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KKR And SK Launch South Korea's Largest Renewable Energy Platform

By Tsvetana Paraskova of OilPrice.com

Global investment firm KKR and South Korea’s industrial conglomerate SK Inc are launching the single biggest renewable energy platform in South Korea to help meet growing power demand from AI and chip manufacturing.

KKR and SK Inc are creating the platform, valued at about $1.3 billion, or 2 trillion South Korean won, to combine 1.7 gigawatts (GW) of clean energy capacity in operation and a pipeline of projects in development that would boost the platform’s total capacity to 10 GW, the investment firm said in a statement. 

The renewable electricity will help meet South Korea’s surging clean-power demand from AI data centers and semiconductor manufacturing, according to the global investor.  

The 10 GW capacity targeted by the platform would be capable of simultaneously and continuously powering 100 large-scale, 100MW-class data centers, KKR said.

“At this scale, the Platform is well positioned to become a reliable, large-scale source of clean power for Korea's most demanding industrial users, from AI data centers to global semiconductor production lines, and more,” the global investment firm said.

KKR will have management control of the platform in its initial phase, while SK will participate as an equity investor and retain the flexibility to pursue control rights through future discussions.

“Korea is one of Asia’s most attractive renewable energy markets, underpinned by strong corporate demand for clean power from the semiconductor, data center, and manufacturing sectors,” said Keith Kim, Partner at KKR.

“Together, we are establishing a leading, scaled renewable energy platform that can supply reliable clean power to Korea's most demanding industrial users.”

In April, while South Korea was scrambling for oil supply not passing through the Strait of Hormuz, the Korean Ministry of Climate, Energy, and Environment said the country would target to generate at least 20% of its power supply from renewables by 2030, up from about 11% now.

“We will swiftly implement the energy transition plan to make sure that South Korea remains resilient to external shocks, such as the ongoing conflict in the Middle East,” Climate Minister Kim Sung-whan said in April.

Tyler Durden Thu, 07/02/2026 - 05:00

Paris Deputy Mayor Blames US Air Conditioning For French Heat Wave

The peasantry is not allowed to have creature comforts, otherwise, they might start thinking like free men.  So, let them eat cake (and fight each other over the last few box fans).  

As we covered last week, over 1.2 million tourists have traveled to each US city hosting a World Cup game, and the resulting culture shock has gone viral across social media.  Notably, European visitors have been surprised by American infrastructure, hospitality and, strangely, air conditioning. 

Apparently, European media and governments have spent an inordinate amount of time and energy conditioning their populations with propaganda about the US being a dangerous cesspool of "racism" and violence.  Instead, Europeans found freedom...and luxurious, cold air. 

In response, EU citizens have been traveling back across the and asking their political leaders why, in the midst of a deadly summer heat wave, air conditioners are not more common.  Only 19% of the population has air conditioning in their homes, compared to 90% in the US.  Instead of offering a rational explanation, these governments have moved to restrict or outright ban air conditioners while blaming the US for their problems.

🇫🇷‼️🚨 “WE AGREE THAT PEOPLE MUST NOT SUFFOCATE - BUT”

French Minister of Ecology Monique Barbut rants about air conditioning:

"I'm horrified by people who tell me we just need to put AC everywhere …

Do you think that by air-conditioning everything we're going to prevent… pic.twitter.com/rUyJYmv55X

— Lord Bebo (@MyLordBebo) June 28, 2026

Paris Deputy Mayor Audrey Pulvar, a radical leftist who has in the past defended mass immigration and dismissed the reality of migrant crime, took to social media to attack the US as the "source" of the ongoing French heat wave.  She wrote on Instagram:

"Dear American journalists and social media 'influencers': for days, some of you have been criticizing and making fun of Paris because the city does not have A/C in every room. OMG, this is so rich!" 

"As the second-largest emitter of greenhouse gas emissions in the world, you bear a significant amount of responsibility for global warming and the consequences we, in France, are experiencing. Your cities '90% air-conditioned' are not unrelated to this. In Paris, we take responsibility."

The Deputy Mayor of Paris, Audrey Pulvar, says the U.S. bears “a significant amount of responsibility for global warming” and the recent heatwave in France

🇺🇸🇫🇷 pic.twitter.com/56MBJURgI3

— Visegrád 24 (@visegrad24) June 29, 2026

"If every American city made the same ecological transition efforts as Paris and many European cities, believe me, the whole world would be better off. So please, enough with the lecture. Just start doing your part. Best regards..." 

I reality, the European political class is not angry over American jokes online; they're angry over the legitimate concerns of citizens asking why the government is constantly propagandizing against (and legislating against) central air?  French officials don't care what Americans have to say about France, they care about what the French people say about France because it makes the government look bad.    

The conflict might sound bizarre to the average American, but many Europeans have been taught to view air conditioning as a bourgeois luxury for selfish people.  The fact that Europe suffers more deaths every year from heat than the US has gun related deaths doesn't seem to be a concern for green politicians. 

Pulvar thinks she has a slam-dunk argument by playing the carbon card, but she is, of course, very wrong.  Carbon emissions have nothing to do with global temperatures.  There is no such thing as man-made global warming.  The European people are suffering for nothing. 

Climate alarmists and climate scientists pull their temperature data from the 1880s onward, which is an incredibly narrow window of time in the Earth's climate history.  The fact that this problem is never addressed showcases the reality that climate science is politically motivated rather than fact based. 

When we look at the temperature record going back hundreds of millions of years, it becomes obvious that the Earth has been much hotter in the past compared to today.  In fact, we just exited an disastrous ice age and temps are near historic lows.  When these stats are compared to global atmospheric carbon content over the same period of time, the basis for today's carbon emissions theory is completely debunked. 

There is no correlation or causation relationship between carbon emissions and climate change.  Meaning, there is no evidence whatsoever that human industry and the emissions it produces has any affect on temperatures, and this includes air conditioners.  Man-made climate change is a lie. 

The question is, why are they lying?  Europe is a perfect example of green socialism in action, as numerous countries enter steep industrial decline.  Climate change is used as an excuse to whittle away individual freedoms, property rights, and access to basic amenities.  They are training the population to live without. 

Leftist governments also use climate change as an excuse for their mass immigration agenda, claiming that global warming is the cause, rather then the fact that they are luring in migrants with taxpayers funded subsidies and free handouts.  In short, the climate lie is about tearing down the western world. 

If Europeans stop believing the lie, then the agenda goes out the window.  The demand for air conditioning is viewed as a symbol of the citizenry no longer believing.      

Tyler Durden Thu, 07/02/2026 - 04:15

The Collapse Of Schengen... Over 1 Million Illegal Migrants Apply For Spanish Citizenship

Via Remix News

When the socialist-communist government of Pedro Sánchez first announced he was going to begin the mass legalization of migrants in his country, his government claimed this would amount to 500,000 people. Now, twice as many people are being legalized than first claimed, and importantly for the rest of Europe, those migrants now have the right to freely move through the Schengen zone.

Due to his mass amnesty, The New York Times has now labeled Spain a "beacon of the global left."

In April, the socialist-communist government in Madrid first issue the decree, giving illegal migrants three months to submit their application.

According to the New York Times, more than 1 million applications had already been submitted by illegal immigrants.

Vox party leader Santiago Abascal has accused Prime Minister Pedro Sánchez of taking the long-term move of naturalizing millions of foreigners to give himself and left-wing parties an electoral advantage in upcoming elections.

"Pedro Sánchez is willing to rob us of the next general elections by manipulating the census and handing out Spanish nationality," wrote Abascal. "And it is necessary for us to mobilize to prevent him, after everything he has stolen, from also stealing the elections from us."

Pedro Sánchez está dispuesto a robarnos las próximas elecciones generales manipulando el censo y regalando la nacionalidad española.

Nos alegramos de que la denuncia de Santiago Abascal haya sido escuchada.

Lo peor de Pedro Sánchez ya ha llegado.

Y es necesario que nos... pic.twitter.com/85F4CTumFn

— VOX ?? (@vox_es) June 30, 2026

Across Europe, conservative and right-wing politicians are reacting with shock to the huge legalization numbers Spain is now reporting.

"The decision to legalize them means that they will be able to move and settle freely in any place in Europe. Left-wing governments are bringing about the collapse of the Schengen Area and mocking the safety of Europeans. Not only does Spain, under the Migration Pact and in full accordance with the law, have the power to offload illegal immigrants to other countries, but it is also legalizing their stay," wrote Polish MEP Anna Bry?ka.

Premier Hiszpanii Pedro Sanchez poinformowa?, ?e ponad milion imigrantów z?o?y?o wniosek o zalegalizowanie pobytu w Hiszpanii.

Decyzja o ich legalizacji oznacza, ?e b?d? oni mogli nieskr?powanie porusza? si? i osiedla? w dowolnym miejscu w Europie. Rz?dy lewicy doprowadzaj? do... https://t.co/KfAXPP7qL8

— Anna Bry?ka (@annabrylka) June 30, 2026

Sánchez has also been accused of passing the law with no democratic legitimacy. He announced that the Council of Ministers approved the decree initiating the implementation of this decision into the state legal order. Notably, this mass legalization was never formally voted in by parliament. Instead, Sánchez forced through an emergency decree.

The politician marketed the decree by talking about people who are in Spain in an "irregular situation" and noted that "again, I feel proud to be Spanish."

Calls to the European Commission demanding the immediate removal of Spain from the Schengen Area have been met with silence. Illegal arrivals enter Europe through this country every day.

As predicted and warned by both the Spanish opposition and many other political and media outlets, it turns out that there are many more newcomers willing to legalize their stay than the Spanish authorities announced.

The program on legalization of status stems from a citizens' initiative from 2024, which was supported by over 700,000 people. The measure was also supported by hundreds of organizations that describe themselves as humanitarian, along with business groups and the Catholic Church. To count on approval of the application, the newcomer must have been in Spain for at least five months and have no criminal record.

Read more here...

Tyler Durden Thu, 07/02/2026 - 03:30

Russia Buying Gasoline From India To Tackle Shortages

Russia, whose refining capacity has come under significant strain in recent months, has started seaborne imports of gasoline from India (the same country it exports millions of barrels of oil to), Reuters reported citing industry ​sources, in an effort to mitigate fuel shortages triggered by ‌Ukrainian attacks on its energy infrastructure.

Fuel shortages are being felt across Russia's 11 time zones with rationing, long queues at filling stations and a record gasoline price increase, as a result of relentless Ukraine strikes on the country's refineries. 

On Tuesday, the Kremlin said that Russia was in contact with ​other countries and discussing imports of fuel at acceptable prices.

An industry source said ⁠at least 60,000 metric tons of gasoline have been dispatched from India to Russia. Another ​source said that two tankers, with parcels of 30,000 to 40,000 tons each, have been sent. A third ​source said that in total, Russia plans to import 400,000 tons of gasoline from various countries each month, including from neighboring Belarus, which has already been exporting fuel to Russia.

Gasoline consumption in Russia is at least 110,000 ​tons per day in summer, when demand for fuel is high.

It was not immediately clear which ​Indian refiner will be supplying gasoline to Russia.

President Vladimir Putin acknowledged on Sunday at a meeting with government ministers and other ‌officials ⁠that Ukrainian drone strikes on oil refineries had triggered fuel shortages in some regions, but said that Russia was dealing with them. 

Elsewhere, Belarus almost tripled gasoline rail supplies to Russia to more than 70,000 tons in the first half of June versus the first half of May, according to Reuters ​calculations and sources.

Russia's parliament approved amendments ​to its tax ⁠code last week aimed at tackling the fuel shortages due to Ukrainian drone attacks, while also offering subsidies on fuel imports, pegged to Indian ​delivery costs and prices.

If Russia is the world's gas station, then India is rapidly emerging as the world's refiner: in what is emerging as a giant processing round trip, India's crude oil imports from Russia surged to a record ​high in ⁠June, ship tracking data from LSEG and Kpler showed, as refiners snapped up Russian barrels to mitigate the impact of the Strait of Hormuz closure on other sources of supply.

Russian oil accounted for more ⁠than half ​of India's overall imports in June, up from 36.5% ​in May, the Kpler data showed.

And now India is selling back the refined product back to Russia. 

India, the world's third-largest oil importer, received about 2.70 million barrels per day of oil ​from Russia in June, preliminary data from Kpler and LSEG showed.

Tyler Durden Thu, 07/02/2026 - 02:45

Alastair Crooke: Russia Hearing The European Clamor For War, Announces It's Ready

Authored by Alastair Crooke

The de-escalation framework that unfolded in the US-Iran Lucerne talks largely stayed true to the original Iranian 10-point plan. Meanwhile, President Trump and Vice-President Vance deliberately muddy the waters, claiming that Iran has already agreed to IAEA inspections of Iran’s nuclear facilities (a claim repeatedly denied by Iran): Vance announced that the IAEA could have begun inspections this week. No – – the “Framework” only refers to the possible IAEA supervision of the dilution to the 60% enriched stockpile subject to a final agreement with the US having been reached.

Trump, writing on social media, later falsely asserted: “Iran has fully and completely agreed to highest level Nuclear inspections long into the future.” In fact, the IAEA are only inspecting the joint Iran-Russia power station in Bushier at Russia’s request, because Russia wants to ensure compliance on its involvement. In other words, it is a Russian request to satisfy its own IAEA compliance commitment.

Trump then warned Iran that he may have to “finish the job [militarily]” — (if he doesn’t get a very good deal) — which, he says, would take “ about a week,” and adds that Iran will be required to use any unfrozen Iranian funds to be held in ESCROW accounts (accounts controlled by the US) to buy “corn and soybeans for their people, because right now their people are very hungry — and they’re buying exclusively from us.”

So, it’s pretty clear what’s ahead — Trump is reverting to his New York real-estate mode of negotiations. In the Art of the Deal, his 1987 book, ghost written by Tony Schwartz, the text advises the use of “extreme and unpredictable demands to create anxiety and force concessions from rivals.”

Thus, we are back to the General Kellogg playbook — Kellogg advised Trump that the only thing that works with Putin or the Iranians is pressure — and then still more pressure.

Familiar Trumpian tactics. Show a little initial flexibility to tease out adversaries in order to pull them into negotiations; subsequent false claims of Iranian concessions and extreme demands are then used to increase pressure on Iran (whilst Trump appears tough to the angry neocon constituency and to his “base” back home).

This style of pressure may work for New York real-estate deals, but will be ineffective with both Iran and Russia.

Such threats will be counterproductive with Iran, and place the US on a collision course. “The Islamabad understanding was not the result of pressure and coercion, but rather the result of the resistance and authority of the Iranian nation,” Mr Qalibaf, the chief Iranian negotiator, retorted.

In practical terms, as Will Schryver, a shrewd observer of the US military, notes, Iran has pressure points “more numerous and capable than the US can bring to bear on the battlefield” —

“In my view, [Schryver says], a powerful US military presence in the Persian Gulf region has become utterly untenable. They’re just trying to save face now. I do not believe, [he concludes] the US military can mount even a 72-hour high-intensity operation at this point in time.”

“But I think they’ll try. Probably just Trump bluff, but it would not surprise me if they try to play one last card to gain the upper hand.” (Maybe after the midterms, and with the US having rebuilt somewhat its munitions shortfall).

To which Iran likely will respond by closing the Strait of Hormuz again, and attacking, pari passu, regional (Gulf) infrastructure. Trump will be gaming the economy who first plays “Chicken.” A further military venture likely will only further erode American military standing.

Quite possibly, however, Trump may be prepared to cut his losses in Iran — the war anyway is a liability to his Midterm electoral calculus — by circling back to Ukraine and Russia. The Kiev Independent released a report yesterday, quoting a “senior Ukrainian official saying that Trump had privately given Zelensky the greenlight to act 'more boldly' against Russia.”

Here we go again, roundabout time — “Trump says he doesn’t really believe Putin will do anything without pressure,” the Ukrainian official added.

Simplicius speculates:

Trump has clearly been frustrated by his inability to settle any of the conflicts he had promised easily. And recently, on the heels of the Iranian memorandum saga, he even admitted that he would now be “turning his attention” back to Ukraine.

As such, it’s plausible that Trump would have given secret encouragement to the Europeans to ‘shape the battlefield’ in order to ‘soften’ Russia up ahead of whatever next Trump might have planned.

If this is true (and it probably is), the Europeans are playing with matches and risk lighting a conflagration. The E3 leaders, Starmer, Merz and Macron, met on 7 June with Zelensky to promise both unwavering support and — in the context of pledging further pressure on Russia —

…underlining the urgent need to scale up the production of interceptors; deep strike capabilities and anti-ballistic missile co-development — and further to support the future sustainability of the Ukrainian Armed Forces.

In short, the Europeans intend to ratchet up deep strikes into Moscow and St Petersburg, which will likely kill and unsettle their inhabitants.

The E3 carefully planned how to stage-manage the upcoming G7 summit, the EU summit, with Zelensky showcased at both events, promising to increase the pressure on “President Putin to agree to an immediate and complete ceasefire, taking the current contact line for its start-point.” European leaders also pledged to co-ordinate ahead of the NATO summit in Ankara (7-8 July) to achieve increased pledges of military support for Ukraine.

The E3 states are explicitly gearing up with new missiles to strike deeper, and more destructively, into Russia. The British government, for example, has announced that —

…the UK project to develop low-cost advanced long-range strike weapons for Ukraine has reached a significant milestone, with three British-designed systems successfully flight tested. The ground-launched strike weapons reportedly are capable of hitting targets more than 500km distant, at a speed of 600 km/h – whilst carrying a 225 kg warhead.

According to the Financial Times, Trump was “hugely impressed and enthusiastic” with Ukraine’s recent campaign of long-range strikes on targets deep inside Russia at last week’s G7 summit. At the summit, Trump also agreed to increase sanctions on Russian energy.

It is clear that the E3 had been plotting a major psy-op to convince Trump that Ukraine was not on the back-foot against Russia (as Trump may have been briefed); but rather had regained the front foot, and that the US should support the European agenda to force a Russian capitulation agenda (ceasefire, borders unchanged, reparations paid by Russia and war-crimes trials for Russian officials indicted with crimes, etc).

BREAKING AND UNUSUAL

It appears STRATEGIC matters will be discussed, as six red folders were seen during Putin’s meeting with members of the Security Council. pic.twitter.com/UFqMhzQFmw

— RussiaNews 🇷🇺 (@mog_russEN) July 1, 2026

These developments have brought two major developments out of Russia...

Firstly, senior Kremlin aides, notably Yuri Ushakov, Putin’s spokesman, have been saying over the past three days the “spirt” of the Anchorage summit, and its concomitant understandings, “have effectively collapsed” — “The US abandoned them.” Moscow no longer expects those commitments to be honoured and is focused solely on securing its own “victory” through military means.

Foreign Minister Lavrov went further, describing the Alaska meeting as an American “ploy” designed to buy time for Ukraine to rebuild and rearm its military — essentially likening them to the Minsk Accords that similarly were mounted as a deceit.

Deputy Foreign Minister Sergei Ryabkov said:

We also see Washington’s line moving closer to the most rabid anti-Russian policies pursued by the US’s closest European allies – namely, the UK and France.

This represents a huge strategic shift. Russia no longer seeks a relationship with Washington, though contact with DC will continue.

The second development stems from President Putin’s address at the St George’s Hall to military cadets on June 23. Putin, in summary, told the young officers that the West manufactures a Russia threat, then accuses Russia of creating that very threat. This, said Putin, is a historically repeated pattern going back to 1941.

Putin implied that a threshold had now been crossed: He stated that whilst, until recently, NATO countries had limited themselves to supporting the Kiev regime to wage war on Russia, the West today is openly talking about preparing for a war against Russia, and is building up their military offensive budgets. German Chancellor Mertz has been quite vocal in this regard, Putin said.

Russia’s response, he said, is focused on modernizing its nuclear triad and its Army, and strengthening the combat capability of the Aerospace Forces and the Navy. The explicit mention of the nuclear triad in direct proximity to the discussion of Western preparation for war against Russia was certainly a pointed message to Trump and the Europeans.

Russia has heard the European clamor for war. It has now made the strategic decision in response to prepare for war in Europe.

Tyler Durden Thu, 07/02/2026 - 02:00

What's Behind The Plunging Won And Sudden Liquidity Collapse In Korean Markets

South Korea’s won weakened for a fourth day as overseas investors accelerated their relentless sales of local stocks.

In response, USD/KRW rose 0.1% to 1,552.60, extending its four-day gain to 1.2% (i.e. KRW drop).

According to Barclays, pressure from both resident outflows and more recently in the case of Korea, heavy foreign outflows, could pose further headwinds even as exports performance remains robust and domestic equities extend their bubble. 

Let's take a closer look at what's driving the key moves in Korea.

Why was USDKRW higher?

Other than stronger USD, Goldman has been highlighting that rebalancing related equity outflow has been the dominating factor. Equity outflow from Jun 22nd till month-end amounted to US$18bn, bringing total Jun equity outflow to US$30bn. This follows the US$27bn outflow observed in May. As of today, Samsung and Hynix are 32% and 30% of MSCI Korea respectively, which are 7% and 5% above the 25% single stock limit. A combined 12% rebalancing effort would lead to another US$24bn outflow with US$200bn AUM (passive and active) estimated tracking MSCI Korea.

Additionally, other portfolio concentration limits such as UCITS and HF internal concentration limit rule are also likely to be driving the rebalancing related outflows. In terms of timing, some fast money rebalancing is relatively real time, while many real money and passive investors may rebalance at quarter-ends which led to more concentrated outflows.

FX hedging need by foreign investors drove RHS USDKRW demand. Goldman estimates average foreigners’ FX hedging ratio for Korean equities to be 10-15%, and the hedging mainly happens in offshore NDF market. As of March-end, foreigners’ exposure to Korean equities was US$1tn. Due to the 68% expansion in market cap in KOSPI in Q2, the associated FX hedging need rose by an estimate of US$68-US$102bn (US$1000*68%* 10-15%) during the quarter. This has led to sharp increase in RHS NDF hedging demand, some of which concentrated at quarter end as well. 

Other than above-mentioned hedging dynamics, FX hedging demand by USD-denominated total return swaps with leveraged equity underlying provided to offshore clients by local security houses via intermediaries also likely added to FX hedging demand in NDF market, especially as equity marketcap expanded quickly in Q2.  

Why did liquidity tighten?

• Sharp rise in borrowing by securities firm was likely the main driver behind tighter onshore liquidity. Surge in onshore retail margin trading and leveraged single-stock ETFs caused sharp rise in funding needs of local securities firms. In particular, with leveraged ETF, the need to post futures margin for hedging positions for securities firms drove the borrowing demand.

• Local news reported securities firms’ commercial paper and short-term bonds issuances exceeded KRW100tn each month and accounted for 80% of short-term bond issuance in recent months.

• Decline of collateral value for securities firms facing offshore counterparties worsens the liquidity situation. When local securities firms face offshore intermediaries on total return swaps, they not only have rising needs to post margins from underlying stock advance, but also from declining collateral value as KRW FX depreciated and KTB sold off. These dynamics further increased securities firms’ margin requirement in KRW terms, which in turn added to their local borrowing demand. Similar situation happened in late 2022 with KRW and KTB sold off sharply at the same time during BOK hiking cycle. Looking forward, local news reports Samsung securities plans KRW600tn short-term issuance in Jul, indicating such liquidity tightness is unlikely to ease. 
• Forthcoming BOK hike (starting in Jul per GIR base case) likely also added to the expectation of higher funding costs ahead.
• Goldman has observed widening of spread between NDF curve offshore and onshore FX swap. This could be a result of unwinding onshore-offshore arbitrage positions as RHS hedging demand caused sharp surge in NDF points. 

 
Looking ahead, if Korean equity continues to charge higher in a volatile fashion, combined with likely BOK hikes, Goldman thinks such liquidity environment is likely to stay or tighten further. Thus NDF points are likely to stay elevated and the bank prefers pay on dip. In a strong USD environment, KRW FX pressure is unlikely to ease from external forces, which does not help NDF points to fall either. On the other hand, if Korean equities fall meaningfully, NDF points may retrace, as smaller notional exposure to Korean equities by foreigners (either direct or leveraged) would reduce the associated FX hedging.

On FX spot, it is much harder to see sustained equity inflow in the short term: If Samsung/Hynix continue to lead KOSPI higher, equity rebalancing related outflow would further dominate; if equities fall, broad-based outflow is likely to follow which is likely to offset the positive FX impact from unwind of RHS hedging. Only when equities fall substantially so that Samsung & Hynix’s market cap fall under the concentration limits, a recovery from there may attract inflows.

Thus equity outflow may continue to weigh on KRW in the near future.

As market unwinds debasement trades and USD remains resilient, Goldman expects USDKRW may further rise gradually, with authorities’ various smoothing efforts help to limit the speed of KRW depreciation. Although Korean exporter USD selling is expected to rise as export grows organically and domestic capex expands, given current exporter conversion is already relatively high, Goldman expects large and volatile equity related flows to remain dominant for USDKRW path ahead. 

Tyler Durden Thu, 07/02/2026 - 00:41

Supreme Court Justice Thomas Says Birthright Citizenship Ruling 'Devalues' US Citizenship

Authored by Jack Phillips via The Epoch Times,

Supreme Court Justice Clarence Thomas issued a lengthy dissent criticizing the high court's majority ruling against President Donald Trump's executive order restricting birthright citizenship, saying the decision would effectively devalue American citizenship as it was understood by those who created the Constitution's 14th Amendment.

Supreme Court Associate Justice Clarence Thomas poses for an official portrait at the East Conference Room of the Supreme Court building in Washington on Oct. 7, 2022. Alex Wong/Getty Images

Thomas said the majority is attempting to repurpose the 14th Amendment "to protect its own set of preferred rights that the Reconstruction Congress never contemplated and that cannot find support in its text," referring to the post-Civil War era of the mid-to-late 19th century.

Further, he argued that the June 30 ruling denigrates the idea of U.S. citizenship, saying that it has been used by "foreign birth tourists and illegal aliens."

"I am not sure that today's opinion will stand the test of time," Thomas wrote. "The Citizenship Clause 'added greatly to the dignity and glory of American citizenship.' Today's opinion devalues that citizenship."

The order issued by Trump aimed to exclude children of illegal immigrants and temporary visitors from gaining automatic birthright citizenship. In 1898, the high court delivered the landmark birthright citizenship ruling in United States v. Wong Kim Ark, which effectively stated that any child born in the United States to immigrants is granted citizenship regardless of the nationality of the child's parents.

In addition to Thomas, Justices Samuel Alito and Neil Gorsuch dissented and indicated that they would allow Trump's executive order to stand. Justice Brett Kavanaugh partially concurred with the majority in saying that he thinks the Trump administration's executive order does violate a federal statute but that the constitutionality of birthright citizenship is an open question and that the executive order doesn't violate the 14th Amendment.

"The Court today takes the extraordinary step of holding facially unconstitutional the President's Order excluding from citizenship the children of foreign temporary visitors and illegal aliens," Thomas said in the 91-page dissent, which is significantly longer than the majority's opinion.

Thomas indicated that he sided with the Trump administration's arguments that the 14th Amendment, ratified three years after the end of the Civil War in 1868, was intended to give citizenship to black people who were freed from slavery rather than automatically giving it to the children of immigrants.

"In doing so, the Court adds to the sad history of the Fourteenth Amendment, which was designed and understood to secure equal rights for the freed blacks but has instead been repurposed for political projects that the Reconstruction Congress did not support," he said.

Chief Justice John Roberts wrote the majority opinion and was joined by Justices Sonia Sotomayor, Elena Kagan, Amy Coney Barrett, and Ketanji Brown Jackson.

"Citizenship, then and now, was the right to have rights - to freely participate in our political community. The Framers of the Fourteenth Amendment extended that promise to 'every free-born person in this land,'" Roberts wrote, citing congressional debate over the 14th Amendment. "We keep that promise today."

Multiple lower courts have blocked the executive order, signed by Trump early in his presidential term last year, and it has not taken effect anywhere in the United States. The high court ruled on the president's appeal of a lower-court ruling from New Hampshire that struck down the birthright citizenship restrictions.

Birthright citizenship was the first Trump administration immigration-related issue to reach the Supreme Court for a final ruling. Since he took office, Trump has rolled out policies designed to deport large numbers of illegal immigrants, namely those with criminal records.

He has also canceled temporary protected status for hundreds of thousands of people living in the United States, bolstered U.S. border security, initiated policies encouraging illegal aliens to self-deport, and issued other rules.

In response to the June 30 ruling, Trump said, "[The ruling is] too bad for our Country, but we can easily make it up in Congress through Legislation."

"Congress should start TODAY to work on ending expensive and unfair to our Country, Birthright Citizenship," he wrote on Truth Social. "They will have my Complete and Total Support!"

In a previous post, he argued that "dumb judges and justices" allow wealthy women from China and elsewhere to come to the United States with the sole purpose of giving birth so that their children will be American citizens. He noted that few other countries have such a policy.

The American Civil Liberties Union (ACLU) hailed the majority opinion, saying that the "decision reaffirms a fundamental American promise - if you are born here, you are a citizen."

"A president cannot change the Constitution by executive fiat," ACLU National Legal Director Cecillia Wang said in a statement. "Our brave clients and our legal team stand with millions of people around our country who spoke up for one of our most cherished rights. The Constitution's guarantee of birthright citizenship stands strong."

Tyler Durden Wed, 07/01/2026 - 23:30

FAA Moves To Lift 50-Year Ban On Overland Supersonic Flights

The Federal Aviation Administration (FAA) on Tuesday moved to end the more than 50-year ban on civilian supersonic flights over the continental United States, proposing rules that would allow aircraft to exceed the speed of sound provided they don’t produce a sonic boom.

The U.S. Department of Transportation (DOT) announced on June 30 that the FAA has issued a notice of proposed rulemaking that would replace the more than 50-year-old prohibition on overland civil supersonic flight with a regulatory framework focused on limiting noise rather than speed.

As Tom Ozimek reports for The Epoch Times, the proposal marks a key step in implementing President Donald Trump’s executive order signed last month directing the FAA to repeal regulations that the administration says have unnecessarily constrained U.S. aerospace innovation.

“For more than 50 years, outdated and overly restrictive regulations have grounded the promise of supersonic flight over land, stifling American ingenuity, weakening our global competitiveness, and ceding leadership to foreign adversaries,” Trump said in the order.

If finalized, the rule would clear the way for what the DOT described as a new generation of commercial supersonic aircraft capable of dramatically reducing travel times while minimizing the noise impacts that led regulators to ban such flights in the early 1970s.

“Restoring supersonic flight over land isn’t just about speed, it’s about unleashing American innovation and ushering in a Golden Age of Travel,” Transportation Secretary Sean Duffy said in a statement.

Current regulations prohibit civilian aircraft from flying faster than Mach 1 over U.S. land except under special flight authorizations for research and testing in isolated test areas.

The FAA aims to finalize the rule by mid-2027.

Shift From Speed Limits to Noise Limits

Under the proposed rule, that blanket speed restriction would be replaced with a noise-based operating standard.

Aircraft operators would instead have to prove through FAA-approved measurement, modeling, or other methods that their aircraft can prevent excess levels of sonic boom overpressure at the ground.

By adopting a performance-based regulatory framework, the proposal would usher in what the FAA described as a clear pathway for “safe, efficient, and commercially viable operation of civil supersonic aircraft in the United States.”

FAA Administrator Bryan Bedford said that innovative technologies have made it possible for the agency to rethink regulations adopted decades ago.

“Advances in aerospace engineering, materials science, noise reduction, and new operational concepts will eliminate the old sonic boom,” Bedford said in a statement. “This means we can ultimately repeal the ban from the 1970s on supersonic flight over U.S. territory while minimizing noise impacts to residents in communities along the route and near airports.”

Tuesday’s proposal follows Trump’s executive order directing the FAA to repeal the overland supersonic flight ban within 180 days and establish interim noise-based certification standards before developing permanent regulations.

The proposal will be open for public comment for 45 days after publication in the Federal Register.

The Transportation Department said that, in addition to this first proposed rule, the FAA plans to put forward another one later this year that would establish landing and takeoff noise standards for supersonic aircraft.

“We are working at lightning speed to safely enable the next quantum leap in aviation technology and deliver an exciting new way to fly to the American flying public,” Duffy said in a statement.

The FAA cited Boom Supersonic’s February 2025 XB-1 test flight and NASA’s Farfield Investigation of No-boom Thresholds (FaINT) research as evidence that advances in technology have made a blanket ban on overland civilian supersonic flight obsolete.

Boom Supersonic founder and CEO Blake Scholl welcomed Tuesday’s announcement, saying in a post on X that “legalizing supersonic flight is a great way to celebrate America’s 250!”

“Boomless supersonic flight is technically feasible,” he said.

Tyler Durden Wed, 07/01/2026 - 23:00

Trump Takes Maiden Flight On New Air Force One Jet

Authored by Jacob Burg via The Epoch Times,

Ahead of a trip to North Dakota on July 1 to honor the opening of the Theodore Roosevelt Presidential Library, President Donald Trump officially debuted a refurbished Boeing 747-8 luxury jet that will serve as the interim Air Force One.

President Donald Trump pumps his fist after touring the inside of the newest aircraft in the presidential fleet at Andrews Air Force Base, Md., on June 19, 2026. The Qatari royal family gifted the $400 million, Boeing 747-8 to be used as the new Air Force One. Alex Wong/Getty Images

Set to open on Saturday in Medora, North Dakota, the 96,000-square-foot facility is carved out of local soil and overlooks the Theodore Roosevelt National Park, among the rugged Badlands where the former president spent many of his formative years.

Trump is honoring Roosevelt ahead of the nation's 250th anniversary on July 4, and Wednesday's trip marks the new plane's inaugural flight as the interim Air Force One.

The Qatari government gifted the $400 million Boeing 747-8 luxury jet to the federal government last year, and it is one of the largest gifts Washington has ever received.

At the time, the gift drew scrutiny from across the political spectrum, including among some of the president's base.

When the Air Force first unveiled the plane earlier this month, it said the modified jet was up to the military's security standards.

"We're very proud of this. The country is very proud of it, and you can do two things: you can low-key it, or you can show it," Trump told reporters on the tarmac before departing for North Dakota on Wednesday.

When asked how much taxpayer money was required to refurbish and upgrade the plane to meet security standards, Trump said, "very little relative to what it would cost if we did it a different way."

"Frankly, we couldn't build a plane like this because we wouldn't be willing to spend the kind of money necessary. [Qatar] spent top dollars," Trump said.

"I went to Qatar and said, 'I'd like to use it for a period of time,' because the other ones, as you know, are under construction; they'll be here in two years, and because you know the [former Air Force One] is 35 years old."

The three new Boeing 747-8 jets that will serve as the new Air Force One fleet under the VC-25B program are still being prepared and are not expected to be flight-ready until mid-2028.

While built on the 747-8 airframe, the VC-25B jets come with critical upgrades, including advanced technology and "increased capacity and further enhanced capabilities for presidential travel," according to Boeing.

Jackson Richman and Reuters contributed to this report.

Tyler Durden Wed, 07/01/2026 - 22:30

Executive Order Execution: Three Reactors Achieved Criticality Before July 4th

On July 1st, the Department of Energy (DOE) announced microreactor developer Deployable Energy had achieved criticality on their Unity reactor design at Idaho National Labs (INL). 

CRITICALITY NUMBER THREE! 🎉

On June 30, 2026, at around 11:55 PM MDT, @DeployableE’s Unity microreactor achieved initial criticality at @INL. It is the third nuclear test reactor this year to go critical under @ENERGY authorization.

Congratulations to Deployable Energy on… pic.twitter.com/TaIKbtnNTx

— Office of Nuclear Energy | US Department of Energy (@GovNuclear) July 1, 2026

This is the third privately developed and funded reactor to have obtained the nuclear milestone of sustaining a chain reaction of fissioning uranium atoms inside of a reactor core.

Executive Order 14301, “Reforming Nuclear Reactor Testing at the Department of Energy”, was the starting point. The executive order contained, among many other things, a goal for the DOE to start up a reactor testing program that enabled rapid iteration and commercialization of advanced nuclear technology.

Soon after, the DOE launched the Reactor Pilot Program (RPP), as well as a sister program to fuel these reactors (in the future) called the Fuel Line Pilot Program (FLPP).

The selectees of the RPP included 11 different reactor projects:

• Aalo Atomics Inc.
• Antares Nuclear Inc. 
• Atomic Alchemy Inc.
• Deep Fission Inc. 
• Last Energy Inc. 
• Oklo Inc. (two projects)
• Natura Resources LLC
• Radiant Industries Inc. 
• Terrestrial Energy Inc. 
• Valar Atomics Inc.

Over the next several months, the developers raced to iterate through their designs with the goal of achieving criticality before America's birthday, this upcoming weekend. 

First, Antares achieved zero power criticality on their sodium heat pipe design in the beginning of June. This was followed a couple weeks later when Valar achieved criticality on their gas reactor in Utah. Valar took the testing a step further to actually producing nuclear heat and performing critical safety tests on a live stream.

And just before reaching the July 4th holiday, Deployable Energy announced their success in achieving a chain reaction of fission in their core. 

Deployable Energy's success is most notable because the company was not even a part of the RPP. The company was achieving iteration and criticality of their reactor design under the more recently launched Nuclear Energy Launch Pad. This program is the long-term successor project that will succeed the RPP in the FLPP for the years to come.

Multiple other companies are still in pursuit of initial criticality, which will enable them to continue on their path of iteration and preparation for commercializing their designs under the Nuclear Regulatory Commission. This includes companies like Oklo, Radiant, and Aalo. 
 

Tyler Durden Wed, 07/01/2026 - 22:00

Justice Department To Prioritize Birth Tourism Probes After Supreme Court Ruling

Authored by Aldgra Fredly via The Epoch Times,

Federal prosecutors on June 30 were directed to prioritize investigations into "birth tourism" schemes after the Supreme Court struck down President Donald Trump's executive order ending birthright citizenship for children born to illegal immigrants.

Migrants, including a pregnant Haitian woman seeking to give birth in the United States, are apprehended by a U.S. Border Patrol agent in Yuma, Ariz., on Dec. 7, 2021. John Moore/Getty Images

Colin McDonald, the Justice Department's assistant attorney general for fraud, said in a memo to department employees that the U.S. immigration system is being exploited by foreign nationals who travel to the country "under false pretenses" to give birth and secure U.S. citizenship for their children.

He instructed all U.S. attorneys and the Criminal Division to work with the Department of Homeland Security to investigate and prosecute those involved in such schemes.

"The Department of Justice will investigate and hold accountable those who engage in this unlawful conduct, as well as those who solicit and sell these criminal services to others," McDonald said.

The memo cites some cases related to birth tourism schemes, including one from 2024 that involved a couple who allegedly helped Chinese nationals to give birth in the United States in exchange for money.

The couple, identified as Wei Yueh Liu and Jing Dong, operated a business called "USA Happy Baby Inc." that helped Chinese nationals obtain fraudulent visas to enter the United States. They also provided housing and coached their customers on how to hide their pregnancies from immigration authorities, according to the department. The two were each sentenced to 41 months in prison.

In another case, a Chinese fugitive named Chao "Edwin" Chen allegedly ran a "large-scale birth tourism scheme" that charged hundreds of thousands of dollars to help foreign nationals give birth in the United States. The department said Chen's business claimed to have a "100-person team" in China and the United States and to have served more than 500 Chinese birth tourism customers.

"As these examples make clear, birth tourism schemes exploit our immigration system and violate criminal law," McDonald said.

Many birth tourism-related cases were prosecuted as visa fraud. McDonald said federal prosecutors should consider prosecuting the schemes under laws covering wire fraud, money laundering, illegal use of a means of identification, identity theft, and conspiracy to commit healthcare fraud.

Trump's order on birthright citizenship, issued on Jan. 20, 2025, stated that the 14th Amendment's citizenship clause does not extend citizenship universally to everyone born within the United States.

According to the order, a person born in the United States is not "subject to the jurisdiction thereof" if his or her mother was unlawfully present in the country and the individual's father was not a U.S. citizen or lawful permanent resident at the time of the person's birth.

However, the Supreme Court ruled on June 30 that Trump's executive order ran counter to the U.S. Constitution.

Chief Justice John Roberts, who authored the majority opinion, said that the Constitution's 14th Amendment covers even children birthed by illegal immigrants, citing English legal doctrine that generally treats any person born in a country as a citizen of that country.

After the ruling, Trump posted on Truth Social urging Congress to work on legislation that would restrict birthright citizenship.

"Congress should start TODAY to work on ending expensive and unfair to our Country, Birthright Citizenship," the president said. "They will have my Complete and Total Support!"

Zachary Stieber contributed to this report.

Memorandum for DOJ Employees on Prosecution of Fraudulent Birth Tourism Schemes from Assistant Attorney General Colin McDonald ⬇️ https://t.co/hoilA5o2TE

— U.S. Department of Justice (@TheJusticeDept) June 30, 2026 Tyler Durden Wed, 07/01/2026 - 21:30

These Are The Biggest Pain Trades

Last week saw renewed skepticism in the AI narrative, this week there is growing skepticism to the semiconductor narrative. A multitude of reasons from leveraged single-stock ETFs to a too hawkish Fed were apparent in explaining renewed Tech weakness. Indeed, despite Micron’s post earnings rally, which has now fully faded, much of the broader tech sector did not bounce back as might have been expected.

In a note laying out the biggest pain trades in the market currently, titled appropriately "The Biggest Pain Trades" (available to pro subscribers) HSBC's multi-asset strategist Duncan Toms writes that he is wary of how narratives can drive near-term market moves even if fundamentals do not justify changing tack. For example, last year’s AI bubble narrative saw US semiconductors fall c.15%. But as AI bottlenecks become more evident than bubbles, we saw a much more aggressive rally.

According to the self-admittedly bullish strategist, for HSBC to be more concerned right now, we’d need to see overly bullish sentiment and positioning. But by the bank's measures this is firmly neutral. More dovish US rate expectations could be another catalyst for equity strength – and last week’s data prompted a tentative step in that direction. Elsewhere, oil is no longer a key driver  of many financial markets
(see RHS chart below and high frequency correlations).

As we enter into the second half of the year a lot of views for H2 have become widely held. So to address the key pressure points, Duncan and his team highlight and outline key pain trades that could potentially catch the consensus off-guard. These pain trades are:

1. The AI trade continues unabated
2. Europe outperforms,
3. an explosive USD rally,
4. US Treasury curve steepening,
5. EM yields decline
6. a derailing of the Russell 2000 rally.

Pain trade #1: The AI trade continues unabated

The AI trade continues to face scrutiny and comparisons to the tech bubble of the late 1990s/early 2000s. The bubble narrative was rife in Q4 2025, but this broadly gave way to clear bottlenecks as agentic AI has led to even higher data center and chip demand (although today's META news clearly dented that belief). Yet, HSBC laments,the bearish narratives keep coming. 

So what if, instead, the AI trade just continues and valuations actually begin rising strongly again? Forward PE ratios currently suggest no sign of exuberance (Chart 1). For example, Nvidia at just under 20x is currently sitting at a 10-year low in its 12m forward PE ratio. That’s some contrast vs the equivalent metric for Monster Beverage at a 10-year high at just under 40x 12m forward PE (of course, forward PEs are cheap simply because consensus is projecting hockeystick earnings... and consensus has never been wrong before).

Firmly set in its bullish ways, HSBC thinks even a mere re-rating back towards middle-ranging valuations in the context of their own history will be enough to see the AI trade continue strongly. Here even HSBC admits that an alternative pushback is that future earnings expectations have become too positive and the reality check will then come. Yet the main problem with that is that many of these stocks have seen realized earnings growth over the last year outstrip stock price performance (to which one can answer that this is the result of frontloaded earnings through excess pricing and tokenmaxxing, both of which are no longer relevant thanks to a flood of extremely capable and cheap Chinese open-sources models). 

So, all of Meta, Amazon, Microsoft, Nvidia, Broadcom, and Micron have seen trailing PE ratios fall too in the last 12m. The same can’t be said of many other parts of the markets.

Here, HSBC proposes an even more aggressive bullish scenario, namely the possibility that earnings growth estimates haven’t yet caught up with strong earnings momentum. For many names at the forefront of the AI story in the US, expectations for full year 2026 earnings growth is flat or lower than the year-on-year earnings growth seen in the 12 months to Q2 2025. This is despite a pickup in earnings revisions ratio for these names in recent months. As such, while the narrative on AI continues to search for cracks, the pain trade could be continued strength and upside surprises on AI in H2.

Pain trade #2: Europe outperforms

A view on European equities outperforming is in some respects very tied into views on the AI trade. On a market cap basis Europe does not have the same exposure to AI that can be attained in the US or even now Emerging Markets (Chart 5). Even away from that the resurgence of US exceptionalism keeps the idea of a European outperformance firmly away from consensus views. In some respects it might be surprising that European equities have actually closely tracked an equal weighted S&P 500 in recent years (Chart 6).

Two catalysts could prompt European equity outperformance: the first is a stronger USD. If this stronger USD is gradual and not driven by a haven bid in a risk-off move, then this can actually be a tailwind for European equities. A stronger USD would act as a headwind to mega-cap US earnings translating their foreign revenue back into the USDs, while act as the opposite tailwind for the more internationally exposed European Equity market. The second ingredient for possible European outperformance could be improving growth prospects. Since the start of the Iran conflict, consensus growth estimates for 2026 have fallen faster in Europe than the US.

A reversal of this trend – or further, a re-appraisal of European growth expectations beyond pre-Iran levels – would help European equities catch up to other global regions.

Pain trade #3: An explosive USD rally

According to HSBC, the outcome of the June FOMC provided the key ingredient to re-embrace a stronger USD again, with the lack of forward guidance and focus on inflation keeping the currency supported. A more rapid and sizeable move from the Fed relative to elevated market pricing could lead to an explosive USD rally, as could a sharp re-escalation in geopolitical tensions.

The USD has strengthened after the June FOMC as markets took the even split among policymakers on potential rate hikes as a hawkish tilt, reflected in higher front-end US yields. This marked a clear shift from prior meetings toward a less dovish tone, which has in turn been supportive for the currency.

The explicit focus on a lack of forward guidance and pursuit of price stability is favoring the currency from a rates differential perspective, as rate hike pricing elsewhere recedes due to the softer outlook for oil prices but remains steady for the USD. HSBC thinkgs the FX market is increasingly likely to focus on fundamentals and move away slowly from geopolitical gyrations, with the June FOMC having acted as the catalyst. The bank now forecasts a gradually stronger broad USD, with it moving out of soft orbit . Rate differentials are therefore likely to continue gaining traction, but the currency still has a gap to close. A stronger USD would be painful, but HSBC sees the “pain trade” in the FX market taking the form of a more explosive period of USD strength. This would occur predominantly through two separate factors.

The first is if the Fed gives an indication in the coming months that it is prepared to act more aggressively than market pricing. Such a shift by the Fed would likely lead to a sharper ascent in the currency if this also translated into a rapid tightening of financial conditions. Key to this is the strength to which both near-term US activity and inflation data pan out.

Explosive USD strength in this scenario could be amplified by a concurrent re-escalation of geopolitical tension. The USD’s correlation with oil price movements appears to be weakening, as it has strengthened in recent sessions while oil prices have softened. Despite this, one can't rule out the USD benefitting if geopolitical headlines began to drive the FX market once again and Brent prices rose abruptly.

A combination of these factors could set the USD on course for a steeper appreciation than our current forecasts. It would also likely set the currency on track for similar potent performance to that seen in 2022.

Pain trade #4: US Treasury curve steepening

Flipping the script: Bond markets came into 2026 on the back of three consecutive 25bp rate cuts from the Fed − and with both the FOMC’s dot plot and forward pricing pointing to lower policy rates by year-end at the time, Treasury curve steepening was a clear-cut consensus expectation in January.

That view has since flipped. Risks to the Fed’s dual mandate have shifted sharply, and markets have repriced the policy path. Conflict in the Middle East, the effective closure of the Strait of Hormuz, and the resulting oil shock pushed up both headline and core inflation. Meanwhile, the labor market has stayed resilient: unemployment has held steady and non-farm payrolls have risen year-to-date. Front-end yields are markedly higher, driving curve bear flattening; 2s10s and 5s30s have each compressed by around 45bp

Against this backdrop, a return to bull steepening forces driving the Treasury curve has become increasingly hard to envision absent clear signs of economic deterioration – which has yet to emerge in the data. This shift in risk cases can be starkly seen in options-implied Fed funds rate distributions.

The HSBC chart below depicts the probability weight for each Fed funds target range based on 3M SOFR options. As recently as end-February, markets were evidently looking for modest rate cuts as a baseline, and saw risks meaningfully skewed to the “left-tail” amid narratives around the impact of AI on the labor market. Since then, however, this skew has been effectively entirely priced out. “Right-tail” risks of meaningful rate hikes have become a key concern based on these distributions.

HSBC also sees a shift in market narratives at the long-end of the curve. At the November Treasury refunding announcement, policymakers indicated there were considerations of potential increases to coupon supply further out the curve. Such a move would prompt curve bear steepening as higher long-end issuance may spark supply-demand imbalance concerns. The Treasury has since, however, maintained its forward guidance that issuance needs would continue to be met by incremental T-bill issuance for at least the next several quarters. Steepening moves led by the long-end thus appear less likely as well.

Taken together, the evolution of risks to the Fed’s dual mandate and skews to forward rate pricing increasingly reflect a market primarily concerned about Treasury curve flattening. And though positioning in flatteners may not be quite as crowded as steepeners were at the start of the year, curve steepening would now represent a pain trade for markets.

Pain trade #5: EM yields decline / duration rallies

The last couple of months have been a proper resilience test for emerging markets, and investor caution towards EM local debt has become increasingly pronounced. HSBC’s latest EM Sentiment Survey shows local currency debt (LCD) as the weakest-positioned major EM asset class, with net positioning, i.e., the difference between overweight and underweight positions, falling further to -32% from -21% in March. Moreover, there seems to be a significant shift in fixed income preferences towards hard currency debt (EXD) as investors expect policy rates to creep higher over the next three months. In other words, investors appear to have positioned for persistent inflation pressure, limited monetary easing, and continued underperformance of local rates amidst a stronger US dollar.

But what if the next pain trade is not another spike in EM yields, but a rally in EM duration?

he first catalyst might be the sharp reversal in oil prices. The surge in energy prices following the Middle East conflict triggered an aggressive hawkish repricing of monetary policy, as investors accounted for higher inflation. That said, oil prices have seen a sharp decline (down by 25%) following the deal between the US and Iran, which has also been accompanied by investors pricing out some the expected EM rate hikes (chart 14). Should oil prices remain around current levels – or fall further – the case for additional systemic tightening would weaken materially.

Meanwhile, the inflation data may also help with lower yields, given the aggressive upward revision to inflation forecasts. May CPI releases are cases in point; they surprised to the downside across the majority of 22 EM economies, pushing the EM CPI surprise diffusion index sharply into negative territory. With the bar now set high, downside inflation surprises may become easier to deliver, allowing investors to remove part of the inflation and policy premium currently embedded in curves.

Importantly, the long-end of the yield curves could also be supported by the easing of term premium, as stronger nominal growth could improve debt and fiscal ratios. Moreover, lower oil prices would support current account balances in energy importing economies. Taken together, these could ease some of the pressure on the currencies, particularly in markets where real yields remain high and recent tightening expectations look increasingly stretched, even in a backdrop of a stronger US dollar.

Pain trade #6: US rate hike fears could derail Russell 2000 rally

As we enter H2, the Russell 2000 has delivered standout performance, up 20% YTD. Small caps have also outperformed the S&P 500 by 12% − a sharp reversal versus the past five calendar years of underperformance. Russell 2000’s performance has been driven by
a roughly even mix of both improving earnings expectations as well as re-rating of valuations. 

That said, the move could potentially become a pain trade driven by a combination of below points:

1) Oil prices – Brent has drifted lower at a sharp pace recently from USD118/bbl to cUSD74/bbl on the back of positive developments on Strait of Hormuz. There are still daily headlines on passing routes, tolls, authorization required for ships to pass; hence any setbacks in developments could lead to re-acceleration in oil prices, triggering a potential risk-off mode from a sentiment perspective. In such a scenario, investors would likely shift towards quality large cap stocks rather than small caps given their clear profitability gap (net margins for Russell 2000 at c5% vs c15% for SPX).

2) CPI and rate hike expectations – On the back of the previous point, consensus 2026e inflation expectations have been revised higher by c90bps to 3.5% since start of US-Iran war. This translates to consensus now estimating c40bps of rate hikes by year-end, a sharp reversal from the two rate cuts expected at the beginning of the year. Small-cap companies have around 20% of their debt maturing in the near term, meaning they may need to refinance at higher rates, putting pressure on profitability. At the same time, they are also more highly leveraged with net debt to EBITDA c5x vs 1.6x for S&P, leaving small caps more exposed if rates rise.

3) Lack of valuation support – Russell 2000 currently trades at a 12% premium to L5Y median range and also at 92nd percentile based on 30 years’ history; and the premium to the SPX has widened now as well to 35%, compared to median 18% historically (chart 20). Fundamentally, about a quarter of stocks within the index are estimated to report a loss in 2026e, and the median stock’s N12M ROE at just c10% vs 19% in the S&P 500.

Much more in the full Biggest Pain Trades report available to pro subscribers.

Tyler Durden Wed, 07/01/2026 - 20:45

US B-2 Bomber Showcases Ability To Launch Stealth Anti-Ship Missile For First Time

Authored by Ryan Morgan via The Epoch Times,

The U.S. Air Force confirmed, for the first time, that a B-2 Spirit stealth bomber successfully launched an AGM-158C Long-Range Anti-Ship Missile (LRASM) against a target vessel during a naval exercise.

A U.S. Air Force B-2 Spirit Stealth Bomber, assigned to the 509th Bomb Wing, deploys an AGM-158C Long Range Anti-Ship Missile to support a live-fire sinking exercise as part of Valiant Shield 2026 over the Philippine Sea, June 27, 2026. U.S. Air Force/Tech Sgt. Thomas Barley

Designed as a stealthy anti-ship cruise missile with semi-autonomous targeting capabilities, the LRASM reached early operational capability with U.S. combat aircraft in 2018. The pairing of this missile with the B-2, however, is a newly disclosed capability.

A B-2 demonstrated the LRASM launch capability during Valiant Shield 26, a multinational joint exercise that involved the sinking of the decommissioned amphibious transport dock ship USS Juneau on June 27. The sinking exercise took place in an area of the Philippine Sea north of the Marianas Islands.

"This is the first time we have publicly released the B-2's demonstrated ability to carry and deploy an AGM-138C LRASM," an Air Force spokesperson said in an emailed statement to The Epoch Times on June 30.

The pairing of the stealthy anti-ship missile and the stealth bomber could enhance their effectiveness against adversary forces, and is particularly relevant in a potential conflict in the Indo-Pacific region, where China has rapidly expanded its naval forces in recent years.

In 2020, China overtook the United States as the nation with the most warships, and has continued to modernize its naval forces in the years since.

"The B-2's impressive performance underscores the US military's commitment to adaptability and flexibility in the face of emerging security challenges," Gen. Kevin B. Schneider, the commander of the Pacific Air Forces, said in a June 29 statement.

"By prioritizing counter-maritime strike operations, we can maintain a decisive edge over adversaries, protect our national interests and ensure the free and open Pacific that underpins our global security."

Last year, the U.S. military demonstrated the stealth prowess of the B-2 by using the bombers to breach Iran's air defense network to deliver a set of strikes targeting Iranian nuclear facilities.

U.S. military analysts have assessed that China is gearing its military development toward what's known as an Anti-Access/Area Denial (A2AD) strategy, wherein they may quickly lay claim to a sea region and then install defensive measures that make it hard for outside forces to intervene.

The U.S. military has hoped to position the LRASM as a counter to the A2AD strategy by designing it to be less reliant on external guidance systems, which may be limited in a U.S.-China conflict.

Lockheed Martin developed the LRASM for the U.S. Air Force and U.S. Navy. The missile was first integrated with the Air Force's B-1B Lancer bomber and the Navy's F/A-18 Super Hornet fighter jet.

Efforts are underway to integrate the LRASM with other aircraft, including the F-35 Lightning II stealth fighter, the F-15 Strike Eagle fighter jet, and the P-8A Poseidon maritime patrol aircraft.

Since 2020, the U.S. government has also sold LRASMs to Australia to integrate with their F/A-18 fleet.

Tyler Durden Wed, 07/01/2026 - 20:30

Xi Touts Communist Party's Global Reach, Hails PLA's Rising Strength In 105th Anniversary Address

Chinese President Xi Jinping used a major speech marking the 105th anniversary of the Chinese Communist Party on Wednesday to both tout China's global influence and pledge a stronger armed forces build-up while staying steadfast in an ongoing crackdown on corruption within top military ranks.

Bloomberg concluded of the speech, "Xi Jinping signaled China's ambition to play a more high-profile role, a strategy that involves rallying developing nations as a counterweight to what he views as fading US influence."

via Associated Press

This is of course not a 'new' message out of Beijing, but is some renewed messaging at a moment Washington risks getting permanently bogged down in the Middle East after Trump launched Operation Epic Fury against Iran while struggling to extricate itself from the resulting Hormuz crisis. The Iran war remains deeply unpopular especially among BRICS and Global South countries and populations.

The Chinese leader in the fresh comments vowed to "uphold the party’s absolute leadership” over the People's Liberation Army (PLA) while continuing to give it all needed support and advancement in defense technology.

“We must advance the modernization of national defense and the armed forces,” Xi told party members. He described that the CCP remains on course to "resolutely wage the critical, protracted, and comprehensive battle against corruption."

Just in the past three years, no less than two defense ministers have been dismissed by Xi, and the once seven-member Central Military Commission - China’s top military body - has been drastically reduced to just Xi and one other general.

Interestingly, in the Beijing speech Xi also made direct reference to the Taiwan crisis.

"Resolving the Taiwan question and realizing the complete unification of the motherland is an unswerving historical mission of our party and the shared aspiration of all Chinese people," he said.

While not specifically naming the United States or anything country, he said that "we oppose interference by external forces."

As for the years-long military purge, a former CIA analyst who follows Chinese elite politics, Christopher K. Johnson, recently told the NY Times of the ongoing purge trend, "This move is unprecedented in the history of the Chinese military and represents the total annihilation of the high command."

"When Xi says the Party leads everything, he means it. When he says security comes before development, he means it. When he says capital must be guided and disciplined, he means it. And when he says Taiwan is central to national rejuvenation..." https://t.co/zgGEQdiEvn

— Christoph Rehage🇪🇺 (@crehage) July 1, 2026

The PLA has seen significant internal turmoil, especially since the Communist Party’s 20th Congress in late 2022. Several top military figures - including Defense Ministers Li Shangfu and Wei Fenghe, and CMC Political Work Department head Miao Hua - have disappeared or been removed, and many more followed. 

Tyler Durden Wed, 07/01/2026 - 20:00

Nancy Pelosi Institute To Launch At UC Berkeley After Former Speaker Leaves Congress

Authored by AG News Staff via American Greatness,

Former House Speaker Nancy Pelosi will lend her name to a new institute at the University of California, Berkeley after retiring from Congress, with the university announcing it has already raised $35 million toward a $50 million fundraising goal.

The Nancy Pelosi Institute for Representative Democracy is scheduled to open in January 2027, when Pelosi is expected to leave Congress.

According to the university, the institute will serve as a center for research, teaching and civic engagement focused on representative democracy and public leadership. Pelosi also is expected to co-teach a course on Congress.

UC Berkeley said the institute will focus on four primary areas: strengthening American democracy, addressing major social, economic and environmental challenges, promoting human and civil rights, and "ensuring political leadership that represents the full spectrum of perspectives and backgrounds in California and the country."

The university said the institute's location at UC Berkeley would give a diverse student body, including first-generation and low-income students, access to opportunities often associated with Ivy League institutions.

"The work of democracy is never finished, and securing its future is our greatest calling," Pelosi said in a statement. "UC Berkeley has a long, proud history of challenging the status quo and producing leaders who run toward the greatest challenges of our time. I am honored to partner with this exceptional community of scholars and students so we can equip the next generation with the tools they need to strengthen our democratic institutions and forge a future that serves the public good."

UC Berkeley Chancellor Rich Lyons said the institute would combine the university's faculty and students to advance its mission.

"We intend to do more than simply study democracy; we are building this institute to strengthen it," Lyons said.

The institute will be established at UC Berkeley, a university known for progressive activism, and will open after Pelosi concludes her congressional career.

Pelosi, 86, served two terms as House speaker and remains the only woman to hold the position. She served from 2007 to 2011 and again from 2019 to 2023.

Tyler Durden Wed, 07/01/2026 - 19:30

Meet The "World's Most Dangerous" Hotel That Leaves Guests Stranded 35 Miles Offshore

A remote former Coast Guard tower off the coast of North Carolina has become one of the country's most unusual vacation destinations, with thrill-seekers paying to spend days stranded 35 miles out in the Atlantic on what's been dubbed the world's most dangerous hotel, according to the NY Post.

Interest in Frying Pan Tower recently surged after charter captain Austin Aycock posted a TikTok showing six guests being dropped off at the rusting structure before he motored away, joking, "See you in a couple days!" The video has attracted more than 2.2 million views, with viewers split between fascination and disbelief.

(Photos: NY Post)

Built in 1964, the decommissioned light station sits about 80 feet above the ocean in an area known as the "Graveyard of the Atlantic." Once guests arrive, there's no easy way back. Leaving requires either a helicopter or a 35-mile boat ride to shore.

The Post writes that rates start at about $200 per person per night with a three-night minimum stay. Aycock said one particularly adventurous group remained on the tower for two weeks.

The location isn't for the faint of heart. The surrounding waters are home to great white, bull, and tiger sharks, while the tower sits in hurricane-prone waters where storms can bring winds exceeding 100 mph. Medical emergencies also present a challenge due to the remote location.

(Photos: NY Post)

Despite its isolation, the tower can accommodate up to 12 guests across eight bedrooms and offers modern comforts including solar power, high-speed internet, hot showers, a fully equipped kitchen, and a reverse osmosis water system.

Visitors can fish, snorkel over a nearby reef, shoot biodegradable clay targets, or hit fish-food golf balls into the ocean. A professional chef is also available for private groups, while the massive helipad doubles as a scenic spot for stargazing and watching the sunrise.

The viral video sparked plenty of reactions online. Some commenters said nothing could convince them to stay overnight, while others joked the tower would be the perfect place to hide from a zombie apocalypse. One viewer summed up the skepticism by asking, "What's the opposite of a bucket list?"

Tyler Durden Wed, 07/01/2026 - 19:05

As Democrats Freak Out Over Socialist Takeover, Kamala Harris Speaks With Zohran Mamdani

In the same week Democrats began sounding alarms over radical left-wing revolutionaries gaining power and hijacking the party, there is a new report from Axios that Kamala Harris privately spoke with far-left New York City Mayor Zohran Mamdani and held closed-door meetings with progressives, including pro-Palestinian activists, as she appears to lay the groundwork for a potential 2028 White House run.

Axios reported, "Harris, who occasionally has texted with Mamdani in the past few months, called him two days after the mayor's handpicked candidates swept three congressional races in New York City, ousting a pair of incumbents."

"It's the latest sign the former vice president is laying the groundwork for a potential White House run in 2028 — and is looking to strengthen or repair her relationships with left-wing Democrats," the report said.

Axios did not reveal the specifics of the conversation, but the timing is telling.

Democratic Party elites are increasingly fearful that Democratic Socialists are gaining real power inside the party, and Harris' private outreach to Mamdani suggests she understands the far left may be impossible to ignore ahead of 2028.

The wake-up call for the Democratic Party came last week in New York City, where Democratic Socialists scored closely watched House primary victories over candidates backed by House Democratic Leader Hakeem Jeffries.

The result sparked panic inside the party, as establishment Democrats went to MSM to rant:

Veteran Democratic strategist James Carville/ New York (D) Congressman Tom Suozzi

'START YOUR OWN MOVEMENT': Veteran Democratic strategist James Carville is calling on Socialists to start their own movement and stop using the Democratic Party to advance it.

"If it's such a powerful, sweeping movement that's got momentum everywhere, then go ahead and be at the… pic.twitter.com/et3mZzqIA8

— FOX & Friends (@foxandfriends) June 26, 2026

New York Attorney General Letitia James

Sen. Elissa Slotkin, D-Mich

🚨 DEMOCRATS IN FULL CIVIL WAR — MODERATES VS SOCIALISTS!

Even Elissa Slotkin is reading the tea leaves: “The Democratic Party is a circular shooting squad… we just don’t have people who understand the moment and what leadership means.”

James Carville straight-up telling the… pic.twitter.com/IlGBHWUNMQ

— Gunther Eagleman™ (@GuntherEagleman) June 26, 2026

Hakeem Jeffries

Hakeem Jeffries refuses to answer if he will work with New York City Democrat Socialist Darializa Avila Chevalier.

CNBC: How are you going to work with some of these folks?

JEFFRIES: “Her views are clearly not my views… in terms of what brings Democrats together…” pic.twitter.com/JdjmwxSfr2

— RNC Research (@RNCResearch) June 25, 2026

Our take is that Harris might not just be repairing relationships with socialists but also hedging against a party base that is quickly shifting far left as the establishment scrambles to contain it.

That's because mainstream America might not be ready for a socialist takeover. The Trump team fired up their narrative machine and blasted the "communists" last week ... Trump said on Truth Social last week:

"These are not social Democrats; these are hard-core, godless Communists. This is the most serious threat to our Country since its existence 250 years ago."

Polymarket odds on Democratic Presidential Nominee 2028

Whether Harris asked Mamdani to dial back the socialist propaganda remains unknown as the party, with no guardrails, increasingly embraces socialism and Marxism - just as much of Latin America is eradicating far-left extremists from power.

Tyler Durden Wed, 07/01/2026 - 18:15

Copper Demand Surges, But Supply Deficit Is Hard To Solve, Expert Says

Authored by Mary Prenon via The Epoch Times,

The ongoing artificial intelligence (AI) boom underscores a harder-to-resolve supply issue for copper, according to veteran natural resource investor Rick Rule.

Speaking recently with Siyamak Khorrami, host of EpochTV’s “Market Insider,” Rule said the increasingly energy-intensive lives people around the world are living have pushed up demand for copper. With companies and countries investing heavily in AI, future demand for the red metal will be “staggering,” he said.

At the same time, the world, especially the United States, doesn’t have enough copper development projects “in the pipeline,” Rule said, making a copper shortage and higher prices inevitable.

Growing Supply Deficit

According to the International Copper Study Group, global refined copper consumption rose to 28.2 million metric tons in 2025 from 25.8 million metric tons in 2022, while production increased to 28.6 million metric tons from 25.2 million metric tons over the same period. This represents a supply surplus of 400,000 metric tons.

However, given the essential role copper plays in electrification, digitalization, and technologies such as AI, data centers, electric vehicles, and defense, a January S&P Global study predicts that demand for the metal will rise to 42 million metric tons by 2040. The study also estimates that, without “meaningful supply expansion,” there could be a copper shortfall of about 10 million metric tons by then.

Copper prices have risen significantly. Copper futures on the New York Mercantile Exchange settled at $6.20 per pound on June 28, nearly doubling from their post-pandemic low of $3.23 per pound, reached on July 11, 2022.

The situation is more challenging for the United States. The country is a net copper importer, producing less than half of the refined copper it consumes. According to the United States Geological Survey, a scientific agency under the Department of the Interior, America produced 850,000 metric tons of refined copper in 2025 while consuming 2.2 million metric tons, resulting in a deficit of more than 1 million metric tons.

The United States is expected to remain a net importer of copper through 2040, with imported refined copper projected to account for about 70 percent of consumption, according to a June 23 SEC filing citing Wood Mackenzie data.

In November 2025, the Department of the Interior added copper to the U.S. Geological Survey’s critical minerals list.

Underinvestment

“In copper, we have been systemically underinvested in exploration, in construction, in development, and we’ve been doing so for 30 years,” Rule told Khorrami.

“This is a capital-intensive, long-term business. There is nothing we can do right now—nothing, not one thing—that will prevent a supply shortage within five years.”

Source: U.S. Geological Survey, Mineral Commodity Summaries 2025—Copper

Rule said developing a new copper mine is a very long process, taking about 10 years to explore and find a mine, three years to drill, three more years “in a good country” to secure a permit and funding, and two years to build—about 18 years in total.

“The difficulty is that people weren’t doing enough of this 18 years ago,” he said.

Wood Mackenzie estimated in a 2021 analysis that the world copper industry had committed around $120 billion in capital spending to maintain production at the time, offsetting the impact of grade decline and depletion.

“Nonetheless, without additional substantial investment, production will decline from 2024 onwards. Coupled with demand growth, this decline in output will lead to a theoretical shortfall of around [16 million metric tons] by 2040,” the analysis states. To close the copper supply shortfall, the analysis said, the industry would need about $325 billion in additional investment.

“The industry is looking right down the barrel at an incredible capital spend to merely maintain current production levels, never mind increase it to meet the demands of rural electrification in the third world, data centers, electric vehicles, the electrification of everything,” Rule said.

“If you believe the numbers that people like Google and Amazon are putting out in terms of their data center demands, we will need to produce more copper between 2026 and 2050—24 short years—than has been mined in the history of mankind,” he said.

Rule said the industry has entered a copper construction cycle.

“For a long time, when copper was languishing at $3 a pound, the industry didn’t make enough money to build new mines; $6 a pound is not a bad incentive price.”

Permitting Hurdles

However, he said there are currently few construction-ready projects due to decades of underinvestment in mineral exploration. In the United States, he added, the permitting process is a major hurdle for these projects to move forward.

For example, Rule said the Resolution Copper project, jointly owned by Australian mining giants Rio Tinto and BHP and located in Arizona, is a high-quality copper deposit and well-located, but has been waiting more than a decade for a permit.

According to Rio Tinto’s website, if developed, the Resolution Copper project could be one of the largest copper mines in the United States, having the potential to supply up to one-quarter of the U.S. copper demand.

After decades of exploration, the Resolution deposit was officially discovered in 1995, according to the Department of Agriculture. It started the permitting process in 2013 and released its independent Final Environmental Impact Statement in 2019, entering a new phase of public consultation, according to a Rio Tinto press release. The company said in a March release that it had completed a key land exchange advancing the project toward development.

“All of this points to the fact that we’re going to have to get used to higher copper prices,” Rule said.

Tyler Durden Wed, 07/01/2026 - 17:50

Man Who Sued Pepsi Over Fighter Jet Finally Gets His Reward 30 Years Later

Three decades after suing Pepsi for refusing to give him a fighter jet, John Leonard finally got a reward that may be even better, according to a post at Supercarblondie. 

Leonard became the center of one of advertising's most famous legal battles after taking a 1996 Pepsi commercial at face value. The ad, promoting the company's Pepsi Points loyalty program, jokingly claimed customers could redeem seven million Pepsi Points for a military Harrier jet.

Rather than laugh it off, the Seattle college student raised enough money to buy the required points and submitted a claim for the aircraft. Pepsi rejected it, insisting the jet was never a real prize.

The article says that the case went to court, where a judge ruled that no reasonable person would believe Pepsi was seriously offering a fighter jet in a soft drink promotion.

Although Leonard lost the lawsuit, the bizarre dispute became legendary and was later chronicled in the Netflix documentary Pepsi, Where's My Jet?.

Now, nearly 30 years later, Frontier Airlines gave the story a happy ending. As part of a Super Bowl campaign called "The Big Redemption," the airline converted Leonard's original seven million Pepsi Points into seven million Frontier Miles, effectively giving him free flights for life.

The airline even featured Leonard in a tongue-in-cheek commercial, handing him the keys to an Airbus A320neo as a nod to the decades-old saga.

Now in his 50s with a wife and children, Leonard joked that unlimited airline miles are far more practical than owning and maintaining a military fighter jet. After waiting three decades, he never got the Harrier, but he may have received an even better prize.

Tyler Durden Wed, 07/01/2026 - 17:25

20-Year Old US Citizen Charged In Israel With Spying For Iran

Via The Cradle

A 20-year-old US citizen living in Jerusalem is set to be charged with spying for Iran, according a police statement issued Tuesday, ahead of the individual’s indictment. 

The US citizen was detained by Israeli authorities on June 9, but the case is only this week being revealed. Israel's police say he maintained contact with an Iranian intelligence-linked handler. According to the police, he captured photographs and videos of "sensitive" Israeli sites.

Getty Images

The statement also claimed he received "dozens to hundreds" of dollars for each task he carried out on behalf of Iranian intelligence. The suspect’s activities were being carried out in the past few months, according to the authorities. 

A prosecutor’s declaration was filed against the US citizen on Tuesday. He will be officially charged with espionage in the near future.

Israeli police are requesting that the alleged Iran-linked spy remain imprisoned until legal proceedings conclude.

Israel has witnessed a major surge in Iranian espionage activity over the past year. Early last month, Tel Aviv indicted one Israeli citizen and three soldiers for cooperating with Iranian intelligence services and carrying out espionage work, including capturing photos of “sensitive sites.”

The intelligence activity reportedly included photographing train stations, shopping centers, security cameras, and the Israeli Air Force Technical School.

Hebrew media reports from May said some of the accused independently approached their Iranian handlers requesting additional missions.

Israeli outlets had also reported in late April that two Israeli Air Force technicians who were operating at the Tel Nof Air Base near the city of Ashdod were set to be charged with espionage for Iran.

By April, over 50 indictments had been filed against Israeli citizens accused of spying for the Islamic Republic since October 2023, according to Mondoweiss.

Security analysts and commentators in Israel have described the situation as an "espionage epidemic" fueled by public distrust of political leadership, corruption, and general discontent among Israelis.

Recent cases in 2026 alone include an Iron Dome reservist accused of passing system details for $1,000, multiple active-duty soldiers charged with espionage, and a thwarted plot to assassinate former prime minister Naftali Bennett.

Tyler Durden Wed, 07/01/2026 - 17:00