Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

The Equal Employment Opportunity Commission (EEOC) is seeking a court order for investigating systemic race discrimination allegations against white workers by footwear and apparel corporation Nike Inc., according to a Feb. 4 statement from the agency.

The EEOC filed an action in federal court to compel Nike, headquartered in Oregon, to produce information related to allegations that the company discriminated against white workers as part of its diversity, equity, and inclusion (DEI) programs.

According to the filing made by EEOC in the U.S. District Court for the Eastern District of Missouri, the agency is looking to enforce an administrative subpoena against Nike for failing to submit the required information, which was initially requested in 2024 by then-commissioner, and now chair, Andrea Lucas.

Lucas alleged that Nike, since at least 2020, engaged in “a pattern or practice of disparate treatment against white employees, applicants and training program participants in hiring, promotion, demotion, or separation decisions, including selection for layoffs; internship programs; and mentoring, leadership development and other career development programs.”

EEOC is the sole federal agency that investigates and litigates against companies for violating federal law prohibiting employment discrimination.

In an emailed statement to The Epoch Times, a Nike spokesperson said that this was a “surprising and unusual escalation,” adding that the company had already shared thousands of pages of information with the EEOC, and written detailed responses to inquiries, and is in the process of providing additional information.

“We are committed to fair and lawful employment practices and follow all applicable laws, including those that prohibit discrimination,” the spokesperson said.

Diversity and Inclusion at Nike

According to the diversity, equity, and inclusion page on Nike’s website, the company drives “equitable experiences for all teammates across the employee lifecycle.”

In its fiscal year 2024 “Representation by the Numbers” document published online, Nike said women made up 50.3 percent of the global corporate workforce. As for racial representation, white employees made up 57 percent, with black employees making up 9 percent, Asian 18 percent, and Hispanic 8.8 percent.

Based on Bloomberg data, from 2020 to 2021, Nike showcased the largest amount of change against hiring white workers among large U.S. companies. While the numbers of black, Hispanic, and Asian people went up across the board, Nike let go of white workers, said the analysis.

Kismet Mills is currently Nike’s chief diversity, equity and inclusion officer. She assumed the post in 2024.

EEOC will take necessary steps to counter corporate DEI programs that seek to discriminate based on race, Lucas said.

“Title VII’s prohibition of race-based employment discrimination is colorblind and requires the EEOC to protect employees of all races from unlawful employment practices. Thanks to President Trump’s commitment to enforcing our nation’s civil rights laws, the EEOC has renewed its focus on evenhanded enforcement of Title VII,” said Lucas, who was hired by President Donald Trump to head the EEOC in November.

Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, and sex.

The Trump administration has shown a steadfast opposition to DEI policies, with the president issuing executive orders against the implementation of such policies during his initial days in office.

DEI policies violate civil-rights laws, while undermining national unity, as “they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system,” said Trump’s Jan. 31 executive order.

In 2024, nonprofit law firm America First Legal filed a federal civil rights complaint with EEOC against Nike alleging racial and sex discrimination in violation of Title VII.

The firm said in a statement at the time that Nike appeared to be using numerical quotas for hiring, training, and promotion. The company aims to have 50 percent of women in the global corporate workforce and 45 percent in leadership positions by 2025, said America First Legal.

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

New York City’s health department said on Feb. 4 it has joined the World Health Organization’s (WHO) Global Outbreak Alert and Response Network, becoming the latest Democratic-led jurisdiction to link up with the United Nations-coordinated public health system following President Donald Trump’s decision to withdraw the United States from the WHO.

The move places New York City alongside California and Illinois, whose leaders have said they will participate in the global outbreak network despite the federal government’s formal exit from the WHO last month.

The WHO-coordinated Global Outbreak Alert and Response Network (GOARN) links hundreds of public health institutions worldwide to detect and respond to emerging disease threats.

“By joining GOARN, New York City gains access to a global network of over 360 institutions and organizations that respond to acute public health events with the deployment of staff and resources to affected countries,” the New York City Health Department said in a statement.

“Infectious diseases know no boundaries, and nor should the information and resources that help us protect New Yorkers,” Acting Health Commissioner and Chief Medical Officer Michelle Morse added.

Trump formally pulled the United States out of the WHO on Jan. 22 after completing a one-year withdrawal process triggered by a January 2025 executive order. The order suspended all U.S. funding to the organization and directed the recall of U.S. personnel working with the agency.

The president’s order cited the WHO’s “mishandling of the COVID-19 pandemic that arose out of Wuhan, China, and other global health crises” as reasons behind the U.S. withdrawal. It also singled out the WHO’s failure to adopt reforms and what Trump described as inappropriate political influence by member states as additional reasons for pulling out.

The United States had been the organization’s largest financial contributor, providing roughly $1.28 billion during the 2022–2023 biennium, according to the WHO.

Secretary of State Marco Rubio and Health Secretary Robert Kennedy Jr. said in a joint statement announcing the U.S. withdrawal that the organization had acted against U.S. interests despite Washington’s role as a founding member.

“This action responds to the WHO’s failures during the COVID-19 pandemic and seeks to rectify the harm from those failures inflicted on the American people,” the two officials said. “Promises made, promises kept.”

Democratic-led States Defy WHO Withdrawal

Democratic leaders in several states have criticized the administration’s decision and moved to maintain direct ties with the global health network.

Illinois Gov. JB Pritzker said on Feb. 3 that his state would join GOARN, making Illinois the second state, after California, to do so. Pritzker said Trump’s withdrawal undermined science and weakened the country’s ability to respond to global health threats.

“I refuse to sit idly by and let that happen,” Pritzker said in a statement, adding that GOARN membership would give Illinois access to global early-warning alerts, outbreak intelligence, technical collaboration, and surge support during major public health events.

California Gov. Gavin Newsom announced his state’s participation on Jan. 23, calling the U.S. withdrawal from the WHO “reckless” and saying it would harm Americans. California became the first U.S. state to join the network after the federal exit.

“California will not bear witness to the chaos this decision will bring,“ Newsom said in a statement. ”We will continue to foster partnerships across the globe and remain at the forefront of public health preparedness.”

Newsom announced the collaboration after meeting WHO Director-General Tedros Adhanom Ghebreyesus at the World Economic Forum in Davos, Switzerland, and said he is weighing a 2028 presidential run.

The White House did not respond to a request for comment on New York City’s decision by publication time.

Reuters contributed to this report.

In our AMZN earnings preview, we said that the price reaction from META and GOOGL “leaves Amazon in a precarious place as it prepares to report earnings after the close today: does it project some berserk number or does it risk being conservative? After all, the only thing that will matter is the capex forecast (the earnings will likely be good enough).”

Well, we were wrong: the earnings were not good enough: the company missed on earnings and its guidance was rather week. And so before we even get to the biggest shock of the report – the company’s CapEx guidance – here is what the company reported for Q4:

• EPS $1.95, missing estimates of $1.96… an ugly miss at the very top.

Revenue was a bit better, and even though several items (physical stores, third party sellers missed), AWS was stronger than expected.

• Net sales $213.39 billion, beating estimate $211.49 billion
  • Online stores net sales $82.99 billion, beating estimate $82.3 billion
  • Physical Stores net sales $5.86 billion, missing estimate $5.88 billion
  • Third-Party Seller Services net sales $52.82 billion, missing estimate $53.16 billion, net sales excluding F/X +10%, estimate +11.2%
  • Subscription Services net sales $13.12 billion, beating estimate $12.74 billion, net sales excluding F/X +12%, estimate +10.4%

The good news is that the most important revenue item, AWS, beat:

• AWS net sales $35.58 billion, beating estimate $34.88 billion; net sales excluding F/X +24%, estimate +21%

This was an impressive number as the 24% YoY increase in AWS revenue not only smashed estimates, but was the highest in three years: remarkable growth for a business that keeps growing and has a more difficult base effect to “beat” every quarter. 

Geographically the results were disappointing with North America missing, offset by strength in International

• North America net sales $127.08 billion, missing estimates of $127.21 billion
• International net sales $50.72 billion, beating estimates of $49.74 billion

Going down the line: 

• Operating income $24.98 billion, beating estimate of $24.82 billion; this included charges of $1.1 BN
• Operating margin 11.7%, in line with the estimate of 11.7%
• North America operating margin +9%, beating estimate +8.51%
• International operating margin 2.1%, missing estimate 4.27%
• Fulfillment expense $30.83 billion, below estimate $31.42 billion

In its release, the company said that demand was strong for AI, Chips, Robotics, and all other Existing Offerings. 

While AWS sales growth was solid, just as impressive was the the margin for the segment also increased from 34.64% in Q3 to 35.03%, just beating the median Wall Street estimate of 35%. Elsewhere, North American profit unexpectedly jumped to $11.472 billion, resulting in a profit margin of 9.03%, beating estimates of 8.51%, while international margins dropped to to 2.05% from 2.93%, missing estimates of an increase to 4.27%.

As a result of the drop in AWS profits, Amazon’s consolidated operating margin posted a notable jump and in Q4 increased 9.7% to 11.7%, just shy of an all time high. 

However, while the above data was ok, it was the company’s guidance that led to an immediate collapse in the stock price after hours. No, it wasn’t the revenue, although that did come in a bit weak: 

• Net sales are expected to be between $173.5 billion and $178.5 billion, or to grow between 11% and 15% compared with first quarter 2025. The midpoint is a bit weak compared to the median estimate of $175.54 billion.

The projected 13% revenue growth is on the low-end of where the company has been in the past year. 

But while revenue guidance was disappointing, if a bit muted, it was the company’s capex guidance – a first for AMZN – that stole the show, because with Wall Street estimates of $146.1 billion in 2026 capex, the company went and reported that it expects to invest about $200 billion in capital expenditures in 2026, a 50% increase from 2025 and an openly ridiculous number, one which is more than a quarter higher than the consensus estimate! Needless to say, there is just not enough grid capacity and electrical power to satisfy the $700BN in CapEx guidance among the Mag7s. 

The number was so shocking that even though Wall Street may have been ready to give AMZN the benefit of the doubt for its solid AWS performance and impressive margin bounce, the CapEx guidance was just so gargantuan, there was no way the stock would jump especially after yesterday’s GOOGL debacle. Putting the updated capex numbers in context, the 5 bighyperscalers now expect to spend over $700BN in capex next year. The only problem: there is nowhere near enough electrical capacity to feed all these brand new data centers.

And so AMZN crashed after hours, sliding as much as 11%, and trading around $200. Another $15 drop from here, and the stock will be where it last traded in 2021…

More details have emerged from Wednesday’s Trump-Xi phone call, which it turns out was quite lengthy for the two leaders, lasting about two hours. We reviewed previously that President Trump hailed the “excellent” call, which was “long and thorough” – but Chinese version which was issued later presents something more contentious.

China’s official readout made clear that President Xi in the conversation focused heavily on Taiwan, and ways Washington can dial back the tensions over the self-ruled island.

Xi called the US approach to Taiwan “the most important issue in China-U.S. relations,” declaring that China “will never allow Taiwan to be separated from China.”

“The US must handle arms sales to Taiwan with extreme caution” Xi said, in reference to the billions in arms packages the US has signed off on over several years, spanning multiple administrations.

Taiwan was quick to respond to the contents of this call, with Taiwan’s president, Lai Ching-te, telling reporters Thursday: “The Taiwan-US relationship is rock solid, and all cooperation projects will continue uninterrupted.”

Separately Taiwan’s foreign ministry also pointed out that US weapons sales to Taiwan continue unabated, Xi’s warnings notwithstanding. Another key part of the call is seen in the following:

China is considering buying more U.S.-farmed soybeans, President Donald Trump said after what he called “very positive” talks with President Xi Jinping on Wednesday, even as Beijing warned Washington about arms sales to Taiwan.

In a goodwill gesture two months before Trump’s expected visit to Beijing, Trump said Xi would consider hiking soybean purchases from the United States to 20 million metric tons in the current season, up from 12 million tons previously. Soybean futures rallied.

Trump has repeatedly stressed the need to keep lines of communication open with Beijing, even as he insists on safeguarding American interests and regional security, and as Washington continues arms support to Taipei.

“The relationship with China, and my personal relationship with President Xi, is an extremely good one, and we both realize how important it is to keep it that way,” Trump had written on Truth Social Wednesday, soon after the call was conclued.

“I believe that there will be many positive results achieved over the next three years of my Presidency having to do with President Xi, and the People’s Republic of China!” – he followed with.

I read a CIA assessment of Xi Jinping and it said that he was “incorruptible, doesn’t care about money, doesn’t drink or participate in any vices, and always knows the right answer”.

Can you imagine what the Chinese assessment of Trump is?

— Mike from PA (@Mike_from_PA) January 27, 2026

But to review of Xi’s red lines and Washington’s proneness to testing them: “In December, the US state department announced its largest-ever arms sales package to Taiwan, valued at more than $11.1bn and including missiles, artillery systems and drones,” writes The Guardian. “The package is yet to be approved by Congress.”

“China reacted angrily to the proposed arms sales, conducting two days of military drills around the island in late December, for which it dispatched air, navy and missile units,” report recalls.

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

U.S. President Donald Trump opted not to choose between Vice President JD Vance and Secretary of State Marco Rubio as potential successors in the 2028 Republican presidential primary during a Feb. 4 interview with NBC News.

The president had, on earlier occasions, suggested that Rubio and Vance would be the top Republican contenders for 48th president of the United States.

In the NBC News interview, Trump was asked who should be at the top of the 2028 presidential primary ticket.

“Well, I don’t want to get into this. We have three years to go. I don’t want to, you know, I have two people that are doing a great job,” Trump said.

“I don’t want to have an argument … I don’t want to use the word fight, it wouldn’t be a fight. But look, JD is fantastic, and Marco is fantastic.

“I would say one is slightly more diplomatic than the other. I think they’re both of very high intelligence. I mean … they will do shows. They will do Joe Rogan, as opposed to the opponent not doing it because they couldn’t handle it.

“They’re both very capable. I do think this—the combination of JD and Marco would be very hard to be beaten.”

When asked whether he would endorse someone in the 2028 primaries, Trump replied he “hadn’t even thought of it” but would be inclined to do so.

Rubio ran as a Republican candidate in the 2016 presidential race, competing against Trump, who went on to win his first term. Since joining the second Trump administration, the 54-year-old has been active on multiple fronts.

In addition to serving as secretary of state, Rubio was appointed acting head of the U.S. Agency for International Development (USAID) in February 2025 and national security adviser in May 2025. In July of that year, he confirmed the shutdown of USAID, highlighting that foreign assistance provided by the agency failed to deliver results for Americans.

Earlier, in February 2025, Panama’s president said his country would not renew its Belt and Road Initiative agreement with China after a meeting with Rubio, who called on the country to address the Chinese Communist Party’s influence in the region, in what was one part of the Trump administration’s assertive moves in the Western Hemisphere.

Vance, who has been active in both domestic and international roles, was instrumental in blocking Democrats from restricting Trump’s ability to continue military action in Venezuela, casting the tiebreaking vote in the Senate that defeated the proposal. The 41-year-old has also emerged as a prominent defender and advocate of the administration’s “America First” agenda.

Both Rubio and Vance served as Republican senators prior to joining the Trump administration last year. Rubio was elected to the U.S. Senate from Florida in 2010, while Vance was elected to the U.S. Senate from Ohio in 2022.

Regarding a potential 2028 presidential ticket, Vance said in a media interview in October 2025 that he wants to perform well in the current administration before considering such a proposal.

Meanwhile, Rubio backed Vance as a great pick for the next presidential election without ruling himself out of the race.

In December, conservative organization Turning Point USA, now headed by Erika Kirk, endorsed Vance for 2028.

According to a Harvard CAPS Harris Poll fielded on Jan. 28 and 29, Vance “leads convincingly” among Republican voters as their next candidate for president. Vance got 53 percent of the polled votes, far higher than Rubio’s 17 percent, which put him in the third spot. Donald Trump Jr. took the second spot with a 21 percent share.

At first, the market was happy to reward big capex forecasts (META); but just a few days later, it changed its mind and decided that the bigger the beat, the bigger the penalty (as was the case with GOOGL today). That leaves Amazon in a precarious place as it prepares to report earnings after the close today: does it project some berserk number or does it risk being conservative? After all, the only thing that will matter is the capex forecast (the earnings will likely be good enough). 

Looking at the bigger picture, Bloomberg notes that it’s probably not a great sign that Amazon’s share price is down more than 4% on the day of earnings, before the first headline has even hit. After the hyperscalers Microsoft and Alphabet spooked markets with their huge spending plans — Meta seems to have got away with it — perhaps the best thing Amazon could do would be to announce that it plans only moderate capital expenditure in 2026. 

One thing in Amazon’s favor is that analysts aren’t really projecting too much growth. The consensus is that diluted earnings per share rose just a bit over 5% year-on-year to $1.96 in the fourth quarter. That’s little-changed from $1.95 in the third quarter. Revenue at Amazon Web Services is expected to have increased 21% to $34.9 billion, but that’s still less than half the revenue the company gets from its main business: online stores. Growth there is expected to be slower at roughly 9% year-on-year. 

Its business mix explains why Amazon is so much less profitable than its peers and why the profitability of the cloud business will be key.

Capex aside, here is a preview of what JPMorgan’s trading desk expects:

AMZN PREVIEW – AWS Acceleration & AI Positioning

SENTIMENT – Bullish, But Concerns Remain. Conversations & focus heavily AWS-skewed, no change there. 3Q EPS & re:Invent provided clarity on capacity expansion, supply from NVDA, Trn 2/3 performance & rollout, Rainier timing & doubling. Investor focus on degree of acceleration & cloud industry $ re-capture. AWS price increases suggest strong demand. But concern remains around AMZN’s overall AI positioning/strategy, relative gap to Azure/Google Cloud growth, & Trn adoption. Strong Stores execution expected, along w/NA & Int’l margin expansion. 

The stock remains a Best Idea for JPM stgrategist Doug Anmuth.” We remain bullish on AWS growth acceleration driven by core cloud growth & ramping AI contribution led by Project Rainier, Trn ramp, & new partnerships. N.America & Int’l OI margin expansion, solid AWS margins (though likely down Q/Q), & cost discipline support healthy FCF growth in ’26 even against AI-driven capex growth. Valuation attractive on GAAP P/E & FCF.

FOCAL POINTS – 

1. Accelerating growth on: 1) Project Rainier/Anthropic ramp; 2) increased capacity doubling by 2027; 3) Tr2 performance & Tr3 ramp; 4) core workloads/tech migrations
2. More backlog growth in October than all of 3Q…OpenAI partnership could expand
3. Watching $ growth Q/Q & Y/Y
4. AWS pushbacks: 1) mid-20’s%+ AWS growth could come w/Azure & Google Cloud growing 2x that rate; 2) Tr chip rollout still early & needs bigger adoption beyond Anthropic; 3) Anthropic cloud/compute diversification
5. Stores executing well w/8% holiday e-comm growth from Visa & Adobe slightly above
6. Lower cost to serve on robotics/automation & inbound improvements

Takeaway from the recent JPM survey – AMZN: Favorite Mega Cap (46% of respondents)

According to UBS strategist Dwyer, the most prominent question since 3Q she has gotten is, “Why isn’t this up more?” Her response is “that was market-related exiting the year or maybe investors were waiting for one more quarter of strong execution before backing, but for a long list of reasons it’s pretty clear that it is structural reacceleration and not just a one-time event.”

Here are UBS’s buy-side Bogeys which the company will have to overcome:

• Q4 AWS Growth: up 22-23% y/y
• Q4 EBIT: $26.5-27 bn versus guide $21-26 bn/ around 11% margin at midpoint
• Q4 Total Sales: high end of guide $206-213 bn/ around 10-13% y/y
• Q1 EBIT Guide H-E: $22.5-23 bn
• Q1 Total Sales Guide H-E: $176-178 bn

And the sellside consensus

Authored by Jack McPherrin via The Epoch Times (emphasis ours),

Most Americans believe that when they “buy” a stock, bond, or exchange-traded fund in a brokerage account, they become the legal owner of that security. The statement shows their name, and the shares appear as belonging to them.

But in the modern U.S. securities system, that intuition is often wrong in the way that matters most: legal title and control. What most investors hold is not a directly owned asset recorded in their name, but a contractual claim—what the law calls a “security entitlement”—against a financial intermediary.

That may sound like semantics until one asks a simple question: In a systemic financial collapse, who is first in line to retrieve those securities? In other words, the difference between owning an asset and holding a claim can determine whether investors’ assets are legally subordinated to other claims, and whether investors recover their assets at all.

The answer depends less on what your account statement says and more on how Wall Street’s plumbing and a little-known uniform state law governing securities ownership were built to perform under stress.

The Invisible Owner of Record

For most of the history of securities markets—from English common law through much of the 20th century—investors who bought shares were recognized as their legal owners, often holding certificates in their own name. Trades were slower, more cumbersome, and paper-intensive, but ownership was straightforward. If you bought shares, you were typically the registered owner by default.

That is no longer how most securities ownership works.

The modern system is built around a centralized clearing and custody structure dominated by the Depository Trust Company (DTC), a privately owned institution controlled by the largest U.S. banks and broker-dealers. In broad terms, major brokers and banks “deposit” investors’ securities at the DTC, which holds them in pooled form. The registered owner reflected on issuer records is typically not the end investor and often not even the brokerage firm the end investor uses. It is DTC’s nominee, Cede & Co.

Here is the practical consequence: when you “own” a stock through a brokerage account, you are generally what is called a “beneficial owner” credited on your broker’s books. The owner of record is upstream, and the securities themselves sit in a centralized system designed to reduce costs and manage institutional risk—rather than to preserve clear, direct ownership for ordinary investors.

If that sounds like a technicality, think of the difference between owning a car and leasing a car. A lease can give you many of the benefits of use, but it is not the same legal relationship to the underlying property. In the same way, a security entitlement can provide financial benefits from an asset while leaving the investor multiple steps removed from legal title and direct control.

This distinction, quietly normalized over decades, has created a fragile kind of “ownership” that many investors do not understand and that policymakers have not adequately confronted. I explore these issues in greater depth in “The Next Big Crash,” a book I co-authored that examines how modern financial market structures put investors at serious risk during moments of systemic financial stress.

The Legal Structure That Decides Priority

Wall Street’s indirect holding system might be defensible if it merely replaced paper certificates with electronic records while preserving the investor’s core property rights. But that is not what happened. The deeper shift occurred in the law that governs these relationships—Article 8 of the Uniform Commercial Code (UCC)—which has been amended and adopted by every state legislature in the country.

In plain English, UCC Article 8 establishes that the securities credited to customers at a brokerage are generally not supposed to be treated as the brokerage firm’s property. That sounds comforting, until one reaches the key exception clauses in the statute, which clearly state that under certain conditions, a broker’s secured creditor gains priority over the assets of the broker’s customer.

This is not a fringe interpretation. It is explicitly stated in the law itself, which has been sharply criticized by leading securities law scholars. If a broker pledges its customers’ securities as collateral and their creditor gains legal “control,” that creditor stands ahead of the customers who bought the securities. Crucially, this applies even if brokers have acted improperly or illegally, as long as collusion with the creditor cannot be proven.

To most people, that should feel backward. If you pay for an asset, you should not lose it because your middleman used it—properly or improperly—to fund its own survival.

But under the modern regime, what many customers have is not a direct, registered ownership interest in a specific, identifiable security. Instead, they have a contractual claim defined by the intermediary system and the priority rules that put banks first during an economic crisis.

‘Customer Protection’ Is Not the Same as Ownership

Defenders of the current structure will point out that there are rules intended to protect customer assets. They are right. There are segregation requirements, reporting requirements, and oversight mechanisms. There is an entire framework that assumes customer property can be kept separate from a failing firm’s creditors.

The problem is that rules are not self-enforcing, especially in a crisis. And history shows that when financial firms face existential pressure, the temptation to treat customer property as a lifeline can become overwhelming.

The collapse of Lehman Brothers illustrates the danger. In the years leading up to its failure, Lehman routinely violated customer segregation requirements by pledging customer securities to JPMorgan Chase to secure its own borrowing. When Lehman collapsed in 2008, JPMorgan asserted secured claims over those assets, freezing large quantities of customer property inside the bankruptcy estate. Many customers did not receive their assets for nearly five years as secured creditors litigated priority over pledged customer assets.

Lehman was not an isolated case. In 2007, Sentinel Management Group commingled and pledged hundreds of millions of dollars in customer securities as collateral for a revolving credit line, triggering years of litigation over whether a bank’s secured claim could override investor rights. Most customers were not made whole for nearly a decade. And in 2011, MF Global filed false segregation reports and unlawfully tapped segregated customer accounts to meet margin calls, leaving tens of thousands of customers without access to funds they relied on for routine operations. Even when recoveries eventually occurred, the process took years.

These episodes differ in detail, but they share a theme: protections that investors assume to be absolute can fail in practice. And when they do, investors can be thrown into prolonged legal uncertainty. Even a “successful” recovery can be devastating when retirement savings, liquidity, or margin collateral are frozen for months or years.

Some readers may point to the Securities Investor Protection Corporation (SIPC) as a safeguard. SIPC does provide limited insurance when a brokerage firm fails. But like the Federal Deposit Insurance Corporation (FDIC) for banks, it was designed to manage isolated insolvencies—not systemic financial crises. Its reserves total less than $5 billion, a minuscule number compared to the tens of trillions of dollars held at major brokerage firms. More importantly, SIPC cannot prevent customer assets from being frozen or subordinated while insolvency proceedings unfold.

The uncomfortable truth is that “customer protection” in an intermediary system is not the same as being the registered owner with clear property rights. It is a set of promises and procedures that depend on compliance, monitoring, solvency, and the willingness of institutions to follow the rules when doing so is more costly than breaking them.

None of this is an argument for widespread panic, nor a claim that every investor is doomed. It is a diagnosis of a real property-rights vulnerability embedded in the architecture of modern finance.

If policymakers want markets that are resilient in the next crisis, they should start by being honest about what most investors actually “own.” Clear disclosure, access to direct ownership for those who want it, and a reexamination of legal priority rules that place intermediaries ahead of customers are not radical demands. They are basic questions of property rights, investor protection, and trust. Financial systems run on confidence, and confidence cannot rest on assumptions that quietly collapse when stress arrives.

The views and opinions expressed are those of the author. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Authored by Susan Crabtree via RealClearPolitics.com,

Borrowing from novelist James Hilton, who coined the word “Shangri-La” to describe a Tibetan utopia in a 1933 novel, Franklin Roosevelt gave that name to the peaceful retreat we know as Camp David.

For California Gov. Gavin Newsom and Los Angeles Democrats, Shangri-La hasn’t become synonymous with a place that connotes peace on earth. It stands for a hellish homeless housing nightmare, eye-popping fraud, and the ease and scale with which con-artists rip off taxpayers.

In October, federal agents arrested Cody Holmes, the 31-year-old former CFO of Shangri-La Industries, a downtown Los Angeles-based developer who was supposed to be providing housing for homeless people in Southern California. First Assistant U.S. Attorney Bill Essayli for the Central District of California, a Trump appointee, charged him with mail fraud.

Holmes, who pleaded not guilty, is accused of embezzling more than $2 million in taxpayer funds slated for homeless housing construction to host extravagant parties; a $46,000-per-month Beverly Hills mansion; private jet travel; leases of exotic cars; high-end handbags totaling $128,000; a $35,000 diamond watch; and 20 VIP passes for the 2023 Coachella Music and Arts Festival.

Meanwhile, Shangri-La Industries executives showered Newsom and Los Angeles County Democrats with political donations as they were applying for some $100 million in state contracts that the CFO later allegedly looted to fund his and his ex-girlfriend’s lavish lifestyle.

Even after federal prosecutors exposed the massive fraud, Newsom and L.A. Democrats haven’t severed ties with the embattled developer and have kept political donations from the firm’s executives. Newsom has also allowed the construction firm to continue to tout his endorsement on its social media.

Powerful Friends

Holmes allegedly defrauded the California Department of Housing and Community Development by submitting fabricated bank accounts in its applications for state contracts to build homeless housing. Acting on behalf of Shangri-La, Holmes allegedly falsified $160 million in assets controlled by Shangri-La and its affiliates to demonstrate that the firm had liquid funds to contribute to the construction projects.

According to the government, most of those funds never existed. The FBI traced only an estimated $24,000 that the developer had on hand at the time of the applications for Newsom’s signature Homekey contracts, a program launched amid the COVID pandemic lockdowns that converted empty motels into homeless housing. Holmes is accused of providing false bank statements for Shangri-La Industries to acquire the more than $100 million in state grant money for seven Homekey projects, according to an affidavit filed with the complaint and other court documents.

Shangri-La Industries has historic roots to billionaire Steve Bing and Bill Clinton, whom the Bing-led company paid more than $2.5 million to serve as a strategic adviser. Bing died by suicide in 2020, more than a decade after founding the investment, entertainment, and philanthropic empire.

California housing authorities are also suing Shangri-La Industries for breaching contracts under Newsom’s signature Project Homekey homeless housing project in a likely futile attempt to recover the missing millions. Yet, no criminal action was taken against anyone involved until Essayli issued his indictment against Holmes last fall.

Shangri-La Industries CEO Andy Meyer, who also goes by Andy Abdul-Wahab, according to court documents, has blamed Holmes for the bank and mail fraud and filed a lawsuit against him. The suit accuses Holmes, his former intern, of embezzling company funds by moving the money to accounts and shell companies that he controlled while allegedly also transferring money to Madeline Witt, his then-girlfriend. Witt is named as a co-defendant in the suit.

Newsom, L.A. Dems Mum on Returning Shangri-La Donations

Newsom’s office did not respond to an inquiry into whether he planned to return any of the funds Shangri-La employees have donated to his campaigns over the last decade. A RealClearPolitics review of campaign donations found at least $18,000 from Abdul-Wahab to Newsom’s campaigns for governor and lieutenant governor.

Newsom’s office also did not say whether he stands by a quote endorsing Shangri-La Industries and its partner, Step Up On Second Street, which Shangri-La has used on its now-defunct website under the heading, “What Our Customers Are Saying,” and on its active Instagram account.

“In a matter of months, not years, Shangri-La and Step Up gave some of the most vulnerable Californians the dignity of a key, a lock, a door, a place to call home,” the Newsom quote states in reference to a homeless housing project in San Bernardino. California’s campaign finance database also shows a mysterious $30,000 donation from Shangrila Investment LLC in support of Newsom’s signature Proposition 1 homeless ballot initiative. The initiative, which barely passed with 50.2% of the vote in March 2024, approved a $6.4 billion bond for more state homelessness spending and attempts to address related mental health and addiction for the first time.

In the final days of the mail-in voting election, as the outcome hung in the balance, both sides, Newsom and those opposing the ballot measure, urged voters whose ballots may have been rejected to fix their signatures.

Yet, so far, Newsom’s “CARE court” project, attempting to address mental health and addiction, has reportedly fallen far short of expectations. Other controversial donations to the homeless ballot initiative include $100,000 from Edison International and affiliated entities, the parent company of SoCal Edison, whose equipment caused the Eaton fire that killed 19 people last year; and $250,000 from PG&E and affiliated entities, the Northern California utility that caused the 2018 Camp Fire, the deadliest fire in state history, responsible for 84 deaths.

It’s unclear whether this $30,000 donation from Shangrila Investment LLC is related to Shangri-La Industries or other affiliated entities that court documents connect to the embattled developer. Neither Newsom’s office nor Capitol Compliance, the D.C.-based entity that helps run Newsom’s ballot committee, returned repeated requests for comment.

Asked if the donation made by Shangrila Investment LLC is affiliated with the Shangri-La developer at the heart of the fraud scandal, Holmes’ high-powered attorney Michael Freedman, who has represented Harvey Weinstein and Bill Cosby, replied only: “No comment.”

State campaign-finance records show that Abdul-Wahab also showered donations on state and local officials, including $30,000 to the Los Angeles County Democratic Party in 2022, when the developer was trying to win the homeless contracts. The Los Angeles County Democratic Party did not respond to an inquiry about whether it planned to return the funds.

Other donations from Meyer Abdul-Wahab went to former Assemblywoman Wendy Carillo, who represented Glendale and parts of East Los Angeles and is the first former illegal immigrant to be elected to the state Assembly. Additional donations went to Assemblywoman Cecilia Aguiar Curry, who represents a west Sacramento district that includes areas of parts of Napa and is serving as majority leader of the Assembly; Sen. Sabrina Cervantes of Riverside and parts of San Bernardino County; Assemblywoman Jacqui Irwin who represents the city of Thousand Oaks; Sen. John Laird of Santa Clara and Monterey; Assemblyman Alex Lee of Fremont, Milpitas and West San Jose; and Assemblywoman Buffy Wicks of the East Bay.

In December 2021, U.S. Rep. Robert Garcia, a Democrat and the former mayor of Long Beach, where Meyer Abdul-Wahab resides, returned two Shangri-La donations during Garcia’s run for lieutenant governor, according to Cal-Access, the state campaign donations database.

Lobbyists for Shangri-La Industries include Panorea Avdis, partner at Sacramento Advocates, a public affairs and lobbying firm, along with several other firm associates, according to a state lobbying database. Before becoming a lobbyist, Avdis was chief of staff to Lt. Gov. Eleni Kounalakis, and previously served a stint as a director of external affairs at California’s housing department during the administration of GOP Gov. Arnold Schwarzenegger, as well as the state’s Business and Economic Development office under Democratic Gov. Jerry Brown. Sacramento Advocates did not return requests for comment about its relationship with Shangri-La Industries.

At least two of the Homekey motel conversion projects in Southern California have been renovated and are now fully occupied: a 98-unit former Good Nite Inn in Redlands (now called Step Up in Redlands) and a 76-unit former All-Star Lodge in San Bernardino (now Step Up in San Bernardino).

Shangri-La Stiffed Subcontractors

Subcontractors and suppliers to the San Bernardino and Redlands projects filed $2 million in liens for unpaid work and materials, and at least some contractors say they have yet to be paid and are growing increasingly doubtful that they ever will be. Shangri-La Industries allegedly illegally obtained more than $50 million in new loans for several Homekey properties across the state without notifying the state housing department.

Adolfo Gomringer Sr., who owns AG Flooring, told RCP that he has yet to receive $93,000 that Shangri-La owes him for metal framing, drywall, demolition, and flooring work his company performed for the San Bernardino motel conversion in 2023. Gomringer said he has written to Newsom, L.A. Mayor Karen Bass, and L.A. and San Bernardino County officials, asking for their help, but has not received a response.

“Unfortunately, I didn’t hear back from anybody, so I just gave up hope,” Gomringer told RCP this week. “Honestly, it’s just shocking that there was nothing in place to protect us—the contractors actually doing the work on these jobs.”

Gomringer said he doubts that Holmes is the only Shangri-La employee in on the fraud, adding that the extent of the deception may not be fully realized. He referred to a call with a bond company claiming to have received a wire confirmation from Shangri-La that his company had been paid in full, which Gomringer said is completely inaccurate.

“I said, ‘Please send me a picture of that wire, because I am the owner of the company, and I can tell you frankly, that’s not true,’” he said.

According to the FBI agent’s affidavit used in the criminal complaint against Holmes, the young CFO completely fabricated a Bank of America account statement showing $59 million that did not exist.

Richard Staropoli investigated bank fraud cases for years as a Secret Service agent, then went on to serve as chief information officer and head of risk for the international hedge fund Fortress Investment Group. Staropoli told RCP that the California housing department should have performed basic due diligence practices to verify the bank accounts Shangri-La claimed to have, and the exact amounts in them.

“Are you kidding me?” Staropoli said in reaction to the FBI’s investigative findings in the Holmes case. “Are you telling me that at this level of the amounts of money that’s involved here, nobody’s checking this? This just speaks to the incredibly poor practices of California’s housing authorities.”

In early January, Essayli warned that more arrests are coming after finding “massive” fraud in California’s homeless services.

In mid-January, police arrested Alexander Soofer, who allegedly used millions of taxpayer dollars slated to house and feed hundreds of homeless to purchase a $7 million mansion in Westwood, pay for private jet travel, lavish spending at luxury resorts across the United States, a vacation property in Greece, his children’s private school tuition, and a $125,000 Range Rover.

Soofer is also accused of feeding 600 homeless people—which his organization, Abundant Blessings, housed—Ramen noodles, canned beans, and breakfast bars instead of the three healthy meals a day the contract required.

“California is the poster child of rampant fraud, waste, and abuse of tax dollars,” Essayli said, referring to the more than $24 billion the state has spent on fraud without demonstrating any impact from the investment. “The state has facilitated the spending of billions of dollars to combat homelessness, with little to show for it and almost no oversight.”

“Thankfully, the federal government has begun auditing California’s spending, and today’s is just one example of how fraudsters have swindled millions of dollars from taxpayers,” he added. “This money should have gone to those in need, instead it lines the pockets of individuals subsidizing their lavish lifestyle.”

In a testy email exchange last week, Essayli labeled Newsom the “king of fraud” for failing to provide basic oversight measures to protect taxpayer funds and blasted him for claiming the homeless fraud isn’t his fault.

Newsom’s press office, responding to a conservative influencer blasting the governor over homeless fraud after Essayli’s indictments against Soofer, denied any culpability.

“TOTALLY FALSE to imply the Governor was responsible for this fraud! Fraud is unacceptable—and unlike Donald Trump, who pardons fraudsters, Newsom demands anyone who steals taxpayer dollars be prosecuted to the fullest extent of the law.”

“WRONG,” Essayli responded in an X post. “You and the California legislature facilitated this fraud by handing out billions in tax dollars to these nonprofits with zero vetting and zero state oversight.”

Billionaire Bing’s Ties to Shangri-La Industries

Shangri-La Industries—the firm ensnared in the homeless fraud scandal—originally was created by billionaire entertainment mogul Steve Bing, a Democratic Party mega-donor, film and music producer, and the grandson of Manhattan real estate developer Leo Bing.

At 18, Bing inherited a $600 million fortune from his father, then dropped out of Stanford University in his junior year to move to Hollywood and produce and invest in movies. Along the way, he also fathered British actress and model Elizabeth Hurley’s son Damian in 2002.

Bing gave at least $50 million to candidates and California ballot measures over two decades, including Newsom, former Health and Human Services Secretary Xavier Becerra, who is running for governor, Sen. Alex Padilla, as well as Hillary Clinton, John Kerry, Al Gore, and Nancy Pelosi. He formed Shangri-La Entertainment, Shangri-La Music, and Shangri-La Construction, which later became Shangri-La Industries. Besides the $2.5 million Shangri-La Industries paid to Bill Clinton in 2009 and 2010, according to Forbes magazine, Bing also gave between $10 million and $25 million to the William J. Clinton Foundation in 2008.

Bing’s death is still shrouded in mystery. When the 55-year-old jumped to his death from the 27th floor of a luxury apartment building in Century City, he was nearly broke with only $300,000 in assets. Friends suggested he was depressed because of a lack of contact with people during the COVID lockdowns, but the true reason remains unknown.

Bing’s daughter, Kira Kerkorian, in a lawsuit filed against Abdul-Wahab, alleged that Bing sold Shangri-La Construction to him in 2017, but accused Bing of never paying the agreed-upon amount. The lawsuit, however, was dismissed without prejudice, meaning that a judge terminated it, but Kira Kerkorian could decide to amend it and refile.

So far, Kerkorian hasn’t refiled. She was essentially disowned and disinherited by two fathers. Her mother, former tennis pro Lisa Bonder, was married to casino and media mogul Kirk Kerkorian, who was 48 years her senior, for only 28 days in 1999. When Bonder became pregnant, she insisted Kerkorian was the father and secured a $100,000-per- month child support agreement and established a $7 million trust for Kira.

But private detective Anthony Pellicano swiped a piece of dental floss used by Bing, a former boyfriend of Bonder, proving through DNA testing that Bing was Kira’s father. Kira was left with $8.5 million when Kerkorian died in 2015 at age 98.

One day after Bing died, Shangri-La Construction’s Instagram account eulogized Bing in a post titled, “With Heavy Hearts We Remember: Steve Bing.”

“Endlessly generous and passionate about the people and causes he loved, he was truly a rolling stone—he belonged to nobody, but he gave a piece of himself to everyone and everything he crossed.” The post also promised that Shangri-La Industries would “never forget his passion for helping people,” and promised to “continue to advance this mission every day.”

News flow around the memory crunch is accelerating by the week, and the casualty list is growing.

Just this morning, Qualcomm and Arm Holdings warned that shortages of high-bandwidth memory (HBM) could crimp smartphone production this year. Apple signaled earlier this week that it will prioritize higher-end iPhone models, while Nintendo shares slid as soaring HBM costs threaten to squeeze margins.

The alarm bells are getting louder after a new report from The Information, citing two sources, saying Nvidia won’t release a new gaming GPU (RTX 60 series) this year due to a HBM supply crunch, forcing it to prioritize limited HBM for its far more profitable AI chips over gaming GPUs.

If confirmed, it would mark the first year in roughly three decades that Nvidia has not released a new consumer-grade gaming GPU.

Here’s more color from The Information:

The delay will also push back the release of Nvidia’s next-generation gaming GPU. Likely called the RTX 60 series, it was originally scheduled to begin mass production at the end of 2027, according to one of th people.

The existing line of gaming GPUs, the RTX 50, is based on Nvidia’s current Blackwell GPUs, while the RTX 60 is based on the upcoming Rubin chips.

Nvidia CEO Jensen Huang publicly announced last month that mass production of Rubin AI chips had already started and that the company was on track to ship them to customers in the second half of this year.

. . . 

Nvidia is also slashing production of its current line of gaming chips—the GeForce RTX 50 GPUs—because of the memory shortage, one of the people said. Prices of Nvidia’s latest gaming GPUs have already risen at retail stores and websites due to their scarcity over the past year.

“Demand for GeForce RTX GPUs is strong, and memory supply is constrained,” a Nvidia spokesperson told the tech outlet, without confirming the delay. The person added that all GeForce products are in stock and shipping to customers.

Latest on the memory crunch:

• Memory Shortage Fears Spread, Raising Alarm At Qualcomm And Arm

• Nintendo Profit Misses As Soaring Memory Prices Could Become Major Headache

• Apple Prioritizes Premium iPhone Rollout As ‘Great Memory Crunch’ Tightens Global Supply

Makes sense:

• “Do It Now”: Industry Insiders Urge Consumers To Front-Run PC, TV, Smartphone Purchases As ‘Memory Crunch’ Will Intensify

Professional subscribers can learn more about the memory industry on our new Marketdesk.ai portal​​​​.

We suspect the memory crunch is about to get a whole lot worse.

Authored by Tim O’Brien via PJMedia.com,

While snow and ice continue to wreak havoc in New York, while the homeless continue to live in deadly cold conditions on the street without the city’s safety net of warm shelter when the weather gets below freezing, and as the mayor himself warns residents of a dire fiscal crisis ahead, Zohran Mamdani found time this week to visit a man in the hospital who tried to kill a police officer with a knife. 

Police were forced to shoot Jabez Chakraborty on Jan. 26 after the man’s family called 911, wanting an ambulance to take the 22-year-old for treatment over some form of mental health crisis.

Reportedly, the caller made no mention of the possibility that Chakraborty might have a weapon. 

When police arrived on the scene, and a family member let them into the house, Chakraborty charged the officer with a large knife in his hand.

Body camera footage shows that as he retreated out of the front door, the officer had to shoot the man to neutralize the threat. 

Mamdani just went to visit Jabez Chakraborty in the hospital today

Here is the bodycam of him charging NYPD with a knife, which resulted in an officer discharging his weapon to protect himself https://t.co/rBo7DZ4AYK

— Jack Posobiec (@JackPosobiec) February 4, 2026

At last report, Chakraborty was on a ventilator in the hospital, where on Monday he received a personal visit from the mayor. 

A day later, the mayor was hosting an unrelated press conference, but he made the point that Chakraborty’s attempt to kill a police officer “underscores just how urgently we need a different and more effective mental health response system,” which involves the creation of a new Department of Community Safety. 

Mamdani promised this, among many other things, when he ran for mayor, saying that such a department would complement and bolster New York’s other mental health response services. Part of this involves – you guessed it – dispatching social workers in response to some calls instead of police. 

Watch that video again and imagine if the city official who entered that door was an unarmed social worker. What do you think would have happened? Do you worry that Chakraborty might have scratched himself with the knife as he stabbed the unsuspecting city employee, and perhaps his family members? 

The city’s mayor would seem to have more concern over an armed, disturbed individual than his city’s own employees and the individual’s family members. Reports are that New York is interviewing and hiring staff for the new community safety department. The mayor has not indicated how many people will be hired or exactly how the department will be structured. 

On Tuesday, reporters asked Mamdani how the city would respond to a situation like Chakraborty’s once his new social worker-centric policies are implemented. 

He had no response other than to say, “A lot of this is exactly the focus of the conversations that we’re having internally in developing out this Department of Community Safety.” How can he propose such a radical alternative to current procedures without having a more concrete idea of how these types of situations will be addressed? 

The reason becomes obvious when you look back at his campaign and the promises he made, and when you compare all of that to every real-world situation he now has to face as mayor. Before he took office, it was all theoretical, all academic. Everything seemed so simple, and his solutions so right. 

During the campaign, when these policing issues came up, Mamdani referred to his 17-page white paper on the topic. 

The paper made a case to improve coordination among city offices that seek to prevent “gun violence,” homelessness, and mental health crises. Apparently, Mamdani felt that instead of getting to the root of actual problems, adding a layer of bureaucracy was the key. Some of these other offices include: the Office of Gun Violence Prevention, the Office for the Prevention of Hate Crimes, and the Office of Community Mental Health. At last word, these offices will soon fall under the umbrella of the new Department of Community Safety. 

To be sure, New York already had a non-police response program. It’s called B-HEARD. That’s an acronym for “Behavioral Health Emergency Assistance Response Division.” 

While running for office, Mamdani often mentioned B-HEARD as something he wanted to build around. The division uses EMTs/paramedics and mental health professionals in calls where 911 operators have not detected violence or an imminent threat. Mamdani’s vision has all the bells and whistles, including alternatives to prison. 

If you’re wondering how much all of this legacy and new bureaucracy might cost, estimates are that the department’s budget may exceed $1 billion. All of that, and Mamdani still doesn’t have a good answer for what happens when a social worker gets called to a location where a mentally unstable person could pick up a knife or a gun and attack. 

A lot can happen between the time a caller reaches out to 911 and the mental health professional gets on scene. At the same time, given the chaos and stress that define these types of situations, it’s very plausible that the caller may not even think to mention the existence of a weapon when there is one. 

Police will tell you that you shouldn’t need to be told a suspect has a weapon to be on your guard for whatever may unfold. Quite often, mentally deranged people who could become violent start out by screaming at family or people in public or by behaving very erratically. 

In Mamdani’s utopian vision, New York will bank on prevention of violence in the form of outreach to vulnerable populations in the city, the creation of volunteer safety patrols, and the use of conflict mediation and “de-escalation” approaches. 

If Mamdani’s vision were a college thesis, I’m sure some Columbia professor would give him an A. But it’s not. He’s in the real world now, and he’s already proven that some of his solutions can involve the risk of death. That’s of no matter. The people of New York were forewarned by Mamdani himself. There are no surprises here. 

The only thing we don’t know is whether Mamdani brought flowers with him when he went to the hospital to visit a man who tried to kill a cop.