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The transcript from this week’s, MiB: Jeff Chang, President and Co-Founder of Vest, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

 

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[00:00:16] Barry Ritholtz: On the latest Masters in Business podcast. I sit down with Jeff Chang. He’s co-founder and president of vest. They are a firm that specializes in defined outcome investing, buffered ETFs. They try and remove the uncertainty of outcomes of your investing by using options and derivatives to come up with very, very specific products. I thought our conversation was fascinating, and I think you will also, with no further ado, my podcast with Jeff Chang. Jeff Chang, welcome to Bloomberg.

[00:00:52] Jeff Chang: Great to be here, and thanks for having me. Oh, well

[00:00:54] Barry Ritholtz: Thank you so much for coming. I’m kind of always fascinated by people who have unusual or diverse backgrounds. You in particular US Naval Academy and then an MBA from Georgetown. Is that right? What, what was the original career plan?

[00:01:11] Jeff Chang: So, I grew up in Annapolis. The original career plan was to be, you know, be part of the Navy. And unfortunately, I got medically discharged for, for asthma and then, then decided to pursue more of a business path. And that’s what kind of led me to, to Georgetown. And then after Georgetown, I actually, right after, I actually always wanted to start my own company. Right. In fact, this is kind of a funny thing. Most people don’t know this. I’ve never actually said this. When I first started, I actually started a flat screen TV company in 2012, OEMing them from China. And do you remember back in the day, like flat screen TVs used to be like 25, 30,000.

[00:01:54] Barry Ritholtz: Oh yeah. When they first came out, they were crazy.

[00:01:55] Jeff Chang: Yeah. Yeah. So I was in DC selling those. In fact, I remember selling TVs to Reagan National Airport. So when you like, look at what terminal you are, back in the early two thousands. Wow. Those were Jeff Chang TVs that were there. No kidding. I think another client was Six Flags. Like when you, you

[00:02:13] Barry Ritholtz: The wait, how long the wait is.

[00:02:14] Jeff Chang: Yeah, yeah, exactly. Exactly. But then, you know, as TVs became further and further down, like I was like, Hey, that’s not the business I want to be in.

[00:02:21] Barry Ritholtz: So all commoditized, why do you want to be

[00:02:23] Jeff Chang: There? Yeah. It all commoditized. So I, it taught me a lot about starting a business on, you know, that and about life, is that I realized that I needed actual hard skills that that created a, a, you know, value add. And also the other component was I, I also realized that doing like accounting books, I didn’t pay too much attention in accounting. So I actually for six months went and studied for the CPA exam and took the CPA exam to be accounting, which was actually a twofold kind of reason. I think one of my mentors once told me is that like, hey, there, there is, for the better word, there’s fu money and FU skills. Right? Right. You don’t have that money. So make sure you’ve built skills in which you’re not always beholden to other people. And if you thought about it that, you know, the two guaranteed things in life is death and taxes. Right. And so in my head was I didn’t wanna be an undertaker, but I could take the CPA exam and assure that

[00:03:27] Barry Ritholtz: Participate in taxes wasn’t

[00:03:29] Jeff Chang: Exactly, exactly. So

[00:03:30] Barry Ritholtz: A growth industry.

[00:03:31] Jeff Chang: So that was the reason why I took the CPA exam was that like, Hey, I know I would never starve because, you know, after the failure of my first firm, I was like, Hey, there’s, you always have to have at least a safety net. And that also informed me that when I started a new company, accounting is actually extremely important when you’re starting a, a, a firm or even a startup for that matter. And it actually came to pass that, that has been a very, very important part of, of my career path as well.

[00:03:59] Barry Ritholtz: So, so it’s certainly a useful set of skills. Yeah. But I’m gonna assume the first business didn’t fail because of bad accounting. Yeah. It’s just a hyper competitive market That’s right. With razor thin margins and as stuff as economies of scale came out. That’s right. The market just dies for that.

[00:04:19] Jeff Chang: Yeah. And that really informed me is that you have to have an edge. I I, I think over the 13 years of founding this company, I noticed that there were actually key features that I noticed even going through Y Combinator, my classmates and people that built very successful companies, they had very common characteristics for their success. Right. In fact, I, I had Asian parents, they optimized for intelligence. Right. Which was very, you know, you get straight A’s you play the violin or the piano and you kind of go through that

[00:04:50] Barry Ritholtz: Process. They’re optimizing for Ivy League admission Exactly. Is what you’re, you’re implying.

[00:04:54] Jeff Chang: Exactly. Exactly. And or be a doctor for

[00:04:58] Barry Ritholtz: That matter. Right. This is so different from Jewish parents. Yeah,

[00:05:01] Jeff Chang: Exactly. So it was, and then as kind of over the years, I realized that the optimization, like if, you know, when I have kids, ’cause you know, I, I don’t have kids, at least none that I know of. But if I did, I would optimize for, actually number one is grit like that. And that grit is the not giving up. Like, like, you know, your company fails, what’s the next thing? Like, you, you know, you pick up yourself from your bootstraps and you, you, you get up and go. It’s almost like the thing is, like, as an example, my parents didn’t let me play video games. Right. But I realized video games actually, if, if you introduce grit, like, you know, if you play Call of Duty, like I was the guy that when I play Call of Duty in my twenties, I would buy the, the headphones that would let me hear whether or not someone’s behind me. ’cause whatever it takes to win, like that type of, you, you ever see that kid that does not wanna lose that like fails, but then gets up and figures out a way to win that is grit. And I feel

[00:05:57] Barry Ritholtz: Like that resilience is more important Exactly right. Than anything

[00:06:00] Jeff Chang: Else. And then the second is, I realize that nothing in this world can be done alone. That success requires you to have partnerships, friendships, and know people that can help build great things. Great things don’t come by yourself. And that’s what I think second is influence your ability to let people see your dream and believe in your dream. Think about this, like, if you’re starting a company, not just selling your product requires influence. Like convincing your first investors, your first employees to quit their jobs, their high paying jobs to make almost nothing and take equity. That’s talk about like selling a dream that’s influence. Like think about, you know, some of the greatest entrepreneurs out there. They, you know, you probably heard like Steve Jobs as a reality distortion field. You know what that is? That’s influence. Right? That is one of the key things.

I think when, when you’re looking at business influence is such a, a, a key thing of, of something that required to have success. ’cause like I said, nothing in the world is done alone. This third, which comes back to my point is creativity. The ability to spot things that other people don’t see. Right. To basically be, to see opportunity, to see things, to combine things together and have that opportunity. Then the last, if you combine it is intelligence. If you do all four, and I can give you examples of people who are immensely successful just with grit. Hmm. And by the way, it’s in that order. Influence, grit, influence, creativity. And last is intelligence.

[00:07:32] Barry Ritholtz: So, so I wanna, I wanna stop you there for a sec. Yeah. Because I wanna spend time going over Y Combinator. Yeah. I wanna talk about this. But before we get there, I mentioned the Naval Academy of such an unusual background. Talk a little bit about what your experiences were like at places like Freddie Mac, the World Bank, FBR and ProShares. That’s such a diverse Yeah. Set of experiences. What did you take away from that life experience and and how did that ultimately lead you to launching your own firm?

[00:08:06] Jeff Chang: Yeah. So I could tell you one of the best things about what the military teaches you is not just teamwork and looking after the people next to you and really making a commitment. But there’s also another thing is work ethic. Like, I, I could tell you that I’m a morning person. I, I didn’t grow up a morning person, but it’s like 5:00 AM I’m up. And, and the funny thing is, my girlfriend’s a night person. She’s like, how are you? Like, sprightly at five 30. And I was like, that is actually learned behavior. Right? So that was like kind of the first thing of, of learning grit and, and you know, tackling the day early on, making your bed things. Those small things in life, I think have been really, I’d say important and, and you know, kind of keystone in in that process. The second is actually when I first started my first job at the World Bank, after trying to start my company, I had to translate fi energy companies in China.

And I had two problems. Number one was I didn’t, my Chinese wasn’t good enough. And secondly, my accounting wasn’t good enough, hence the CPA Right. Came in. I was like, at least I gotta learn one. And then I cut over to Freddie Mac. And if you remember during the 2002, 2003 timeframe is when Freddie Mac went into Restatement. So as a certified public accountant, I was extremely sought after at that time. So I worked at Freddie Mac and I realized that I really wanted to, I read Liar’s Poker by Michael Lewis, and I realized that I, hey, I really wanted to trade mortgages. So I started to

[00:09:42] Barry Ritholtz: Take, which by the way, he said he’s horrified. ’cause he thought this was a cautionary tale. Yeah. And all it did was encourage more people to do that Wall

[00:09:51] Jeff Chang: Street. Yeah, totally. Totally. Reading that book really made me want to be, you know, what he said in the book, big Swinging. Right? Like everybody, it was just a such a, a fun story. It it, it almost painted Wall Street in a specific way, but it was just the interesting part. And, and by the way, it also got me into reading f Bozi about fixed income, about the mortgage market. And, and then I wanted to be a trader. So, you know, I studied for the CFA exam, I got my CFA charter. I didn’t know that would lead me to over a decade of teaching CFA. Right. But that was really fun to do that and, and kind of give back. But, so trading mortgages, Freddie, and then FPRI got to trade during 2008, I got to have a front row seat to seeing the, you know, bear Stearns Lehman, you know, I remember trading repo during the oh eight, September oh eight.

It’s the, the month I lost all my chest hair in, in, in one month. But it was fascinating. I mean, that’s what I thought finance was like. So then, you know, later on I cut over to convertible bonds and options. Then the flash crash hit in, in 2010, which was, by the way, I, I’d never seen an entire trading desk stand up within one minute of everybody’s like, what’s going on? So yeah, I got to see a lot of, of Wall Street in, in my twenties and thirties. It was, it was a definitely a formative time of understanding, you know, kind of what, what made capital markets tick and, and, and understanding and also understanding the pitfalls, the, the hubris of finance that, you know,

[00:11:32] Barry Ritholtz: Well that has to be the big takeaway from oh 8, 0 9 Yeah. Is that markets go up and down. Yeah. And if you’re leveraged Exactly. It’s a problem. And if you’re highly leveraged Yeah. It’s usually pretty fatal. Yeah,

[00:11:47] Jeff Chang: Exactly. And you know, and disasters are always clear in hindsight. Right. And you, you look back and you’re looking at 20, 30% default rates. You’re like, why That would’ve, that would’ve been so clear in your mind when you started to look at some of the data. And so that was really formative. And the other component is, is kind of like what Warren Buffet says. You always know who’s not wearing pants when the water goes out. Yeah. When

[00:12:11] Barry Ritholtz: The tide goes out.

[00:12:12] Jeff Chang: For sure. Yeah. Exactly. And so I always, I I’d say think about, hey, if the tide goes out, make sure the, the money we manage for our clients that we’re, we got pants on. Right.

[00:12:24] Barry Ritholtz: Ri risk management turns out to be more than just a exactly. Phrase. It’s really important if you’re running other people’s

[00:12:30] Jeff Chang: Minds. Exactly. And it’s something that you live and breathe. And what I actually, you know, a lot of our investment products is to try to get our clients to, to understand that. And you utilize kind of, a lot of the tools that we build are basically pants. Like, you know, when the water goes out, make sure that, that you have something there because of uncertainty.

[00:12:51] Barry Ritholtz: That’s to say the very least. So, so let’s talk a little bit about that. You come out of this experience on a desk through the financial crisis. You launch Vest in 2012. What was the motivator? What led you to say, Hey, I think we could do this better?

[00:13:07] Jeff Chang: Yeah, so I had a very short stint at ProShares where I met my co-founder, Koran, he worked on the structuring desk at, at Barclays. And we talked about, you know, like, Hey, let’s start our own firm. And then our first idea was going to be, you know, buffers like, like, like downside protection that we saw in the structure note market. And by the way, this actually segued into the mortgage crisis because in 2008, the largest issuer structure notes was Lehman Brothers. Right. Like, you have a hundred percent protected note and then now you’re standing in bankruptcy court. So that was a big change in the industry. I think the structure note industry went from 120 billion to 30 billion in, in that timeframe from after the 2008 crisis. So I,

[00:13:56] Barry Ritholtz: I’ll tell you a funny story. Yeah. I was a market strategist at a brokerage firm in oh 2, 0 3, and we got pitched a downside protected SMA and I was just sitting in, in a conference room hearing this pitch, what are the, any questions? And I didn’t ask the obvious question that I thought, which was, well, great, the NASDAQ’s down 81%. Yeah. Where were you five years ago? Who needs this now? But the question I asked and got got called into the corporate council’s office for was, Hey, what about counterparty risk? How do we know Yeah. That you guys are gonna be there to, to make the trade good. Sir Lehman Brothers has been here for 189 years. It’ll be here long after you’re gone. I’m like, okay. No, it’s an actual risk that no one was even discussing. Yeah. It was just assumed. So it turned out that, you know, counterparty risk is a real, is a real thing. Oh, it

[00:14:57] Jeff Chang: It, yeah. It’s a very real thing.

[00:14:59] Barry Ritholtz: So we’re gonna talk a little more about Vest and Buffer funds in a moment, but I just wanna get the timing right and talk a little bit about your experiences at Y Combinator. You launched Vest with your co-founder in 2012. You joined Y Combinator in 2015. What, what led you to saying, Hey, let’s, let’s see if we can hook up with the guys over at Y Combinator?

[00:15:23] Jeff Chang: Yeah, so that’s the thing. In finances, there’s not too much innovation, right? Because it’s a lot of regulation and so on and so forth. And so even at our company, we, we always, even our identity today is still, you know, Silicon Valley meets Wall Street. Right. I always think that, like in my mind, if, you know, someone in Silicon Valley were to come into our business, they could end up in jail. Right. Or if Wall Street ends up in, in Silicon Valley, you know, you, you, you might be, you know, just end up in a ditch. ’cause you know, you’ll

[00:15:57] Barry Ritholtz: Be run over for sure.

[00:15:58] Jeff Chang: Yeah, exactly. Because the end of the day is, you know, we went four years with no income. Wow. Right? Like lived off our Wall Street bonuses, me and my co-founder Kran Sue, like, we didn’t get paid for, you know, four plus years to found this company. Like that’s how much you have to the grit and the belief in something. And, and that culture really, really, I think comes out of kind of startup, kind of the Silicon Valley area. Y Combinator at the time

[00:16:26] Barry Ritholtz: Run run by Paul Graham, is it

[00:16:29] Jeff Chang: Paul Graham at, that was the first year Paul Graham stepped down and Sam Altman when I showed

[00:16:35] Barry Ritholtz: Up Ah, gotcha.

[00:16:36] Jeff Chang: Was president of Y Combinator. So 2015,

[00:16:38] Barry Ritholtz: I didn’t realize

[00:16:39] Jeff Chang: 2015. Yeah. Sam was president of Y Combinator. For the folks out there that don’t know. So yc, you know, similar to like a college application, you, you fill out an online college application, you actually don’t need a company. They, they help you form the firm. And you know, the companies that have come out of that program, you know, Airbnb, Reddit, Coinbase, DoorDash, OpenAI was funded by YC Research. So all of that, all of those firms came out of yc. So in fact, I think I read a book called The launchpad, which talks about yc, the companies that they’re, I mean, the first class of YC included Sam Altman, Justin Kahn, who founded Twitch, and Alexis Hanon who founded Reddit. And I think there was like, correct mem May, maybe nine companies. I mean, that’s a all star cast if you ask me for Yeah,

[00:17:33] Barry Ritholtz: Absolutely.

[00:17:34] Jeff Chang: For a class. And so it was definitely someplace that we wanted to be around. There weren’t a lot of finance firms. In fact, vest is the largest asset manager to merge outta yc. So it was definitely something to try something different and really in, get into the Silicon Valley and really push the innovation within, within finance.

[00:17:58] Barry Ritholtz: I don’t know if this is still the case, but a couple of years ago, the standard deal was something like half a million dollars for 7% of the company, plus a three month program of building, iterating, pitching, et cetera. That’s right. Does that more or less sound right? That’s

[00:18:13] Jeff Chang: Right. That’s the deal Today Our deal was probably close to one fifth of that.

[00:18:17] Barry Ritholtz: Oh really? Yeah. Well, 10 years ago. Yeah, exactly.

[00:18:20] Jeff Chang: A lot of changed over the last

[00:18:21] Barry Ritholtz: Decade.

[00:18:22] Jeff Chang: And, and, and they have done a great job. I I, I think they have maintained their, I I, I think the stat was since 2012, 20% of the super unicorns were funded by Y Combinator. Wow. That’s amazing. And then like second place is like 3% and plus or something like that. And

[00:18:43] Barry Ritholtz: This is like a full on bootcamp where it’s three months and they are really taking you through the process. Here’s how you build a startup. Here’s how you iterate. When you first joined yc, did you have any idea what the final product of Vest was gonna be? Or did that experience clarify where you wanted to go? There

[00:19:04] Jeff Chang: Were certain, we went in with the idea of buffers and downside protection. There were certain pivots as far as like, Hey, what’s the best delivery vehicle to start with?

[00:19:15] Barry Ritholtz: Meaning an ETF as opposed to an SA

[00:19:18] Jeff Chang: Versus, exactly. Exactly. But that was the foundational, if you even look at our application, our pitch, it was exactly talking about the need for downside protection, the need to, you know, fix liquidity and credit risk and other types of instruments. Those were kind of the foundational problems because YC always says that like, make something that people want. And then don’t just come up with the ideas. Start with the problem

[00:19:42] Barry Ritholtz: You’re solving for, solving a

[00:19:44] Jeff Chang: Specific problem you’re solving. And the problem needs to be painful enough. And so anybody out there that’s ever thinking about starting a startup, always start with the problem first and make sure the problem is painful enough for your customer. That that becomes, you know, how you solve it can change a little bit. But the problem always existed and, and we thought that that was a, a, a noble problem to, and, and a painful enough problem to, to seek.

[00:20:10] Barry Ritholtz: That’s a very customer focused approach to building a business. I don’t, I don’t know if Wall Street necessarily thinks in those terms. There tends to be an attitude of this is how it’s been, it’s been successful. Why do you think you’re smarter than everybody else? Smarter than the market? Like, that’s the sort of pushback you’ve gotten and that you tend to get when you roll out a different approach. That’s right. How has the experience been marrying the Wall Street ethos where failure is abhorrent? Yeah. And the Silicon Valley mindset, which is, hey, failure just gets you to the solution. It’s just one more step. Yeah.

[00:20:53] Jeff Chang: And, and that’s where kind of the ethos of our Silicon Valley meets Wall Street is that we live in both worlds. Like our background, me and Qurans are Wall Street backgrounds. That, that there is no move fast and break things mentality on our Wall Street ethos. Right. Right. It is measure four times cut once. This is people’s livelihoods, their, their wealth. So that part we did not adopt, not like break things type mentality. That is not, it’s

[00:21:25] Barry Ritholtz: Hard to do that when you’re a highly regulated industry.

[00:21:27] Jeff Chang: Exactly. Exactly. Second is that we also realized you can’t do this alone. It’s not like we’re starting an Airbnb where we can just kind of do X, Y, and Z. We needed partnerships. We needed, like coming back to the point of influence. Like we needed people that really could help us with innovation. Hence we actually only have two investors. One is Siebel Global Markets, Chicago Board Option Exchange, the largest option exchange in the world. And First Trust one of the largest ETF providers here in the United States that has been intricate in the ability to shape and mold the industry. Just like even with the exchange, like, wait,

[00:22:03] Barry Ritholtz: Let me roll you back. Yeah. You said you only had two investors

[00:22:07] Jeff Chang: Now today.

[00:22:07] Barry Ritholtz: Now, today all So let, before we get there, let’s, let’s talk about the, the Post Y Combinator experience. So they give you barely six figures Yeah. For a small chunk of the company. They, they take you through a, a bootcamp Yeah. That teaches you all these different things from focus on problem solving to iteration to pitching investors. Yeah. Who were the early investors? Invest.

[00:22:34] Jeff Chang: So we had our lead coming outta y Combinator was First Round Capital. People aren’t familiar. That’s the company

[00:22:41] Barry Ritholtz: That It’s a great name. Yeah. If you’re doing venture investing.

[00:22:43] Jeff Chang: Exactly. They were one of the first investors in a small company called Uber. And they had, so that worked out okay. Yeah. They got a lot of big wins there. And after that, you know, we had kind of a party round of a lot of different like angels and other, other smaller VCs. But after that, that’s when SIBO came in and, and wanted a, a bigger stake in the firm. But the whole YC experience was very much like the show Silicon Valley. Right.

[00:23:13] Barry Ritholtz: Which I, which I just loved. Yeah. So great.

[00:23:16] Jeff Chang: And to the point where, like, when we got to yc, we rented a hacker house. By the way, the house that we rented was called Hacker House. And it was a one story building with like three bedrooms, not enough bedrooms for all of us that were working there. I think Koran had to sleep on the floor on a mattress for three months. And by the way, this is coming from being over a decade on Wall Street. Like, we’re now sleeping on the floor.

[00:23:44] Barry Ritholtz: Hey, there’s nothing to do, but get this done.

[00:23:46] Jeff Chang: EE exactly. And this is why I I say like, sometimes like if a former trader on Wall Street ends up in Silicon Valley, they may end up in a dish. ’cause like you have to go four years, no pay sleep on the floor. It’s not fun. Where you’re used to like wearing, you know, suits and loafers on Park Avenue. It’s a big shock to the system. But that’s the thing is like, you know, at the same time, it’s, it’s to okay, sleeping on the floor, it’s better than sleeping on the ground when, when you’re in the military, but that, that’s the grit that you kind of go through. Right.

[00:24:14] Barry Ritholtz: Coming up, we continue our conversation with Jeff Chang, co-founder and president of Vest, talking about his experiences at Y Combinator. I’m Barry Riol. You are listening to Masters of Business on Bloomberg Radio. I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Jeff Chang. He is the co-founder and president of Vest. The firm manages $50 billion in ETFs that are described as outcome oriented investing. Some people call them buffer funds. So you have this experience with Y Combinator, any of that graduating class with you, you’re still in touch with who else were Oh,

[00:25:11] Jeff Chang: Yeah. So I’m not sure if folks out there know GitLab. Oh, of course. Sid. Sid was our, our group. My group,

[00:25:18] Barry Ritholtz: No relationship to GitHub, which predates that by

[00:25:22] Jeff Chang: A long time. But yeah. But GitLab was our, I think they IPO’ed on the Nasdaq, I think over 5 billion or something like that. They’re doing really well. There was, the equipment share was also our, our batch. A lot, lot of lot of big winners in in our, and by the way, you’ve probably been to college where you go into a lecture hall Right. And you have your first day of class. The first day of yc. You know what they tell you? They’re like, you know, 4% of you guys in this room will be billionaires. Right. You know,

[00:25:54] Barry Ritholtz: No intimidation factor at all,

[00:25:55] Jeff Chang: By the way, that’s the math. Right? Right. Sure. Like on average it’s a 4%. I I think right now it’s like five to 6% unicorn rate. But how many classes can you go through that? Like, you’re like, Hey, 4% of four to 5% of you guys are gonna have extremely successful companies coming outta this class. And by the way, you look around and you’re like, oh man, is that really possible? And then you, you, you blink 13 years later, you’re like, wow, it really did happen. Like, there, there’s incredibly successful firms and incredibly successful people. And you look back and like, even now, I look at my group partners. I, I look back, my group partners were incredible. I had Gary Tan who found an initial eyes and also is now the president, COY Combinator, Alexis o’ Handon, founder Reddit. Justin Conn founded Twitch Cap Meac, who was like an allstar in, in in marketing and pr like I had an Allstar group.

[00:26:47] Barry Ritholtz: Yeah, no, it definitely, definitely sounds like it. We’re talking about winners, but Silicon Valley wears losers like a badge of pride. Yeah. Like it’s, hey, this is what’s expected, which is very different than the way the East Coast tends to approach things. Tell us about that. Not being afraid to fail, not being afraid to try things, iterate and take this doesn’t work. Let’s go with that. How, how different is that experience on the West coast than what you experienced on Wall Street?

[00:27:22] Jeff Chang: Yeah, I, I mean definitely in Silicon Valley, failure is, is okay. They, they have a saying if you’re gonna fail, fail fast. Right. Whereas I feel like on Wall Street is like, you don’t want to fail fast. Like that’s called a blow up. Right. Right. So there, there’s some parts. Given the industry that we’re in, we had to ignore some of the, the, the aspects of it. I think everything that we did, I wouldn’t say was ultimate failure. Maybe not the success that we wanted because we wanted to make sure everything we built were strong in foundation. Right. It would like last stand the test of time no matter what happened. Hmm. Maybe not wildly successful, but then that, that’s how you pivot. So it’s not necessarily failure per se, but not the success you’re looking for. Then pivot and try to find other ways to deliver and how to solve the problem better. But I, I still think that the idea of, of not being afraid of failure and that grit and the ability to, you know, pick yourself up. It, it’s that attitude that like, you know, this is not the end. Failure is just the, the mother of success. And you just have to keep learning from those mistakes. Is everything is a learning process. I can’t tell you one person that I know that’s successful. That has not failed.

[00:28:40] Barry Ritholtz: No, that makes perfect sense. You know, you, you don’t know what’s gonna work and you don’t know what’s not gonna work until you try. Yeah. And if you know there, the, there’s a story about, hey, if you’re not failing occasionally, then you’re just not taking enough risk. Yeah. Say to say the very least. All right. So, so let’s talk a little bit about how this developed. You come out of Y Combinator sometime in 2015. When did you first start taking client assets, client money?

[00:29:12] Jeff Chang: Well, NYC we were taking client assets. I think we launched our first mutual fund in 2016. It was the first buffer fund of, of its kind. And then,

[00:29:24] Barry Ritholtz: So wait, let’s stay with mutual funds, which have their own complications with capital gains tax. Sure. Given what you do primarily with derivatives and options in order to create that buffer, how, how does that play out in a mutual fund wrapper?

[00:29:41] Jeff Chang: Yeah. There are obviously challenges that may not be as, let’s say, the same as like an ETF, that, you know, in 2019 they introduced the in kind. This is also another example of the partnership with sibo. It’s, it’s been

[00:29:57] Barry Ritholtz: Around for real estate for forever it seems. Yeah, that’s right. And it just took Wall Street a while to catch up to that. Explain what in con in kind creation and redemption looks like. Yes. And what it means to you.

[00:30:09] Jeff Chang: So in mutual funds, there’s a challenge in, in some cases that in, if there’s a redemption, you would sell your securities, which could have the potential to realize gains. And ETFs not just unique to these ETFs are all ETFs. They have the ability to, let’s say in kind securities. So when someone wants their money back, instead of giving them market maker selling securities and giving them cash, in some cases you can give them securities thereby not potentially realizing the gain for, for the shareholders. So it per has the potential for tax efficiency by having in kind. Now, prior to 2019 October of 2019, that was not, we weren’t able to do that with options that was introduced in October of 2019. So we launched our first Buffer ETFs in November of 2019 in partnership with our partners at First Trust. And so that has been one of the fastest growing areas, not just for our firm, but as the ETF industry as a whole.

[00:31:15] Barry Ritholtz: So, so let’s talk a little bit about what a Buffer fund does. What are the advantages? What are you giving up in order to obtain those vantages? What, what’s the largest fund? What’s the largest ETF now at Vest?

[00:31:30] Jeff Chang: So the largest buffer fund and the one at Vest is BUFR. And it’s built good ticker. Yeah. It’s built on the foundation that, you know, the, the kind of fundamentals of the strategy is the buffer strategy, which is, you know, let’s say you get s and p exposure for one year, the first 10% is protected. So as an example of strategy, if s and P is down 10, you’re flat for the year and then you get upside up to, let’s say a predetermined cap. So let’s say s and P is up 15, you’re up 15. But the most you can make is 15. So if s and P is up 16, you’re up 15. Right. So you’re capped out at that 15%

[00:32:09] Barry Ritholtz: Percent so’s like 23 and 24 kind of unusual. Sure. You don’t usually see 25% two years in a row. Yeah. But if you were in the fund in 22, down 22% Yeah. Means you’re only down 12%. Is that That’s right.

[00:32:26] Jeff Chang: That’s right. So

[00:32:27] Barry Ritholtz: That’s the trade

[00:32:27] Jeff Chang: Off. Yeah. And the, and here’s the thing is that most people don’t realize these strategies have the potential to outperform the market. Even if you’re talking about, you know, high double digit equity returns. ’cause think about this, in 2022 because of inflation, when interest rates went up, stocks and bonds both went down at the same time. Right? Right. You could have mixed your stocks and bonds any way you wanted in 2022 you were

[00:32:48] Barry Ritholtz: Down 60 40 was negative. Exactly. In 2022.

[00:32:51] Jeff Chang: And unless you were managing money 40 years ago, you had not experienced inflation. Right. And you couldn’t hide anywhere. I mean, you were like Tom Brady choosing between alimony and child support while taking your kids to juujitsu practice. Right. Like the thing is there was nowhere to hide. Right. Right. Whereas if you were hedging, and the great thing about hedging is if you buy s and p and you buy an s and p put that put is perfectly negatively correlated to estimate. It’s like buying

[00:33:17] Barry Ritholtz: Insurance. It’s an inverse. Exactly. Its the

[00:33:19] Jeff Chang: Opposite. Right. And so imagine if you had a strategy that did not participate in the majority of the drawdowns in 2022, that means you had more to invest to take advantage of the gains in 20 23, 20 24, and 2025. This is the compounding effect of winning without losing. Right. It’s the compounding effect of playing offense and defense at the same time. Because the end of the day is, a lot of times, you know, these types of strategies are not the get rich game. If you’re 20 years old, probably not the strategy for you. But, you know, in in, in our industry, a lot of the people that have wealth, they’re in the stay rich game. Right. These types of strategies are in the stay rich game. ’cause if, if you have wealth, you just don’t want to be poor. Right. So that’s why that’s the kind of crux of protecting your, your equity exposure.

And the, the idea is, the issue with hedging has always been that to hedge with options and so on and so forth. One of the biggest, and they had surveys on why, you know, investors and financial advisors don’t hedge with options. And they all, everybody said the same. Two things, compliance and scalability. You know, the compliance burden associated with trading options and the scalability. ’cause when you buy a fund, you buy a stock, you, you could put in your portfolio, fall asleep for 30 years, maybe you boun, rebalance once a quarter. You buy an option every 30 days, 60 days from now, you have to trade it by having it inside a fund, we can trade that for you. And so now you can asset, allocate, rebalance once a quarter. It solves a lot of those issues. And, and this is the, the thing that I find very interesting is two things.

Number one is these strategies have been around for over 30 years. The buffer structure note has been around for years. Buffer annuities I think were introduced in 2010. All we did was cut the bank insurance company out. Like instead of having the banker insurance company hedge themselves with options and then issue you a policy or issue you a No, we just said, why not just put the hedge in a fund and now you own it? We cut the middleman out of the middle. The other component is to think about in business that I, I always look back, so Richard Thaer, the professor at University of Chicago won the Nobel Prize for behavioral finance. Right. The

[00:35:31] Barry Ritholtz: Nudge essentially created the field.

[00:35:32] Jeff Chang: Yeah. The nudge. And I believe one of the studies by, by Cornell University had this study of, I think they had kids in the lunch line. They gave them free apples. Like you get the end of the, you get a free apple. Right. By the way, the consumption was like less than like, I don’t know, 20%. Like it was a very low consumption rate. No one took the apple, then they cut the apples up and they put them in little bags. By the way, the consumption went through the roof. Why? This was the nudge, this was the idea that you make it simple, people will use it. Think about options as apples. And then that we had bagged those apples to make it easier for the user to consume them without the compliance and scalability burden to them. Because theoretically, any broker or any financial advisor out there can actually trade those themselves. But that’s like the same thing. Like every child could sit there and cut their own slice their own apples, but they don’t wanna do that.

[00:36:27] Barry Ritholtz: So let me ask you, ’cause ’cause you’ve brought this up a few times, and I wanna hone in on this. Is your target consumer mom and pop main street investors? Or are you focused more on the advisor channel or brokerage channel? Who, or, or all three, some combination.

[00:36:46] Jeff Chang: We are not that focused in the retail space mostly. And, and by the way, I would say a hundred percent of our focus is in financial professionals. Really. Because that, those are our partners. Those are our, the, the people that we stand side by side with. We build products that, those are the people we’re solving problems for them, which they’re solving problems for their clients. We stand side by side with the financial professionals that manage, you know, the,

[00:37:19] Barry Ritholtz: And once you bring them up to speed, it’s, it’s incumbent on them to find the clients that think are the right fit for this. And they get to explain that rather,

[00:37:28] Jeff Chang: Rather than Exactly, because every single client is different and unique. We make products across and every client is different. And how that, that gets utilized. We, we help the financial advisor even, you know, how to best build and achieve their client’s investment objectives. But as far as like the end client, that, that’s typically not, not our customer.

[00:37:49] Barry Ritholtz: So, so I mentioned 60 40 earlier, does a buffered fund act as a substitute for 60 40? In other words, if you own, whether it’s 60 40, 70 30, you own bonds for income, of which there hasn’t been a lot over the past 15, 20 years, but also as a non-correlated asset with equity other than 81 and and 2022 does this and it offsets the volatility in drawdowns inequities. Do buffered funds behave similarly to a 60 40? Is that the thinking? I

[00:38:25] Jeff Chang: Wouldn’t say similarly. Let let me give you a, a kind of a how, how we think about it. So if you look at, let’s say, a strategy of a 10% buffer on s and p, in fact, you know, there are indexes out there that track these. Even if you compare that to let’s say like a BlackRock 60 40 portfolio, you actually notice that the standard deviation is almost identical. The volatility is very similar Right. Over the long term. But the source of the risk management is different. Right. You’re actually hedging, you’re not hoping that the correlation between stocks and bonds, the negative correlation is there that, you know, when my stocks go down, I hope my bonds go up kind of situation. Right? Well

[00:39:06] Barry Ritholtz: Historically they do most of the time. Yeah. They didn’t in 2022. They didn’t in 1981. Exactly. You know, so it, it’s every 40 years or so we seem to get this headache

[00:39:16] Jeff Chang: Or with inflation at, you know, 3%. What happens if inflation rears its head again in 20 year,

[00:39:23] Barry Ritholtz: The next rising. Exactly. You’ll end up with the same issue the next time we see a serious set. Exactly.

[00:39:29] Jeff Chang: And this is why we say why not diversify your risk management and hedge. So if I have a hundred dollars portfolio, and let’s say I have $60 in equity, $40 in fixed income, and let’s just say I take 10 bucks out, I put six, take six from equity, four from fixed income. I put it into let’s say a 10% buffer strategy. In s and p, perhaps the standard deviation of the portfolio could be very, very similar. But notice the source of your risk management has changed. You’ve introduced hedging as the source of your risk management without the compliance, without the trading. Scalability, issues of options. You’ve introduced hedging as the source of risk management if inflation were to rear its head. ’cause the thing is, this is what everybody needs to ask themselves if inflation were to come back. Right. Which is a very, is not a, is a very, there’s a high

[00:40:20] Barry Ritholtz: So non-zero

[00:40:21] Jeff Chang: Possibility. It’s

[00:40:22] Barry Ritholtz: No possibility way above that. Yeah, exactly.

[00:40:24] Jeff Chang: What in your portfolio is going to save you if 2022 repeats itself? That’s the question everybody needs to ask. I always get the, I answer commodities, great commodities. It’s a timing trade, right? That’s right. You can get in, it’ll work. But when it’s not inflationary, what happens to that trade? I, I mean I’m not, well

[00:40:44] Barry Ritholtz: Lemme point out that gold didn’t do great in 21 or 22. Yeah. It’s only in the past few years where it’s really exploded higher.

[00:40:53] Jeff Chang: That’s right. That’s right. So I’m not smart enough to time that trade. And that’s the great thing about these types of solutions is you don’t have to time the trade, right? Like you’re diversifying your risk management through just hedging. And like I said, repeat it again. This is the stay rich game, right? How do we protect wealth? Not, not like make exorbitant amounts of it, but protect wealth and, and, and get a, a decent return from, from people’s wealth.

[00:41:22] Barry Ritholtz: So buffer is 10% hedged on the s and p 500. Tell us about some of the other ETFs you guys run.

[00:41:29] Jeff Chang: So one of the kind of overall themes that we’ve seen in the market is, you know, two things that really people are looking for is downside protection. But the other one is income generation. As the boomers are in retirement, the need for yield has really shown how high it is. I mean, if you look at the derivative income space, I think in 2018, and Morningstar ranked 58th last year is ranked ninth in flows. Right? People are looking for income. And as volatility goes up, just like strategies, like writing cover calls are extremely, it’s a another way to derive yield by monetizing volatility in different asset classes. You could do it in gold, you can do it in Bitcoin, you can do it in equities, you can do it in fixed income. And that’s the thing is people were always thinking one dimensionally that like the innovation is always about thinking three dimensionally when everybody else is thinking in two dimension. Right? This is why we have, you know, build strategies to derive income from, you know, not just equities, but fixed income. But for from gold, from bitcoin, from any asset class you can. So

[00:42:37] Barry Ritholtz: Give us a few ETFs that are primarily income focused. Yeah.

[00:42:41] Jeff Chang: So one of our biggest ones is K and G, which tracks the dividend aristocrats our DVI, which tracks the dividend achievers. These all provide, you know, attractive level of yield I think. So

[00:42:57] Barry Ritholtz: Dividend aristocrats tend to be high dividend, low price. They tend not to be high PE companies. Yeah. So they’re fairly stable. Is that, is that, yeah.

[00:43:08] Jeff Chang: So the companies that have grown their dividend, this was created by s and p back in 2005, companies that grown their dividend for 25 consecutive years. Wow. And these are dividend growers. They’re not dividend payers. So they typically, I believe, you know, yield less than 2%, but they’ve grown their dividend for 25 consecutive years. So for a company to grow their dividend for 25 consecutive years,

[00:43:29] Barry Ritholtz: That’s a stable business. Yes.

[00:43:31] Jeff Chang: And it has to cash flow. It’s not a pe play. Right, right. For, for all intents and purposes, it, it is companies that have to have strong moats. And the other thing that people miss is good corporate governance. ’cause who makes dividend policy? The board for a board to never cut a dividend for 25 years. It, it actually was a filter for good corporate governance. Now

[00:43:52] Barry Ritholtz: And that stock symbol is that ETF symbol is

[00:43:55] Jeff Chang: K-N-G-K-N-G.

[00:43:57] Barry Ritholtz: Yeah. And, and you guys generate additional income on that with cover cover

[00:44:03] Jeff Chang: Call writing. That’s right. That’s

[00:44:04] Barry Ritholtz: Right. So if it’s a 2% yield, what do you actually

[00:44:07] Jeff Chang: Ballpark generating? So we’re, our distribution yield’s probably in the past year over 8%.

[00:44:13] Barry Ritholtz: Really? That’s a big number. And we’re on

[00:44:15] Jeff Chang: Average, I believe covering around 20% of every single name. So, you know, if I have a hundred shares of Walmart, I’m writing an at the money call and let’s say 20 of those shares as an example to achieve that target income. So one of the things that core beliefs that we have when writing cover calls is like one of the biggest drivers is stock selection. You pick good stocks, you get good results. Right. While you know the aristocrats, they don’t have the high flying mag seven names. Right. But definitely as you look forward into the windshield, these are really gonna be the names as the market bronze out. Right? Like I really do think in the next year you’re really looking at kind of a barbell approach where you, you, you have the NVIDIAs and the, and the high hyperscalers in your portfolio, but you really need to have the strong staples that cash flow, especially.

[00:45:05] Barry Ritholtz: What are, what are some of the names in KNG?

[00:45:08] Jeff Chang: Well, you got like Chevron, Walmart, like your really blue chip names that are there. I mean, look at Chevron. They, they, they have the potential to be, you know, one of the beneficiaries of oil in Venezuela, right? Like they were, they were there before. They, these are the cash flowing like crime like companies that like, like I said, grown their dividend for 25 consecutive years. These are strong, strong names that are out there.

[00:45:34] Barry Ritholtz: Do you, do you do anything with fixed income on the yield side? Yeah. As well.

[00:45:37] Jeff Chang: Yeah. So we have cover calls on high yield tracking. HYG gives you also, I believe a double digit distribution yield only covering about, you know, 20 to 25% of the portfolio. So you’re still getting over, you know, on a weekly basis. 70.

[00:45:55] Barry Ritholtz: And and what’s that? ETF symbol

[00:45:57] Jeff Chang: HYTI Heidi. Yeah. And,

[00:46:01] Barry Ritholtz: And what about Commod? Do you do anything on the commodity side? So

[00:46:04] Jeff Chang: We have gold, I-I-G-L-D. So you know, biggest knock on gold has been the hunk of metal. Since your portfolio doesn’t do anything now you can monetize the volatility and have, you know, potentially

[00:46:16] Barry Ritholtz: Same process covered coal writing. Exactly. So it, this is why CBO is a partner with you guys. How does that relationship help you manage all of this option writing all this? That’s a great call

[00:46:30] Jeff Chang: Activity. That’s a great question. So let’s take I Gold as an example, right? Prior to that fund, GLD options stopped trading at four o’clock. By the way, this is one of the reasons why SIBO partnered with us, is how do we solve certain issues in the option market for the construction of of funds, right? If options stop trading at four o’clock and I need to know the close, I can’t create an ETF on that. That’s right. Right. SS and p options. SPI options, they trade, they close at four 15 today. GLD options stop trading at four 15. By the way, that’s a really cool statement to say that the entire street trades GLD options, that extra 15 minutes because we wanted that,

[00:47:15] Barry Ritholtz: That’s great.

[00:47:16] Jeff Chang: But that’s because you

[00:47:17] Barry Ritholtz: Have, you have to take the closing price at four and then use it for an in day

[00:47:21] Jeff Chang: Hedge or Yeah. We that we need that, we need that option market to be open that extra 15 minutes. And by the way, that, that those products by First Trust, invest, are, are the reason why we have an extra 15 minutes to trade GLD options. So if you’re, you’re late and you’re trading at 4 0 5, that, that’s us.

[00:47:38] Barry Ritholtz: And, and option trading is so much more complicated. So much more difficult. Yeah. Like you, I started on an equity desk, but have always been a little bit of a, an option junkie. Yeah. ’cause it’s so fascinating and most people use, don’t use options correctly, they’re just making like a lottery ticket bet. Yeah. Which tends not to be smart. You guys are using options for a very specific purpose to achieve what you describe as a defined outcome. Yeah. Solving

[00:48:09] Jeff Chang: Result, a problem,

[00:48:10] Barry Ritholtz: Solving a problem started with a problem. Really interesting. Yeah. Coming up we continue our conversation with Jeff Chang, co-founder and president of Vest. I’m Barry Ritholtz, your listening to Masters in Business on Bloomberg Radio. I’m Barry Ritholtz, your listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Jeff Chang. He’s president and co-founder of Vest. The firm specializes in outcome oriented investing via primarily ETFs. They run over $50 billion in assets. Yeah. Before I get to my favorite questions, I want to ask any, so we’ve covered stocks, bonds, commodities, you mentioned crypto. What are you doing in terms of crypto and generating additional defined outcome results? Yeah. Using derivatives.

[00:49:15] Jeff Chang: Yeah. So we have a strategy also target income almost, I believe about a 18, 19% yield. And you’re still only covering about 20%. So that strategy tracks Bitcoin. So you can get on a weekly basis, let’s say, you know, 70, 80% of the upside in Bitcoin. And then a, you know, really high, high, almost 20% yield by monetizing the volatility. It’s the same thing because like, just like gold, some of the knock is, is that it just sits in my portfolio doesn’t do anything. And the value,

[00:49:47] Barry Ritholtz: Well no one could say that about Bitcoin. Yeah. It’s always doing something going up or going

[00:49:51] Jeff Chang: Down. Yeah, yeah, exactly. And

[00:49:52] Barry Ritholtz: What’s the ETF symbol for that?

[00:49:54] Jeff Chang: I bit, I’m sorry. I’m sorry. I’m, I’m sorry. Not I That’s black eye. Yeah, yeah. Defi. D-F-D-F-I-I. That’s right.

[00:50:02] Barry Ritholtz: DFII. Yeah. And so that’s options. How much of the upside, how much of the downside do you get and give up? Or is it just geared,

[00:50:13] Jeff Chang: We’re just writing cover calls on to Target, you know, a specific yield. I, like I said, I think anywhere from recovering every week about 20 to 25%. And at the money, how

[00:50:23] Barry Ritholtz: Often do those roll? Every week. Every week. Wow.

[00:50:25] Jeff Chang: Every Friday. Yeah. The reason why we like Weaks is that when you sell a call, you want the premium to go to zero, right? That’s right. And that decay accelerates in that last week if you’re selling a monthly option. So if you like do it four times a a month, you, you, you have the potential to generate more yield because you’re always capturing that extra decay. It’s like, it’s like football tickets, right? Like you ever go on StubHub like game times at one o’clock and you, you, you go on StubHub at 12, the ticket starts to drop like a rock. Right? Imagine if you kept tracking that and you, you made money off that, that that drop Right. And everything kind of follows that, that in fact, there’s actually only one thing that doesn’t follow that, you know what that is?

[00:51:09] Barry Ritholtz: Go on

[00:51:10] Jeff Chang: Giants tickets, they decay before the season starts.

[00:51:14] Barry Ritholtz: Well, as a guy who used to be in New Jersey for sure. Or

[00:51:18] Jeff Chang: Jets tickets, actually both of those are anomaly. They

[00:51:21] Barry Ritholtz: So really, so in other words, bad assets Yeah. Don’t generate good option returns. Yeah. That, that’s pretty reasonable. Yeah. How often do things get called away? That’s obviously the risk when you’re writing calls. Sure. How, how do you manage around that? How frequently is that built into your models? I mean,

[00:51:39] Jeff Chang: That can happen Oh, pretty frequently. But here’s the deal. Like, like think about this. And this is just a concept of of of of, let’s say I collect a $2 premium and the stock goes up $1.

[00:51:53] Barry Ritholtz: You’re good. Yeah.

[00:51:55] Jeff Chang: I made a a dollar, but it still got called away, but I still made a dollar. I just buy the stock back or however, however way I deal with the assignment, depending on the, the strategy. So the idea is as long as the stock doesn’t go above the premium, if I’m writing out the money or what, what I’ve actually gotten. Exactly. It

[00:52:10] Barry Ritholtz: Gives you a buffer to repurchase the stock not at a loss.

[00:52:14] Jeff Chang: Exactly. And, and this comes into what we call about the implied versus realized premium meaning options. If I look historically of a particular asset, whether it be a stock or a commodity or whatever, and it, it historically moves X I’m not gonna sell the premium at that number. Right. It’s gotta be X plus, right? Right. Just like when you sell car insurance, like if my expected loss is a thousand dollars, I’m not gonna sell the premium F for a thousand. I’m gonna sell it for $1,200 to make 200. Right. That extra little bit. Right? So in options, they have what’s called the implied versus realized premium. And so that’s really kind of where you’re trying to capture is, is the implied volatility versus what the realized volatility. And you’re hoping that the implied will be greater than the realized. I mean that’s the hope and option, especially when you’re selling them. Right. I think there’s a stat that like, you know, 60% or 70% of the time the person selling the option wins the trade. Right? Right.

[00:53:12] Barry Ritholtz: Most, you know, old option traders don’t die, they just expire worthless. Yeah, exactly. Is the old, old desk joke, but Exactly. You know, if you are a writer of options, you’re making a very specific bet. Yeah. And if you’re a purchase of options, you’re making a very different bedside.

[00:53:25] Jeff Chang: Yeah. Yeah. I mean, you see this, you know, in some cases the buying options is like you said, it, it, it, it, it can, you know, even Warren Buffet said there could be weapons of mass destruction. I mean, you could see these zero day options that people are buying.

[00:53:38] Barry Ritholtz: Yeah. That’s become crazy.

[00:53:39] Jeff Chang: I mean, those are like scratch off lottery tickets. Right, right, right. Who’s buying them? I don’t know. The kid in his mom basement popping his pimples eating manna sandwiches. I don’t know. At,

[00:53:47] Barry Ritholtz: At one point in time I imagine that there were market makers that had a hedge that for reasons Yeah. That were complicated. They were stuck with overnight positions. Yeah. Like I almost understand that, but the day traders playing with these Yeah, this is fanduels and draftking. Yeah. Pure speculative nonsense. Yeah,

[00:54:08] Jeff Chang: Exactly. So that’s why we don’t have anything in that space, but it is something to look at from afar.

[00:54:16] Barry Ritholtz: Huh. Really, really fascinating stuff. Last question before I jump to my favorite questions. So you are constantly thinking about how do we hedge this position? How do we create a buffer? How do we define a specific outcome for clients? What do you think the average investor isn’t thinking about relative to that approach? But, but perhaps should be. What, what do you think most people are kind of missing or not paying enough attention to? And, and it could be a geography, it could be a policy, whatever. But you, you’re obviously thinking about a lot of things differently than the typical index purchaser. What are we missing?

[00:54:59] Jeff Chang: Yeah, I think, you know, while we’ve had a tremendous amount of growth in, in kind of the option space of downside protection and, and the income generation part, I think a lot of the market is still, I think thinking two dimensionally in the stocks and bonds. Right? Like instead of just diversifying across, think about you could still diversify, but think about other ways to shape your return. Right? Or thinking about income generation out of the equity portfolio think about income generation or boosting yield in your fixed income part of it. And then also thinking about risk management beyond diversification there, while there is a lot of good part of the financial professional space that is picking up on this, I still don’t think like we are just tip of the iceberg at this point. Right. Hmm. That’s on one, one standpoint. I think people are, are still missing. The second I think is the, I think one of the biggest drivers in the market today, and no one would disagree is ai. Right? For sure. However, that’s not the part that people are, are, are missing that, you know, having been through the two thousands, I really feel like this is like 1999, 2000. Like think about the stocks that were big then, right? Like you had

[00:56:15] Barry Ritholtz: Juniper Networks. Yeah. Metromedia fiber. Wow. Right.

[00:56:18] Jeff Chang: Like I remember you guys remember price line

[00:56:21] Barry Ritholtz: Global crossing. Yeah. Well pri you know, a lot of these companies have been either absorbed into other companies. Yeah. And still price line Expedia, there’s a through line there. Totally. How is pets.com not Chewy today? Yeah. So some of ’em were just a little early.

[00:56:37] Jeff Chang: Exactly. So now let me ask you, who won that trade? Facebook, Google, Netflix, Amazon. Amazon,

[00:56:42] Barry Ritholtz: Apple, Microsoft. A

[00:56:44] Jeff Chang: Lot of those companies were private or startups then Google,

[00:56:48] Barry Ritholtz: Right?

[00:56:48] Jeff Chang: Yeah. Like, think about that. And I think that’s the same, like history doesn’t repeat itself. It rhymes. I actually think a lot of the, kind of the hugely successful companies from AI are in startup mode. So they’re at y combin error. 90% of the, almost 80 90% of the companies at YC are AI driven. They have, I’ve seen an article recently. Their month over month average for the batch is double digits, meaning their revenue is growing over 10% month, month to month, month over month. Wow. Or, or in some cases week over week,

[00:57:23] Barry Ritholtz: The week that, that’s unbelievable. And I, I said to someone the other day, someone said, who’s gonna de Deron Nvidia? And I said, the founder of that company hasn’t graduated high school yet, but he’s coming or she’s coming. He’s not, it’s not impossible. All right. Let’s, let’s jump to our favorite questions that we ask all of our guests. Starting with, who are your mentors who helped shape your career?

[00:57:49] Jeff Chang: Oh, that’s a great question. I would actually have to say my brother. Really? Yes. And

[00:58:00] Barry Ritholtz: In

[00:58:00] Jeff Chang: What way? My, I have an older brother. He’s four years older than me. He’s the overachiever, I’m the underachiever of the family. Okay. So my brother, I remember growing up, he was like the, he was good at math and science. I would literally show up to class and they’d be like, oh, you’re Bill Chang’s brother. You must be smart by the way, you know what that does to you as like a, a lot of pressure. Yeah. A lot of pressure. So he went on, he worked at Apple and then was at Tesla. I think he was chief architect of the Dojo Dojo project. If, if PE folks that aren’t familiar with Dojo, it’s the AI system at Tesla that coded the self-driving. Hmm. Right. He recently, and in fact, Bloomberg wrote an article about his firm density AI that I think they are one of the, the first companies to really kind of take on. ’cause the Dojo, I think system is one of the, one of the more efficient ways that can take on Nvidia for the chip. So that’s why it’s funny that you said like, Hey, the person that’s gonna deth throw Nvidia, may, may not, may still be in high school. I was like, yeah, he might just be four years older. Older than me. Or Right.

[00:59:13] Barry Ritholtz: Or he could be deep into the process already.

[00:59:16] Jeff Chang: Yeah. Yeah. So they recently, like I said, like Bloomberg just wrote an article about them on density ai. And he, he has been extremely, like, a lot of times people ask like, Hey, did you work that hard? ’cause your parents were, you know, like tiger parents? No, actually I was just chasing my brother the whole time. It was definitely a different dynamic and yeah. I couldn’t be more proud of him. And a lot of times people are like, Hey, what, what tea are the Changs drinking? Because we’re, but we get along great. While we’re competitive, we, we support each other. But he’s been, you’re in

[00:59:54] Barry Ritholtz: Different fields, so the competition. Exactly. Yes,

[00:59:56] Jeff Chang: Exactly. He’s an engineering. I I’m in finance

[00:59:59] Barry Ritholtz: Financial engine. Yeah. Yeah, exactly. So similar, similar background. Exactly. Let, let’s talk about books. What are some of your favorites? What are you reading right now?

[01:00:05] Jeff Chang: Yeah. Well, I said Liar’s Poker was Right. Classic was a very influential one. Classic. Yeah.

[01:00:10] Barry Ritholtz: Just had its 30th anniversary, I think last year. Yeah.

[01:00:12] Jeff Chang: I like, I thought was really good for me it was the book Influenced by Robert Chelani.

[01:00:19] Barry Ritholtz: Fantastic.

[01:00:19] Jeff Chang: It was a great book. The kind of along with that, how to Win Friends and Influence People. I think those are great. I actually in finance, one of my first ones was The Intelligent Investor by Ben Graham. Yeah. Ben Graham. Those are kind of cornerstones. Yeah.

[01:00:34] Barry Ritholtz: That, that’s a great list. Yeah. I know you are on planes a lot. Yeah. When you’re not reading, what, what are you streaming? What’s keeping you entertained on these long cross country flights? Either podcasts or Netflix or whatever.

[01:00:48] Jeff Chang: I do listen to podcasts. A master’s in business. Yeah. However, there’s a new thing that I I I’ve been doing, actually, it’s not a book. Right. And it, it, it’ll probably be hit everybody differently on, on what I’m doing here. Okay. And I could tell you, I got this from a good friend of mine and he’s gonna kill me for saying this. So I’m good. A friend of mine, his name Matt Bellamy, he’s the lead singer in the Muse. Okay. And he, he actually taught me this, so I can’t take credit for this. We go into chat GBT and he actually sent me the prompt and we prompt chat, GBT tell me in the last two weeks what you have learned that is beyond human comprehension. Something along those lines. Really.

[01:01:37] Barry Ritholtz: How

[01:01:38] Jeff Chang: Fascinating. And by the way, it spits out all this stuff because if you think about it, humans, like we as a human, you could get a PhD in biology, you get a PhD in astrophysicists, you get PhD in chemistry. But like, you’re the expert in their field. But think about this, that like chat GBT passed the bar exam in like, I don’t know, like a couple weeks. Right, right. So it’s becoming experts in everything and then it’s combining all of those things together. So how many like PhDs and chemistry astrophysicists do you have that like have like the expert in everything and then what comes out? Like you tend to learn so many things that like, by the way, it turns into this rabbit hole. And I noticed that my prompt actually, ’cause I always tell it to me, like, explain it to me, me like I’m 16. So I’ve been driving into this other thing of, it’s been teach me about quantum entanglement. Are you familiar with this? Of course. Well, like

[01:02:29] Barry Ritholtz: Who isn’t familiar with spooky action at a distance? I mean, they teach that in middle school. Yeah,

[01:02:35] Jeff Chang: Exactly. So the, the quantum entanglement of that, you have two protons that, you know, if you do want to XY we’ll do the same. It’s just like having two dice if dice on Earth, by the way, they’ve proven this, like if you roll the, the, the dice on earth, it rolls a six. It’ll definitely roll a six. And it’s not bound by space and time. So basically it could be light years away, you roll that dice, it rolls an eight, this one in earth is gonna roll an eight. And so then they sort of combine that with is that part of human consciousness that is your consciousness. Quantum entangled is what makes

[01:03:10] Barry Ritholtz: You, you

[01:03:11] Jeff Chang: By the way this type of like thinking, there’s,

[01:03:13] Barry Ritholtz: There’s a related topic, and I haven’t run this through chat GBT, but I should, which is the concept of emergence. Yeah. Intelligence emergence as the natural outcome of the universe. Why does the universe exist if not to create a conscience Yeah. Intelligence or, although the flip side of that is life is fairly common throughout the universe. Hydrogen, carbon, oxygen, nitrogen. But advanced technological life so far at least appears to be exceedingly rare. Yeah. So that’s the counterbalance of totally. Of emergence. Totally. But,

[01:03:52] Jeff Chang: And then the other thing that I found recently that people can dig into, I think this is fascinating, is that your head experiences time different than your feet from the proximity of gravity’s.

[01:04:05] Barry Ritholtz: Well certainly we have to adjust GPS Yeah, yeah. Because the, for the relative relative relativity Yeah.

[01:04:11] Jeff Chang: The GPS versus

[01:04:12] Barry Ritholtz: Which, which Einstein turned out to be Right. About that. Exactly. So, but the difference between your head and feet Oh yes. Is so tiny. Unless yes, you’re falling into a black hole and then spaghettification So is is the problem.

[01:04:24] Jeff Chang: Yeah. So then you take quantum entanglement and you then say, okay, if I have a proton here and a proton elsewhere, and the light and the how that proton experience is time through entanglement versus how time bends with gravity. By the way, all of this just keeps going deeper and deeper and deeper on the rabbit. And then, and then the thing is, is that I keep telling it to explain it to me like I’m 16 now. My entire prompt explains everything. I will explain it to you as if you’re 16 years old.

[01:04:57] Barry Ritholtz: So the, the issue I occasionally run into Yeah. With perplexity or, or Chachi pt, is it tends to conform its output to you. Yes. And sometimes I’ll ask a question and it’s like, no, I don’t want a list of 10 podcast questions. Yes. I just tell me about Jeff Chang and what led to vest. Don’t gimme a podcast. That’s right. I I have my own

[01:05:20] Jeff Chang: Questions. That’s why I use multiple gr everything else. Right. That, that way I get a, a whole plethora. And then what ends up happening is you get all this new stuff and then you dig deep into whatever topic. And I found that so fascinating because I just, it’s curiosity. It’s like it’s

[01:05:37] Barry Ritholtz: Continue if you’re interested in these sorts of things. Exactly.

[01:05:39] Jeff Chang: Absolutely. And, and

[01:05:41] Barry Ritholtz: By the way, but you have to be on guard for the occasional hallucination. Oh, a hundred percent. And every now and then I find myself leaving AI to go to just traditional search. Yeah. And say, Hey, show me a source for this. Is is this? Yeah. I, I don’t think before ai I don’t think people were skeptical enough about the sources of what they consumed with ai. Yeah. You really have to know what is real and what is fake. That’s right. People, people missed that. All right. Our final two questions. What sort of advice would you give to a recent college grad interested in a career in asset management? Or, or, or gen or ETFs specifically?

[01:06:22] Jeff Chang: Yeah. I think a recent college grad. I think similar to kind of bringing it full circle, same thing. Like develop the skills that, you know, you’re not beholden to anybody. Right. Whatever that is. Whether you’re in college or outta college. Like, develop those skills that you can actually, that they’re portable, one to the other. And then not be afraid of failure. Take chances. Now, this is not for everybody. I would say, you know, meaning not everybody is going to be a founder. Not everybody’s gonna be an entrepreneur, which I, by the way, I find as two different people. Founder has the creativity. An entrepreneur has the grit and influence. A founder has to have the creativity. ’cause you’re, you’re actually introducing a whole new industry or a whole new thing that somebody else has not seen yet. Right. But that’s the thing. And then also keep your eye out for painful problems that you have the skillset to solve. So obtain those skill sets and then have your eyes out, eyes peeled throughout life. Write them down.

[01:07:29] Barry Ritholtz: Look for pain points,

[01:07:31] Jeff Chang: Look for pain points, look for problems. And then the second, the last thing is just a personal thing is don’t take yourself too seriously. Right. Have fun with life. And, and I think that, that, that is, ’cause otherwise all this stuff can create massive amounts of burnout.

[01:07:46] Barry Ritholtz: And our, our final question, what do you know about the world of buffered funds investing ETFs today might have been healthful 15, 20 years ago when you were first getting started,

[01:07:59] Jeff Chang: How hard it would’ve been, right. Like literally,

[01:08:03] Barry Ritholtz: Would that have discouraged you from launching or, yes.

[01:08:06] Jeff Chang: I think that was actually the superpower, right? Like when you climb a mountain and you don’t know how high it is and there’s a cloud base, if you saw and a clear view, it, it probably wouldn’t be, if you told me to quit my job and I wouldn’t get paid for four plus years, I probably wouldn’t have done that. But then it’s like always success is always around the corner. At least you dream of it, right? Everybody sees what you are now. They don’t see the pain where you’re constantly just waiting for that cloud to clear on the next part of the mountain. Because I, I could tell you this, that like, if, if, if you saw the how big the mountain is, it would be nobody would do it. Huh.

[01:08:43] Barry Ritholtz: Really, really interesting. Yeah. Thank you Jeff for being so generous with your time. We have been speaking with Jeff Chang, co-founder and president of Vest. If you enjoy this conversation, well check out any of the 600 we’ve done over the past 12 years. You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever you get your favorite podcasts. I would be remiss if I didn’t thank the Croc staff that helps put these conversations together each week. Alexis Noriega is my video producer. Sean Russo is my researcher. Anna Luke is my podcast producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

~~~

 

 

The post Transcript: MiB: Jeff Chang, President and Co-Founder of Vest appeared first on The Big Picture.

Poland Plans Social Media Ban For Under-15s

Three months after Australia banned minors under the age of 16 from accessing social media, Poland is preparing to do the same thing.

A 14-year-old boy poses at his home near Gosford as he looks at social media on his mobile phone in New South Wales, Australia, on Oct. 24, 2025. David Gray/AFP via Getty Images

A bill is currently being prepared by the largest party in Poland's ruling Civic Coalition Party that would prohibit children under the age of 15 from using social media platforms, and would require tech companies to verify users' ages. 

Education Minister Barbara Nowacka laid out the plan on Friday, which include fines of up to 6% of the worldwide (global) revenue of social media companies if their services remain accessible to under-15s. 

"We need to limit access to social media for children under 15. At the same time, we need to work on mental health and raise awareness among children, parents, and the entire Polish society about the dangers of social media," Nowacka said. 

If sped through legislation, Poland's bill could take effect as early as 2027, however the coalition hasn't fully signed off yet, and it will undoubtedly face legal pushback from US tech giants. 

As the Epoch Times notes further, on Dec. 10, Australia became the first country to impose nationwide restrictions on minors accessing social media, banning those under 16 from a dozen platforms.

The restrictions were brought in amid concerns over mental health, online harms, and screen addiction affecting Australian children.

Poland is the latest country in the European Union to say it was planning to introduce a ban or some other form of restriction, with other member states similarly citing concerns over children’s mental health.

In France, legislation is moving through parliament to ban children younger than age 15 from accessing social media platforms. Denmark and Slovenia are likewise looking at bans for under-15s.

Spain will follow Australia in banning social media for minors under age 16.

Portugal is taking a different approach. Rather than introducing an outright ban on children under a certain age from accessing social media, it aims to require explicit parental consent for children aged 13 to 16 to access the platforms.

Other countries around the world are making similar plans, including Malaysia, which says it will ban social media accounts for children younger than age 16 this year.

‘Age-Gating’ Social Media

British Prime Minister Keir Starmer announced a series of new proposals earlier this month aimed at protecting young people from social media addiction, including a proposed ban for under-16s, subject to a public consultation.

Some measures by the UK and the EU to curb online harms have led to tensions with the United States, home of many big tech companies, around issues of free speech and regulatory overreach.

Privacy and free speech advocates, such as UK-based Open Rights Group, say that a social media ban for under-16s would be an ineffective response to online harms.

The Open Rights Group says it would lead to “age-gating” across all social media platforms, requiring users to prove their age.

“Protecting children online should not mean building a surveillance infrastructure for everyone,” Open Rights Group spokesman James Baker said.

“We need regulation that puts users back in control, not policies that force people to trade their privacy and voice for access to modern life.”

Rachel Roberts and Reuters contributed to this report.

Tyler Durden Mon, 03/02/2026 - 04:15

Gulf States Say They've Shot Down More Than 1,500 Iranian Missiles, Drones

Authored by John Haughey via The Epoch Times (emphasis ours),

Five Persian Gulf nations that host U.S. military installations claim they have collectively shot down more than 1,500 Iranian missiles and drones since the United States and Israel launched their joint attack at 9:45 a.m. Tehran time on Feb. 28.

A plume of smoke rises from a reported Iranian strike in the industrial district of Doha on March 1, 2026. Mahmud Hams/AFP via Getty Images

The United Arab Emirates (UAE)—whose forces have battled Tehran-backed Houthis in Yemen—has borne the brunt of the Iranian attacks.

While numbers are fluid and reported timelines varied, as of 6 p.m. ET on March 1—2:30 a.m. March 2 in Iran—the UAE Ministry of Defense reported it had knocked down 165 ballistic missiles, two cruise missiles, and more than 540 drones.

Debris from destroyed projectiles crashed into several Abu Dhabi residential neighborhoods, killing at least one civilian, the ministry reported, also stating that at least three people have been killed in Iranian strikes in UAE.

The attacks are “a blatant violation of national sovereignty and international law,” the ministry said in a statement, warning UAE would “take all necessary measures to protect its territory, citizens and residents, and to safeguard its sovereignty, security and stability.”

Bahrain’s military said March 1 that its air defense systems had intercepted at least 45 missiles and nine drones, with the U.S. Navy’s Fifth Fleet headquarters in Manama and a British navy base specifically targeted.

No casualties were reported at the U.S. and UK bases. British forces reported shooting down a drone in Manama. UK Prime Minister Keir Starmer on March 1 said the British have accepted a U.S, request to use its bases across the Middle East, including its large air base in Cyprus, to strike Iranian missile launchers.

Kuwait’s military reported it shot down nearly 100 missiles and almost 300 drones during the first 24 to 36 hours of the conflict.

The Iranian attacks focused on Ali Al-Salem Air Base where American and other international forces are stationed. Drones also struck Kuwait International Airport on Feb. 28, causing minor injuries and “limited damage.”

Italian Deputy Prime Minister Antonio Tajani, however, told Italian news outlet ANSA that a Kuwait International Airport runway sustained extensive damage.

Qatar’s Ministry of Defense said it shot down 65 ballistic missiles and at least 12 drones fired at it from Iran. “We possess the full ability to protect the country and fend off any external threat,” the Qatari ministry said, adding Qatar is “secure and stable,” although the country’s air space has been temporary closed to commercial traffic.

Two ballistic missiles struck the U.S. Al-Udeid Air Base causing no reported casualties and little damage, while a drone strike disabled an early warning radar installation.

Most U.S. Air Force airmen and aircraft normally stationed at Al-Udeid, including KC-135s in-flight refueling jets, C-17A Globemaster transports, and C-130 Hercules airlift transports, were moved to other bases in the Mediterranean and Diego Garcia in the Indian Ocean in the days preceding the attack.

Jordan’s armed forces reported March 1 that they had intercepted 13 ballistic missiles and knocked down nearly 50 drones targeting U.S. forces at Muwaffaq Salti Air Base.

“The armed forces engaged 49 drones and ballistic missiles targeting Jordanian territory today,” the Jordanian armed forces said in a statement, adding “13 ballistic missiles were successfully intercepted by Jordanian air defense systems, while drones were shot down.”

An undetermined number of missile and drone attacks have also been reported in Saudi Arabia, Iraq, and Syria.

U.S. forces at Harir Air Base in Erbil in northern Iraq’s Kurdistan area were attacked with missiles and drones with no casualties and little damage reported. British forces report they knocked down several missiles in Iraq.

ZeroPointNow Mon, 03/02/2026 - 03:30

UK, France, Germany Slam Iran For 'Reckless' Retaliation - Are Ready To Assist Israel And US

Leaders from Germany, the UK and France are waving their fists over Iran's "reckless" retaliatory strikes in the region, and say they're ready to throw down to stop Tehran from further responses. 

Britain's Prime Minister Keir Starmer makes a statement from Downing Street in central London on Feb. 28, 2026, following the U.S. and Israeli strikes on Iran. Jonathan Brady/POOL/AFP via Getty Images

On Sunday, German Chancellor Friedrich Merz, British Prime Minister Keir Starmer, and French President Emmanuel Macron stood in solidarity, saying in a joint statement that they were "appalled" by Iran's "reckless" retaliatory strikes that targeted not only US and Israeli military sites in the region - but other allies as well (Dubai got the business, among others). 

"We will take steps to defend our interests and those of our allies in the region, potentially through enabling necessary and proportionate defensive action to destroy Iran’s capability to fire missiles and drones at their source," the statement reads. "We have agreed to work together with the US and allies in the region on this matter." 

British forces have already engaged - with a Typhoon fighter jet shooting down an Iranian drone with an air-to-air missile during a defensive air patrol in Qatar. 

As the Epoch Times notes further, Starmer addressed his nation on the matter later on March 1, revealing that he also granted a request from the United States to use UK bases in the region to attack Iranian missile sites. But he affirmed that this did not mean that he was tasking British armed forces to join the United States in offensive action.

“Iran has launched sustained attacks across the region, at countries who did not attack them,” Starmer said. ”They’ve hit airports and hotels where British citizens are staying. This is clearly a dangerous situation.”

The prime minister noted that at least 200,000 British citizens were in the Middle East, including residents, families on vacation, and others in transit.

He defended his government’s decision to allow the United States to use British bases to attack Iranian missile launchers and storage depots, calling it a “defensive” action and saying the only way the threat will be stopped is by destroying the missiles at their source.

“Iran is pursuing a scorched earth strategy, so we are supporting the collective self-defense of our allies and our people in the region, because that is our duty to the British people,” Starmer said.

Meanwhile, Merz announced on X that he would meet with U.S. President Donald Trump on March 3 to discuss the latest developments, noting that he remained in close contact with other European powers, Israel, and the affected region.

“Now is not the time for finger-pointing, but for unity and joint action,” he said.

The Associated Press contributed to this report.

Tyler Durden Mon, 03/02/2026 - 02:45

When The Return Flight Is The Only Goal: Merz Ends China Trip

Submitted by Thomas Kolbe

It took some time for the supposed difference between Annalena Baerbock’s feminist foreign policy and the approach that the diplomatic corps under Chancellor Friedrich Merz would take to become clear. What has changed is less the substance than the performative act. Under the Sauerland-born Merz, tone and gestures shifted—the staging is meant to appear more masculine, sober in style, perhaps more professional, less embarrassingly activist—but the content remains largely unchanged.

Ironically, arch-enemy Donald Trump became the spiritus rector of a new theatrical element in the Chancellor’s media showcase. In Trump-style, Friedrich Merz announced on February 25 the climax of his China trip: the conclusion of a major order for the European aerospace giant Airbus. China will acquire 120 aircraft, models A320, A350—details to follow later—ordered from the company that has become the most successful “success child” of the European project.

The Chinese hosts are politely attentive: they don’t let the Chancellor return home empty-handed and grant him quick fame in the 2026 super-election year. Images, headlines, pathos—the stage is set. The Chancellor as doer, as promoter of German and European interests, as a foreign-policy acquirer in global competition—a German Donald Trump?

A sober look at the numbers puts the theatrics in perspective. Year after year, Chinese customers fill Airbus’s order books with hundreds of aircraft. Major orders from China are no exception; they are part of a long-established procurement rhythm. Demand is structural, not spontaneous—the production slots had long been planned and coincided with the Chancellor’s trip by chance.

A media storm in Trump-style, with the small but crucial difference that the U.S. president returns from foreign trips with real investments in his industry’s production capacity. Factories are built, sites expanded, capital flows measurably into American value creation. Whatever the magic formula—tariffs, deregulated economy, robust growth—America attracts real investments, binding capital and industrial substance domestically.

Friedrich Merz, by contrast, presents routine industrial orders as personal triumphs. He frames scheduled large orders as the result of his diplomatic prowess—a German deal-maker in action. But the crucial difference is that for career politician Merz, only media impact counts. One brings production capacity home; the other brings press releases.

Let’s credit Merz: his trip falls during a critical election phase. In such moments, images, gestures, and quickly digestible wins matter. Fleeting triumphs feed the narrative of the doer in the chancellery, regardless of catastrophic domestic performance.

It is also reassuring that Germany continues to receive the highest protocol honors in China and that Beijing evidently values German history more than the sad present. Reception in the Great Hall of the People by Premier Li Qiang, a personal audience with President Xi Jinping, evening dinner, military welcome at the airport. The choreography is flawless: flags, honor guards, carefully staged images. Protocol-wise, Germany still plays in the Champions League.

Geopolitically, however, the picture is different. Merz called China a “strategic partner” before the trip without defining what this means in the current world situation. Beijing firmly backs Moscow in the Ukraine war. How does the Chancellor think the EU’s 20 sanction packages against Russia affect relations with Beijing? Every new measure against Russia is not just a signal to the Kremlin but also a geopolitical marker toward China.

Merz could personally observe China’s perspective on Germany and the EU’s growing isolation in geopolitics. Protocol pomp does not reverse strategic erosion. From Beijing’s perspective, the question is simple: what offer should one make to a delegation from a country that has weakened its industrial base through self-inflicted dismantling while simultaneously complaining about trade disadvantages?

The consequences of European eco-socialism are immense. Germany has become a net importer of capital in trade with China. The trade balance increasingly tilts against it. In key industrial sectors, competitive advantages have eroded; energy-intensive value creation is under pressure.

Against this backdrop, sympathy for the Chancellor and his economic representatives is limited. The misery is homegrown. Every new regulation, levy, or transformation mandate tightens industry further, reducing Germany’s flexibility in global competition.

In China—a political dictatorship under a single party but economically largely guided by market efficiency—German-European moralizing meets maximum incomprehension. There, scale effects, productivity, market share, and technological sovereignty matter. Moral self-assurance does not replace industrial strength.

Merz lamented unfair Chinese trade practices given Germany’s deep trade deficit. Market access must be fair, disadvantages avoided. The words sound determined, aimed at reciprocity in global trade. And they sound naive.

Because isn’t it worth asking whether Europeans have long been world champions of hidden protectionism? Whether German and European policies repeatedly sparked the grotesque race toward emission-free economies via maximal repression? Regulatory hurdles, taxonomies, supply-chain laws, CO₂ border adjustments—all form a dense mesh of indirect market barriers.

It is by no means China’s fault that Germany’s economic propulsion—industry, engineering, machinery, automotive—has, under EU regulations and energy-transition fanaticism, disassembled at accelerated speed. Those who systematically eliminate their own cost advantages lose ground globally and geopolitically.

Merz exemplifies a European political class eager to blame external actors for structural weaknesses. He is living proof that Europe and Germany have a long way to go before a brutally honest assessment of problems.

Flattering China and the apparent alignment on population surveillance and censorship expansion makes Europe, at best, an unloved vassal of Beijing.

Europe, as a cultural entity, should seek salvation in alignment with Americans. In the bastion of free markets, deregulation, and rational energy policy—in the land of ICE and Christian-humanist cohesion—lies the most likely, only acceptable future for European policy.

China sees Europe as a dumping ground for surplus production—Europe as a decaying heir of the colonial era. European markets absorb domestic overcapacity. Structural dependency on resources like rare earths and energy grows. The leverage is not in Europe.

The era of European dominance is over. Moral self-assertion against factual dependence? Helpless. Puerile. Expensively paid.

Friedrich Merz’s visit to China was a campaign appearance for the CDU. He followed diplomatic protocols but was substantively unremarkable. The images were staged; strategic impact remains limited. Europe deserves better policy.

* * * 

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

Tyler Durden Mon, 03/02/2026 - 02:00

Is The US Military Campaign Against Iran Part Of Trump's Grand Strategy Against China?

Authored by Andrew Korybko,

The goal is to obtain proxy control over Iran’s enormous oil and gas reserves so that they can be weaponized as leverage against China for coercing it into a lopsided trade deal that would derail its superpower rise and therefore restore US-led unipolarity.

Trump claimed that the US’ military campaign against Iran is to “defend the American people”, while many critics have alleged (whether in jest or not) that it’s to distract from the Epstein Files, but few observers realize that it’s actually all about China. It was explained here that Trump 2.0 “decided to gradually deprive China of access to markets and resources, ideally through a series of trade deals, in order to imbue the US with the indirect leverage required to peacefully derail China’s superpower rise.”

To elaborate, “The US’ trade deals with the EU and India could ultimately result in them curtailing China’s access to their markets under pain of punitive tariffs if they refuse. In parallel, the US’ special operation in Venezuela, pressure on Iran, and simultaneous attempts to subordinate Nigeria and other leading energy producers could curtail China’s access to the resources required for fueling its superpower rise.”

The resource dimension that’s relevant to Iran is a major part of the US’ “Strategy of Denial”.

That’s the brainchild of Under Secretary of War for Policy Elbridge Colby, and it was expanded on in this analysis here from early January.

As was written, “US influence over Venezuela’s and possibly soon Iran’s and Nigeria’s energy exports and trade ties with China could be weaponized via threats of curtailment or cut-offs in parallel with pressure upon its Gulf allies to do the same in pursuit of this goal”, which is to coerce China into indefinite junior partnership status vis-à-vis the US through a lopsided trade deal.

Most observers missed it, but the new National Security Strategy calls for ultimately “rebalance[ing] China’s economy toward household consumption”. This is a euphemism for radically re-engineering the global economy through the previously described means, namely curtailing China’s access to the markets and resources responsible for its superpower rise, so that it no longer remains “the world’s factory” and thus ends its era of being the US’ only systemic rival. US-led unipolarity would then be restored.

Circling back to Iran, “[it] represented about 13.4% of the total 10.27 MMbpd of oil [that China] imported by sea” last year per Kpler, hence why the US wants to control, curtail, or outright cut off this flow. ‘Plan A’ was to achieve this through diplomatic means for replicating the Venezuelan model that entered into effect after Maduro’s capture. Iran flirted with this but didn’t commit since it would entail the country’s strategic surrender, ergo why Trump authorized military action for achieving this instead.

In pursuit of this, Trump promised the IRGC in his video announcing his country’s military campaign against Iran that they’d have immunity if they laid down their arms. This reinforces the abovementioned claim that the US wants to replicate the Venezuelan model since it strongly suggests that he envisages newly US-aligned IRGC running Iran in the political interim before new elections just like the newly US-aligned Venezuelan security services run their own country during their own current political interim.

Such a scenario would avert Iran’s possible “Balkanization”, thus preserving the state so that it can then resume its prior role as one of the US’ top regional allies, which might then aid the Azeri-Turkish Axis’ efforts to project Western influence along Russia’s entire southern periphery. In that event, the US would simultaneously obtain unparalleled resource leverage over China via proxy control of Iran’s oil and gas industries while tightening its encirclement of Russia, which would deal a powerful blow to multipolarity.

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

Tyler Durden Sun, 03/01/2026 - 23:40

DOJ Charges 30 More People For Minnesota Church Invasion

Via Headline USA,

Attorney General Pam Bondi announced charges Friday against 30 more people who are accused of civil rights violations in a January protest inside a Minnesota church where a pastor works for Immigration and Customs Enforcement.

Bondi said on social media that 25 people were in custody and more arrests would follow.

The new indictment comes a month after independent journalists Don Lemon and Georgia Fort and prominent local activist Nekima Levy Armstrong were charged for their alleged roles in the protest at Cities Church in St. Paul, Minnesota.

“YOU CANNOT ATTACK A HOUSE OF WORSHIP. If you do so, you cannot hide from us — we will find you, arrest you, and prosecute you,” Bondi wrote in the post.

“This Department of Justice STANDS for Christians and all Americans of faith.”

In total, 39 people now face charges of conspiracy against religious freedom and interfering with the right of religious freedom.

The new defendants will have an initial court appearance and a magistrate judge will set conditions for their likely release. Lemon and Fort said they were at the church as journalists covering news. Levy Armstrong was the subject of a doctored photo posted by the White House showing her crying during her arrest. The three have pleaded not guilty.

Protesters descended on Cities Church on Jan. 18 after learning that one of the church’s pastors also serves as an ICE official. The protest drew swift condemnation from Trump administration officials and conservative leaders for disrupting a Sunday service.

The indictment says the “agitators” entered the church in a “coordinated takeover-style attack” and engaged in acts of intimidation and obstruction.

“Young children were left to wonder, as one child put it, if their parents were going to die,” the indictment says.

A lawyer for the church praised the Justice Department for charging more people.

“The First Amendment does not give anyone — regardless of profession, prominence, or politics — license to storm a church and intimidate, threaten, and terrorize families and children worshipping inside,” Doug Wardlow said in a statement.

The revised indictment adds new allegations when compared to the original filed in January.

It says two people “conducted reconnaissance” outside the church a day before the protest and recorded their visit on video, with one saying, “My thoughts are to be able to close up this whole alleyway right here.”

The court filing quotes one protester as chanting in the church, “This ain’t God’s house. This is the house of the devil.”

Separately, a woman who was at the church service has filed a lawsuit against some people who were charged, alleging emotional trauma and an inability to exercise her religion that day.

The protest came at a tense time in Minnesota, where the Trump administration sent thousands of federal officers for Operation Metro Surge after a series of public fraud cases where the majority of defendants had Somali roots. Officers frequently deployed tear gas for crowd control in neighborhood clashes with residents, often detaining them along with immigrants.

On Jan. 7, a federal officer fatally shot Renee Good, 37, in Minneapolis. In another fatal shooting a week after the church protest, a federal officer killed 37-year-old nurse Alex Pretti.

Nationwide demonstrations erupted in response, followed by a change in Operation Metro Surge’s leadership and the eventual wind-down of the immigration enforcement operation. Roughly 400 ICE officers and Homeland Security agents were expected to remain in Minneapolis by early March, down from roughly 3,000 at the peak, according to a court filing.

Since then, the Twin Cities have grappled with the impact to communities and the local economy. The city of Minneapolis said it suffered an impact of $203.1 million due to the operation, with tens of thousands of residents in need of urgent relief assistance.

Tyler Durden Sun, 03/01/2026 - 16:20

Joe Biden Makes Insane Claim That He Reduced Illegal Immigration

It's time for a fact check.  Former President Joe Biden is back after a year largely absent from the public eye, and he's just as incoherent as ever.  Biden left the White House in disgrace after a dismal first term when his own party supplanted him as the primary candidate for the 2024 elections against Donald Trump. 

His cognitive decline became obvious after his debate performance and questions remain if he was actually aware of the majority of his own executive orders and pardons, or if these were signed illegally by one of his staff with an autopen.  Furthermore, he left the nation is a state of complete chaos, but in a recent speech at a South Carolina Democratic Party event in Columbia, he claims he actually did a bang-up job. 

Biden took to the podium, slurring and stuttering, but did manage to rewrite history when he argued that:

"Despite the fact that Covid drove migration to record levels all around the world, the day I left office, border crossings in the United States were lower than the day that I entered the office I inherited from Trump. That’s just a fact.”

Biden also asserted that he left Trump with the "strongest economy in the world" when he exited office.  Truly, a mind boggling version of events. 

It should be noted that it's highly unlikely that Joe wrote these statements himself or that he is fully aware of what he is saying (like most of his presidency).  However, if this is the DNC's fantastical historical revision then it needs to be addressed.

As soon as Joe Biden was "elected" in November of 2020, illegal immigration began to surge.  With Trump on the way out the signal had been sent to begin flooding the southern border.  Efforts among globalist NGOs and the UN to fund and equip migrant caravans started well in advance of the election.  Once in office, the Biden Administration oversaw the worst immigrant invasion in US history.

Apprehensions, catch and release, amnesty claims and unchecked crossings skyrocketed. 

Biden certainly did not leave office with less illegal immigration than when he entered.  His claim that crossings were in decline at the end of his term is technically true, but this was not because of any policy his administration enforced.  It was, in fact, the state of Texas and their "Operation Lone Star" designed to lock down their vast border. This project resulted in a 74% decline in crossings in 2024.

Measures included cargo containers and razor wire as deterrents to illegal migrants, as well as increased border patrols.  The Democrats consistently interfered in these efforts, using a temporary Supreme Court ruling to justify tearing down razor wire and actively allow migrants to pass in direct violation of the constitutional mandate to protect US states from foreign invasion.  

The argument that the pandemic triggered the border surge is nonsensical.  Covid restrictions under Trump that ended asylum claims (Title 42) initially slowed the already low crossing numbers to a crawl.  The explosion in crossings occurred after Biden's election.   

Almost immediately upon Biden's exit and Trump's return, a handful of policy changes resulted in a 95% drop in illegal border crossing.  Not only that, but migrant camps in Mexican towns just across the southern border disappeared.  Meaning, all the Democrat claims that these migrants were "fleeing poverty, war and persecution" were completely fabricated.  If that had been true, then the migrants would have stayed at the border because they would have had nowhere else to go.

The shut down of the Democrat's CBP One mobile application (which streamlined asylum claims) was the final nail in the coffin for their immigration agenda.  Illegal crossings are now at lows not seen since 1970, and a new border wall was not even necessary. 

Sadly, the US is still dealing with the aftermath of Democrat control and the migrant invasion. An estimated 10 million illegals entered the country on Biden's watch, adding to already high numbers of illegals over the course of the past 20 years.  Democrats continue to misrepresent the history of these events, just as they continue to obstruct any attempts to deport the foreigners they allowed in. 

Tyler Durden Sun, 03/01/2026 - 15:45

The Trump Administration Ditches Another Rogue DOJ Official

Authored by Tudor Dixon via American Greatness,

The second Trump administration is very different from the first. As 45th president, Donald Trump was saddled with disloyal officials who constantly undermined his agenda. The Ukraine impeachment scandal, among other events, was the result of this internal subversion.

But the second term sets a new standard for loyalty.

The administration will no longer tolerate rogue officials making their own policy.

This was made clear last week when the administration pushed out Gail Slater, the Justice Department’s antitrust chief.

Slater made a name for herself by going against administration policy and insisting on her personal priorities. While some misguided conservatives praised Slater as a “MAGA patriot,” her record reveals a very different streak. She was weak on China, weak on defending free speech, and weak on combating woke corporations.

Her departure signals that the second Trump administration is serious about ensuring officials are committed to the president’s agenda.

Slater ran afoul of the administration in her incorrigible opposition to the HPE-Juniper merger. The merger was supported by national security experts in the administration as necessary to counter the growing menace of Chinese tech dominance. The merger would allow American companies to coalesce resources to take on Huawei on the world stage. 

One official told Axios last year that blocking the deal would have “hindered American companies and empowered” Chinese entities. But Slater was resolutely opposed to it, in spite of the national security claims raised. The administration overruled her objections and approved the deal anyway. “Competition is global, and a combined HPE-Juniper is a stronger bulwark against that, against Huawei,” a government source told Fortune on why the administration approved the merger. “It will be the only U.S.-based company that provides the entire technology stack that Huawei does.”

It should be noted that one of Slater’s deputies who oversaw this matter was a Chinese sympathizer. Roger Alford was one of Slater’s key allies in the DOJ’s Antitrust Division before he was forced out last year. He boasts a record of praising China since the early 2010s and once even criticized Trump to a Chinese audience over his desire to reform the trade imbalance between the two countries.

Slater has a dubious record on free speech. In 2020, she signed on as a member of a project dedicated to formulating a framework for “moderating speech online.” The report, in which her name appears as an endorsee, praised social media companies for suppressing “misinformation” about COVID-19 and “hate speech.” The study also urged governments to take a proactive stance on “moderating” online content to ensure that liberal standards are enforced.

While Slater and her allies like to proclaim her as a bold populist standing up against corporate power, she approved one of the more concerning business moves in recent history. Disney, which stands as one of the wokest companies in the country, was able to add important NFL media assets to its empire. The deal raised eyebrows for giving the NFL partial ownership of ESPN, which is supposed to be an independent body covering the league, as well as for allowing Disney to grow even larger in the market. Experts warned the deal could result in price hikes for consumers and violate the spirit of antitrust laws. But Slater seemed unmoved by these arguments and approved the deal before departing from the DOJ.

It’s unclear how it serves the nation to defend the interests of Huawei and Disney, but Slater made a point to do so in her role at the DOJ.

If we want to make America great again, Trump needs reliable team players to enact his agenda. Slater did not fit the bill. She had her own agenda that did not fit with the MAGA one. That’s why she’s out of office.

Tyler Durden Sun, 03/01/2026 - 15:10

Oil Soars Over 10% In OTC Trading, Whether That Sticks Depends On How Long The War Lasts

With war in the middle east raging, and the world's most important oil transit choke point - the Straits of Hormuz which accounts for 20% of daily global oil transit - "effectively" halted after at least three ships were attacked in the vicinity of the waterway - even as Iran’s Foreign Minister Abbas Araghchi told Al Jazeera TV his country has no intention to close the Strait of Hormuz and has kept it open so far, markets have just one question: where does oil open when futures resume trading in a few hours. 

Well, we can tell you: according to the IG Weekend Market, an OTC market that reflects prices across over the counter exchanges, oil is set to open more than 10% higher, with spot WTI trading around $75 and Brent set to rise over $80.

Source: IG

That's not the question: the question is where does oil trade in a week, a month, a year, and - tied to that - what happens to the oil price curve.

The price spike comes despite OPEC+’s announced modest supply hike. But for such gains will sustain, or extend, investors will need to decide that the conflict is going to drag on. Indeed, this new wave of war is bigger, broader and messier than last June’s fighting. The gap between attacks and retaliation has narrowed: In previous waves it took days, but now it’s hours.

As Bloomberg's Garfield Reynolds reminds us, during the 2003 invasion of Iraq by US-led forces, crude actually tumbled at the start of hostilities, on speculation the US would achieve a rapid victory. It ended up rebounding from an April trough to enter a long uptrend as it became clearer that there would be no straightforward resolution. 

The stakes are higher for oil this time. Iran’s output accounts for more than Iraq’s did in 2003, and Iraq had much less capacity to threaten the Strait of Hormuz. Iran has said it doesn’t plan to close the key shipping channel, but there have already been signs that the conflict is halting tanker traffic.

“Tankers are starting to build by the Strait of Hormuz, but nothing seems to be going through at the moment – tankers are definitely spooked,” said Matt Smith, oil analyst at energy consulting firm Kpler.

That means any lack of clarity on the endgame increases the potential for sustained advances in crude over the coming weeks. Any signs of a prolonged and drawn-out struggle boost the likelihood of crude reaching $80 a barrel and beyond, with Bloomberg Economics outlining a scenario that sees oil spiking above $100 in an extreme disruption scenario.

Sure enough, Middle East leaders have warned Washington that a war on Iran could lead to oil prices jumping to over $100 per barrel, said veteran OPEC analyst Helima Croft from RBC. Analysts from Barclays also said prices could rise to $100.

Other analysts see a more modest jump depending on how the conflict develops. Prices should rise by at least $3 to $5 per barrel when trading starts, said Andy Lipow, president of Lipow Oil Associates. 

The worst-case scenario is an attack by Iran on Saudi oil infrastrucure followed by a complete closure of the Strait, Lipow said Sunday. Oil prices would jump by $10 to $20 in this scenario, the analyst said, which he put at a 33% likelihood. 

And so, while the world waits to see next steps, it's buying oil and asking questions later. The attacks already are much wider in scope than last June. Iran’s response already has gone beyond the retaliation it offered in the opening stages of June’s war.

For its part, Bloomberg's economists thing Iran’s response will continue to escalate. While it can’t match the US’ military superiority, Iran can impose significant costs and seek to bog the US down in the region. Iran’s targets already include US bases in the region and Israel. Tehran could expand to energy infrastructure and regional shipping routes, either directly or through its partners in the region. That includes the Houthis in Yemen, who’ve said they’ll resume their disruption of shipping in regional waters. The possible outcomes are laid out in the chart below.

Source: Bloomberg

The price of oil will ultimately be determined by where the war finds its equilibrium point. 

In a possible indication that the oil price spike will be brief, Trump said Sunday that Iran wants to talk and he has agreed to do so, leaving open the possibility that there might be a path to de-escalation that avoids a big, prolonged disruption.

“They want to talk, and I have agreed to talk, so I will be talking to them,” Trump told The Atlantic on Sunday. The president told CNBC that U.S. military operations in Iran are “ahead of schedule.”

Tyler Durden Sun, 03/01/2026 - 14:31

Robert De Niro Could Face 5 Years In Prison Over Trump "Get Rid Of Him" Threats

Authored by Steve Watson via Modernity.news,

Bill O’Reilly has called for the Secret Service to haul in Robert De Niro for an “intensive interrogation” following the actor’s repeated threats against President Trump, warning that De Niro could face up to five years behind bars if convicted under federal law.

The demand comes amid growing scrutiny of De Niro’s unhinged anti-Trump rants, which have exposed the depths of Trump Derangement Syndrome among leftists desperate to undermine America First leadership.

O’Reilly zeroed in on De Niro’s recent MSNBC interview where the actor repeatedly declared “we got to get rid of him” in reference to Trump.

Bill O’Reilly says Robert De Niro should be pulled in by the Secret Service for an “intensive interrogation” after reportedly threatening President Trump.

If convicted, O’Reilly says De Niro could face 5 years in prison.

O’REILLY: “Now, he said the words, ‘we got to get rid of… pic.twitter.com/PtXZPkkf3d

— Overton (@overton_news) February 26, 2026

“Now, he said the words, ‘we got to get rid of him’ three times,” O’Reilly stated.

He slammed MSNBC host Nicolle Wallace for failing to challenge De Niro on the spot.

“Any interviewer other than Nicole Wallace would have said, ‘what do you mean by that? He’s elected. 77 million people voted for him,’” O’Reilly noted.

“What’s ‘we got to get rid of him?’ Are you talking about impeachment? What are you talking about?” he added.

O’Reilly then put himself in the shoes of the Secret Service director, emphasizing the gravity of such statements given the recent assassination attempts on Trump.

“So, I’m watching this and I’m the head of the Secret Service,” O’Reilly said.

“USC, US code 871, it is a crime to threaten not only the president of the United States but the vice president and everybody else in succession,” he added.

“And with Donald Trump and the assassination attempts, this goes WAY up,” the host stressed.

“Okay, so I’m the Secret Service director and I’m seeing this three times, ‘we got to get rid of him’ — I got agents pulling De Niro in for a Q&A and he better have a lawyer,” O’Reilly asserted.

He warned that De Niro’s responses during questioning could lead to charges, noting “Now, you could charge him based upon his answers to the interrogation.”

“If he takes the fifth, a refused answer on the grounds, right? You could charge him. And if he were convicted, he’d get 5 years in prison under this code,” O’Reilly urged.

As we previously reported, De Niro broke down in tears during that same MSNBC appearance, sobbing over Trump’s supposed “division” while claiming the President is “attempting to destroy this country.”

In the interview, De Niro spluttered, “You have to lift people up. You can’t divide people… this thing (Trump) they’re destroying, attempting to destroy this country and maybe not even understanding why. It’s up to us to protect the country.”

He also ranted about Trump refusing to leave the White House, stating, “We see it we see it we see it all the time, he will not want to leave.”

De Niro has previously labeled Trump advisor Stephen Miller a “Nazi,” adding, “He’s a Nazi. Yes, he is, and he’s Jewish and he should be ashamed of himself.”

“Everything, the point is we have to keep fighting and pushing until he is out, period. There’s no other way. He’s not going to want to leave the White House,” De Niro has insisted.

O’Reilly’s analysis highlights how Hollywood’s unchecked hatred is now crossing into potential legal territory, especially as Trump’s policies expose the failures of leftist agendas.

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Tyler Durden Sun, 03/01/2026 - 14:00

CNN Forced To Admit Dems Are Tanking On Immigration Despite Anti-ICE Propaganda

Authored by Steve Watson via Modernity.news,

Fresh analysis lays bare the Democrats’ crumbling position on immigration, with voters trusting Republicans more than ever to handle border security—even as radicals ramp up their attacks on ICE and deportations.

CNN data analyst Harry Enten highlighted the stark shift during a recent segment, noting that despite the barrage of anti-ICE rhetoric, Democrats are faring worse now than during Trump’s first term.

“Despite EVERYTHING that’s been going on, Democrats in a WORSE position than Trump’s 1st term!” Enten said.

? BREAKING: CNN was just forced to confirm that Democrats are PLUMMETING on the issue of immigration despite the relentless propaganda and smears on ICE

WOW, they are down -11 points from Trump's first term! ?

"Despite EVERYTHING that's been going on, Democrats in a WORSE… pic.twitter.com/9LV5DY3U4H

— Eric Daugherty (@EricLDaugh) February 26, 2026

He pointed to polling data showing voters believe “They think Democrats will do a WORSE JOB on immigration than Republicans.”

On border security specifically, Enten added: “Border security? HELLO! 2018, Republicans up 13. The advantage is a little LARGER NOW, up 15 points!”

Dismissing any notion that Democrats could capitalize on the issue, he concluded: “The idea Democrats can take the ball and run away on it? Polling says NO, NO, NO.”

This comes amid a wider hardening of public attitudes toward immigration enforcement. Republicans now hold a five-point lead on who Americans trust more on immigration—a complete reversal from Democrats’ six-point edge in 2018.

The propaganda stemming from places like Minnesota against ICE has clearly failed, as Enten’s breakdown confirms.

These developments build on the groundswell of support for deportations. As detailed in our earlier report on overwhelming American demand for deporting illegals and full ICE cooperation, polls from outlets like Cygnal and Harvard Harris showed 73% agreeing illegal entry is a crime, 61% backing deportations, and 67% insisting on local officials working with federal authorities.

Multiple surveys reinforced this, with 55% to 64% favoring mass deportations across sources like the New York Times, Marquette, CBS News, and ABC News. Enten himself previously noted this “uniformity across four pollsters” as a “majority view,” with 63% supporting deporting recent arrivals and 87% for those with criminal records.

The leftist frenzy only amplifies this backlash. Incidents like this Minnesota woman stalking and abusing ICE agents tracking a child rapist murderer illegal, showcase the radicals’ dangerous obstruction. 

Her chilling admission that she “doesn’t care” about victims underscores the extremism driving voters away.

From high school assaults on pro-ICE students to AOC’s “teach-ins” on interfering with operations, these tactics are fueling everyday Americans to rally behind Trump’s crackdown.

DHS reports spikes in threats and assaults on agents, yet the public tide turns harder against open borders. With 55% now wanting decreased immigration levels—the highest since post-9/11—globalist policies are being rejected outright.

As Enten’s latest numbers prove, the Radical Left’s sabotage is collapsing under its own weight. Trump’s push to secure borders and empower ICE isn’t just popular; it’s the mandate restoring sovereignty and safety to American streets.

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Tyler Durden Sun, 03/01/2026 - 12:50

Convicted Child Sex Offender To Run For Office In California

You can already hear some liberals and left-leaning libertarians now:  "He paid for his crime, right?  So what's the problem? What about the politicians mentioned in the Epstein files...?"

But "whataboutism" is not a valid argument for rationalizing societal decay.  And if America isn't capable of applying the most basic standards at the lowest levels of government, then America is lost.

Rene Campos, a registered sex offender, is seeking elected office in California - launching a campaign for Fresno City Council amid fierce backlash and renewed questions about whether someone with his record should hold public office.

Campos was arrested in 2018 following a cyber tip to the Central California Internet Crimes Against Children Task Force.  He was found in possession of child sex abuse material, according to court records. In 2021 he entered a no-contest plea to a single misdemeanor charge of possessing and controlling child pornography/child sex abuse material (likely under California Penal Code § 311.11).  He served only one month in prison and a two year probation period.

Campos describes himself as a gay man who is running for office on the platform of "reduced crime and rehabilitation."

  

Possession of child pornography is typically treated as a felony, even in a woke haven like California.  How the Fresno candidate was able to make a deal for a misdemeanor charge and spend only one month in prison is a mystery, but this does help to confirm ongoing suspicions that California's legal system is falling into steep decline. 

California is notoriously soft on child sex abusers.  Recently, a Sacramento parole board released Daniel Allen Funston, who was convicted in 1999 of sixteen counts of kidnapping and child molestation after a horrific crime spree in Sacramento County, during which he kidnapped, raped, and beat eight children ages 3 to 7. 

Funston was originally sentenced to three consecutive life terms plus 20 years, but was set free at age 64 due to a California elderly inmate program (maybe he'll run for office, too).  

Data from 2022 shows that the Golden State released over 7000 child sex offenders after less than one year of incarceration.  Interestingly, "digital blocks" were added to the Megan’s Law website that prevent more recent analysis. 

State Senator and LGBT activist Scott Weiner has supported multiple pieces of legislation that help to reduce punishments for sex offenders.  He authored a bill in 2017, signed into law, which created a three-tier sex offender registry system in California. It allows some "lower-risk" offenders (including those convicted of misdemeanor possession of child pornography) to petition for removal from the registry after 10-20 years (Tier 1 or 2), rather than lifetime registration. 

Perhaps the most disturbing factor is that in California a candidate like Campos actually has a good chance of winning.  He is a member of the LGBT community, a minority, and he appeals to the progressive desire to prove that laws are "artificial constructs" and that criminal convictions should not "define a person."  In other words, Campos could win the election simply because he gives leftists an opportunity to prove that even the worst criminals are merely downtrodden victims who were never given a chance to succeed.   

Tyler Durden Sun, 03/01/2026 - 12:15

Germany's Pension Time Bomb: $2+ Billion In CRE Losses Expose Cracks In The Fiat Era

Submitted by Thomas Kolbe,

A shock for the insured members of the Versorgungswerk Zahnärzte Berlin-Brandenburg (VZB). According to a report this week by Bloomberg, losses at the private pension fund total €1.1 billion. Roughly 50 percent of its invested capital has effectively been wiped out—channeled into private loans to non-listed companies, including rPlanet Earth in California, a shrimp farm in northern Germany, and, repeatedly featured on the investment menus of German pension funds, U.S. commercial real estate.

The auditors, advisors, and executives involved now face what may become a legal marathon. Much suggests that VZB ventured well beyond the traditional risk framework that would normally be considered prudent for a professional pension institution.

A similar fate befell the Bayerische Versorgungskammer (BVK). Last year it recorded accounting losses of up to €853 million. Once again, U.S. commercial real estate exposures were at the center of the turbulence, including properties such as the Transamerica Building in San Francisco—an internationally recognized problem asset.

Unlike VZB, however, BVK has substantial financial reserves. The assets it manages still total around €170 billion. On this robust capital base, it secures retirement benefits for physicians, lawyers, and numerous other professional groups.

The Bloomberg report further lists additional pension schemes displaying a similar pattern: recurring write-downs in the U.S. commercial real estate segment. Among the affected institutions are the Kirchliche Zusatzversorgungskasse des Verbandes der Diözesen Deutschlands (KZVK), the BASF Pensionskasse, the Telekom Pensionskasse, and the Apotheker- und Zahnärztefonds Schleswig-Holstein.

Nationwide, at least 18 pension institutions have taken unscheduled write-downs totaling more than €2 billion on commercial real estate investments since 2020. The system is under pressure—but it is not yet tottering. German pension funds collectively manage around €300 billion in assets. Nevertheless, pressure on asset managers to recalibrate risk profiles to a changed interest-rate and market environment is likely to intensify in the coming years. But where can reliable returns still be found when the classic portfolio mix of safe sovereign bonds—upon which entire pension systems were built over decades—appears to belong to the past?

Few will be able to avoid adding equity risk going forward. Allocations to precious metals—and possibly to Bitcoin, the so-called digital gold—as assets without traditional third-party risk appear to be a logical option. Equity stakes in the energy sector are also likely to gain significantly in attractiveness. In particular, the economic superpowers U.S. and China are on the verge of a massive AI and nuclear power boom, developments that are likely to be reflected in capital markets.

Yet many portfolio managers have remained anchored to the old worldview: sovereign bonds and commercial real estate—precisely those segments that, against the backdrop of high public debt and negative demographic trends, are increasingly losing structural stability and thus implying growing downside risk—remain dominant building blocks of portfolio strategy.

This traditional portfolio approach promised stable income and attractive yields. What was overlooked, however, is that structural shifts have fundamentally altered the underlying data: the rise of remote work, sweeping restructuring within the American economy, and the accelerating deployment of artificial intelligence have significantly reduced demand for conventional office space. What was intended as yield-enhancing diversification has, in many cases, turned into concentrated risk—with substantial consequences for the stability of the affected pension institutions.

Mounting pressure under expansionary monetary policy led to a gradual shift away from the liquid, stable-yielding, long-term sovereign bonds that had proven themselves over decades, toward higher-yielding but significantly more illiquid asset classes. Many asset managers tilted portfolios toward private debt, real assets, and promissory note loans backed by real estate covenants—extending even into high-risk mezzanine financing for non-listed, speculative projects.

The sharp interest-rate hikes that followed years of monetary expansion in 2022 hit the real estate sector with full force. Insolvencies increased, default risks slipped beyond the effective control of auditors, while asset managers responded to monetary volatility and swelling public debt by assuming ever greater risks.

The combination of prolonged ultra-low rates followed by abrupt tightening has exposed the weaknesses of many investment strategies.

The deep cracks now visible in the financial architecture of German pension funds are systemic. Years of low-rate policy aimed at financing highly deficit-ridden state budgets, along with the economic damage inflicted by lockdowns during the Covid years, have dramatically increased pressure on both investors and pension portfolio managers. In essence, we have been living under this policy regime since the great debt crisis a decade and a half ago.

Pension liabilities require a minimum return on invested capital. The crisis in bond markets is pushing investor strategies further along the risk curve into asset classes that traditionally did not appear on the radar of these institutions’ portfolio managers. Put differently: high volatility and the selloff at the long end of top-rated sovereign bonds reflect a fundamental reassessment of inflation and debt risks currently underway in government bond markets. The fiat credit-money system is entering a particularly volatile phase.

How private pension funds and insurance systems will ultimately be financed and backstopped remains unclear. Will state guarantee funds step in if losses escalate into systemic risk and entire institutions begin to wobble?

Experience from the rescue practices during the great financial crisis suggests that governments may once again act in line with the protective umbrella strategy associated with former German Chancellor Angela Merkel. That would mean placing large bond issues on the market, underwritten by the European Central Bank, to secure payment flows and obligations of affected institutions. Market distortion follows market distortion—an intervention spiral designed to stabilize the financial structure in the short term, yet failing to resolve underlying problems and sending fatal signals for further misallocation of capital.

For individual investors, it is crucial to recognize that many central banks have gradually reduced their bond holdings after years of large-scale asset purchases.

The fact that major central banks—such as China’s—are increasingly backing their balance sheets with structurally expanded gold reserves is a clear warning signal.

How stable is our banking system, really? How large are the third-party risks hidden in balance sheets? And how liquid will bond markets remain in the coming years if even formerly fiscally reliable states like Germany issue hundreds of billions of euros in new debt?

The fact that numerous states worldwide have begun expanding strategic energy and commodity reserves is another strong signal. It suggests that future currency systems may, sooner than expected, once again become more tightly linked to real scarcities—whether precious metals, energy, or broad commodity baskets.

The era of unbacked fiat credit money, at least in its current form, is gradually drawing to a close. German pension funds must incorporate this reality into their calculations—sooner rather than later.

* * * 

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

Tyler Durden Sun, 03/01/2026 - 10:30

Amazon Warns Of "Degraded" AWS Service In UAE After "Power Issues" Amid Middle East Conflict

Iran's retaliatory attack ramped up on Sunday after the U.S.-Israeli Operation Epic Fury killed Supreme Leader Ayatollah Ali Khamenei on Saturday morning. Follow-on strikes were reported in Israel, across multiple Gulf states, and maritime incidents affected commercial shipping lanes in and around the Strait of Hormuz.

One notable and unexpected point of disruption has emerged in the Middle East critical infrastructure on Sunday morning, with Amazon reporting that its Middle East (UAE) data center region has experienced a power issue that degraded internet connectivity and impaired cloud service availability.

AWS reported that its ME-CENTRAL-1 Region (mec1-az2), which refers to a specific cluster of AWS data-center infrastructure in the United Arab Emirates, is experiencing operational issues due to a "localized power issue." AWS stated that the severity of the incident is "degraded."

"Other AWS Services are also experiencing error rates and latencies for some workflows. We have weighed away traffic for most services at this time. We recommend customers utilize one of the other Availability Zones in the ME-CENTRAL-1 Region at this time, as existing instances in other AZ's remain unaffected by this issue," AWS wrote on its status page, adding, "We are actively working to restore power and connectivity, at which time we will begin to work to recover affected resources. As of this time, we expect recovery is multiple hours away."

UAE Data Center Map 

Data Cables Map 

The AWS status report made no mention of whether the power disruptions were due to Iranian missile or drone strikes on UAE critical infrastructure, such as transmission lines or power generation facilities.

Earlier, the UAE Ministry of Defense announced that the "country was subjected today to a blatant attack by Iranian ballistic missiles, which was dealt with by the UAE air defenses with high efficiency, and a number of missiles were successfully intercepted."

BREAKING:

The air defense systems of the UAE are countering Iran’s air attack against the Emirates tonight pic.twitter.com/Hui0VESXFF

— Visegrád 24 (@visegrad24) March 1, 2026

Beyond the UAE, Bahrain, Kuwait, Qatar, Jordan, and Israel have been subjected to Iranian retaliatory attacks - this is mostly because US military installations are in these countries.

Qatar's Ministry of Defense issued a statement saying: "The State of Qatar expresses its strong condemnation of the targeting of Qatari territory with Iranian ballistic missiles."

The UAE has confirmed a temporary closure of its airspace as an "exceptional precautionary measure."

One key question is whether the conflict is now spilling beyond military targets and into civilian critical infrastructure. If that line has already been crossed, U.S. hyperscalers expanding in the UAE, including Microsoft, whose commitment totals about $15.2 billion and includes significant AI and cloud datacenter spending, may need to be reassessed given the fiery geopolitical climate.

Tyler Durden Sun, 03/01/2026 - 10:15

Tens Of Thousands Stranded Amid Mass Airspace Closures At Mideast Hubs: "It's Chaos Here"

The US State Department is warning all American citizens to exercises extreme caution when traveling abroad amid the ongoing US-Israeli military operation against Iran, which has included two days of heavy bombing aimed at regime change - and which has already resulted in the death of Ayatollah Ali Khamenei and some 40 top military leaders.

"Following the launch of U.S. combat operations in Iran, Americans worldwide and especially in the Middle East should follow the guidance in the latest security alerts issued by the nearest U.S. embassy or consulate," a fresh weekend US notification says. "They may experience travel disruptions due to periodic airspace closures. The Department of State advises Americans worldwide to exercise increased caution."

Explosions at Dubai International Airport following Iranian strike.

Not only is Israel's airspace closed, as Iranian retaliatory ballistic missiles rain down, but much of the Gulf nations have restrictions and airspace closures in place. This after at least two regional airports have been struck.

"One person has been killed and 11 injured at airports in Dubai and Abu Dhabi, as Iran launched attacks across the Middle East in response to a massive and ongoing attack against it by the US and Israel," BBC reports.

Abu Dhabi authorities said a drone targeting Zayed International Airport (AUH) was intercepted, resulting in "falling debris" which killed one person and injuring seven.

Dubai International Airport, one of the busiest hubs in the world, has also been hit and suffered damage. So it's not just the skies over the region which are dangerous at this moment, but in some cases the very airport terminals, especially if located just across the Persian Gulf from Iran, amid its broader retaliation targeting US bases and those Arab states hosting them. The Iranians appear to be going straight after Gulf civic infrastructure, given the same is being done to Tehran.

"More than 3,400 flights were canceled Sunday across seven airports in the Mideast, according to flight tracker Flightradar24," AP notes. "Airports in Dubai and Abu Dhabi in the United Arab Emirates, and Qatar’s capital, Doha, and Manama in Bahrain were among those closed."

Evacuation starts at Dubai International Airport after it was struck by Iranian suicide drones. pic.twitter.com/gPoWCAWjy6

— Lapo Pontecorvi (@LapoPontecorvi) March 1, 2026

Thousands are stranded at regional airports, and many are likely seeking refuge and shelter elsewhere in these cities, as major civic infrastructure from Bahrain to UAE to Kuwait could come under potential attack. "It's chaos here" - some stranded British travelers have said:

Thousands of Britons have been left stranded in the Middle East after global airlines grounded hundreds of flights due to US and Israeli strikes against Iran.

Iran and Iraq’s airspaces were closed due to the escalating military action, which has seen blasts reported in multiple countries across the region, and Dubai International Airport, the biggest global aviation hub, suspended all flights on Saturday.

Mike Boreham, who had been on holiday in Dubai with his wife, was due to get the 1.10pm British Airways flight back to Heathrow when the captain told the passengers the airspace had been closed.

And it goes the other way too. People from the Mideast and Mediterranean region who are trying to get back home often cannot at this point:

Tens of thousands of Israelis found themselves unable to return to Israel on Saturday after Israel and the US launched a major joint military strike on Iran.

As Iran responded by firing missiles and drones, Israel closed its airspace until at least Monday, the Transportation Ministry said, making travel through Ben Gurion Airport and other flight hubs impossible.

Rescue flights are being planned for when Israel reopens its airspace, with El Al announcing it was putting a wide plan in place and saying that its own ticket holders will automatically be assigned seats.

Dubai authorities are shutting down the entire airport after an Iranian missile struck Terminal 3 at Dubai International Airport, source in the airport told me. pic.twitter.com/zibMPKHgJi

— Ihtisham Ul Haq (@iihtishamm) February 28, 2026

Meanwhile President Trump has called for full regime change in Iran, after the Iranians have already appointed an interim successor to the slain Ayatollah Khamenei. This means that US-Israeli military operations there could continue for days more, and possible weeks, or even longer. 

The Middle East's travel woes, and possibly by extension and domino effect - some European hubs - could soon grow much worse. Of course, this is the least of the region's problems as broader war breaks out.

Tyler Durden Sun, 03/01/2026 - 09:55

EU Imposes Drastic Tariffs on Chinese Goods: Is A Trade War Looming?

Submitted by Thomas Kolbe

Tensions in international trade policy are escalating on multiple fronts. After the U.S. Supreme Court initially declared the tariff regime implemented by President Donald Trump since April of last year unlawful, it appears the administration has explored new ways to stabilize its tariff policy going forward.

The signs on the international trade front continue to point toward turmoil. Not least, it is the ramped-up Chinese export machine that is increasingly in the crosshairs of U.S. protectionism and European defensive measures.

Beijing is using its massive export engine to offset deflationary pressures in its domestic economy—a result of state-induced capital misallocation and a shrinking population. Through export subsidies and other support measures, the government seeks to stabilize employment while boosting industrial production.

However, this comes at the expense of trade margins and production capacities in other countries, which increasingly fall behind in competition with China.

It was predictable that the still high-purchasing-power internal market of the European Union would attract attention, given the U.S.'s hardline approach. Europe risks becoming a de facto unloading hub for Chinese goods. The consequences are evident in the trade balance, which recorded a deficit of €305 billion for the EU economy last year.

Weakened by its own energy policy and the regulatory framework of the green transition, European manufacturers in nearly all industrial and consumer sectors face the global competitive arena with their backs to the wall. The ongoing deindustrialization has significantly contributed to many European business models losing ground in international competition.

Germany, in particular, appears as a sort of laboratory experiment: in trade with China, the country has now become a net importer of capital. The former know-how advantage of German engineering is no longer unassailable—it seems to be history.

European policymakers now appear determined to pursue a path of protectionism themselves.

On February 7, 2026, the European Commission adopted Regulation 2026/274, responding to the Chinese export surge with anti-dumping tariffs. The first targeted product group: ceramic and porcelain imports. Around 60% of the assortments in European e-commerce and physical retail come from Chinese production. Tariffs within this group were raised from 18–36% to a consolidated 79%.

The affected products include, among others, tableware and kitchen items made of ceramic, porcelain, and stoneware originating from China. This also includes items such as spice grinders, coffee mills, and pizza stones. The new tariff regime is set to last initially for five years.

The Commission acted without involving national parliaments—mirroring the approach frequently criticized when applied to U.S. President Donald Trump, particularly in trade matters. In precisely those instances where Brussels regularly demands transparency, multilateralism, and rule-based procedures, it now itself takes unilateral executive action. Viewed in this light, criticism of Trump’s unilateralism appears profoundly hypocritical.

The Commission’s executive action reflects a rather elastic interpretation of its mandate. Should it identify dumping practices by trade partners—as in this case—it may impose corresponding tariffs. Neither the Council of the European Union, the European Parliament, nor national governments are involved in this process—a clear indication of growing concentration of power in Brussels.

The consequences of this tariff move—which is likely to expand to additional product groups—impact not only Chinese exporters but also European traders. They report liquidity shortfalls, rising insolvency risks, and significant challenges in compensating pre-financed transactions. The interests of European consumers evidently play no role in Brussels’ decisions.

Should further categories such as e-bikes, auto parts, or tires be added, as is currently rumored, this could have tangible effects on consumer prices across the EU. Moreover, the tariffs apply retroactively to ongoing shipments, further exacerbating the financial strain on European traders.

Brussels’ drastic response indicates that parts of European industry are under severe pressure from Chinese imports—and that the escalation in trade policy has now reached a new level.

So far, the Chinese leadership has not reacted to Brussels’ tariff measures. Chancellor Friedrich Merz may place trade issues at the forefront during his visit to China from February 24–26, where he is also expected to meet President Xi Jinping.

Recall that last year the dispute over the strategically critical export of rare earths—dominated by China—nearly escalated twice. Beijing is not hesitant to wield its geostrategic leverage in trade policy and defend its interests with a firm hand.

Fundamentally, a recalibration has occurred. In its strategy toward China, the EU is first raising the tariff wall, ignoring potential countermeasures from Beijing. Starting July 1, 2026, e-commerce imports from third countries with a value under €150 will face a €3 flat-rate fee per package. This aims not only to complicate invoicing by Chinese companies via third countries but also to exert targeted pressure on trade channeled primarily through platforms like Temu and Shein.

According to the EU, these measures aim to curb unfair competition and stabilize the internal market. Of course, such claims must be taken cum grano salis. Europeans are, after all, the undisputed masters of hidden trade protectionism. Their regulatory catalogs—particularly in climate policy—contain numerous non-tariff measures with deep protective effects.

Global trade is increasingly moving within geopolitical spheres of influence. Europeans would be wise to align with U.S. rules and integrate into the Western hemisphere. Yet Brussels appears intent on simultaneously confronting both major trade blocs.

* * * 

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

Tyler Durden Sun, 03/01/2026 - 09:20

85% Of Babies In 2026 Will Be Born In Asia And Africa

In 2026, 85% of babies worldwide will be born in just two continents: Asia and Africa.

Where someone is born can shape everything from access to education and healthcare to long-term economic opportunity.

This map, via Visual Capitalist's Bruno Venditti, shows how global births are distributed across continents, based on population projections from the United Nations.

Asia Accounts for Nearly Half of Global Births

Asia is expected to see about 64.9 million births in 2026, accounting for roughly 49% of all births worldwide. Despite declining fertility rates in countries like China, Japan, and South Korea, Asia’s sheer population size keeps it at the center of global demographics.

South and Southeast Asia, in particular, continue to contribute large numbers of births each year. As a result, nearly one in every two people born in 2026 will be born somewhere in Asia.

Africa Makes Up More Than One-Third of Global Births

Africa is projected to record 47.6 million births in 2026, representing 35.9% of the global total. This reflects the continent’s high fertility rates and young population structure.

Many African countries are still early in their demographic transitions, with limited declines in birth rates so far. As population growth accelerates, Africa’s share of global births has been rising steadily and is projected to increase further later this century.

Smaller Shares in the Rest of the World

All other continents account for a relatively small share of global births.

Latin America and the Caribbean are expected to see 9.3 million births, or 7% of the total, while Europe accounts for just 4.6%. North America’s share stands at 3%, reflecting lower fertility rates despite population growth driven by migration. Oceania contributes 0.5% of births, and Antarctica, with no permanent population, records no births at all.

If you enjoyed today’s post, check out The World’s Safest (and Least Safe) Countries on Voronoi, the new app from Visual Capitalist.

Tyler Durden Sun, 03/01/2026 - 08:45

AI Boom And European Bond Markets: A Deep Dive

Submitted by Thomas Kolbe

The “credit pump” could rightfully claim its place as a symbolic flag of the European Union. With virtually unlimited access to the bond market, politics magically transforms an inexhaustible credit stream into political maneuvers and ideological wizardry. Through this manipulation of money, processes and institutions are transplanted into the real world that, under normal circumstances, could never have surpassed the fantasies and limits of political ideology.

Wind turbines in forests, fully electric cargo bikes in an industrial nation that destroys its own engines of prosperity in favor of an artificial green subsidy economy, plunging itself into trillions of euros in new debt – a historically unprecedented degrowth spectacle, which has not erupted into open revolt only because hundreds of thousands losing their jobs are somehow absorbed into the public sector or cushioned, if not sedated, by the largesse of the German welfare state.

The same applies to open-border policies. Here too, perpetual credit seems to lubricate a project designed to unlock new voter potential for the political left. This process becomes possible through the systematic destruction of monetary value. National debt is not merely a fiscal problem; it erodes the fragile economic fabric of society. Moreover, it sends the fatal signal that an overpowering actor like the state can override the limits of productivity, reason, and scarcity at the push of a button.

Thus, the so-called debt brake was a political paper tiger from the start: Germany abandoned the path of political seriousness long ago and joined the ranks of debt magicians. It has become a driving force in an ideologically overgrown swamp of debt, making the refinancing problems of heavily indebted Eurozone states increasingly visible year after year.

Leading the debt race this year is the magic duo Germany-France. Budget figures are falsified, accounting tricks like special funds have become the standard of self-deception. Both countries enter 2026 with new debt of roughly five percent each.

The overall refinancing requirement of the Eurozone stands at €1.5 trillion. These are the gross issuances of government bonds necessary to roll existing debt forward and finance newly incurred deficits. 

This means around €100 billion more must be funneled into public coffers via the bond market. Will the legal framework be adjusted? Will major capital pools, banks, and pension funds be further coerced into the fiat credit system? Will the ECB once again step in massively as a buyer to dampen rising interest rates amid higher debt loads?

But how long can such a process sustain itself like a perpetuum mobile? When will the seemingly inexhaustible sources of the bond market run dry? The political camouflage will end when only the European Central Bank, as lender of last resort, keeps new debt liquid through massive market interventions. With each intervention, the money supply grows, along with doubts about the currency’s stability. Trust erodes, and the truth about the manipulation of interest rates, time preferences, and real costs – including the financial dimension of green transformation and migration into European social systems – can no longer be concealed.

This would be the moment of truth, the instant the house of cards of permanent debt starts to wobble. The crucial question is: which forces or developments could accelerate this process? Real resources for financing investments in the capital stock are limited. The state competes for credit to fund its social, climate, and military ambitions. It systematically displaces productive capital and lures scarce resources into unproductive channels with promises of returns, incentives, and subsidies. Growth dies; the nation’s prosperity diminishes.

If this is insufficient, additional credit is mobilized – if necessary, through central bank bond purchases. Meanwhile, pressure on the bond market intensifies: investors increasingly turn away from long-term government securities, while in the United States, the AI-driven economic miracle is heating up capital markets.

US tech corporations alone plan bond issuances of up to $360 billion this year to finance additional data centers and expand energy capacities. The European market is also under the sights of Microsoft, Google, Facebook, and others. Bonds worth €120–170 billion are expected to be placed on the Euro market, a growth of over ten percent compared to last year. The US economy is mobilizing all sources to anchor domestic growth with capital.

A tough competitor for sovereign issuers, as the private sector lures with dynamic business projects and generally higher returns. 

How much additional capital will flow from Europe to the United States? How large is the negative effect triggered by this American capital vacuum in the EU, which must mobilize resources to fund growing welfare states?

Clearly, interest rates will gradually rise, making refinancing and debt service in Europe more expensive. Budgetary room will shrink further.

And it becomes obvious what no one talks about: the massive downward movement of the US dollar against the euro is now a trap. Every investment from a European perspective in the United States, with a prospectively rising USD, becomes more profitable and yield-bearing. The strong euro acts as a second tariff barrier and intensifies the suction effect of investment capital into the US.

The Eurozone, and thus the economically closely interlinked EU member states, are coming under growing pressure. Geopolitically dependent on their energy suppliers, they remain rigid toward the energy and resource giant Russia. Europe walks a narrow line between dependence and self-interest.

Europe is strong when it relies on its regional competencies and strengthens intra-continental competition. Only this way can business models, engineering skill, and ideas emerge to meet the strong competition from China and the US on equal footing and maneuver into a better strategic position relative to competitors.

Ideologically, patriotic-conservative forces are called upon to end the climate-socialist madness, stabilize budgets, and put an end to the disastrous open-border policies – time is pressing for fiscal consolidation and state downsizing, even if Brussels and Berlin see it differently.

State downsizing and consolidation may sound like political fairy tales, yet Europe should never be written off. The continent has repeatedly emerged from severe crises and self-inflicted civilizational ruptures renewed and reinvented.

Capital and cultural foundations exist. Perhaps the American capital vacuum will help bounce Europe’s cultural decay – financed by the debt printer – off the wall of truth in the bond market.

* * * 

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

Tyler Durden Sun, 03/01/2026 - 08:10