Iran has placed its missile defense systems on high alert, anticipating potential Israeli and US airstrikes on nuclear sites, The Telegraph reported. The report follows a Bloomberg report citing the International Atomic Energy Agency, which found that Iran’s uranium stockpile has surged in recent months. 

The Telegraph cited two high-level government sources that say Tehran has been expanding missile defense coverage around nuclear and missile sites for fear of potential joint military strikes by stealth fighter jets by Israel and the US.

“They [Iranian authorities] are just waiting for the attack and are anticipating it every night and everything has been on high alert – even in sites that no one knows about,” one source told The Telegraph.

“Work to fortify nuclear sites has been ongoing for years but it has intensified over the past year, particularly since Israel launched the first attack,” he added.

“Recent developments, including Donald Trump’s comments and reports about potential plans from his administration to strike Iran, have further intensified activities.”

Iran’s nuclear sites: 

Earlier, Bloomberg obtained a copy of a new IAEA report stating that Iran’s uranium stockpile is nearing weapons-grade levels, with a 50% increase in enriched uranium over the past three months.

“The significantly increased production and accumulation of high enriched uranium by Iran, the only non-nuclear weapon state to produce such material, is of serious concern,” IAEA Director General Rafael Mariano Grossi wrote in the report, adding that Iran’s increased production of uranium enriched to 60% levels of purity after being censured by the IAEA in November. 

Trump has unleashed the “maximum pressure” strategy on Tehran to drive its oil exports to zero and crash the Persian Gulf nation’s economy. This could be the early beginnings of regime change. 

Our latest reporting on Trump’s maximum-pressure strategy:

• Trump To Restore ‘Max Pressure’ On Iran With EO Aimed At Driving Its ‘Oil Exports To Zero’

• Trump Begins Sanction Campaign Against Tehran’s “Oil Network”

• Treasury Targets Iran’s Oil Network In New Sanctions As Trump Stuns By Talking Deal

• Two Ways Of Stopping Iran Getting Nukes: ‘With Bombs Or A Written Piece Of Paper,’ Trump Says

And this.

• US Intelligence Suggests Israel Is Trying To Drag Trump Into Preemptive Attack On Iran

• US Flies B-52 Bombers Over Middle East In Show Of Force Amid Regional Tensions

There are plenty of Iran hawks in the Trump administration, but the question will be whether the non-interventionist-leaning officials, such as Director of National Intelligence Tulsi Gabbard, win out.

If not…

.. then traders will have to start thinking about pricing in a war-risk premium into Brent.

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

The combination of extremely rich equity valuations, high interest rates, and a new President taking bold actions will likely continue to whip stocks around for the foreseeable future. Alongside those volatility-provoking factors is that the S&P 500 just posted two annual twenty-plus percent gains in a row. Accordingly, seeing average or below-average returns this year and volatility spikes should not be surprising. If we are correct about volatility, it’s entirely possible that our worst behavioral traits as investors will be provoked. Given this possibility, it’s worth taking a break from our typical market or economic topics and focusing on behavioral economics.

Turn on CNBC or Bloomberg, and commentators discuss the economy, corporate earnings, and politics. They present those topics and many others as the rationale to explain why specific markets, asset classes, and individual securities behave as they do. While they have merit, investor behavioral instincts are the most critical driver of short-term gyrations and the least discussed by the media. Given psychology’s outsized yet underappreciated role in financial markets, let’s learn how to better govern our inner voice, leading to more rational decision-making.

What Is Behavioral Economics?

Behavioral economics studies individual and group psychology in relation to traditional economic and market theories. The goal is to understand better how individuals make investment decisions.

Traditional economics and most market theories assume that people are rational. Furthermore, because they are rational, they must always make decisions in their best interest. Conversely, behavioral economics acknowledges that humans are irrational and frequently influenced by cognitive biases and emotions that often work against their best interests.

Behavioral economics helps explain why markets sometimes behave unpredictably and why “rational” investors make seemingly irrational choices.

Key Theories in Behavioral Economics

The following paragraphs describe a few crucial biases and thought processes that we all harbor and play a role in our investment decision-making. As you read them, consider how they may apply to you.

Bounded Rationality

This concept, introduced by economist and Nobel prize winner Herbert Simon, suggests that individuals have limited cognitive resources and cannot process all the information required to make perfectly rational decisions. Simply, we have limited bandwidth.

To overcome this failure, we often use shortcuts to make decisions that are “good enough.” Simon called this adaptive process “satisficing.” The term comes from the words “satisfy” and “suffice.”

Prospect Theory

Developed by Nobel prize winners Daniel Kahneman and Amos Tversky, this theory describes how people evaluate potential losses and gains unequally. Many studies have found that most people are susceptible to loss aversion. In other words, we are more sensitive to losses than to profits. This bias leads to risk-averse behaviors when facing potential gains and risk-seeking behaviors when facing potential losses. In other words, we are more likely to double down on a losing position than a winning position.

Anchoring

This cognitive bias occurs when individuals rely too heavily on an initial piece of information (the “anchor”) when making decisions. For example, many investors stay fixated on the price at which they bought an asset. In such a case, they may consider that to be the stock’s fair value even if conditions change. Thus, if the stock falls, they may perceive it as undervalued regardless of why the price declined.

Overconfidence

Many professional and retail investors overestimate their knowledge and ability to predict market movements. This overconfidence can lead to excessive trading and risk-taking, often resulting in suboptimal investment outcomes.

Casinos and sports gambling sites prey on this bias. By default, the odds are less than fifty percent that a gambler will win a bet or hand. The more they play or bet, the better the odds they will lose money. So why do so many people bet and gamble? They have confidence that they have some knowledge or skill that others don’t. This same behavioral trait holds for many investors.

Herd Behavior

People often follow the actions of others, especially those deemed “experts” or viewed as popular. The social media term influencer applies to many in the financial media. The more uncertain the situation, the more this bias takes hold. Herd behavior, when strong enough, can lead to bubbles and crashes as investors push prices up or down based on the behavior of others.

If this weren’t the case, stock valuations would remain stable. Sellers would emerge when valuations became rich, and buyers would step in when they became cheap. Today, valuations are at record levels despite growing concern about the market’s fundamental economic underpinnings.

Let’s focus on how those five concepts can impact financial markets.

How Behavioral Economics Affects Financial Markets

Behavioral economics has underappreciated implications for financial markets. By understanding the psychological factors that influence investor behavior, we can better explain market anomalies and develop strategies to mitigate their impact on our returns.

Bubbles and Crashes

Traditional economic theories don’t explain why asset bubbles form and why they ultimately burst. If every investor was rational and fully aware of all available information, who would overpay for stocks, thus causing bubbles? Similarly, why do investors sell instead of buy once stocks become cheap?

Herding and overconfidence can be a winning combination in upward-trending markets. However, these behaviors often come at a steep cost. The combination of a belief that one can generate above historical returns over long periods and similar sentiment from the masses can put markets and individual asset prices way above rational valuations.

The process can be circular. As investors become enamored with their gains, confidence grows. In the process, they become less rational. Conversely, when stocks are cheap after a crash, many investors may have lost their confidence but cannot take advantage due to their loss aversion. In fact, many investors panic and sell when prices are at cheap valuations.  

Over/Underreaction to News

Sometimes, markets overreact to new information, causing prices to adjust quickly and often more than is warranted by the news. In such circumstances, prices will frequently reverse some of the overreaction and adjust accordingly. Some investors have a three-day rule to avoid overreacting. They wait to see the market or asset price action for three days before acting. However, in strong trends, the rule can be harmful. Consistent overreaction to certain news and underreaction to other news, alongside herding, can extend prices well above what should be expected. In these cases, adjustments will occur but can take longer than many expect. 

Other times, markets underreact to new information. Bounded rationality helps explain this phenomenon. At times, investors do not fully process, understand, or appreciate the implications of new information immediately. As a result, prices may gradually adjust as more investors become aware of the news and its impact.

Behavioral Trading And Portfolio Management Tips

With some behavioral biases in mind, it is worth sharing a few tips to help avoid being too reactionary or complacent during periods of high volatility.

Avoid Overtrading

No one is smarter than Mr. Market, goes a Wall Street adage. Overconfidence can lead to trading more frequently than is optimal. Accordingly, the more trades you conduct, the higher the likelihood that Mr. Market will get the best of you.

Warren Buffett takes the logic to an extreme.

“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

We believe overtrading can harm returns, and a strict passive buy-and-hold approach has drawbacks. Active portfolio management is essential as economic and market conditions change. The tricky part is learning when a trade makes sense and is logical versus when our biases get the best of us and force a trade. 

Home/Familiarity Bias

Investors tend to favor domestic over foreign investments, a phenomenon known as home bias. They also prefer certain stock factors over others. For instance, the chase has recently been on for mega-cap stocks. As a result, some very cheap and poorly performing small-cap stocks are ripe for investment.

Succumbing to these biases can leave a portfolio inadequately diversified, thus offering more risk. Reducing or avoiding our home and familiarity bias opens the door to more extensive potential investments. Think outside of your comfort box.

Disposition Effect

The disposition effect refers to the tendency of investors to sell winning investments too early and hold onto losing investments for too long. This behavior is driven by loss aversion and the desire to avoid realizing losses. As a result, investors may miss out on potential gains and incur more considerable losses. Further, investors may miss out on better opportunities as their money and mind are tied up.

Behavioral Portfolio Theory (BPT)

This theory, developed by Hersh Shefrin and Meir Statman, suggests that investors often create portfolios that reflect their psychological preferences and biases. By understanding these preferences, investors can better appreciate their blind spots.

The theory makes a case for investment advisors. Hiring someone to manage your money helps avoid a portfolio regulated by your biases. This is not to say that professionals don’t harbor similar biases, but some are more adept at understanding their biases and working around them. Furthermore, while they have biases, they differ from yours and weirdly create diversification from the rest of your assets.

Summary

Behavioral economics provides valuable insights into the psychological factors influencing investment decision-making. Taming these flaws, or at least better appreciating them, should give us more comfort. Further, it will allow us to walk the fine line of active investing, where we are not overly active yet not excessively passive.

By acknowledging that we are not always rational and are subject to cognitive biases, we can better understand market anomalies and develop strategies to mitigate and even take advantage of their impact.

After two consecutive stellar auctions, moments ago the Treasury concluded the week’s schedule of coupon sale when it auctioned off $44BN in 7Y paper, and just like the week’s previous auctions, this one too was very strong.

Pricing at a high yield of 4.194%, the yield was 26bps lower than last month’s and was the lowest since September; and like the week’s previous two coupon auctions, this one too stopped through the When Issued 4.203% by 0.9bps.

The bid to cover was 2.64, virtually unchanged from last month’s 2.643 and just below the six-auction average of 2.66.

However, unlike the week’s previous two coupon auctions which saw a surge in foreign demand, today’s sale was in line with recent performance as indirect bidders took down 66.1%, down from 67.1% and the lowest since November; And with Directs awarded 25.2% or the highest since November, Dealers were left holding just 8.8%, the lowest since October.

Overall, this was yet another solid auction and one which comes as yields continue to tumble – thus without any concession – which shows just how much demand there suddenly is for US paper. Sure enough, yields dropped to another session low after the auction results hit the tape. Then again, once sentiment flips and yields blow out again, which they will, everyone who bought at today’s yield will be underwater. Until then, however, let the party continue.

Huge and unprecedented words issued by America’s Commander-in-Chief in a press briefing on Thursday…

Trump says Ukraine can “forget about” joining NATO: “That is probably the reason why the whole thing started.”

Ukraine can forget about NATO, says Trump pic.twitter.com/Os4qLWsl2j

— Ragıp Soylu (@ragipsoylu) February 26, 2025

Of course, Vice President J.D. Vance earlier this month voiced this point of view of the administration while addressing a gathering of defense leaders in Brussels. But never before has a US president so forcefully voiced that a path to NATO membership simply won’t happen.

This also marks the most directly Trump has ever said NATO expansion is a key reason for the tragic war, which has taken hundreds of thousands of lives, having started in the first place. 

Mainstream media fact-checkers have been out in force, decrying this perspective as ‘Russian propaganda’. But is this really the case?

The head of NATO itself in the recent past said the quiet part out loud and fully admitted that constant NATO expansion to Russia’s doorstep was a central driving factor:

From the start of the Russian invasion of Ukraine, we’ve been told that the issue of NATO expansion is irrelevant to the war, and that anyone bringing it up is, at best, unwittingly parroting Kremlin propaganda, at worst, apologizing for or justifying the war.

So it was curious to see NATO Secretary General Jens Stoltenberg earlier this month say explicitly that Russian president Vladimir Putin launched his criminal war as a reaction to the possibility of NATO expanding into Ukraine, and the alliance’s refusal to swear it off — not once or twice, but three separate times.

“President Putin declared in the autumn of 2021, and actually sent a draft treaty that they wanted NATO to sign, to promise no more NATO enlargement,” Stoltenberg told a joint committee meeting of the European Parliament on September 7. “That was what he sent us. And [that] was a pre-condition for not invade [sic] Ukraine. Of course we didn’t sign that.”

“He went to war to prevent NATO, more NATO, close to his borders. He has got the exact opposite,” Stoltenberg reiterated, referring to the accession of Sweden and Finland into the alliance in response to Putin’s invasion. Their entry, he later insisted, “demonstrates that when President Putin invaded a European country to prevent more NATO, he’s getting the exact opposite.”

How much clearer could the then NATO Secretary-General have said it (in the Sept. 2023 comments)? Here’s the clip below:

For all those who still has doubted genesis of the conflict in Ukraine and trusted Empire of lies.

Jens Stoltenberg confirmed that 🇷🇺 prepared draft treaty with NATO back in 2021.
The conflict could be avoided if NATO ended its expansion and adhered to NATO-Russia Founding Act. pic.twitter.com/QsZoTiMXg1

— Russian Embassy in Kenya/Посольство России в Кении (@russembkenya) September 25, 2023

Trump also on Wednesday blasted the European Union…

“The European Union was formed in order to screw the United States, that’s the purpose of it. And they’ve done a good job of it. But now I’m president.”

Among other things, Europe has lately been accused of seeking to thwart Trump’s peace plan for Ukraine, even offering a rival rare earth minerals deal. The Europeans and Ukrainians have been cut out of direct negotiations with Moscow under Rubio.

NOW – Trump says Ukraine can “forget about” joining NATO: “That is probably the reason why the whole thing started.” pic.twitter.com/LNsSN2ig5G

— Disclose.tv (@disclosetv) February 26, 2025

As for former NATO chief Stoltenberg’s remarks which fully vouch for and back Trump’s point of view on the cause of the Russia-Ukraine war, they can be accessed at NATO’s website. The full transcript is here.

Via RealInvestmentAdvice.com,

During Donald Trump’s first term, some investors bought into the Trump 1.0 Put. The trade was based on the market’s belief that Trump believed the stock market’s performance was a referendum on his presidency. Accordingly, investors thought that Trump would do everything he could to backstop the stock market if it fell. Thus, some investors thought it worthwhile to sell puts, collect the proceeds, and sit back comfortably, not fearing losses. According to a Bloomberg article, US Treasury Yields Offer A Scorecard For The White House’s Cost Cutting Vows, Trump’s second term proxy may be the Trump 2.0 Put. 

The Trump 2.0 Put has a similar meaning to the 1.0 Put, except it pertains to the bond market. Per Bloomberg:

Trump has famously obsessed with the stock market as a real-time referendum on his presidency. 

But now, with Musk and Treasury Secretary Scott Bessent in his ear at the start of his second term, much of the attention has shifted to another benchmark — the 10-year Treasury bond yield.

Trump made a fortune in real estate. As such, he is keenly aware that interest rates and leverage greatly impact economic growth. 

The administration seems to appreciate that Powell has little control over longer-term rates that are much more impactful on economic activity. As such, Trump, with the guidance of Treasury Secretary Scott Bessent, is focused on lowering long-term interest rates. To do this, they must first get bond investors to reduce or eliminate their fears of high deficits and inflation. These fears manifest themselves in the bond term premium. 

If the Trump plan effectively reduces yields, those writing puts on bonds or outright long bonds may benefit from the Trump 2.0 Put.

Market Trading Update

Yesterday, we discussed that the recent weakness was part of a corrective cycle and could last longer. We have recently discussed money flows, which have continued to support the market over the last month; however, that has changed. As we saw on Monday and Tuesday, money flows have peaked and turned lower as selling pressure continues to build in the market. More importantly, there has been a clear risk-off rotation, with money flowing into bonds and out of high-beta areas like technology and bitcoin.

That rotation has pushed Treasury bonds, as represented by TLT, above their 100-DMA and the downtrend line from last October. While bonds are getting overbought short-term, they remain on a buy signal and now have a higher year-to-date return than the S&P 500 index. I expect to see a pullback and retest of support at the rising trend line, but if the breakout above the 100-DMA holds, we could see a further move. Such will be particularly the case if economic data continues to weaken.

Another aspect of the rotation in Treasury bonds suggests that recent equity market weakness may not be over yet. As such, bonds’ hedging value remains key to a risk-managed portfolio. If you are long Treasury bonds, continue to hold them for now and take profits if you own them as a trading position. If you are looking for an entry point be patient and buy pullbacks that don’t violate the rising trend line from the 2025 lows.

House Buying Conditions

Not surprisingly, 6-7% mortgage rates and stubbornly high home prices make it financially challenging to buy a home. The first graph below, courtesy of Bravo Research, shows that home-buying conditions have been the worst since at least 1960. 

Making matters worse, high mortgage rates have precluded many potential sellers from selling. Consequently, the supply of homes for sale remains low. We are not breaking news with our commentary thus far.

However, where this gets very interesting is in the ages of buyers. As the Koyfin graph shows, in just a few years, the median age of homebuyers has risen by about 7 to 8 years to 56. The median age for first-time buyers is 38. Affordability is a problem, and as the data show, older people, who are most likely more financially established, are the dominant transactors in the current market. Home prices and/or mortgage rates must fall to improve the housing market’s health. 

Until then, expect the number of homes selling to stay near 20+ year lows. Moreover, older people will likely remain the dominant transactors.

Authored by Victor Davis Hanson via American Greatness,

To find an impossible peace between Ukraine and Russia we must understand the recent history of the war and the European and American roles in it. 

So, Americans should revisit some fundamental realities and questions from which to remember before going forward:

Why Did Putin Invade Ukraine in 2022?

Putin did start the war. Trump’s trolling aside, he knows that because he correctly pointed out that Putin invaded his neighbors in three of the last four administrations—but not his own, given Trump’s deterrence.

The most obvious answer why Putin did is that he thought he easily could. But why in 2022—as he had in 2008 and 2014?

Putin has nonending opportunistic desires to recombobulate what he thinks properly is and will always be Russian—whether territories to be formally absorbed or as coerced satellite states. But he moves on them only whenever he thinks the benefits outweigh the costs.

And by February 2022, he certainly felt they did.

The U.S. and NATO had lost all appearances of deterrence vis-à-vis Russia. Joe Biden had been part of the Obama-Biden administration that had naively appeased Putin for some eight years. Remember their 2009 reset by Secretary of State Hillary Clinton that was based on numerous flawed and disastrous assumptions:

1. The prior Bush sanctions against Putin for invading Georgia and grabbing parts of South Ossetia were overly harsh, reflective of his supposed cowboyism evident in Iraq.

2. The Obama mystique, coupled with criticism of the prior Bush administration, would win over Putin. Remember Obama’s 2012 hot mic appeasement in Seoul, when Obama promised Putin “flexibility” (i.e., cancellation of Eastern European defense, if Putin gave Obama “space” for his “last election” (i.e., please don’t invade and embarrass Obama until after he was reelected in 2012).

3. The U.S. thought it could act unilaterally in Libya and Syria, talk of expanding NATO in Europe, and expect a humiliated Russia to keep silent and distant.

4. Once rebuffed by Putin, who took Obama’s measure, an angry and rejected U.S. would cajole, beg, and finally try to force European Union democratic values onto the Putin regime—by sanctions, by aiding Russian dissident groups, and by claiming Putin was America’s archenemy.

The flawed working theory was that an either compliant or defiant Putin could acquiesce and begin liberalizing Russia, in emulation of EU and US democracy.

All these assumptions were manifested by both Obama and Biden in a number of ways:

1. By ignoring Putin’s 2014 absorption of the Donbas and Crimea;

2. By ignoring Putin’s continual cheating on the Intermediate-Range Nuclear Forces Treaty;

3. By contextualizing his hacking and cyber warfare that were targeting U.S. institutions and corporations (“Cut it out!” said Obama to Putin; “Certain critical infrastructure should not be attacked,” piped up Biden);

4. By suspending offensive weapons shipments to Ukraine;

5. By Biden’s announced hesitation to react to Russia’s “minor incursions” in Ukraine;

6. By coupling such appeasement with a near decade of tough talk (Putin as a “killer”) and Putin-bogeyman hysterias like “Russian collusion” and “Russian disinformation.”

7. And finally, and most importantly, by fleeing from Kabul after abandoning to the terrorist Taliban a $1 billion embassy, a $300 million airbase, and billions of dollars in military equipment.

Weakness and appeasement when coupled with loud false charges are a disastrous combination.

What Was the Biden/NATO Strategy to Deter Putin?

The most obvious answer is there was none.

After the failure of Obama covertly promoting the pro-Russian Ukrainian government in 2014 and trying to select replacement candidates that would supposedly cement the transformation of Ukraine into an EU, NATO-member, Westernized garrison state on Russia’s border, there was only an embarrassed acceptance that the Obama-Biden group had played into the hands of the aggressive Russian bear. But it soon proved it had no desire for any ensuing effort to put him back into his cave.

So, what followed with Biden after February 24, 2022, was ad hoc, on-the-fly measures that, as best we could tell, were guided by naivete:

1. Gradually and silently slide Ukraine into NATO;

2. Convince the Europeans to step up and arm Ukraine;

3. Increase weapons shipments and provide economic and intelligence aid to Ukraine to levels sufficient not to lose the war, but not to excess to win it and provoke nuclear Russia;

4. Keep feeding the war endlessly in efforts to bleed out the Russian military, weaken Putin, and perhaps provoke a “democratic revolution” in Russia;

5. Transform Ukraine and Zelensky into modern heroes by:

Overlooking entirely that Zelensky had all but canceled habeas corpus, most opposition parties and media, and postponed scheduled elections. In other words, was our once rock star becoming a “benevolent” wartime autocrat amid the apparent corruption of US and NATO aid?

Keeping mostly silent about the horrendous costs to Ukraine, where a quarter of the population has fled the country, 500,000 have been killed, wounded, missing, or captured, while the economy and infrastructure have been all but destroyed—with no end in sight.

What Were and Are America’s Strategic Interests?

We have many interests and, in no particular order, would like to work to see the following occur:

1. Stay out of a theater-wide, European war with a nuclear power.

2. End the horrific killing.

3. Seek a sustainable peace that keeps Putin inside his own borders.

4. Convince Europe to rearm, defend its own interests, and deter Russia.

5. Free up some US military investment in Europe to pivot to Asia and deter China.

6. Disrupt the Russia-China alliance.

What Should Trump Now Do?

1. Talk softer while carrying a bigger stick.

2. Leverage, if possible, a return of Putin to his February 23, 2022, borders.

3. Accept that none of the last three presidents believed Ukraine could militarily regain Donbas and Crimea and neither will be recaptured.

4. Keep Ukraine out of NATO.

5. Help NATO to ensure Ukraine is well-armed and capable of thwarting any Russian violation of the peace—in other words, a hyper-NATO ability without being in NATO.

6. Insist that all NATO countries must meet their 2 percent contributions and over the next three years up it to 5 percent.

7. Allow U.S. interests to do business in Ukraine for a variety of economic and strategic advantages.

For all of Putin’s bluster, he has paid a terrible price for marginal gains. And he would not like to repeat the invasion of an even better-armed Ukraine. Despite his braggadocio, Putin seeks an end to the war.

Russia has lost respect worldwide, especially in its military. And great powers in its neighborhood, like India and China, no longer fear Russian arms. Even without a NATO Ukraine, it is likely that both Ukraine and Europe will be better armed in the years ahead.

China may be more restive and opportunistic vis-à-vis Russia. Bottom line: Putin has lots of reasons to see the war end, especially if he understands that he cannot win it, or at least cannot win it without further political instability at home.

Trump also wants an end to the war and for lots of reasons. He knows that the U.S. is divided or rather, its parties have flipped. Conservatives want to end the war and see our military redirected to deterring China. They believe our presence abroad should not be enlarged, given the massive efforts at home needed to solve the debt, border, and cultural crises. The MAGA, don’t-tread-on-me creed is to avoid wars and entanglements unless belligerents either attack us or attack our close friends to hurt us.

In weird contrast, peacenik liberals quietly want the war to go on. They quite unrealistically believe that greater U.S. and European aid, along with Ukrainian and NATO partnership, will eventually “crack” Russia, lead to Putin’s removal, and the installation of a glorious Western, EU-Russian political and cultural democracy.

Trump must negotiate with, but not necessarily believe, Putin and proceed in Reagan’s trust-but-verify fashion. For the immediate term, he can neither politically afford to expand the war to gain negotiating leverage nor simply, in a Kabul-fashion, pull out and be blamed when Ukraine is overrun or continue the no-end-in-sight current Biden killing-field policy.

So, to avoid all three unpalatable choices, Trump wishes to move quickly and decisively to cut a deal no one will like now—but may be appreciated once the slaughter ends.

As for Ukraine, Trump has enormous leverage over it for two obvious reasons: 1) Zelensky’s resistance to Russia will collapse if U.S. military aid is even modestly cut back; 2) Zelensky is no longer the pop star of 2022 who saved Kyiv in what was naively then thought to be a short, quick victory for Ukraine.

Trump can persuade Zelensky to give up his NATO hopes and his dream of regaining lost pre-2022 territories. Instead, he can tell him to seek to reopen a free society—with or without his leadership—and to rebuild a new, somewhat smaller, more secure, and even better-armed Ukraine.

The model—unfortunately—is not a gloriously defiant and courageous Finland of winter 1939. Instead, it is—realistically—an exhausted, proud, and realistic Finland of March 1940, when it finally accepted the reality of a Russian impending victory, negotiated, surrendered disputed territory, was often criticized but still preserved its autonomy, balanced East and West, finally gained international respect, armed to the teeth, and deterred Russia from entering the Finnish quagmire again.

Trump can make the argument that Russian détente with the U.S. and Europe is in Russia’s interests. The West does not have any territorial ambitions in Russia—unlike Moscow’s current partner of convenience, China, which most surely does. That is Beijing’s attitude toward any territorially large, naturally rich neighbor (like Australia) that is underpopulated. Putin will likely stay in power if the war ends now; he will see real threats to his regime if it continues for another three years.

Trump can let Europe decide whether it wants a beefed-up NATO, under strong U.S. leadership and engagement, in which all the parties invest 2 percent of their GDP in defense now and 5 percent in three years.

Or he can let Europe prefer to keep conning and lollygagging—sorta, kinda arming, sorta, kinda not arming. And thus, Europe will ensure that the U.S. becomes a nominal 2-percent member but forgoes leading an alliance of what Obama once called deadbeat “free riders.” Their choice, not ours.

In sum, Trump can end the war to no one’s satisfaction, or let Europe and Zelensky negotiate and see the war continue endlessly to no one’s satisfaction. 

Given geographical realities, the U.S. can live without a settlement, but eventually, all the other parties cannot.

For all the media screaming and left-wing accusations, Trump’s recent antics have at least accomplished the following: the NATO nations, Ukraine, and Russia are all confused about what Trump is saying, and so now all the more want him to stop the war.

Via The Variant Perception blog,

The relative strength of the US economy makes tariff threats an effective negotiating tool, and “America First” trade and security priorities mean tariffs will remain a feature of Trump’s second term. Allocations to volatility and TIPS should prove the best hedges for headline risk and the stagflationary impulse from implemented tariffs.

As tariff announcements start to dominate headlines, we provide three key points to serve as anchors:

• Weak rest of world (i.e., non-US) growth means less bargaining power for targeted countries

• Demand is the US’s key “export” and the ultimate currency

• Tariffs are here to stay as MAGA 2.0 embraces Reagan + Roosevelt

Weak rest of world (i.e., non-US) growth means less bargaining power for targeted countries

At inauguration, we noted the slim Republican House majority could make tariffs a higher priority (relative to tax cuts) in Trump’s second administration than his first. One key difference between today and 2018 is the global growth backdrop, raising the likelihood of quicker resolutions to tariff threats in order to avoid a significant growth downturn in targeted countries.

On the growth front, the US economy is much stronger relative to the Euro Area and China than at the onset of the first trade war in 2018 (which was preceded by a period of “globally synchronized growth”).

This raises the stakes for non-US countries, whose economies would come under further pressure from a protracted trade war (see shaded area above). It’s possible these growth imbalances encourage targeted countries to settle tariff disputes quickly (as seen today with delayed tariffs on Mexico).

Demand is the US’s key “export” and the ultimate currency

On top of the favorable cyclical backdrop, the US’s role as the chief source of global external demand gives it more bargaining power in trade negotiations.

The US trade deficit has persisted for the past 25 years and represents the US’s role as the “shock absorber” for global excess production. In other words, one can consider consumption demand to be the key export of the US to the rest of the world. So, any like-for-like retaliation will hurt non-US countries more given the US (as the chief buyer) can turn to other sellers more easily than a seller can find a buyer that can replace the US.

Related to this, the US is also a closed economy relative to most other economies. So, any broad-based decline in trade will weigh less on the US economy than other more trade-dependent economies.

Tariffs are here to stay as MAGA 2.0 embraces Reagan + Roosevelt

The asymmetric leverage leaves the Trump administration free to pursue its MAGA/”America First” strategy of restructuring trade and security and make it likely that tariffs will be a regular feature of this administration, not only a negotiating tool.

The use of tariffs to implement the “America First” strategy appears to be a consensus among key members of Trump’s administration, notably Treasury Secretary Scott Bessent (who recently advocated for gradual implementation of US tariffs up to 20%) and chair of the Council of Economic Advisors Stephen Miran (who outlined a similar plan in “A User’s Guide to Restructuring the Global Trading System”).

The trade policy echoes Reagan’s administration, which used measures like “Voluntary Export Controls” to limit imports of foreign goods and incentivize foreign companies to invest in the US. We think Trump will use tariffs consistently to boost investment in the US, given he’s repeatedly stated that the best way to avoid tariffs is to build in the USA.

Meanwhile, the security policy echoes the Roosevelt Corollary, which extended the Monroe Doctrine to allow for more direct US intervention in the broader Americas. The threat of tariffs to force Colombia to accept repatriated citizens, Panama to not renew its key canal deal with China, and Mexico to bolster border security are all evidence of a modern Monroe Doctrine/Roosevelt Corollary in action.

S&P and Treasury yields are the best KPIs, long TIPS + vol the best hedges

While Trump has stated he is not concerned about the market reaction, we still think a meaningful equity market drawdown or economic slowdown are the key constraints to Trump’s use of tariffs. After all, the only major pause in tariff announcements in Trump’s first term was during the S&P 500’s 15% pullback at the end of 2018. Treasury yields breaching 5% on inflation fears could also prove a constraint on Trump’s tariff agenda.

Taken together, we think long exposure to TIPS and volatility will be the best hedges against tariff headline risk and the stagflationary effect of tariffs (once they are implemented).

Via American Greatness,

A new disclosure by the Internal Revenue Service (IRS) to the House Judiciary Committee reveals that, under the Biden administration, the IRS leaked the taxpayer information of more than 405,000 Americans–including President Trump.

Rep. Jim Jordan (R-OH), who chairs the House Judiciary Committee, began an inquiry into the leaks last year and with this latest disclosure has found that the scope of the leak was much larger than the Biden administration initially led the public to believe.

The Obama IRS targeted conservatives.

The Biden IRS leaked your data. https://t.co/hOO66tONWX

— Rep. Jim Jordan (@Jim_Jordan) February 25, 2025

The scandal began in late 2019 when an IRS contract worker named Charles (Chaz) Littlejohn, illegally accessed and stole tax returns and return information for President Trump and other wealthy Americans and then leaked that information to news outlets.

Littlejohn pled guilty to the unauthorized disclosure in Oct 2023 and was sentenced to 5 years in prison.

In April 2024, the IRS issued letters of notification to victims whose data had been leaked but the notifications prompted deeper questions into how many people’s data may have actually been disclosed.

One month later, an IRS spokesman stated that “more than 70,000” taxpayers had been affected by the leak.

In Dec 2024, a second round of notifications was issued to individuals and entities that were not part of the initial 70,000 recipients of the first notice.

Rep. Jordan sent the IRS a letter on Jan 30, 2025 requesting more detailed information about the leaks and the IRS’s response letter sent on Feb 14 revised the number of people affected to 405,427 with approximately 89% of those taxpayers being business entities.

The leak of taxpayer data under the Biden administration follows the controversy of the Obama administration being accused of abuse for using the IRS to target conservative individuals and organizations.

Take note that the same coalitions protesting the prospect of DOGE engineers having access to IRS records and other financial data are conspicuously quiet about the actual abuses that took place under presidents Obama and Biden.

Remember when the Washington Post refused to endorse Kamala Harris in the home stretch of the 2024 election and the entire organization went full Handmaid’s Tale? Now multiply that by 100…

For his second act, owner Jeff Bezos announced on Wednesday morning that the Post’s opinion pages will be “writing every day in support and defense of two pillars: personal liberties and free markets,” in addition to the standard fare.

As Bezos explains on X;

There was a time when a newspaper, especially one that was a local monopoly, might have seen it as a service to bring to the reader’s doorstep every morning a broad-based opinion section that sought to cover all views. Today, the internet does that job.

I am of America and for America, and proud to be so. Our country did not get here by being typical. And a big part of America’s success has been freedom in the economic realm and everywhere else. Freedom is ethical — it minimizes coercion — and practical — it drives creativity, invention, and prosperity.

What’s more, WaPo opinion editor David Shipley – formerly of propaganda rag The New Republic as well as Bloomberg’s editorial section, quit the paper rather than present a more balanced view.

Whether or not we can actually Trust Bezos and the CIA’s favorite outlet to follow through – this is a five-alarm fire at the Post. 

I shared this note with the Washington Post team this morning:

I’m writing to let you know about a change coming to our opinion pages.

We are going to be writing every day in support and defense of two pillars: personal liberties and free markets. We’ll cover other topics too…

— Jeff Bezos (@JeffBezos) February 26, 2025

The paper’s chief economics reporter, Jeff Stein, framed it as a “massive encroachment by Bezos” which “makes clear dissenting views will not be published or tolerated here.” (lmao!)

Massive encroachment by Jeff Bezos into The Washington Post’s opinion section today – makes clear dissenting views will not be published or tolerated there

I still have not felt encroachment on my journalism on the news side of coverage, but if Bezos tries interfering with the… pic.twitter.com/7hzWCUDCVV

— Jeff Stein (@JStein_WaPo) February 26, 2025

Everyone at WaPo is gonna walk out today aren’t they? https://t.co/XdJvOSSF0Y

— Blume Industries CEO Balding 大老板 (@BaldingsWorld) February 26, 2025

And the reaction from WaPo journalists has been like sunlight hitting a vampire. https://t.co/UyovKKm3sW

— Stephen L. Miller (@redsteeze) February 26, 2025

And the reaction from WaPo journalists has been like sunlight hitting a vampire. https://t.co/UyovKKm3sW

— Stephen L. Miller (@redsteeze) February 26, 2025

Former WaPo propagandist Jen Rubin (who quit in January to fade into obscurity), joined the swan song.

Musk-Trump destroy WaPo. pic.twitter.com/xBQjEVg4MN

— Bluesky Libs (@BlueskyLibs) February 26, 2025

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Romania’s conservative populist presidential election front-runner Călin Georgescu has been arrested in a shock move by the state, which has left his supporters bewildered and outrage, as they mobilize to protest what appars brazen ongoing political persecution.

The detention and ‘questioning’ by police and the prosecutor’s office is reportedly in relation to last November’s canceled vote that he won, after unsubstantiated and vague claims of ‘Russian interference’ were claimed. Western media has commonly sought to portray him as a ‘far-right, pro-Russian’ candidate.

“Călin Georgescu was going to file his new candidacy for the Presidency. About 30 minutes ago, the system stopped him in traffic and he was pulled over for questioning at the Prosecutor General’s Office! Where is democracy, where are the partners who must defend democracy?,” a post on Georgescu’s Facebook account indicated.

Back in December Romania’s Constitutional Court had ruled “to annul the entire electoral process for the election of the President of Romania… to ensure the correctness and legality of the electoral process” – as the controversial and completely unprecedented ruling stated.

The ‘problem’ was that 62-year old Georgescu, the widely dubbed ‘far-right’ contender, came out on top in a first round of voting in a ‘shock’ outcome which left political opponents scrambling and claiming Russian intelligence was behind the massive and sudden rise in his popularity.

After winning the first round on November 24th, he was scheduled to face reformist Elena Lasconi of the liberal Save Romania Union (USR) in the second round. Crucially, Georgescu’s huge underdog victory also happened with zero campaign spending, according to his declaration. This was another ‘problem’ and conundrum for authorities and his political enemies.

But the supposed ‘smoking gun’ was related to mere social media posts on platforms like TikTok. The ruling came after President Klaus Iohannis declassified intelligence that alleged Russia ran a far-reaching campaign comprising thousands of social media accounts to promote Georgescu across platforms like TikTok and Telegram.

Footage of his arrest on a Romanian street:

🚨🇷🇴 EXCLUSIVE: MORE FOOTAGE OF CALIN GEORGESCU GETTING ARRESTED

He won a Presidential election, so they cancel the election and now arrest him.

‘Democracy’ in action in EU and NATO member: Romania

See below tweets in the chain for the full story of what I woke up to this… https://t.co/0ZEBuyq9fj pic.twitter.com/WklqgPWkje

— Mario Nawfal (@MarioNawfal) February 26, 2025

Currently, Romanian news outlets are reporting that police are searching the homes and offices Georgescu’s close associates, reportedly in connection with the funding of his election campaign last year.

According to the latest from Politico: 

Prosecutors suspect 27 people of acting against Romania’s constitutional order, public incitement, initiation of a fascist organization and false statements regarding the sources of financing an election campaign, but they didn’t name Georgescu or his aides in their statement.

However, shortly after news of the raids broke Wednesday morning, Georgescu claimed that the searches were aimed to block his new presidential candidacy.

A machine translation from the Romanian of Georgescu’s post reads in part as follows: “The communist-Bolshevik system continues its odious abuses! Today, at 6 am, they descended again on families in dozens of locations, waking children from their sleep.”

“They are looking to invent evidence to justify the theft of the elections and to do anything to block my new candidacy for the presidency,” the post emphasized. “They have been searching for three months without success.”

🚨 BREAKING: Romanian presidential front-runner Calin Georgescu has been arrested, his team says.

He won the first round—before it was canceled over alleged “Russian influence.” It later turned out the interference had actually come from the pro-EU liberal party PNL. pic.twitter.com/AncH3yP3Yj

— Brian McDonald (@27khv) February 26, 2025

The arrest has happened ahead of the new election date of May 4th – which had been set by authorities for the new rerun vote. It’s as yet unclear if Georgescu will be able to participate in the ‘do-over’ election – and the legal intervention does appear an effort to damage and block his campaign from moving forward. If no single candidate wins over 50% of the ballet, a runoff would be scheduled for May 18.

In early January, as people took to the streets in support of Georgescu, the blocked frontrunner wrote in a social media post: “You petty politicians, with your ungrateful and immature games, you won’t even know what hit you in this global storm.” He compared Romanian leaders and judges with former French president Nicolas Sarkozy, who is on trial on corruption charges. “You are so small that you aren’t even able to understand anything. Nothing you do will make a difference anymore. The inevitable, is inevitable.”