatollah regime.

From a European perspective, the implications are clear. The highly energy-dependent continent is increasingly politically adrift. For many governments, a lot is at stake if prices are not swiftly brought under control. Rising energy costs, growing production expenses, and mounting burdens on households and businesses threaten a new economic stress test for Europe.

For a week, Brussels has been in frenetic motion. Ursula von der Leyen’s European Commission stages media-friendly exercises that amount to little more than political shadowboxing: attempting to solve a shortage problem that cannot be eliminated through domestic production. Member states are currently discussing  joint purchasing consortia and familiar tools such as subsidies and cost offsets for energy-intensive industries – the usual toolkit, deployed repeatedly in the past. In other words, much of it boils down to massive debt accumulation intended to temporarily alleviate the effects of the Hormuz blockade. 

Looking to Germany, one sees how vulnerable Europe’s energy architecture remains. The rapid decline of gas storage levels underscores the importance of a robust strategic reserve.

In this context, the European decision to mandate a strategic oil reserve equivalent to at least ninety days of average consumption was farsighted. The timing and scale of reserve deployment remain uncertain.

A note on the disproportionately high gasoline prices in Germany: this is precisely the effect when a high-taxing fiscal state claims roughly 65 percent of the retail price. In an energy crisis, this structure paradoxically makes the state a short-term beneficiary of rising prices.

The Europeans’ inability to act was epitomized by German Environment Minister Carsten Schneider of the not-so-social Social Democrats. Faced with rising fuel costs, he bluntly recommended that Germans switch to electric cars. This cynical stance – coming from the security of a well-padded, subsidized political bubble – makes the attitude so unbearable. Those who drive the country economically – millions of commuters dependent on cars for their livelihood – are dismissed entirely.

Naturally, the expansion of renewable energy and the continued commitment to the green transition remain central points on the EU agenda. They simply cannot escape their closed, ideologically narrow argumentative framework.

Other options remain politically taboo. The exploration of domestic gas reserves in Europe or the long-term maintenance of coal-fired power – even in Germany – is still not seriously considered. The pressure on political decision-makers has evidently not yet reached a level sufficient to return to a pragmatic, rational energy policy.

From the U.S. perspective, the Hormuz blockade and the planned political power shift in Tehran fit into a larger strategic concept. Control over oil and gas flows from Venezuela, combined with the U.S.’s record domestic production, could create a significant problem for China, which is existentially dependent on imports from these regions.

Should the U.S. achieve its political objectives in Tehran, a massive shift of power would tilt in its favor. Together with the oil states more closely bound to its power structure, it could dominate the global energy market and substantially strengthen its position relative to Beijing.

This is of critical significance for future negotiations with China. It concerns not only energy but also access to rare earths, curbing Chinese influence in the Western Hemisphere, and the so-called fentanyl war, where the last word has certainly not yet been spoken.

Another observation is worth noting. In this reorganizing geopolitical power constellation, which is largely determined by access to energy and strategic resources, Europe has largely lost its strategic agency. Between the U.S., Russia, and China, it barely emerges as an independent actor.

Europe has thus accomplished a remarkable feat: politically caught between all stools – and now standing as a dependent price-taker in energy markets, with its back to the wall.

The Strait of Hormuz crisis has also shaken a previously overlooked market: maritime insurance. Following Tehran’s threat to close the strait, several tanker attacks occurred off the coast. Insurance premiums soared, and major providers – a market dominated by the City of London – immediately withdrew. Risks were too high, and coverage in the event of a claim could no longer be guaranteed.

This was the decisive moment: U.S. President Donald Trump announced that the U.S. Development Finance Corporation (DFC) would step into the gap. State-backed war and political risk coverage at “very reasonable” prices, as he put it, would provide relief. This creates a government-supported competitor to Lloyd’s. The U.S. is not only supplying insurance capacity but combining it politically with U.S. naval escorts – gunboats.

For the now virtually invisible British Empire in financial and insurance markets, this – following massive attacks on the London-based LBMA precious metals markets – would be the next pillar of its power structure to wobble, a framework previously sustained mainly through international trade.

In short: the next geopolitical lever for the U.S. comes into view, should it capture a significant portion of this insurance business. Whoever controls the underwriting lever – who decides which risks are covered and which tankers receive a policy – wields a massive sanctioning instrument. Insurance has thus become a geostrategic tool, with Europe left on the sidelines.

* * * 

About the author: Thomas Kolbe, a German graduate economist, has worked for over 25 years as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Private insurers are padding their pockets with billions in alleged overpayments from Medicare Advantage, and hardworking American seniors are footing the bill through higher Part B premiums, according to a congressional report obtained by the Wall Street Journal.

The report, issued by the bipartisan Joint Economic Committee, shows that controversial practices, such as adding extra diagnoses to trigger larger government reimbursements, drove up Medicare Part B premiums by $13.4 billion in 2025 alone.

That amounts to roughly 10% higher costs, or more than $200 extra annually, for the average senior on a fixed Social Security income. The impact extends beyond enrollees in Medicare Advantage plans. Traditional Medicare beneficiaries are also paying higher premiums to help subsidize the private plans’ gains.

Rep. David Schweikert (R-AZ), who chairs the committee, said in a statement to the Journal, “Extra spending on Medicare Advantage is not just coming out of the federal government’s budget, a portion of this comes out of you.”

Politicians scream at each other over scraps while Medicare Advantage spits out $84B in overpayments in a single year.

That’s almost $1T in misaligned incentives we could fix in one reconciliation bill that pays for real health, not for coding seniors as sicker. pic.twitter.com/aG0RHSf5Bt

— Rep. David Schweikert (@RepDavid) February 16, 2026

The Journal reports:

Medicare Advantage, which has long enjoyed support from Republicans, has faced growing bipartisan scrutiny. Among the biggest players in the business are UnitedHealth Group, Humana and Elevance Health.

Lawmakers and government investigators have been probing how insurers’ billing practices have contributed to Medicare Advantage costs. A congressional watchdog found Medicare Advantage costs the federal government more than traditional Medicare, partly because of insurers’ billing practices. The insurers are paid more to cover enrollees who have more health conditions, and they can boost their reimbursement by recording more diagnoses.

Medicare Part B, which covers doctor visits, lab tests, and outpatient services, had standard premiums around $185 per month in 2025, deducted directly from Social Security checks. Due to these alleged overpayments, however, everyone pays more for the same benefits.

Speaking to the Journal on Friday, Medicare agency administrator Mehmet Oz said that while he doesn’t believe Medicare Advantage insurers are as overpaid as has been reported, he did concede that, “we should change the rules.”