70% Of US Farmers Say That They Won't Be Able To Buy All The Fertilizer They Need In 2026

Authored by Michael Snyder via The Economic Collapse blog,

We might want to listen to what the farmers are telling us, because if they don’t grow our food we do not eat. Coming into this year, we were already facing the worst farming crisis in America in at least 50 years. Farmers all over the nation are drowning in debt, and farm bankruptcies have been soaring. In all my years, I have never seen America’s farmers so angry, and now the crisis in the Strait of Hormuz has made things much worse. Spring planting season is here and there is a global scramble for whatever supplies of nitrogen fertilizer that happen to be available. As a result, prices have skyrocketed and farmers all over the planet are facing some incredibly tough choices.

That is even true here in the United States.

According to a brand new survey that was just conducted by the American Farm Bureau Federation, 70 percent of U.S. farmers say that they will not be able to purchase all of the fertilizer that they need in 2026 because it has become so expensive…

Conducted by the American Farm Bureau Federation April 3-11, the survey shows 70% of respondents say fertilizer is so expensive that they will not be able to buy all the fertilizer they need.

More than 5,700 farmers, both Farm Bureau members and non-members, from every state and Puerto Rico took the survey. Farm Bureau economists analyzed the results in the latest Market Intel.

The analysis reveals that almost 8 in 10 farmers in the southern U.S. say they can’t afford all needed supplies this year, followed by the Northeast and West at 69% and 66%, respectively, compared to 48% of the farmers in the Midwest.

Fertilizer prices were already at frighteningly high levels even before the war with Iran started, and since that time they have surged dramatically…

Nitrogen fertilizer prices have gone up more than 30 percent since the start of the conflict on Feb. 28, according to Market Intel. Combined fuel and fertilizer costs have also risen between 20 and 40 percent, with urea prices jumping 47 percent since late February.

Many people out there don’t seem to understand this yet, but this is going to affect all of us.

If 70 percent of U.S. farmers use less fertilizer this year, those farmers will grow less food.

If there is less food available, prices will go up.

Needless to say, food prices are already at ridiculous levels, but they are going to go even higher.

In impoverished countries, conditions will be even worse.

Due to a historic lack of nitrogen fertilizer, hundreds of millions of families that are currently barely existing “may soon find they are only able to afford little or no food”…

In many parts of the world, vulnerable families who today are currently managing to put some food on the table may soon find they are only able to afford little or no food.

“If this conflict continues, it will send shockwaves across the globe, and families who already cannot afford their next meal will be hit the hardest,” said WFP Deputy Executive Director and Chief Operating Officer Carl Skau.

I wish that I could get people to understand how serious this is.

Goldman Sachs is publicly admitting that the global fertilizer crisis is spreading a lot faster than they were originally projecting.

We desperately need the Strait of Hormuz to be reopened immediately, but that simply isn’t going to happen.

The Iranians continue to strangle commercial traffic through the Strait, and the U.S. has now “completely” cut off traffic to Iranian ports…

The U.S. blockade of Iranian ports is now fully into effect, “completely” cutting off Tehran’s international sea trade that powers about 90% of its economy, the U.S. Central Command said late Tuesday stateside.

The announcement comes at a time when the White House has been signaling a diplomatic solution to the conflict in the Middle East, as discussions around continuing negotiations with Iran are underway.

“A blockade of Iranian ports has been fully implemented as U.S. forces maintain maritime superiority in the Middle East,” said Brad Cooper, Centcom commander, highlighting that it was achieved under 36 hours of President Donald Trump’s order.

The Trump administration is convinced that this blockade will force the Iranians to give in.

According to U.S. Central Command, the first 48 hours of the blockade have been a resounding success…

But the Iranians are showing no signs of backing down.

On Wednesday, an official with the IRGC warned of severe consequences if the U.S. does not end the blockade…

Iran’s Revolutionary Guard announced Wednesday that Tehran would not allow the import or export of goods through the Persian Gulf, the nearby Gulf of Oman and the Red Sea unless the United States lifts the blockade it imposed earlier this week around the Strait of Hormuz.

Ali Abdollahi, commander of Iran’s Khatam al-Anbiya emergency headquarters, said the measures would be “firm and decisive” steps to protect Iran’s national interests and sovereignty.

According to Abdollahi, if the U.S. continues the blockade Iran has decided that it “will not allow any exports or imports to continue in the Persian Gulf, the Sea of Oman, and the Red Sea”…

In his statement broadcast by Iranian state television, Abdollahi said Iran would move to disrupt shipping routes in the Red Sea and elsewhere if the U.S. continued its blockade, initiated by President Donald Trump.

“The powerful armed forces of the Islamic Republic will not allow any exports or imports to continue in the Persian Gulf, the Sea of Oman, and the Red Sea,” the commander of the Khatam al-Anbiya Central Headquarters said.

If Iran is able to successfully stop commercial traffic from traveling through all of those waterways, it will greatly intensify the economic problems that we are starting to witness all over the globe.

In California, the average price of a gallon of gasoline has already almost reached 6 dollars…

Gas prices are soaring across the country, but especially in California. The Golden State average is now nearly $6 per gallon — 40 percent above the national figure. That gap is likely to widen: UC Davis economists estimate that Californians could soon be paying more than $2.50 a gallon above the national average.

In the United Kingdom, officials are bracing for widespread fuel shortages in “two or three weeks”…

Sources told ITV News that the UK is ‘two or three weeks away’ from shortages of diesel and jet fuel, although petrol supplies are healthier.

The Government is said to be facing ‘difficult decisions’ over how to allot fuel supplies, including how to keep ‘ancillary power’ going for NHS hospitals.

If the war with Iran is not resolved quickly, this will only be the tip of the iceberg.

The Iranians are holding the global economy hostage, and they fully realize that this gives them a tremendous amount of leverage.

But there is no way that the U.S. and Israel will ever agree to their demands.

So for now we seem to have an unsolvable problem on our hands, and meanwhile the damage that is being done to the global economy is getting worse with each passing day.

Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

Tyler Durden Mon, 04/20/2026 - 17:00

Tim Cook Stepping Down As Apple CEO; John Ternus, Head Of Hardware, Will Take Over

Confirming long-standing rumors of Tim Cook's replacement, after hours Apple announced that Tim Cook will step down as CEO and become executive chairman of Apple’s board of directorsm while John Ternus, senior vice president of Hardware Engineering whose name has been speculated as the next boss of Apple, will become Apple’s next chief executive officer effective on September 1, 2026. The transition was approved unanimously by the Board of Directors.

Cook will continue in his role as CEO through the summer as he works closely with Ternus on a smooth transition. As executive chairman, Cook will assist with certain aspects of the company, including engaging with policymakers around the world.

“It has been the greatest privilege of my life to be the CEO of Apple and to have been trusted to lead such an extraordinary company. I love Apple with all of my being, and I am so grateful to have had the opportunity to work with a team of such ingenious, innovative, creative, and deeply caring people who have been unwavering in their dedication to enriching the lives of our customers and creating the best products and services in the world,” said Cook.

Tim Cook joined Apple in 1998 and became CEO in 2011, overseeing the introduction of numerous products and services, including new categories like Apple Watch, AirPods, and Apple Vision Pro, and services ranging from iCloud and Apple Pay to Apple TV and Apple Music.

Under Cook, Apple's market cap grew from $350 billion to $4 trillion, more than 1,000% increase; meanwhile revenue quadrupled, from $108 billion in 2011 to $416 billion in 2025. That's a more than 2x Price/Sales expansion under Cook, who showed that you don't need original ideas, you just need cash for buybacks, to be successful as a CEO.

“John Ternus has the mind of an engineer, the soul of an innovator, and the heart to lead with integrity and with honor. He is a visionary whose contributions to Apple over 25 years are already too numerous to count, and he is without question the right person to lead Apple into the future. I could not be more confident in his abilities and his character, and I look forward to working closely with him on this transition and in my new role as executive chairman.”

“I am profoundly grateful for this opportunity to carry Apple’s mission forward,” said Ternus. “Having spent almost my entire career at Apple, I have been lucky to have worked under Steve Jobs and to have had Tim Cook as my mentor. It has been a privilege to help shape the products and experiences that have changed so much of how we interact with the world and with one another. I am filled with optimism about what we can achieve in the years to come, and I am so happy to know that the most talented people on earth are here at Apple, determined to be part of something bigger than any one of us. I am humbled to step into this role, and I promise to lead with the values and vision that have come to define this special place for half a century.”

Additionally, Arthur Levinson, who has been Apple’s non-executive chairman for the past 15 years, will become its lead independent director on September 1, 2026. Ternus will join the board of directors, also effective September 1, 2026.

“Tim’s unprecedented and outstanding leadership has transformed Apple into the world’s best company. He’s introduced groundbreaking products and services time and again, and his integrity and values are infused into everything Apple does,” said Levinson. “On behalf of the entire board of directors, we are incredibly grateful for his countless contributions to Apple and the world, and we are thrilled he will now be executive chairman. We believe John is the best possible leader to succeed Tim and as he transitions to CEO we know his love of Apple, his leadership, deep technical knowledge, and relentless focus on creating great products will help lead Apple to an extraordinary future.”

“I want to thank Art for the incredible work he has done leading the board of directors for the past 15 years,” said Cook. “I have always found his advice to be invaluable and I appreciate his thoughtfulness and his unwavering dedication to the company. I am grateful he will serve as our lead independent director, and I look forward to working with him in my new role.”

Some more from the press release: 

Ternus joined Apple’s product design team in 2001 and became a vice president of Hardware Engineering in 2013. He joined the executive team in 2021 as senior vice president of Hardware Engineering. Throughout his tenure at Apple, Ternus has overseen hardware engineering work on a variety of groundbreaking products across every category. He was instrumental in the introduction of multiple new product lines, including iPad® and AirPods, as well as many generations of products across iPhone®, Mac®, and Apple Watch.

Ternus’s work on Mac has helped the category become more powerful and more popular globally than at any time in its 40-year history. That includes the recent introduction of MacBook Neo™, an all-new laptop that makes the Mac experience even more accessible to more people around the world. This past fall, his team’s efforts were on full display with the introduction of a redefined iPhone lineup, including the incredibly powerful iPhone 17 Pro and Pro Max, the radically thin and durable iPhone Air™, and the iPhone 17, which has been an incredible upgrade for users. Under his leadership, his team also drove advancements in AirPods to make them the world’s best in-ear headphones, with unprecedented active noise cancellation, as well as the capability to become an all-in-one hearing health system that can serve as over-the-counter hearing aids.

Ternus led much of the company’s focus in areas like reliability and durability, introducing new techniques that have made Apple products remarkably resilient. He has also driven much of Apple’s innovation in materials and hardware design that have reduced the carbon footprint of its products, including the creation of a new, recycled aluminum compound that has been introduced across multiple product lines, the use of 3-D printed titanium in Apple Watch Ultra® 3, and innovations in repairability that have increased the lifespans of several Apple products. 

Prior to Apple, Ternus worked as a mechanical engineer at Virtual Research Systems. He holds a bachelor’s degree in Mechanical Engineering from the University of Pennsylvania.

Apple stock dumped on the (widely telegraphed) news, then recovered much of the initial drop.

Tyler Durden Mon, 04/20/2026 - 16:46

Half Of Americans Live In States Where Weed Is Legal

In August 2013, the Justice Department stated in a press release that it was not going to enforce federal law prohibiting the cannabis use in states that were launching recreational cannabis programs at the time, clearing the way for state-by-state marijuana legalization in the United States.

Approximately 12 years down the line, half of Americans live in states where marijuana is legal and another 105 million have access to medical marijuana.

As Statista's Katharina Buchholz details below, this means that 80 percent of U.S. residents now live in a state with some sort of legal weed.

In 2013, it was Colorado and Washington which were gearing up to legalize marijuana after successful ballot initiatives as part of the November 2012 elections.

But the federal government's policy statement was also relevant for another 18 states and the District of Columbia, which at the time had already legalized medical marijuana.

You will find more infographics at Statista

Data from the Census Bureau shows that between 2012 and 2014, a substantial number of people continued to gain access to medical marijuana as larger states like Massachusetts and Illinois passed measures.

After those years, shifts to recreational weed legislation dominate the statistic with significant legalizations in California (2016), Michigan (2018), New Jersey (2020) and New York (2021), effectively lowering the number of people under medical marijuana legislation only.

Despite this, a total of 15 states have passed medical marijuana ballots or legislation after 2015, including Pennsylvania, Ohio, Florida, Utah and most recently Nebraska.

You will find more infographics at Statista

Texas last year significantly expanded existing laws and is now counted as a medical marijuana state for the purpose of this chart, significantly pushing up the number of Americans under any kind of legal weed law once more.

Tyler Durden Mon, 04/20/2026 - 16:40

Things Get Interesting-er

Authored by James Howard Kunstler,

“It is one thing for the people (of Iran) to be ruled by globally feared autocrats armed to the teeth, but quite another to be governed by humiliated, now impotent incompetents and buffoons.”

- VDH

Wednesday the US / Iran ceasefire expires. It has been an interesting two weeks. The US used it to negotiate an end to hostilities, resupply our ships in the Arabian Sea, do maintenance on our ships and warplanes, dismantle Iran’s banking conduits, and blockade Hormuz to shut down the regime’s remaining income flow. The Iranians used it to jump up and down and go woo-woo-woo. They also tried to dig out the entrances of their bombed caves and tunnels to unearth whatever’s left of their hidden missile launchers. Our satellites watched everything they did and mapped the coordinates.

Negotiations? So far, not fruitful, if termination of hostilities and surrender of Iran’s uranium is the goal. We’re not even sure the Iranians we’re negotiating with have any real authority to make a deal. Iran’s government at this point is a hash of conflicting factions: the Revolutionary Guard (IRGC), which is a large Jihadi mafia that happens to own half of Iran’s economy and controls its advanced missile and drone weaponry; the regular Army (Artesh) which would theoretically defend against a ground invasion, but otherwise just stands by; and the civilian government represented by President Masoud Pezeshkian, Foreign Minister Abbas Araghchi, and Parliament Speaker Mohammad-Bagher Ghalibef — none of whom seem to hold any real decision-making power.

America’s negotiators, led by Veep Vance along with Messrs. Witkoff and Kushner, will land back in Islamabad, Pakistan, today (Monday, April 20).

Our deal is still on the table.

It’s pretty straightforward:

• the aforementioned uranium plus a twenty-year halt of nuclear activities with no path toward a weapon;

• full reopening of the Strait of Hormuz;

• an end to Iranian support for Hezbollah, Hamas, and the Houthis;

• phased-out sanctions and access to frozen assets;

• and cessation of hostilities.

Events over the weekend argue that Iran is not finished playing stupid games and winning stupid prizes.

They tried to run the Hormuz blockade on Sunday with an incoming cargo ship, the Iranian-flagged M/V Touska. The USS destroyer Spruance, an Arleigh Burke-class guided-missile destroyer, blew a hole clean through its engine room and then seized the vessel. Its cargo remains undisclosed for now.

Iran claims that it has closed the Strait of Hormuz. The US said it was already closed via the US blockade (we closed it harder). Iran can’t surreptitiously move any oil out to sell to China or run supplies into the country. Iran will lose about $500-million a day and China will lose the majority of its oil imports. China will jump up and down and go woo-woo-woo over that, while the IRGC will lose its last remaining income stream, meaning no pay for anyone. Let’s see if that prompts an attitude change.

If Iran can’t move its oil, it will soon reach the limit of its oil storage capacity, meaning it will have to shut down its oil wells.

If that happens, the hydrology is such that water invasion of the underground strata will permanently damage the oil fields. Iran is between a rock and a squishy place.

That might be enough to force a deal in the hours ahead.

President Trump has made it clear that the time for Iran jerking-around the US is over.

So then, it’s back to Power Station and Bridge Day (blowing them up).

That would be extremely unfortunate for the ordinary Iranian people.

They are unarmed and helpless to resist the maniacs of the IRGC who would allow Power Station and Bridge Day to happen, who, in effect, don’t really care about the ordinary people of Iran.

However, the regular Iranian army, the Artesh, does have weapons (they are the army and armies are generally armed).

Perhaps they will use them to put the insane jihadi IRGC out of business.

After all, the Artesh’s mission is defense on-the-ground of the Iranian homeland, and just now the biggest threat to Iran is the IRGC.

I guess we’ll have to wait on that and watch.

Meanwhile, interesting developments back on America’s home front: All of a sudden, pieces are moving around the game-board of the ongoing and long-running color revolution that the Trump administration is trying to stop.

By color revolution I mean the Democratic Party and its Deep State cadres’ efforts to transform our country into a matrix of crypto-Marxist racketeering operations — and to evade responsibility for the damage already perpetrated dating back to at least 2016.

The FBI Director, Kash Patel, said explicitly on Maria Bartiromo’s Sunday Morning news show that his agency has amassed hard evidence of fraud in the 2020 elections and to expect arrests presently.

(Hmmmm, maybe not so “baseless” after all.)

Acting Attorney General Todd Blanche has prepared to move Colorado political prisoner Tina Peters out of the state lockup and under protection in a federal facility.

It is rumored that the move is due to Ms. Peters’ imminent transformation into a witness for a federal case against Colorado election officials.

AG Blanche has also hired Joseph diGenova, former US Attorney for the DC District, as an assisting counsel to US Attorney Jason Reding Quiñones in the Southern District of Florida, who, as you know, is running a grand jury down there.

Mr. diGenova, 81, has mapped the events and time-lines necessary to make a solid “grand conspiracy” case against the well-known posse of color revolutionists who perpetrated a series of hoaxes, frauds, and malicious prosecutions on our country and on thousands of innocent citizens (including the current occupant of the White House and his lawyers and associates). Like I said, things get interesting-er.

Tyler Durden Mon, 04/20/2026 - 16:20

Charles Schwab, Citadel Securities Weigh Entering Prediction Markets

Authored by Jesse Coghlan via CoinTelegraph.com,

Traditional finance giants Charles Schwab and Citadel Securities are both considering entering prediction markets, with each separately weighing up how they wish to get involved in the fast-growing sector.

“I think at some point we likely will have prediction markets,” Rick Wurster, the CEO of the banking and investing titan Schwab, told investors during a call on Thursday.

He added that prediction markets weren’t “of tremendous interest” when he recently asked a group of Schwab clients about them, but it was an area the company would “take a hard look at, and it would be quite straightforward for us to offer.”

Charles Schwab CEO Rick Wurster speaking to CNBC after the company launched Bitcoin and Ether trading on Thursday. Source: CNBC

Prediction markets such as the popular Kalshi and Polymarket have exploded in use over the past few months, with both platforms seeing a record combined total monthly trading volume of $23.6 billion in March, according to Token Terminal.

However, Kalshi, Polymarket and other prediction market platforms have also caught the ire of some US state regulators, who have accused them in court of offering unlicensed sports betting.

Some federal lawmakers have also vowed to crack down on prediction markets, claiming the platforms weren’t doing enough to stamp out insider trading.

Wurster said Schwab’s potential offering would steer away from allowing bets on areas such as sports, politics and pop culture as it looks to position itself as a partner for building long-term wealth.

“Prediction markets that are not aligned to that are not something that we want to pursue,” he said.

“If you look at the stats on the success of gamblers, they're not strong, and people generally lose money.”

Citadel “keeping an eye” on prediction markets

Meanwhile, Citadel Securities president Jim Esposito said at a Semafor conference in Washington, DC, on Thursday that the company is “absolutely keeping an eye on developments” in prediction markets. 

Citadel Securities president Jim Esposito speaking at the Semafor World Economy conference on Thursday. Source: YouTube

“We're not there yet, there's not that much liquidity,” he added, but said that the market is likely to “ramp and scale,” and it was “certainly possible” that the market-making firm would potentially look to get involved.

Esposito said Citadel was “not looking at sports at the moment at all, I don't see us entering that market,” but did signal an interest in some event contracts.

He added that Citadel could see its retail and institutional clients use some event contracts as a hedge for risks to their investments, such as contracts for elections, which have been known to move markets.

“That's going to be some of the biggest risks to investors' portfolios that they're going to have to grapple with,” Esposito said. “Having a clean and distinct way to hedge certain risks, I think there's a good use case and industrial logic to it.”

Tyler Durden Mon, 04/20/2026 - 15:40

Hormuz Traffic At Standstill After US Ship Seizure

Confirming the Schrodinger nature of the notorious waterway, the Strait of Hormuz is now just closed even more than before Iran and the US said the vital oil channel had been reopened.

Traffic through the strait on Sunday and Monday was reduced to a trickle following a Saturday surge, after Tehran rejected a continuing US naval blockade and moved to seal the waterway again. The reduced movement underscores just how quickly hopes unraveled that cargoes could once again resume.

On Friday, Iran’s Foreign Minister Abbas Araghchi said the strait was “completely open” for commercial shipping, while US President Donald Trump said Iran was removing sea mines from the waterway. That prompted oil prices to plunge and dozens of tankers to race toward the strait at the mouth of the Persian Gulf. But Iran quickly declared that the passage was closed again as it emerged that the US operation in place since April 13 would not be lifted.

And rejected: the two tankers taking the neutral route, Minerva Evropi and Nissos Keros, have turned around; the Sanmar Herald which appears to be taking the Iran-sanctioned Larak island route is proceeding. https://t.co/aceBI7ki0B pic.twitter.com/gmkM37iA1U

— zerohedge (@zerohedge) April 18, 2026

The Hormuz crisis flared again over the weekend after the US Navy seized an Iranian vessel, during a turbulent period marked by Iranian forces firing at ships and reimposing controls across the strait. The developments pushed oil and natural gas prices higher after Friday’s big declines, reflecting fears of prolonged supply constraints.

The chaotic, start-stop nature of ship traffic through the strait underscores just how difficult it will be to fully restore oil and gas flows that are vital to the global economy, where energy producers need to have visibility months in advance before restarting production.

According to Bloomberg, just two liquefied petroleum gas carriers and two oil product tankers moved through the strait in both directions on Monday. The previous day, two LPG vessels and a cruise liner sailed out of the gulf, while no inbound transits were seen.

The Gas Harmony, an LPG carrier, went dark inside the gulf on Saturday morning but reappeared off the coast of Oman on Monday, indicating that the vessel transited the strait in the interim. The Liberia-flagged ship is owned and managed by Athens-based Gas Harmony Shipping Ltd., according to maritime database Equasis.

Greek and Iranian LPG ships departed the gulf on Sunday along with the European passenger liner, not listed in the charts. Subsequent observations until Monday afternoon, London time, identified further outbound movement by an Iranian product tanker and a second LPG ship.

At least three Mediterranean Shipping Co. containerships and a MSC cruise liner, along with a handful of other passenger vessels, appeared to have exited the gulf on Saturday, hugging the Omani coastline. That was a deviation from the corridor approved by Iran during the short-lived opening of the waterway. Another MSC containership remains off-grid after it stopped signaling inside the gulf. The company didn’t respond to a request for comment.

Six cruise ships clear Strait of Hormuz during brief reopening

A flotilla of cruise ships stranded in Gulf ports since late February has now cleared the Strait of Hormuz, taking advantage of a brief reopening of the waterway before tighter controls returned.

According to… pic.twitter.com/nvnhG4JrkW

— MarineTraffic (@MarineTraffic) April 20, 2026

Diplomatic momentum has wavered after Tehran signaled hesitation regarding a second round of talks in Pakistan, amid the ongoing American blockade of Iranian traffic and the vessel seizure.

The commercial vessels entering Hormuz with active AIS signals during the past day were confined to a narrow northern lane near the Iranian islands of Larak and Qeshm, the route approved by Tehran.

The inbound transits on Monday included an Iranian LPG ship and a fuel tanker.

Tyler Durden Mon, 04/20/2026 - 15:20

'Wright Is Wrong': Trump Rejects Energy Secretary's Comment That Gas Prices May Not Drop Under $3 Until 2027

Pain at the pump might not ease up for American consumers until 2027, according to Energy Secretary Chris Wright, who said on April 19 that the price of a regular gallon of gas could stay above $3 for the rest of the year.

Wright said a price of $3 per gallon of gas “could happen later this ​year, [but] that might not happen until next year” in an interview that aired on CNN’s ”State of the Union” ​program Sunday.

“But prices have ⁠likely peaked, and they'll start going down certainly with a resolution of this conflict [in Iran],” Wright predicted while speaking about how the war has impacted energy prices.

As of April 19, the average price for a gallon of regular gas in the U.S. was $4.04, according to data from the American Automobile Association (AAA).

States on the West Coast and the Northeast have the highest prices, according to AAA.

Before the United States and Israel launched Operation Epic Fury against the Iranian regime on Feb. 28, the price for a regular gallon of gas in the U.S. was $2.98.

The Energy Information Administration’s short-term energy outlook, published on April 7, predicted the average retail price for a gallon of gasoline would be $4.30 per gallon in April.

The Energy Information Administration - designed as a nonpartisan agency within Wright’s Department of Energy - estimated the retail price for an average gallon of gasoline will be $3.46 in 2027, above the $3 level he predicted on CNN.

As the chart above shows, for pump prices to fall back to $3 a gallon, we would need to see crude oil prices back around $60 a barrel - a long way down given the disruptions from the Iran War are likely to ripple through the supply chain for months.

Finally, The Hill's White House correspondent, Julia Manchester, reports that President Trump just told her over the phone that he disagrees with Energy Secretary Wright's assessment that gas prices may not drop until next year. 

"No, I think he's wrong on that. Totally wrong," Trump said, adding that gas prices will drop "as soon as this ends."

With the Midterms looming ever closer, Trump better hope he's right and Wright is wrong.

Tyler Durden Mon, 04/20/2026 - 14:40

Market Lesson: Why Panic Is A Costly Mistake

Authored by Lance Roberts via RealInvestmentAdvice.com,

The Iran shock erased 18% from valuations and fully recovered in two weeks. Investors who panicked missed it all. Here’s what the market lesson is about: risk management, behavior, and what to do with your portfolio right now.

The stock market selloff between February 28 and April 14 produced one of the more instructive market lessons in recent memory. It isn’t because of what the market did, but because of what investors did in response. By April 2nd, the AAII Sentiment Survey showed bearish sentiment at 51.4%, the highest reading in years, well above the historical average of 31%. Put option volume surged, and the financial media ran daily coverage of worst-case oil scenarios, recession projections, and S&P 500 targets as low as 3,800.

However, when you have that combination of bearishness, as we discussed in 5-Consecutive Weekly Declines, markets tend to perform better.

What was surprising was that the S&P 500 recovered completely in two weeks and is now setting all-time highs.

That sequence is not a reason to relax, but it is a valuable market lesson. It is also a good reason to examine what happened to investors who panicked, why the pattern repeats with such regularity, and, most importantly, what a well-constructed portfolio actually looks like when the next stock market selloff arrives. Because it will arrive. The only uncertainty is the catalyst.

The Drill & The Failure

Every major market shock is a test, a market lesson to be learned from. Not a test of whether your thesis was right, or whether you picked the right stocks. A test of whether your portfolio was built to hold under pressure, and whether your instincts are an asset or a liability when it counts.

The Iran conflict delivered a real economic shock. U.S. and Israeli forces struck Iran’s nuclear facilities. Tehran retaliated against Gulf energy infrastructure and the Strait of Hormuz, the narrow waterway through which roughly 20% of the world’s oil supply flows daily, ground to a halt. Brent crude surged from $61 at year-end to over $114 a barrel, and that spike raised inflation expectations, hammered small caps, and sent Asian equity markets into a tailspin as energy costs threatened to consume the profit margins underpinning the region’s AI and manufacturing boom.

Then, at what seemed to be the darkest moment, the market repriced all of that in two weeks. Valuations declined roughly 18% as investors adjusted for the expected impact of higher oil prices on earnings and consumer spending. That repricing was rational, but the panic layered on top of it was not. In the middle of the selloff, predictions of a structural bear market were everywhere, but none of them materialized.

That pattern of maximum fear at the exact moment prices are lowest, followed by regret as they recover, is a market lesson that repeats itself regularly. The investors who liquidated near the recent lows, as sentiment turned negative, locked in losses. But two weeks later, they face an even more difficult decision: do I reenter at prices 10% higher than the ones I sold at? Most don’t. That gap between market returns and the average investor’s actual earnings is the most expensive line item in the typical portfolio.

What Risk Is, And Isn’t

The word “risk” gets used so loosely in financial media that it has lost most of its meaning. A falling stock price isn’t the definition of “risk.” Neither is a scary headline. Volatility isn’t risk either; it’s the price of admission for participating in markets over time.

As I’ve said previously, if you aren’t willing to watch your portfolio decline 10% to 15% without doing something rash, you aren’t really an investor; you are a speculator who happens to be holding stocks.

Risk, defined precisely, is the probability of a permanent impairment of capital. Not temporary losses, or a 10% drawdown that reverses in two weeks. Risk is the permanent impairment of capital, resulting in significantly diminished future outcomes. The distinction is enormous, separating investors who compound wealth over decades from those who don’t.

When the S&P 500 dropped during the Iran shock, the vast majority of that decline reflected a temporary repricing of earnings expectations under elevated oil prices. The underlying companies, their cash flows, their competitive advantages, and their earnings power didn’t change materially. The price changed, but the value didn’t. Investors who sold during that repricing didn’t escape risk; they converted a temporary paper loss into a realized one and then forfeited the recovery.

The market lesson is in the chart. Fear peaked at the moment prices were most attractive. By the time the market had recovered and all-time highs were being printed, fear had nearly returned to historical norms. The investors who acted on that peak in fear did exactly the wrong thing at exactly the wrong moment. The investors who recognized it as a contrarian signal, or who simply had the discipline to do nothing, participated in the full recovery.

The Behavior Gap: The Most Expensive Cost

Dalbar Inc. has published an annual study for over 30 years, measuring the difference between the return delivered by the stock market and the return actually earned by the average equity investor. The gap, which Dalbar calls the “behavior gap,” has consistently shown that the average investor earns two to three percentage points less per year than the indices they’re invested in. That shortfall isn’t explained by fees or bad stock selection. It’s explained entirely by timing decisions: buying after rallies and selling during selloffs.

Over 30 years, a two-percentage-point annual shortfall compounds into a staggering wealth gap. A $500,000 portfolio growing at 8% a year becomes roughly $5 million. The same portfolio growing at 6%, because the investor panicked during selloffs and missed recoveries, becomes roughly $2.9 million. That $2.1 million gap is the price of panic. And the investor who sold near the April 2nd sentiment extreme has already paid a portion of it.

After every major market shock, the “this time is different” argument gains traction. The Iran conflict gave that argument real support. It was a genuine exogenous shock with measurable economic consequences, not a technical correction or manufactured volatility. But the historical record on recovery from sharp, shock-driven selloffs is remarkably consistent, and favors the patient investor over the reactive one.

Since 1950, there have been 20 instances in which the S&P 500 rose more than 10% in a 10-day period, the kind of snapback recovery we saw in April. Over the following 12 months, the index was higher in 17 of those 20 cases, with an average gain of 19%. Nasdaq win streaks of comparable magnitude resolved higher 100% of the time over 12 months, with average gains near 26%. Those numbers don’t guarantee another selloff isn’t coming. That means the investors best positioned to capture those forward returns are the ones who stayed disciplined through the downturn. They rebalanced into weakness, and held enough cash to redeploy rather than liquidate.

Consider 2022. The Fed’s tightening cycle produced a 9-month bear market that erased ~25% from the S&P 500. The investors who sold in October 2022, when sentiment was just as dark as it was in early April 2026, missed a recovery that added nearly 60% over the next two years. The pattern repeats because human psychology repeats. The catalyst changes. The behavior doesn’t.

Build a Shock-Resistant Portfolio

Building a portfolio that survives market selloffs without requiring heroic decision-making isn’t complicated. It’s only unpopular because it involves accepting modest underperformance during the easy, low-volatility periods in exchange for not being the person who liquidates at the bottom during the hard ones.

The UBS analysis of the Iran shock made a point worth internalizing. The assets that acted as refuges during 2025’s tariff-driven selloff, such as gold, the Japanese yen, and Treasuries, provided meaningfully less protection this year. The assets that performed well in 2026, particularly the trade-weighted dollar, did little to offset losses during last year’s episode. In other words, building a portfolio to hedge against the last crisis is a losing strategy. The next one will look different.

The more durable approach focuses not on predicting which hedge will work, but on maintaining portfolio construction that allows you to hold through volatility without being forced to sell. That means genuine diversification across asset classes and geographies. It means a real cash buffer that functions as optionality. It also means rebalancing mechanically rather than emotionally, adding exposure when prices are low and trimming when they’ve run ahead of value.

The Iran conflict reframed a question many investors had avoided asking: Were they genuinely diversified? Investors with heavy commodity-linked exposure looked prescient during the decline. But that quickly fell out of favor as megacap technology stocks took center stage during the recovery. Having diversification means you had positions that performed during both the decline and the rally. Concentrated, one-sided portfolios rarely perform well over the long term.

Here are seven portfolio actions to think about today.

The six weeks between late February and mid-April gave every investor a real-world market lesson. That lesson was in both portfolio construction and behavioral discipline. It wasn’t about Iran, oil prices, or the Strait of Hormuz. The lesson was whether your portfolio was built to withstand a genuine shock. And whether you know the difference between a temporary price decline and a permanent impairment of value.

Those who held, rebalanced, and redeployed cash came out ahead. Those who sold near the lows are now deciding what to do with prices ~10% higher. Most won’t. That’s the behavior gap in real time, and it compounds across every market cycle over an investing lifetime.

After 30 years of watching this pattern repeat, I can tell you with confidence that no amount of market forecasting substitutes for a sound process. The S&P 500 is trading at roughly 20 times forward earnings, the ten-year Treasury yield is near 4.3%, and the geopolitical situation is improving, or at least markets are pricing it that way. What comes next is unknowable. What you do with your portfolio in the meantime is entirely within your control.

That’s always been the real market lesson. The Iran shock just delivered it again, free of charge and clearly labeled.

What you do with it is up to you.

Tyler Durden Mon, 04/20/2026 - 14:20

Supply Chain What? The NSA Is Using Anthropic's Mythos According To Report

Two months after the Department of War declared Anthropic a "supply chain risk" and moved to several all ties with the AI wunderkind, the National Security Agency (NSA), which falls under DoW, is using it according to Axios. 

According to the report, the nation's top surveillance agency is using Mythos Preview - Anthropic's most powerful model to date. It is unclear how the NSA is currently using Mythos, however other organizations are using it primarily to scan their own environments for exploitable security vulnerabilities. The company has restricted access to Mythos to around 40 organizations - as the company says the model's offensive cyber capabilities are too dangerous for wider release. Axios notes further;

• Anthropic only announced 12 of those organizations. One source said the NSA was among the unnamed agencies with access.
   
• The NSA's counterparts in the U.K. have said they have access to the model through the country's AI Security Institute.

On Friday, Anthropic CEO Dario Amodei met White House chief of staff Susie Wiles and Treasury Secretary Scott Bessent to discuss deploying Mythos within the government, as well as Anthropic's wider plans and security practices. 

As we noted late last week, the White House has directed federal agencies to begin using Mythos. So the Pentagon, er, Department of War, has egg (or an egg-like substance) on their face - after Anthropic demanded oversight over its use in military operations and domestic surveillance.

From "Supply-Chain Risk" to Strategic Asset

The government’s relationship with Anthropic had been icy for months. As we noted in February, the Pentagon threatened to blacklist the company as a “supply-chain risk” after Anthropic refused to strip certain ethical guardrails from its models for military use. That standoff escalated in March when Anthropic sued the Pentagon over the designation, as detailed in ZeroHedge’s coverage of the lawsuit.

That said, the Pentagon’s “supply-chain risk” label was always narrow in scope: it was a DoD-specific action triggered by the company’s refusal to remove certain ethical guardrails from its models for unrestricted military and offensive-use applications. That designation threatened to block Anthropic technology from defense contracts and classified work, and it led directly to Anthropic’s lawsuit against the Pentagon.

Today’s OMB memo changes almost nothing on paper for that designation. The Pentagon has not withdrawn it, the lawsuit is still active, and DoD contractors remain restricted from using Claude models (including Mythos) in offensive or surveillance contexts.

Just days ago, the U.S. Treasury was rushing to gain access to Mythos after internal warnings that the model could “hack every major system.” Senior Treasury and Federal Reserve officials had summoned CEOs of the nation’s largest banks to Washington, warning them that the financial system’s exposure to AI-powered attacks had become existential. Behind closed doors, federal agencies - including the Commerce Department’s Center for AI Standards and Innovation - had already begun quiet red-teaming of Mythos. Anthropic co-founder and president Daniela Amodei confirmed the company had briefed the administration early, telling reporters simply: “The government has to know about this stuff.”

Tyler Durden Mon, 04/20/2026 - 14:00

CBP To Begin First Phase Of Tariff Refunds Following Supreme Court Ruling

Authored by Aldgra Fredly via The Epoch Times,

U.S. Customs and Border Protection (CBP) is set to begin the first phase of its refund process for certain tariffs on April 20, following a ruling by the Supreme Court in February.

CBP will deploy the Consolidated Administration and Processing of Entries (CAPE) through its Automated Commercial Environment (ACE) system, which would allow businesses to seek refunds for tariffs they paid that were imposed by President Donald Trump under the International Emergency Economic Powers Act (IEEPA). The Supreme Court ruled on Feb. 20 that the IEEPA does not clearly authorize the president to impose tariffs.

The agency said the CAPE will be implemented in phases, with the first phase starting at 8 a.m. ET on April 20 and covering “certain unliquidated entries and certain entries within 80 days of liquidation.”

The system is designed to “consolidate refunds of IEEPA duties including interest rather than processing refunds on an entry-by-entry basis,” according to CBP.

It stated that importers and licensed customs brokers are required to set up an account on the ACE portal, submit bank account details, and file declarations for imports on which tariffs were paid.

“Importers and authorized brokers should anticipate that valid IEEPA refunds will generally be issued within 60–90 days following acceptance of the CAPE declaration, unless a compliance concern requires further CBP review, ” the agency stated on its website.

“However, certain scenarios, such as entries that are extended, suspended or under review, and warehouse entries, will maintain their liquidation status with validated refunds issued at liquidation.”

In a court filing dated April 14, CBP Executive Director of Trade Programs Brandon Lord said the agency was dealing with “an unprecedented volume of refunds,” with more than 330,000 importers filing about 53 million entries in which they deposited or paid tariffs imposed pursuant to IEEPA as of March 4, which amounted to $166 billion.

“[The CBP’s] existing administrative procedures and technology are not well suited to a task of this scale and will require manual work that will prevent personnel from fully carrying out the agency’s trade enforcement mission,” Lord said, adding that CBP was working to have its ACE functionality ready for use within 45 days.

The Trump administration has been looking at alternative legal avenues after the Supreme Court struck down the reciprocal tariff framework.

U.S. Trade Representative Jamieson Greer said on Feb. 20 that his office would launch new investigations under Section 301 of the Trade Act, covering most major trading partners.

The probe intends to counter “unjustifiable, unreasonable, discriminatory, and burdensome acts, policies, and practices,” Greer said. Further tariffs may be applied if unfair practices are found, he added.

The new trade investigations will cover various areas, including industrial excess capacity, forced labor, pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services, digital services taxes, and ocean pollution.

Tyler Durden Mon, 04/20/2026 - 13:40

Giant Data Center Developer Fermi Crashes 22% After CEO, CFO Abruptly Quit

Last November, we warned that storms clouds were gathering over the torrid, and in some cases chaotic, rollout of US data centers, after Fermi's massive 11 GW energy and data center project in Texas, called Project Matador, which the company has envisioned to be the world's largest AI data center and energy campus in the Texas Panhandle, near Amarillo, was struggling to close the deal with its first major data center tenant (and since Fermi is set up as REIT that allocates income from tenants to shareholders, the delay may raise doubts about attracting other potential money-generating tenants, in a toxic feedback loop).

Fermi's Project Matador - The President Donald J. Trump Advanced Energy and Intelligence Campus.

Fast forward 6 months, and the Fermi story has gone from bad to catastrophic, after the developer of nuclear power for AI data centers, slumped following the sudden departure of co-founder and Chief Executive Officer Toby Neugebauer and the company’s chief financial officer.

The exit of Neugebauer was the definition of a Friday night bomb: it was disclosed in a filing late Friday after the close of trading. Fermi held a conference call over the weekend for analysts, during which it said the board had been considering the change in management for at least three months, according to a research note from Evercore ISI.

On Monday, Fermi issued a statement revealing that Miles Everson resigned as CFO, and that it’s planning a new corporate headquarters in Dallas. Fermi said it has created a “interim office of the CEO,” comprising Jacobo Ortiz Blanes and Anna Bofa, both company executives who will now serve as co-presidents, while it searches for Neugebauer’s replacement. Neugebauer, a major shareholder in the company, will remain on the board. Everson was elected to the board, Fermi said.

As we reported in late 2025, Fermi - which has been developing a massive AI campus in Texas that it expects to initially power with natural gas and eventually plans to add as many as four nuclear reactors - has been dogged by challenges in recent months, including the loss of a key anchor tenant for the site. 

The change at the top of the company “indicates that there was friction between customers and Neugebauer, and negotiations could be simpler going forward,” Stifel Nicolaus analyst Stephen Gengaro said in a note.

For the company's sake, he better be right: the company has so far failed to line up tenants for its complex; and without tenants there is no company (not to mention, what it means for the broader AI space where euphoria is absolutely oozing everywhere). Fermi said in December that a potential user had terminated a $150 million deal.

FRMI shares fell as much as 22% Monday, the most intraday since March 30 when the company said on an earnings conference call that it still hadn’t signed up customers for the campus, which it’s calling Project Matador. Fermi has slumped 69% since its initial public offering last year, giving it a market value of $4.1 billion.

“Fermi’s ability to ink a contract from hyperscalers who are scrambling to secure scarce available power has been perplexing,” Gengaro wrote in the research note. “Some potential customers could be taking a ‘prove-it-to-me’ approach to Fermi’s power campus.”

Some analysts said the management overhaul, despite triggering a stock drop, may ultimately be a positive for Fermi.

“Overall, we view this transition as changing the ‘tone at the top,’ but maintaining the same tenacity and vigor the industry has seen from an operational perspective,” Evercore analysts led by Nicholas Amicucci wrote in their note.

Tyler Durden Mon, 04/20/2026 - 13:20

Anti-ICE Protestors Face Trial After Judge Denies Dismissal Of Federal Charges

Authored by  Bryan Hyde via American Greatness,

Three defendants who took part in an anti-Immigration and Customs Enforcement (ICE) protest last year are headed to federal trial on May 18 after a judge denied their motions to dismiss the case.

The defendants were part of a June 2025 protest near an ICE facility in Spokane, Washington, where they allegedly tried to block and damage law enforcement vehicles in response to the detainment of two Venezuelan men.

The protest against the Trump administration’s immigration agenda coincided with demonstrations in Seattle, Portland, and other major cities.

Just the News reports that the three defendants are part of a group of nine protestors who were arrested and later indicted by the Trump administration on federal conspiracy charges.

Six of the defendants took plea deals, including former Spokane City Council president Ben Stuckart, but the remaining three protestors, Jac Archer, Justice Forral, and Bajun Malvalwalla, chose to file a motion to dismiss their charges as protected free speech.

Malvawalla, a US Army veteran, has alleged that he was assaulted by federal agents during his arrest.

Attorneys for the defendants argued that their clients’ actions were constitutionally protected and challenged the indictment’s sufficiency.

The Dept. of Justice (DOJ) called the motion “meritless” and argued that the demonstration went beyond a constitutionally protected protest, alleging that the defendants blocked a transport van from leaving the federal facility, deflated its tires, and piled objects in front of the exits to stop the agents.​

According to Just the News, a pretrial conference is scheduled on May 5 and the court will also consider motions that day by acting US Attorney General Todd Blanche seeking to exclude certain defense arguments and evidence at trial.

Blanche specifically wants the court to exclude arguments about whether the demonstration was a constitutionally protected protest, and references to other major immigration-related protests.

He also is asking the court to reject claims of political influence, including former acting US Attorney Richard Baker, who resigned days before the indictment, a well as arguments that two Venezuelan immigrants whose transport sparked the protest were here legally.

Liz Moore with the Peace and Justice Action League of Spokane is calling on residents of Spokane “To make sure that immigrant neighbors and loved ones in our community are not isolated and targeted and they experience support.”

Tyler Durden Mon, 04/20/2026 - 13:00

Chicago Man Sentenced To 25 Years For Conspiring With ISIS

Authored by Naveen Athrappully via The Epoch Times,

Ashraf Al Safoo from Chicago has been sentenced to 25 years in federal prison for conspiring to provide material support to ISIS, which involved recruiting members into the terror group and encouraging attacks on its enemies.

Al Safoo, 41, was a leader of online organization Khattab Media Foundation, which pledged allegiance to ISIS, the Department of Justice (DOJ) said in an April 17 press release. The foundation created and spread threats and ISIS propaganda online, with Al Safoo and other members posting pro-ISIS articles, videos, infographics, and essays in coordination with the terrorist outfit.

Most of the propaganda spread by Khattab promoted violent jihad on behalf of ISIS.

The organization’s posts celebrated mass shootings and terror attacks in the United States and encouraged people to engage in “lone wolf” attacks in Western nations.

In one post, Al Safoo asked Khattab members to “cause confusion and spread terror within the hearts of those who disbelieved,” according to the DOJ press release.

In another post, Al Safoo wrote, “Work hard, brothers, edit the issue into short clips, take the pictures out of it and publish the efforts of your brothers in the pages of the apostates. Participate in the war, and spread terror, the [Islamic] State does not want you to watch it only, rather, it incites you, and if you are unable to, use it to incite others.”

Al Safoo immigrated to the United States in 2008 and was naturalized in 2013. In 2018, he was arrested and has since been in federal custody.

A bench trial was conducted last year, after which U.S. District Judge John Robert Blakey found Al Safoo guilty of various charges.

On April 16, Blakey imposed a 25-year prison term for Al Safoo, followed by 10 years of court-supervised release.

The State Department designated ISIS’s predecessor group, al-Qaeda in Iraq, as a foreign terrorist organization in December 2004 under the George W. Bush administration. When ISIS was formed in 2013, the designation carried over.

Over the past several months, multiple individuals have been detained for their support of ISIS.

In December 2025, a Texas man alleged to be an ISIS sympathizer was charged with an international terrorism offense. The man allegedly provided funding and bomb making equipment to people he believed were acting on behalf of ISIS.

Earlier in November, a dual American Albanian national was arrested and charged in New York for allegedly providing support to ISIS and distributing instructions for homemade bombs.

During a testimony before the U.S. House Committee on Homeland Security on Dec. 11, Michael Glasheen, operations director at the FBI, highlighted how ISIS continues to pose a threat to American interests, both domestically and abroad.

The terror outfit is able to “direct, enable, and inspire attacks through their successful use of social media and messaging applications to attract individuals. ISIS seeks direct confrontation with the United States, and almost certainly would exploit any opportunity to attack the U.S. or Western interests,” Glasheen said.

Like other foreign terrorist organizations, he said, “ISIS advocates for lone-offender attacks in the U.S. and Western countries via videos and other English-language propaganda that have specifically advocated for attacks against civilians, the military, law enforcement, and intelligence community personnel.”

The 2025 Worldwide Threat Assessment report from the Defense Intelligence Agency said that ISIS and al-Qaeda have implemented a decentralized plotting approach toward Western nations.

Story continues below advertisement

Both groups are referencing Israel’s operations in Gaza to generate revenue, hire new members, and inspire attacks against U.S., Jewish, Israeli, and European interests internationally.

“The groups are also seeking to improve their weapons capabilities, including with commercial technologies such as UAVs and artificial intelligence,” the report said, referring to unmanned aerial vehicles.

In December, U.S. Central Command (CENTCOM) said it had initiated Operation Hawkeye Strike in Syria following an attack that killed two Army soldiers and a civilian interpreter.

CENTCOM said in a Feb. 14 update that since the launch of Operation Hawkeye Strike, “more than 50 ISIS terrorists have been killed or captured and over 100 ISIS infrastructure targets have been struck with hundreds of precision munitions during two months of targeted operations.”

Tyler Durden Mon, 04/20/2026 - 12:32

 

 

The transcript from this week’s, MiB: Philippe Bouchaud, Founder/Chief Scientist, Capital Fund Management, 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.

~~~

Masters in Business Jean-Philippe Bouchaud
Chief Scientist, Head of Research, Chairman & Co-founder, CFM

Barry Ritholtz  [00:00:16]  This weekend on the podcast. Yet another extra special guest, Jean-Philippe Bouchaud is Chief Scientist, Head of Research, Chairman and Co-founder at CFM. They’re a quantitative trend following hedge fund. They run over $20 billion in client money.

Barry Ritholtz  [00:00:34]  They’ve been around for almost 35 years, put together a very impressive track record. They also run a number of interesting academic research labs and things like that. Jean-Philippe has published something like 300 plus academic papers. They are deep into all the things that drive markets from a quantitative perspective.

Barry Ritholtz  [00:00:59]  I thought this conversation was fascinating, and I think you will also. With no further ado, my interview of CFM’s Jean-Philippe Bouchaud. So what do people call you, JP, Jean-Philippe? What do you like?

Jean-Philippe Bouchaud  [00:01:13]  Jean-Philippe in France. JP in Anglo-Saxon countries. JP.

Barry Ritholtz  [00:01:17]  All right. It seems a little informal, but I’ll go with JP. So, JP, let’s start with your background: PhD in theoretical physics from ENS. You spent some years at very prestigious research institutions. I mentioned Cavendish Labs.

Barry Ritholtz  [00:01:35]  What was the original career plan?

Jean-Philippe Bouchaud  [00:01:38]  Yeah, I was planning to be a physicist, but then, studying statistical physics, and we can go into that later if you wish, I realized that physics can offer much more than studying physics. And then I was always fascinated by numbers. I’ve always liked statistics, and financial markets spit statistics every day.

Jean-Philippe Bouchaud  [00:02:03]  And I thought, this is a very interesting complex system. There are crises, crashes, jumps, the system seems to be driven by its own dynamics. Physicists have to do something about this. And so,

Barry Ritholtz  [00:02:17]  Very — sounds very similar to chaos theory.

Jean-Philippe Bouchaud  [00:02:20]  Yeah, exactly. So I mean, that was the high days of chaos theory.

Barry Ritholtz  [00:02:23]  So I pulled some phrases from some of your papers. One was titled, and I’m gonna mangle this, disordered systems and complex phenomena, which can be either physics or finance. Exactly, it sounds like. But what are the dynamics of glassy systems and granular media?

Barry Ritholtz  [00:02:42]  That sounds fascinating.

Jean-Philippe Bouchaud  [00:02:45]  But it’s all — the problem is how do interacting elements give rise to something surprising? Granular matter is grains that interact with one another. And then you have these strange phenomena called avalanches, where you drop a grain on a slope, and most of the time nothing happens. But sometimes there’s a big landslide that takes all the grains down.

Jean-Philippe Bouchaud  [00:03:13]  And so this, again, is very reminiscent of financial markets, right? I mean, many things happen, nothing much follows, and then sometimes there’s a crash, right? And so this was really intriguing for physicists like me.

Barry Ritholtz  [00:03:27]  So as you’re talking, I’m just thinking of a concept in physics that really applies to markets — the three body problem. When you have those three gravitational masses interacting with each other, it’s fairly unpredictable, which kind of seems like markets themselves.

Jean-Philippe Bouchaud  [00:03:49]  Yeah, I mean, there are two ways to be unpredictable. One is that the system is by itself unpredictable. That even with deterministic laws like the three body problem, you can’t say much after a few seconds, days, or weeks. But there are other kinds of unpredictability when there’s a true source of exogenous noise that hits the system, and you can’t say anything. So that’s the traditional way economists think about markets.

Jean-Philippe Bouchaud  [00:04:16]  They’re kind of buffeted by things you can’t predict because they come from outside. And then I think the physics hunch is that there can be self-generated shocks, self-generated randomness that come from large assemblies of individuals — IE traders, agents that trade and buy and sell to each other. And this can generate intrinsic randomness that is not of the same kind as the three body problem, but really comes from the interaction of a huge number of elements.

Barry Ritholtz  [00:04:53]  So I see the parallels between theoretical physics and finance. What led you to begin shifting in the early nineties from studying theoretical physics to becoming fascinated by market microstructure and physics?

Jean-Philippe Bouchaud  [00:05:13]  Yeah, so as I said, initially, I’ve always been excited by data and trying to make sense of data. So there was something there anyway. But what really drove the transition was, in a sense, the 1987 crash and the Black-Scholes theory. I didn’t know anything about that. And then I wrote a paper on what I was working on, which was physics systems with large jumps, if you want, large crashes,

Jean-Philippe Bouchaud  [00:05:43]  that happened from time to time. And someone who was working in the banking industry called me and said, hey, it’s really interesting because it resembles what happens in finance, and in particular, what just happened, the 1987 crash. And there’s this theory, the actual theory, that is a theory that only works in a world where there are no crashes, where all the motions are small and predictable. They’re random, they’re kind of predictable, even if they’re random in some strange way.

Jean-Philippe Bouchaud  [00:06:16]  And I thought, this is really weird. And this guy said, why don’t you try to generalize Black-Scholes to a world where there are crashes? And I thought, well, that’s really interesting. So I read Black-Scholes and I thought, it can’t be right, they must be wrong, these guys.

Jean-Philippe Bouchaud  [00:06:30]  So I kind of redid everything myself, and found something that looked more interesting than BS because it could be extended to non-Gaussian heuristics, as they’re called — non-normal distributions, bell curves and so on. And so it looked to me interesting, and I thought, okay, maybe we can do software out of that and commercialize it. And so I went and knocked on several doors, and suddenly the door of Jean-Pierre Aguilar opened, and Jean-Pierre Aguilar was someone who had founded actually CFM in ’91. That was ’94.

Jean-Philippe Bouchaud  [00:07:07]  And I started explaining what I had been doing and that I was interested in transferring ideas from physics to finance. And he said, why don’t we create something together? And so at the time, we created a company called Science and Finance, and this was done in two weeks. It was like amazing the way we met.

Jean-Philippe Bouchaud  [00:07:28]  There was a fluid that was flowing between us immediately. And so CFM then merged with Science and Finance in 1990. So it’s now the same firm. But the idea he had at the time — he had this small CTA trading firm, and he thought, I need to beef up my research team.

Jean-Philippe Bouchaud  [00:07:51]  And this guy seems to be interesting. So we just partnered and that’s how it all started.

Barry Ritholtz  [00:07:57]  And that CTA firm specialized in managed futures.

Jean-Philippe Bouchaud  [00:08:00]  Yeah, exactly. Pretty much.

Barry Ritholtz  [00:08:01]  Now I know most of the futures traders, they all seem to be trend followers. How do you think about applying quantitative research and theoretical physics to dealing with futures?

Jean-Philippe Bouchaud  [00:08:15]  Yeah, well that was exactly Jean-Pierre Aguilar’s idea. He said, okay, I’m doing trend following. It’s good, but it’s not rocket science, maybe we can do much better. And so he said, why don’t we work on something more beefy than just trend following?

Jean-Philippe Bouchaud  [00:08:32]  And so, that started the whole thing. And the main idea is data. Physicists are good at looking at data and extracting structures, looking at data and imagining that from that data you can build theories. You can identify what’s important and what’s not.

Jean-Philippe Bouchaud  [00:08:51]  And that’s, I think, the way it all works in physics — that you scrutinize data and then there’s a flash and you think, okay, I can model that. And it’s really the same process in finance, at least as far as we were concerned. And we are concerned now. It hasn’t changed.

Jean-Philippe Bouchaud  [00:09:08]  It’s the same process.

Barry Ritholtz  [00:09:10]  Really quite fascinating. You keep your professorships at ENS and you’ve maintained a foot in academia, even as you’re building and running an asset management firm. Tell us about that.

Barry Ritholtz  [00:09:23]  You’re still publishing papers? What keeps you interested in the academic side of finance?

Jean-Philippe Bouchaud  [00:09:29]  Well, first of all, it is me. I feel I’m a researcher’s researcher at heart, and I need to continue. It’s like people running the marathon — they’re doing something else in life, and then there’s an urge to run the marathon. For me, there’s an urge to understand what I’m doing and understand also things that I’m not doing even now.

Jean-Philippe Bouchaud  [00:09:52]  Even physics problems — I can get excited about them, or trying new things like the ML revolution. How does ML work? Why do large language models work

Jean-Philippe Bouchaud  [00:10:05]  so well, learn so well? I think it’s fascinating. I want to understand. But there’s another reason for doing this: to attract talent, you need to identify them. You need to attract them, you need to be their professor at one point.

Jean-Philippe Bouchaud  [00:10:23]  And I think a lot of the success of CFM has been attracting talents. And I think part of that — only part of that, of course, it’s a teamwork — is due to the fact that I’m still very connected in academic circles, and young students have listened to me giving talks, lecturing, they’ve read my papers, and so they feel, let’s go and work for that firm because it seems that they’re really doing cool stuff.

Barry Ritholtz  [00:10:50]  So is that the thinking behind establishing the research division at CFM? I mean, you run that as a full academic research department, as opposed to a lot of asset management shops. They have a couple of CFPs and MBAs and CFAs working on their quantitative models. You guys seem like you’ve taken it to a whole different level.

Jean-Philippe Bouchaud  [00:11:14]  Yeah, I mean, most — maybe even all — our researchers have a PhD. It doesn’t mean that we’re an academic lab. We’re really working on concrete stuff. We’re really there to make models that work, build portfolios that are robust, model risk, model execution, control costs.

Jean-Philippe Bouchaud  [00:11:34]  All these things are bread and butter for everyday work. But at the same time, we feel that when we find something that is beyond the kind of daily work, and that can be published because it brings something to the academic debate or to the public debate — why, how do markets work? Why are there crashes?

Jean-Philippe Bouchaud  [00:11:53]  Are markets efficient? What about the economy? Do people understand inflation? Do we need new theories to understand inflation, monetary policy, and all these things?

Jean-Philippe Bouchaud  [00:12:05]  We believe it’s our role also, because we have access to so much data and we are privileged. Academics — they don’t have access to so much data. And so we have to give back in a way. And the reason we are doing this is, as I said, not only because we’re driven to do that, but also because it creates an atmosphere where people are happy to work at CFM. I hope. I don’t want to put words in their mouth.

Barry Ritholtz  [00:12:34]  Well, you guys opened up — or expanded — a big New York office. You don’t seem to be having much difficulty recruiting people there. What’s the headcount there now?

Jean-Philippe Bouchaud  [00:12:43]  We have 115 researchers, and 15% of them are in New York.

Barry Ritholtz  [00:12:50]  What motivated expanding the New York office as much as you have?

Jean-Philippe Bouchaud  [00:12:54]  Well, first of all, a lot of our investors are in the US, so we need to be there and interact with them. And we need to have a presence, if only for investor relations, but also because there’s a lot of talent in the US that we want to grab and attract. There’s a lot of data, a lot of brokers, so it makes a lot of sense. So we’ve been in New York for 20 years, and it’s obvious that it is a hub and we should expand there.

Barry Ritholtz  [00:13:26]  So you mentioned earlier your co-founder, Jean-Pierre Aguilar, passed away in 2009. What was the impact on the firm? How did you guys manage around

Barry Ritholtz  [00:13:39]  that? That’s a big loss when you lose a founder.

Jean-Philippe Bouchaud  [00:13:41]  Yeah, it was a tragedy because he died in a glider accident. We knew that he was gliding. We knew that gliding was dangerous, but in a sense, it really means bad risk management, right? We never thought that he could crash. It never occurred to us, which was strange,

Jean-Philippe Bouchaud  [00:14:00]  because these things happen. And so it was tragic because we were not prepared. And it was tragic because he was not only a friend, but he was the public figure of CFM. He was not involved in constructing models.

Jean-Philippe Bouchaud  [00:14:15]  I mean, quants — in a way, what’s great about quant investing is that you don’t need star traders. You don’t need PMs that know everything. It’s a collective effort. And so when someone disappears or resigns or dies, it’s not a tragedy.

Jean-Philippe Bouchaud  [00:14:31]  But in the case of Jean-Pierre, it was even — he was not really involved in the construction of models. He was just very inspiring, generous, and he was really great. He had a vision, when we met, and he thought, okay, with that guy, we can build something great. It’s amazing to think that he was so enthusiastic about creating what we created together.

Jean-Philippe Bouchaud  [00:14:57]  And so we owe him a lot. So when he passed away, it was really difficult. There were several issues. One is that he had 57% of the company. So we had to negotiate with the estate to get back control.

Jean-Philippe Bouchaud  [00:15:15]  That was pretty difficult. But we went through that. And also we needed to reassure our investors. Jean-Pierre seemed to be the public figure.

Jean-Philippe Bouchaud  [00:15:26]  He was a public figure. And he seemed to be the inspiration behind everything. And so we had to communicate that we were at the helm and that we would navigate that, and it worked. And so it was very stressful, but it was very rewarding as well to go through that.

Barry Ritholtz  [00:15:46]  And the firm carries on as his legacy. Coming up, we continue our conversation with Jean-Philippe Bouchaud, Head of Research and Chief Scientist at CFM, talking about the growth of Capital Fund Management. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.

Barry Ritholtz  [00:16:16]  I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Jean-Philippe Bouchaud. He is the Head of Research, Chairman, and Chief Scientist at Capital Fund Management hedge fund, managing over $20 billion, a quantitative shop specializing in managed futures and other quant type funds.

Barry Ritholtz  [00:16:40]  So let’s talk a little bit about the building of the fund. You co-founded Science and Finance in 1994 with Jean-Pierre Aguilar. What was the thought process? Did you think you were building a quant fund, a research shop?

Barry Ritholtz  [00:17:01]  What was the original plan?

Jean-Philippe Bouchaud  [00:17:03]  A quant fund.

Barry Ritholtz  [00:17:04]  From day one?

Jean-Philippe Bouchaud  [00:17:04]  Yeah. From day one, a quant fund. But from day one, we knew that we wanted to be strongly associated with academia. We knew that the only way to innovate — again, coming back to the fact that financial markets are complex systems — it’s really difficult to beat the market.

Jean-Philippe Bouchaud  [00:17:23]  We know that everybody’s trying to beat the market. If we want to have something else to say and not follow the crowd, we have to innovate. And innovating is hard. You have to spend time, you have to have new ideas that nobody else has.

Jean-Philippe Bouchaud  [00:17:37]  And so this means investing heavily in research. So the two are not contradictory. We really wanted to be a quant fund. We knew already about Renaissance.

Jean-Philippe Bouchaud  [00:17:48]  We knew that these guys at Renaissance were very close in spirit and in culture to what we were. And so we thought we were going to try to emulate them. Of course, they’re so great that there’s no way to emulate them. But anyway, this was the aim.

Barry Ritholtz  [00:18:03]  They had a 40 year head start on you guys. So it’s funny you mentioned Renaissance Technologies. When I’m doing my research for CFM, I’m kind of reminded of D.E. Shaw and AQR and a few others, a little bit of Millennium — although they do so much of everything — the thought process behind being a quant shop when there’s so many other quant shops.

Barry Ritholtz  [00:18:32]  If we don’t create our own models, if we don’t create our own findings and innovations, we’re just an also-ran. Is that the thought process behind it?

Barry Ritholtz  [00:18:42]  We have to do this, otherwise — because all of these other quant shops I’ve mentioned, none of them are quite the academic lab that you’ve

Jean-Philippe Bouchaud  [00:18:53]  created. AQR is, I think, closest to us on that front. Renaissance initially took a completely different turn. They thought, we have to be completely secretive about everything and be a kind of black hole where everything goes in but nothing goes out.

Jean-Philippe Bouchaud  [00:19:12]  And that was not our philosophy. We thought that life is too short as well. This is not only — we want to make money for ourselves, for our investors, we want to excel, but not at any cost. We think that there’s something else in life, that there’s a legacy that we want to leave.

Jean-Philippe Bouchaud  [00:19:29]  And this legacy is intellectual as well.

Barry Ritholtz  [00:19:32]  Pursuing the truth as to what drives markets. And what leads to alpha and returns.

Barry Ritholtz  [00:19:36]  Every new discovery of alpha eventually gets arbitraged away. Is that the thinking?

Jean-Philippe Bouchaud  [00:19:44]  Yeah, not exactly. I mean, trend following — it’s not arbitraged away at all. And actually, if you think about it, it’s very hard to arbitrage trend following. If people trend follow, it is going to lead to more trend, not less.

Barry Ritholtz  [00:19:59]  Right? Momentum is not only a Fama-French factor, but it takes on its own life, right?

Jean-Philippe Bouchaud  [00:20:04]  Well, Fama doesn’t like momentum, but anyway.

Barry Ritholtz  [00:20:06]  But isn’t it part — it’s not part of the original three factor model, but wasn’t it in one of the later models?

Jean-Philippe Bouchaud  [00:20:14]  Reluctantly, I think he had to add it, but it’s a disgrace for efficient market theory. So he doesn’t like momentum at all.

Barry Ritholtz  [00:20:22]  Listen, if the math is there, it doesn’t matter if you like it. If it works, if it’s a valid factor, it’s a valid factor. I agree.

Jean-Philippe Bouchaud  [00:20:30]  I agree. I agree. But that’s, again, a physicist’s point of view. Experiments are above everything else.

Jean-Philippe Bouchaud  [00:20:39]  But sometimes when you talk to economists, they have a strange view that theorems and axioms supersede any empirical observation. I was told that by an economist. And so there’s a very strong difference in perception.

Barry Ritholtz  [00:20:54]  I recently had Richard Thaler and Alex Imas in the studio, and I was shocked to learn from them they still aren’t teaching behavioral finance and economics courses at a college level, which is kind of shocking. I agree — you’d think everything we’ve learned.

Barry Ritholtz  [00:21:13]  So let’s talk about another technology. Over the past decade, but especially the past few years, there have been huge advances in artificial intelligence and machine learning, to say nothing about large language models. How are you guys thinking about real world investing driven by AI, and what sort of opportunities does this open up?

Jean-Philippe Bouchaud  [00:21:35]  Well, AI is really an advanced form of data analysis. And in a way, we’ve been doing machine learning forever. The thing is that techniques have evolved. It’s now much more efficient.

Jean-Philippe Bouchaud  [00:21:50]  There are many more things that one can do, in particular reading text. For many years we were just using numbers. And actually for many years we were just using prices and volumes and not anything else — and fundamental information about companies.

Jean-Philippe Bouchaud  [00:22:06]  But now there’s so much data that you can use. There’s a new data set every day that we are presented with by the data vendors. And so there’s a need to handle the data, to read sometimes huge data files. For example, if you think about microstructure high frequency data, there are events happening in the order book of major exchanges at the millisecond level or even faster.

Jean-Philippe Bouchaud  [00:22:31]  This generates a huge amount of information that has to be dealt with, analyzed. And machine learning helps you very much doing that. Reading texts that no human would be able to read and extracting statistical information from that text. So for us it is, I wouldn’t say a revolution, but it’s an acceleration of things that we were trying to do before.

Jean-Philippe Bouchaud  [00:22:56]  And obviously we’re much in tune with that. We’ve actually created a lab at CFM to help transferring technology from what ML people are constructing to what researchers at CFM may be using. But also to try to understand how these things work, right? Because we are very uncomfortable with the idea of black boxes.

Jean-Philippe Bouchaud  [00:23:19]  A black box is something that can improve the research process. But when you think about implementing that in production and having models trading with these models, you really want to be sure that the machine has done something that makes sense. And so understanding what machine learning is actually doing, why are these things working to start with — what is strange is that it works so well, but nobody understands why. When you’re driving a car, the car works really well, but we know exactly why it works, how it works. Machine learning — nobody really understands what’s the magic.

Jean-Philippe Bouchaud  [00:23:58]  And I think it’s a huge intellectual challenge and we want to be part of that.

Barry Ritholtz  [00:24:03]  How much of that is pattern recognition? Because when I think about it, whenever I read about LLMs, it’s really just statistically what makes the most sense for the next letter, the next word, the next sentence. It’s kind of hard to think of crafting a document based on probabilities of the most likely word, if you have these few words beginning. But apparently that’s a big part of how they work.

Barry Ritholtz  [00:24:31]  Or am I grossly over

Jean-Philippe Bouchaud  [00:24:32]  by that? Yeah, so why is that, why does it work, and can it work in finance too? Is it because the language or images have such a strong structure that there’s an internal logic to language or to pictures or to other things that the model is able to capture, and using these relatively simple ideas of statistical prediction of what’s going to happen next is enough to generate meaningful sentences? But maybe there’s part of that — the structure of the data. Is it the case in finance too? Maybe, maybe

Barry Ritholtz  [00:25:12]  not. Well, that’s literally exactly where I want to go. If you’re training an LLM on billions and billions of documents, pages, books, whatever, and it now has a giant data source, so when you get these first few words or first few sentences, here’s what’s most common, here’s what’s second most common.

Barry Ritholtz  [00:25:30]  And here’s a reference check for you to say, how does this compare grammatically, structurally, to the giant corpus we have? I can see the math behind that, because there are only so many trillions of combinations of letters, words, sentences. But when you now apply it to markets, which seem to be so random tick to tick, day to day, can you apply the same sort of logic to investing?

Jean-Philippe Bouchaud  [00:26:01]  Well, there are two problems. One is fundamental: are there structures that you can extract? And we believe that there are, because otherwise we wouldn’t be here. I mean, trend following is a structure, it’s a pretty trivial one, but it is a structure. Now, many other types of structures in the data that we’ve extracted without using ML, or using ML now, or recovering with ML, or even more complicated ones with ML.

Jean-Philippe Bouchaud  [00:26:31]  But the major difference between finance and languages or pictures is, one, the amount of data. Because in the end, stock markets have only existed since, I don’t know, 1900 or 1800, if

Barry Ritholtz  [00:26:45]  you want. Years. So, small data set.

Jean-Philippe Bouchaud  [00:26:47]  Small data set. Except if you go to high frequency — as I said, if you go tick by tick, all the book data, there are huge amounts of data. And there you can think that there’s more to it. But yeah, so there’s the problem of the availability of data, and the frequency at which you want to predict.

Jean-Philippe Bouchaud  [00:27:11]  So for high frequency, I think there’s a lot of structure. For lower frequency, it’s not clear yet that it is going to be useful, used as a kind of technical model, which only looks at prices without reading text. For reading text, we know that there’s a lot of structure which responds to the structure of language. But having said everything you said, there’s still something strange about LLMs or generative AI — that with this process of constructing sentences that are statistically valid, you can invent new things.

Jean-Philippe Bouchaud  [00:27:49]  And that’s the thing that is really strange, right? I mean, you can learn pictures, for example — this celebrity database where you make the machine learn these pictures, and then you ask the machine to generate new ones. And it does. And these are pictures that look exactly

Jean-Philippe Bouchaud  [00:28:08]  — I mean, you look and you think it’s a celebrity, but the celebrity doesn’t exist, right? So there’s something still weird about this that, as I said, nobody really understands.

Barry Ritholtz  [00:28:19]  Really kind of interesting.

Jean-Philippe Bouchaud  [00:28:20]  And so continuing on that, what we are trying to do is to do the same thing with financial markets. So, as I said, a hundred years of data is not a lot, but maybe you can use these gen AI models to generate a million years of fictitious financial markets. That’s interesting.

Barry Ritholtz  [00:28:40]  Very interesting. So let’s talk a little bit about trend following and managed futures. It’s had a few real standout years — in particular, 2022, a real challenging year, and managed futures were at the top of the asset quilt. What does that episode tell us about what strategies work, why they work?

Barry Ritholtz  [00:29:05]  And the question I always find with trend following, why do so few investors tend to stay with them? They all seem to get nervous and tap out right before things — almost when you see people giving up, it’s just about when the turn occurs.

Jean-Philippe Bouchaud  [00:29:23]  I agree.

Barry Ritholtz  [00:29:24]  So first of all, why was 2022 such a standout year?

Jean-Philippe Bouchaud  [00:29:29]  I don’t know.

Barry Ritholtz  [00:29:30]  I mean, aside from the fact that we had big Fed rate hikes and fixed income and equities both got shellacked double digits — kind of rare occurrence the same year. I think you have to go back about 40, 41 years to see both of them down significantly. How do you think about what environment leads to best results for trend following?

Jean-Philippe Bouchaud  [00:29:59]  It is very difficult to say, because otherwise we would have a meta-model that arbitrages and increases the weight of trend following when it’s going to work. Well, there probably is more research to do. And we’ve been trying; we haven’t found anything that’s very convincing. But the beginning of 2026 is also a very good period for trend following.

Jean-Philippe Bouchaud  [00:30:21]  Actually, we wrote a paper in 2014 called ‘200 years of trend following.’ And we were reporting on the fact that since 1800, if you paper trade a very simple trend following strategy, you make money every decade with ups and downs. There are years that are not so good. But as you say, what is striking about the very point you made about people getting out of trend following just before it gets back on, is I think it’s ingrained in people’s behavior to chase performance.

Jean-Philippe Bouchaud  [00:30:57]  So if performance has been bad for a few years, everybody declares it dead. And that was the case in 2014 when we wrote our paper — trend following had been flat for the last five years. And people said, okay, well, trend following is dead now. And we were absolutely convinced that it was not the case, that trend following is such a strong behavioral bias — performance chasing is so ingrained in every one of us, even rational — we can’t help it.

Jean-Philippe Bouchaud  [00:31:26]  And so we bet, and it was confirmed, that trend following would come back. And since 2014 it has been very good actually overall.

Barry Ritholtz  [00:31:35]  Well, you had a market that very much was trending mostly in one direction — I mean, you have Q4 of 2018, and I think 2016 was so-so, but for the past 15 years, the bias has been pretty much in one direction. If you’re on the right side of that, you should do pretty well.

Jean-Philippe Bouchaud  [00:31:52]  Yeah, but I’m not speaking about being long. I mean, right, I’m really speaking about

Barry Ritholtz  [00:31:56]  different asset classes, different assets, and trends up, you long and short.

Jean-Philippe Bouchaud  [00:32:00]  Yeah.

Barry Ritholtz  [00:32:00]  Sure. So it doesn’t matter as long as the trend is in place, you want to participate in it — up or down. And for people who are not familiar with managed futures, there’s a decent amount of leverage used in that product. So you have to really manage the risk of the downside.

Barry Ritholtz  [00:32:17]  But how do you think about the potential upside relative to the risk you’re taking in a futures product?

Jean-Philippe Bouchaud  [00:32:23]  What do you mean exactly? I mean, we just think about risk. Risk is a very complex object actually. There’s volatility, but there’s also correlation.

Jean-Philippe Bouchaud  [00:32:34]  If you deal with a portfolio of futures that has like 150 futures, there’s a very subtle correlation structure between all the assets that you have in your portfolio. So if you think about risk, you really have to think about how all these products interact with one another, talk to one another. And so it’s not only a question of volatility that goes up and down that you have to control, but also a question of how these assets co-move together or anti-co-move together. But the way we think about upside risk is the same as the way we think about downside risk — it is just a question of risk.

Barry Ritholtz  [00:33:10]  So you mentioned 150 different assets. I’m assuming some of these are commodities — wheat,

Jean-Philippe Bouchaud  [00:33:16]  crude oil, gold, commodities,

Barry Ritholtz  [00:33:18]  stocks, bonds, interest rates, right? What else is in the full list of 150?

Jean-Philippe Bouchaud  [00:33:24]  Well, there are different maturities, different countries’ futures, futures in China. I mean, if you count everything, it goes up to — I don’t have the exact number, but it’s in the 150s altogether.

Barry Ritholtz  [00:33:39]  Has CFM been looking at prediction markets, things like Kalshi and Polymarket?

Jean-Philippe Bouchaud  [00:33:44]  No, we haven’t. They’re not liquid enough for us, really.

Barry Ritholtz  [00:33:47]  And you need size, and they can’t provide it. Exactly. Really quite fascinating.

Barry Ritholtz  [00:33:52]  Coming up, we continue our conversation with Jean-Philippe Bouchaud, co-founder and Chief Scientist at Capital Fund Management, talking about how market structures are changing today. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio. I am Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio.

Barry Ritholtz  [00:34:28]  My extra special guest this week, Jean-Philippe Bouchaud, Chief Scientist and Chairman at CFM, a quantitative hedge fund managing over $20 billion in assets. So let’s just talk a little bit about risk management. I know that when you’re dealing with leveraged or long/short or futures, there’s a very robust thought process around risk management.

Barry Ritholtz  [00:34:56]  Tell us a little bit about how you think about correlation and risk.

Jean-Philippe Bouchaud  [00:35:02]  Yeah, we have a disciplined and systematic approach, not only to alpha signals, to building prediction, but also to risk management. We have a pretty sophisticated tool to predict the volatility of tomorrow, the volatility of our portfolio tomorrow. And we are pretty good at that. So of course, we know financial markets are difficult beasts.

Jean-Philippe Bouchaud  [00:35:25]  And even if you have the best model in the world, you can still have unexpected events that blow up your portfolio. That’s something that we can’t say will never happen. But in a way, if you don’t want to take any risk, you shouldn’t be in financial markets, right? You shouldn’t be in that business.

Jean-Philippe Bouchaud  [00:35:43]  So we accept that there might be, I don’t know, a completely unexpected event that breaks the whole financial markets everywhere in the world, and everything is going to fail and there’s nothing to do about that. So that can happen. But barring these extreme events, we think we’re pretty good at predicting what’s going to happen.

Jean-Philippe Bouchaud  [00:36:05]  And over the last 35 years of the existence of CFM — actually our anniversary is this year, we’re celebrating our 35th anniversary in June in Paris, very proud of that — it kind of resisted these 35 years, although we’ve become much better with time. But having said that, there’s always an element that you have to be ready to intervene, even if you’re a quant shop.

Jean-Philippe Bouchaud  [00:36:38]  And so on several occasions in the past 35 years, we decided that our risk model couldn’t know about things that we humans knew, like, I don’t know, the Brexit votes. And in these cases,

Barry Ritholtz  [00:36:53]  so let’s talk about that. Just in the past 12 months, between the tariffs and Venezuela and now the ongoing war in Iran, how does global market volatility around all these geopolitical events — how does a quant shop deal with that? What I’m hearing is the humans have to do what humans do and sometimes override the machines.

Jean-Philippe Bouchaud  [00:37:18]  Sometimes. Yes.

Barry Ritholtz  [00:37:19]  I mean, when unexpected geopolitical events disrupt the world, our models — your models — are just not built to really work their way through that.

Jean-Philippe Bouchaud  [00:37:31]  You’re right. Some events are okay, and like the war in Iran for the moment is not something that our risk models are completely blind to, right? It doesn’t mean that they’ve predicted it at all. It just means that we’re comfortable with the risk that our models have predicted, and they’ve adapted sufficiently fast to the events so that we’re comfortable with the risk level, no human intervention.

Jean-Philippe Bouchaud  [00:37:58]  On the other hand, in some cases it’s completely unexpected. Like tariffs and liberation day — this created havoc. Although, strangely enough, liberation day was announced. Everybody knew what was going to be said, and still everybody

Barry Ritholtz  [00:38:14]  was surprised — didn’t think of the depth of it. I don’t believe — despite ‘I’m tariff man, it’s the most beautiful word in the dictionary’ — I think the 100, 150% tariffs on specific countries, later found to be completely unconstitutional, but at the time I think people were genuinely shocked

Barry Ritholtz  [00:38:33]  by this. And then a week later, a little bit of a TACO trade where, let’s just put a pin in this for 90 days. Again, back to the volatility, how do you deal? Oil is trending upwards and then you have a tweet, ‘the war’s over,’ and then it resumes, and then you have a tweet,

Barry Ritholtz  [00:38:54]  ‘I think we’ve got a deal.’ And then the other side says, we’re not even negotiating. I don’t recall a period in history where the president of the United States just constantly disrupted the normal flow of market activity. How disruptive is this to a quant model?

Jean-Philippe Bouchaud  [00:39:14]  Well, as I said, the two cases seem to be pretty different. Liberation day was really a surprise. And we had to manually intervene. There was something in our models that was completely blind to these things, and we had to make a judgment call.

Jean-Philippe Bouchaud  [00:39:28]  I think the idea really is that humans should use their best judgment in these cases and decide whether it’s reasonable that the risk model knows something about what’s going on or not. In some cases it does. In some cases it doesn’t. The tricky part is not to overreact, because you said you don’t remember periods of the world where things like this happened.

Jean-Philippe Bouchaud  [00:39:51]  But looking back, I’ve been in the markets for 35 years and every year there seems to be something unexpected that happens.

Barry Ritholtz  [00:40:00]  Just not every day.

Jean-Philippe Bouchaud  [00:40:02]  Not every day, but every year. Every

Barry Ritholtz  [00:40:03]  day seems like a lot, right?

Jean-Philippe Bouchaud  [00:40:05]  But in a way, every day means that it becomes a new normal,

Barry Ritholtz  [00:40:09]  I guess.

Jean-Philippe Bouchaud  [00:40:10]  And so it’s not that bad. If it’s every day — but really, this idea that this time is different is something that’s strange. If you look at the world and the history of financial markets, it’s really being normal that’s not normal.

Jean-Philippe Bouchaud  [00:40:27]  And we’ve become used to that.

Barry Ritholtz  [00:40:29]  So let’s stay with the idea of modeling. You’ve been kind of skeptical of certain applications of deep learning in finance. There’s overfitting — no one’s ever seen a bad back test because they all seem to work perfectly in the past. You have a lot of signal-to-noise issues. What are some of the problems with models that you are focusing on improving?

Jean-Philippe Bouchaud  [00:40:57]  Yeah, well, for example, this, exactly what you just said: can you have indicators that tell you whether your back test is overfitted or not? And for many years we struggled with that, and we used judgment again to say this is plausible, this is not plausible.

Jean-Philippe Bouchaud  [00:41:16]  We can believe that we kind of replace the trader that trades every day his signals or his beliefs to a higher level where we are traders of models. We kind of judge — we say this model is good enough to go in production, this model is not convincing enough. But it would be great to have something more systematic.

Jean-Philippe Bouchaud  [00:41:41]  And over the years we’ve been struggling, and I think with some success, to have meta-models that predict whether your back test is really fudged or if it’s decent enough to go in production. So we are kind of industrializing this process of selecting models that will go into production. Does that make sense?

Barry Ritholtz  [00:42:05]  That makes perfect sense. You’re a quant, and we’ve seen some issues with a lot of quant shops in the US where crowding became a structural risk. You have all these systematic strategies, and math is math.

Barry Ritholtz  [00:42:20]  So essentially you end up with a crowded trade. We had what people called the Quant Quake way back when. How do you think about that? How do you manage that problem when you’re constructing portfolios?

Jean-Philippe Bouchaud  [00:42:34]  Sure, it’s something that every day we think about. We were in the Quant Quake in 2007. And actually we were fortunate enough to be out of the markets, or to have de-leveraged already, two weeks before the worst day of the Quant

Barry Ritholtz  [00:42:54]  Quake. Was that an external signal, or one of your model signals, or what led you

Jean-Philippe Bouchaud  [00:42:58]  to it? It was something in the performance already in July. The Quant Quake, the really bad day, happened maybe 9th of August — I don’t remember exactly — but yeah, it was early

Barry Ritholtz  [00:43:08]  August, dog days of summer, for sure. Right.

Jean-Philippe Bouchaud  [00:43:10]  But starting like the 10th of July already, there was something really very strange in our portfolio and we started reflecting on what was going on, and decided someone was de-leveraging and hitting us by shorting our longs and buying our shorts. And this thought process of imagining that even if a fund that was like 10% correlated with ours — not a lot, but 10% — and having every day a kind of systematic de-leveraging policy, it would create exactly the kind of signals that we were seeing in our portfolio. So we thought, okay, this is maybe going to lead to a crash because people are going to suffer, and at one point they’re going to

Barry Ritholtz  [00:43:56]  — it cascades and

Jean-Philippe Bouchaud  [00:43:57]  cascades, and so on. And so that was the rationale for getting out. So in some cases you’re lucky enough to have strong enough signals that tell you that your standard risk model is wrong and you should do something else.

Barry Ritholtz  [00:44:12]  That’s really fascinating. So you are now almost 35 years into being a market quant.

Barry Ritholtz  [00:44:30]  What’s the most important thing about markets that the mainstream funds still get wrong?

Jean-Philippe Bouchaud  [00:44:39]  Well, I think it’s this question of what is price doing? What are moving prices? And a lot of people still believe that there’s something like a fundamental value and that the price is really moving because fundamentals are moving. Whereas we believe — and this touches very recent academic papers that Gabaix and Koijen, two economists, have put forward.

Jean-Philippe Bouchaud  [00:45:06]  They’ve called it the inelastic market hypothesis. And we’ve contributed to that debate as well. And the idea is really that markets are not driven by fundamentals — or at least they are, to some extent, driven by fundamentals. But this is a small long-term effect. On the short run — short run meaning from one day to one year, which is pretty long already —

Jean-Philippe Bouchaud  [00:45:31]  it’s really flows that matter. That is, people buying or selling stuff — whatever the reason they buy or sell is going to move prices. It’s not going to move prices on a short timescale and then disappear. It’s really going to leave a trace in markets.

Jean-Philippe Bouchaud  [00:45:47]  And this is really a fundamental change of point of view that I think is going to percolate and convince more and more people looking forward. But having this change of tag is really important, because in one case, what you need to do to make money is to predict fundamentals. In the other case, you need to predict what people are going to do. And so in a sense, crowding can be a good thing.

Jean-Philippe Bouchaud  [00:46:15]  Because if there’s crowding, it’s easier to predict what the crowd is going to do. And so if — whatever the reason people do things, they move prices — and you’re able to predict what people are going to do because you have behavioral models and structural models that tell you, everything else being equal, people are more likely to do this and that, then you can build models. And I think that’s the reason why we’ve been successful — this change of philosophy. We’re not kind of anchored to fundamentals, we’re anchored to flows.

Barry Ritholtz  [00:46:46]  So this sounds a little bit like the Ben Graham line — I think it’s Graham — in the short run, markets are voting machines; in the long run, they’re weighing machines. Is that the balance between flows and fundamentals?

Jean-Philippe Bouchaud  [00:46:59]  Yeah, I think it’s an old idea. I mean, it’s Keynes also — things like that. But in the long run, we’re all dead — Keynes said that. So it is really a question of whether you’re going to be solvent.

Jean-Philippe Bouchaud  [00:47:16]  I mean — ooh, I’m getting tired. I’ll take that again. What’s the word?

Barry Ritholtz  [00:47:27]  Was that Keynes, by the way, or Graham? I initially thought it was Keynes, and then I checked myself.

Jean-Philippe Bouchaud  [00:47:32]  I’m not sure. But what Keynes said is that — what was his quote? Markets can remain irrational longer than you can remain solvent.

Barry Ritholtz  [00:47:45]  He never said that, but it’s always attributed to him. There’s a great website called Quote Investigator.

Barry Ritholtz  [00:47:52]  And you give them a quote. Because people, as a sort of appeal to authority, they’ll put somebody sophisticated as the source. Einstein never said ‘compounding is the most powerful force in the universe,’ but they always attribute it to

Jean-Philippe Bouchaud  [00:48:09]  — I didn’t know that one.

Barry Ritholtz  [00:48:10]  I spend way too much time perusing quotes on the site. But you would be shocked who said ‘markets are a voting machine in the short run, but a weighing machine in the long run.’

Jean-Philippe Bouchaud  [00:48:23]  I don’t think it’s Keynes, by the way.

Barry Ritholtz  [00:48:25]  No, I don’t remember if it was Keynes or Graham, but I thought it was one or the other. And it’ll tell me — yeah, Benjamin Graham. But the first thing that came to mind was Keynes, or Galbraith. They have so many favorite quotes from

Jean-Philippe Bouchaud  [00:48:38]  — from both. He said many relevant things, even today.

Barry Ritholtz  [00:48:41]  Yes, absolutely.

Jean-Philippe Bouchaud  [00:48:42]  But actually we have models that predict exactly that — on the short run you can have trends and irrational behavior, and on the long run it reverts back to fundamentals. But the long run, from our estimate, is like five, ten years. I’m very long timescale.

Barry Ritholtz  [00:48:58]  I’m trying to remember — it might have been Fama, from Fama-French, who said you can’t really tell if a manager is skilled until you have 20 years of data, because it could just be good luck over five or ten years. Which is kind of fascinating. I want to stay with the efficient market, or the inelastic market hypothesis.

Barry Ritholtz  [00:49:19]  I’m curious as to your thoughts on EMH. I’ve always thought markets were kind of eventually efficient, but not very efficient in the short run. What’s your criticism of EMH?

Jean-Philippe Bouchaud  [00:49:35]  Well, it really depends what you mean by efficient. If you mean that they’re very close to unpredictable, then you’re right. But I think it’s a very dumbed-down version of EMH. The question is whether prices reflect something fundamental that is in principle not knowable, that reflects reality, or not at all.

Jean-Philippe Bouchaud  [00:49:57]  And one smoking gun of that is, do you have long-term mean reversion? That is, can prices do random things, in particular trending — which is really completely against EMH on the short run, that is, from a week to six months, markets are trending. Over six months, one year — and then on the longer timescale, they kind of hover around some long-term trend.

Jean-Philippe Bouchaud  [00:50:28]  And I think this is true, but this is really at odds with efficient markets, which tells you that every day markets are around the correct price, right? And there’s no trend, no mean reversion ever.

Barry Ritholtz  [00:50:42]  Which is not exactly what your day-to-day experience is if you’re in the markets. It seems — it’s not magic. The collective votes of all market participants don’t magically bring you to the correct, in quotes, price.

Jean-Philippe Bouchaud  [00:50:59]  But that’s the assumption of efficient markets. Right? Or actually, not even an assumption — it’s the argument that collectively, if you have — that’s the difference between having rational investors that all take decisions based on noisy observation, but independent from one another.

Jean-Philippe Bouchaud  [00:51:20]  Then because they’re independent, they realize the mean. I mean, some overpriced, some underpriced, and then it’s a voting machine and the vote comes out, right? Because there are enough investors and they’re uncorrelated to one another. But the problem with markets is that it’s not the way it works.

Jean-Philippe Bouchaud  [00:51:36]  People are influenced by what other people are doing and what other people are saying. So instead of having independent guys doing random stuff, it’s kind of one guy who’s doing only one thing, which is a fictitious body that aggregates everybody in the same way.

Barry Ritholtz  [00:51:58]  Let’s jump to our favorite questions that we ask all of our guests, starting with: tell us about your mentors who helped shape the direction of

Jean-Philippe Bouchaud  [00:52:07]  your career. Oh, that’s an easy one. I have several mentors, but two of them are really close to my heart. One is Mandelbrot, of course — the fractal guy.

Barry Ritholtz  [00:52:18]  I knew him personally.

Jean-Philippe Bouchaud  [00:52:20]  Oh, really?

Barry Ritholtz  [00:52:20]  Yes. And he did a lot of things in physics as well. So he influenced a lot.

Jean-Philippe Bouchaud  [00:52:27]  My wife — my wife was a physicist before turning to a playwright now. And she worked on fracture surfaces. The way, when you break a material, what emerges from the fracture is a kind of very rough landscape that is fractal, and Mandelbrot had worked on that, and there was a lot of interaction with Mandelbrot.

Barry Ritholtz  [00:52:50]  Fractal at a molecular level or at a larger level?

Jean-Philippe Bouchaud  [00:52:53]  Well, fractal from the very fine structure to macroscopic length scales. And so Mandelbrot also did his work on financial markets. And for me it was really a revelation. It was something very influential, and out of the dogma of Brownian statistics and Gaussian phenomena and so on.

Jean-Philippe Bouchaud  [00:53:17]  And so it was also very close to what I was doing myself in physics. So it was clear that he influenced me enormously on that.

Barry Ritholtz  [00:53:26]  Didn’t he write a book on market crashes? And how there’s a fractal nature within those? I’m trying to

Jean-Philippe Bouchaud  [00:53:33]  — The Misbehavior of

Barry Ritholtz  [00:53:34]  Markets. That’s right. There you

Jean-Philippe Bouchaud  [00:53:35]  go. I’m actually quoted in that book.

Barry Ritholtz  [00:53:37]  Oh, get out. That’s fascinating.

Jean-Philippe Bouchaud  [00:53:39]  And then Pierre-Gilles de Gennes, who was a Nobel Prize in physics, a French physicist, who was so fantastic. And both these two, and also Phil Anderson, who was a Nobel Prize in physics as well, in the US — these three people, they convinced me that you shouldn’t be stuck to your own field. You should broaden your scope.

Jean-Philippe Bouchaud  [00:54:04]  And what you learn from one field can be very useful in understanding another field. The three of them, they’ve really kind of hovered around and not got tied to their specific initial field. And I think this creates — well, at least for me, this uninhibited me in the sense that I thought, okay, maybe I’m not legitimate to speak about finance because I’m a physicist. But no, it doesn’t matter.

Jean-Philippe Bouchaud  [00:54:34]  If I have things that I strongly believe in, I should better say them and go to the end of them. So I think they were really influential in that

Barry Ritholtz  [00:54:42]  way. So since we mentioned The Misbehavior of Markets, let’s talk about some books. What are some of your favorites? What are you reading right now?

Jean-Philippe Bouchaud  [00:54:50]  Wow, so many. That’s really a very broad question. So my last book is a book on John and Paul, by Ian Leslie — John Lennon and Paul McCartney.

Jean-Philippe Bouchaud  [00:55:03]  It’s a beautiful book. I really loved it.

Barry Ritholtz  [00:55:05]  What’s the name of it?

Jean-Philippe Bouchaud  [00:55:06]  John and Paul.

Barry Ritholtz  [00:55:08]  Is it John and Paul: A Love Story? Am I remembering it correctly?

Jean-Philippe Bouchaud  [00:55:10]  Yeah. I’m a big Beatles fan.

Barry Ritholtz  [00:55:15]  Me too. That’s in my queue.

Jean-Philippe Bouchaud  [00:55:16]  You should read it. Very emotional.

Barry Ritholtz  [00:55:16]  I’m gonna make a recommendation to you for a YouTube channel called ‘You Can’t Unhear This.’ They take apart Beatles songs in ways that — just little things that were done in the recording process that in a million years you never would’ve noticed. And then once you hear it, you just can’t unhear it. And if you’re a Beatles fan, it’s a rabbit hole. You’ll love this. What else besides John and Paul?

Jean-Philippe Bouchaud  [00:55:43]  Yeah, I’m reading something that I should have read for years — Mrs. Dalloway, Virginia Woolf. I’m really a great admirer of Virginia Woolf.

Barry Ritholtz  [00:55:54]  Really interesting. Do you do much streaming TV, podcasts, anything like that? Or we can skip over that.

Jean-Philippe Bouchaud  [00:56:03]  Podcasts a bit, but they’re kind of French podcasts.

Barry Ritholtz  [00:56:07]  So let’s — people are always looking for stuff. So what are you streaming today? What sort of podcasts are you listening to?

Jean-Philippe Bouchaud  [00:56:15]  Yeah, in France we are very fortunate. We have something called — it’s a radio where there’s an enormous — I mean, you could stay tuned all day if you wanted. There’s so many interesting things going on about everything — cultural, literature, but also movies, politics.

Barry Ritholtz  [00:56:34]  We have NPR here. It’s very similar. It’s a rabbit hole. You could fall down.

Jean-Philippe Bouchaud  [00:56:38]  Okay. So lives of major celebrities in culture, in cinema, and theater — all these things. So I’m really a big fan.

Barry Ritholtz  [00:57:06]  Our final two questions. First, what sort of advice would you give to a recent college grad interested in a career in either quantitative investing or theoretical physics?

Jean-Philippe Bouchaud  [00:57:29]  Well, study theoretical physics, and study everything that’s related to data. Pay attention to data, and think about something that you strongly believe in and that you feel has not been investigated. And it doesn’t matter if it’s big or small — make the effort of building something you strongly believe in.

Barry Ritholtz  [00:57:40]  Really good answer. And our final question: what do you know about the world of investing today that you wish you knew 35 years or so ago when you were first getting started?

Jean-Philippe Bouchaud  [00:57:44]  Oh, that it is extremely competitive. Much more than we thought.

Barry Ritholtz  [00:57:47]  Really? Wow. That’s really fascinating.

Barry Ritholtz  [00:58:14]  Jean-Philippe, thank you so much for being so generous with your time. We have been speaking with Jean-Philippe Bouchaud, CFM’s co-founder, Chairman, and Chief Scientist. If you enjoy this conversation, check out any of the 600-plus we’ve done over the past 12 years. You can find those at Apple Podcasts, Spotify, YouTube, Bloomberg, wherever you find your favorite podcasts.

Barry Ritholtz  [00:58:28]  I would be remiss if I didn’t thank the craft team that helps me put these conversations together each week. Meredith Frank is my video producer. Anna Luke is my podcast producer. Sean Russo is my head of research. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

~~~

 

 

 

The post Transcript: Philippe Bouchaud, Founder/Chief Scientist, Capital Fund Management appeared first on The Big Picture.

'Highly Unlikely' US Will Extend Iran Ceasefire, 'Lots Of Bombs Will Go Off' If No Deal: Trump Summary

• Trump says 'highly unlikely' will extend ceasefire if deal not signed in Pakistan.

• President Pezeshkian cites "historical distrust" and states on X: "they seek Iran's surrender. Iranians do not submit to force."

• Vance intends to depart Tuesday to Pakistan, though still unclear whether Iranians will join - Pakistanis say yes, but timeline is fluid. Trump warns "nobody's playing games" & "lots of bombs will go off" if no deal (PBS)

• Xi to Saudi crown prince important phone call: "the first time the Chinese leader had called for the reopening of the strategically vital waterway."

//--> //--> Strait of Hormuz traffic returns to normal by end of April?
Yes 28% · No 72%
View full market & trade on Polymarket

*  *  *

NYT: Iranians Making Plans to be in Pakistan 

The NYT now says the Iranians are soon expected in Pakistan, despite that for the past 12-hours they issued denials that they are ready and willing to enter a second round of talks.

"An Iranian delegation is making plans to travel to Islamabad on Tuesday for negotiations with the United States, according to two senior Iranian officials familiar with the plans. Mohammad Bagher Ghalibaf, the influential political and military figure leading the talks," the publication writes.

Yet, talk about of Tehran is still firm and tough, signaling the two sides are in reality far away from agreeing on anything, particularly the nuclear issue. While Iranian President Pezeshkian has newly stated that "honoring commitments is the basis of meaningful dialogue" - it remains there is "historical distrust". He has stated on X: "they seek Iran's surrender. Iranians do not submit to force."

An afternoon very long Truth Truth Social, claiming that Trump won't let Democrats rush US into making a deal with Iran. Also says the new deal will be far better than the Obama-era JCPOA.

And he followed soon after with:

Trump: 'Highly Unlikely' He Extends Ceasefire

Lots of contradictory messaging this morning from Washington, Tehran, and Islamabad. Trump has said he will note open the Strait of Hormuz until a deal is signed (as both sides inside they in effect control the waterway).

Trump has also asserted that it remains 'highly unlikely' that he extends the ceasefire with Iran, at a moment Tasnim reports that "Iran's decision not to participate in the negotiations has not changed until this moment."

'Lots of Bombs Will Go Off' If Ceasefire Ends With No Deal: Trump

President Trump says bombs will go off if the ceasefire expires (set to end by Wed April 22), PBS reports. But he also said he doesn't know if Iran is doing the next round of talks but says it is fine if Iran is not at the Pakistan talks. So who does Washington, led by VP Vance's team, plan to talk to... itself? Or it might just plan to keep sending messages to the Pakistanis. The US could also be seeking to 'demonstrate' that the Iranians have simply refused negotiations, and so this will 'justify' bombs away again. Here are the latest Monday statements from Trump given to PBS:

• If no deal "then lots of bombs start going off."
• Nuclear weapons will be discussed with Iran at the talks.
• "No nuclear weapons. Very simple. Iran cannot have a nuclear weapon. Very simple."
• "...we're not negotiating anything other than the fact that they will not have a nuclear weapon"
• On the remarks from Secretary Wright that gas may not go below USD 3 until late-2026 or early-2027, Trump says: "I disagree with him totally. I think it'll come roaring down if it ends. If we end it, if Iran does what they should do, it will come roaring down."

His latest Monday morning Truth Social post, which appears very on the defensive:

Fresh Pentagon data indicates the US blockade has thus far directed 27 vessels to turn back.

Contradictory Reports of Vance Travel

So it seems the second round of talks are actually on, after several recent contradictory headlines concerning Tehran's intent to send a team. As of Monday morning the Iranians have been signaling the cold shoulder, even as Pakistani officials quietly leak that their arrival is expected.

The NY Post freshly reports: "Vice President JD Vance and the US delegation to the peace talks here with Iran are en route to Pakistan and expected to land within hours, President Trump on Monday told The Post — adding that he was willing to meet with senior Iranian leaders if a breakthrough is reached." However, CNN is saying he has not actually departed yet, and may not till Tuesday, as the talks are reportedly being planned for Wednesday.

"We’re supposed to have the talks," Trump said in an interview when asked whether talks or still happening of if they are falling apart. He added: "So I would assume at this point nobody's playing games." According to more:

The president confirmed that a high-level US delegation — including Vice President JD Vance, special envoy Steve Witkoff and adviser Jared Kushner — is already en route to Islamabad for the next round of negotiations.

“They’re heading over now,” Trump said shortly after 9 a.m. EST. “They’ll be there tonight, [Islamabad] time.”

NBC notes that, "Further complicating the picture, different Iranian leaders are sending contradictory messages. The IRGC vowed revenge for the seizing of an Iranian cargo ship yesterday, even as Iranian President Masoud Pezeshkian continued to emphasize diplomacy."

Shipping Traffic Halt Latest

Al Jazeera and others have written the strait is at a virtual standstill currently, after the major Sunday incident which saw the US Navy intercept, fire upon, and board an uncooperative ship which was trying to pass the US-imposed blockade. It was an Iranian-flagged ship which was forcibly stopped in the Gulf of Oman, where some dozen US warships have been patrolling.

Just three ships have crossed in the past 12 hours, shipping data indicates. The same publication records that "Oil products tanker Nero, which is under UK sanctions, has left the Gulf and is sailing through the strait, according to satellite analysis from data analytics specialists SynMax and tracking data from the Kpler platform." And: "Two other ships – a chemical tanker and a liquefied natural gas tanker – have also sailed into the Gulf through the critical waterway separately, the data showed."

Reuters: Senior Iranian official says positive efforts have been started by Pakistan to end the US blockade and ensure Iran's participation in talks.

On Monday a spokesman for Iran's military reiterated a threat to "take the necessary action against the US military" after the Sunday US interdiction. He described that that Iran's military exercised restraint over the incident, not taking immediate action, in order to protect the ship's crew, but will act "once it is ensured that the lives of the families and crew of the vessel attacked by the United States are safeguarded." Apparently the crew's family members are accompanying them aboard the vessel, the statement suggests.

⚡️ US military releases footage of “seizure of Iranian ship Touska in Strait of Hormuz” pic.twitter.com/d7qk7G5oeC

— War Monitor (@WarMonitors) April 19, 2026

Important Xi Jinping Statement on Hormuz

China's President Xi Jinping on Monday demanded the uninterrupted passage of vessels through the Strait of Hormuz in a phone call with Saudi Arabia's Crown Prince Mohammed bin Salman, state news agency Xinhua reports. He urged the normalization of shipping traffic after about 50 days of disruption which obviously and significantly impacts Chinese oil imports.

"Normal navigation through the Strait of Hormuz should be maintained, this is in the shared interests of regional countries and the international community," Xi said. He called for an immediate, comprehensive ceasefire and insisted disputes be resolved through political and diplomatic means.

South China Morning Post observes that it was "the first time the Chinese leader had called for the reopening of the strategically vital waterway, which has been repeatedly blockaded since US-Israeli strikes on Iran began on February 28." China imported 5.86 million tons of crude oil from Saudi Arabia, down 10% from February, according to customs data released Monday.

Second Pakistan Talks Imminent? 

After the Sunday dramatic US seizure of the Iranian-flagged ship, Iran's Foreign Ministry has said the country currently no plans regarding a new round of talks, however, it also said it is reviewing the latest Washington proposal related to a second round of Pakistan-hosted talks. With that, by Monday it reasserted that the transfer of enriched uranium out of the country or into US custody has never been on the table. Tehran is insisting that it won't be transferred anywhere.

This firm stance is after President dramatically shifted his tone over the weekend from strangely and surprisingly somewhat praising Iran's leadership (with statements such as the US could work with them and possibly trust them) to once up again ramping up threats, posting "No more Mr. Nice Guy" on social media. 

Currently there are conflicting reports on whether the Iranian side will actually be there for reported possible Tuesday talks. Pakistan officials say the timing of the talks remains fluid. According to the latest via Associated Press Iranian authorities have expressed willingness to send a delegation to Islamabad, citing two Pakistan officials. The officials reports "cautious optimism that delegations from both Iran and the United States could travel to Islamabad."

Some confused and conflicting signaling, likely purposely so...

Iran's Foreign Ministry spokesman Esmail Baghaei:

We have no plans for the next round of negotiations. pic.twitter.com/CFb16qt8vM

— Clash Report (@clashreport) April 20, 2026

The NY Times has declared that JD Vance will try again:

The vice president is scheduled to lead an American delegation back to Islamabad, Pakistan, this week for another round of in-person negotiations with Iran after failing to secure a deal just over a week ago.

Whether the talks even occur seems in dispute. Hours after President Trump announced the trip on Sunday, Iranian state media said that Tehran had not yet agreed to any such meeting. Later, Mr. Trump announced that a Naval destroyer had attacked an Iranian-flagged cargo ship that tried to skirt the U.S. blockade on Iranian ports in the Strait of Hormuz.

President Trump has been threatening major escalation should there be no negotiated settlement, at a moment the two sides' position are very distant especially on the nuclear issue.

Zero Sum Positions on Nuclear Issue

The problem, according to University of Chicago Professor Robert Pape is the zero sum logic of it all. "In a matter of a day, the system snapped back to escalation," he wrote over the weekend. "This is not a story about fragile diplomacy or poor sequencing. It is a story about zero-sum conflict, where the core issues cannot be divided, traded, or deferred without forcing one side to accept a strategic loss—a direct contest over relative power."

"At the center of the war is a fact that cannot be negotiated away: Iran either retains a nuclear capability on the threshold of weapons, or it does not," Pape continues. "There is no stable middle ground that satisfies both sides."

POTUS is laying out two courses of action—a negotiated settlement, or a major escalation.

There is a third option, and he should take it: recognize there is no way to force a positive outcome and simply leave.

The region is not ours to fix. President Reagan chose this path in… pic.twitter.com/5ovi05FdwE

— Joe Kent (@joekent16jan19) April 19, 2026

And more from the analysis: "The same zero-sum logic applies—more visibly and more immediately—to the Strait of Hormuz. Before the war, Hormuz functioned as a global commons, carrying roughly one-fifth of the world’s oil supply. That assumption is now broken. Iran has demonstrated that it can shift from disruption to conditional control, allowing passage under its terms while restricting or denying access when it chooses. The United States, in response, is attempting to preserve open navigation through blockade and interdiction. But these positions cannot be reconciled."

Tyler Durden Mon, 04/20/2026 - 11:48

Aluminum Giant Alcoa To Sell Dormant Smelter To Bitcoin-Miner NYDIG: Report

Authored by Amin Haqshanas via CoinTelegraph.com,

US aluminium giant Alcoa is reportedly nearing a deal to offload its long-idle Massena East smelter in upstate New York to Bitcoin mining firm New York Digital Investment Group (NYDIG).

The company is in advanced discussions and expects the transaction to close “in the middle part of this year,” CEO Bill Oplinger told Bloomberg on Friday. The site, located along the St. Lawrence River, has been inactive since 2014 after Alcoa shut it down amid rising energy costs and global competition.

Built for 24/7 heavy industrial operations, aluminum smelters come with pre-existing substations, transmission lines and high-capacity grid connections. That makes them attractive targets for Bitcoin miners and data center operators, who often spend years securing similar infrastructure approvals from scratch.

Massena East also benefits from hydropower supplied by the New York Power Authority, a key draw for energy-intensive computing firms seeking low-cost and lower-carbon power sources.

US smelters reborn as crypto, AI data centers

The potential sale comes amid a broader trend across the US, where retired industrial sites are being repurposed for digital infrastructure. Earlier this year, Century Aluminum sold its Hawesville smelter in Kentucky to TeraWulf for $200 million, with plans to convert it into a high-performance computing and AI facility rather than traditional industrial use.

TeraWulf shares are up 80% YTD. Source Bloomberg 

Meanwhile, NYDIG has been growing its footprint in Bitcoin mining infrastructure. The firm, owned by Stone Ridge, already holds a stake in Coinmint, which operates mining hardware at the same campus under a long-term lease.

Last year, Crusoe Energy also agreed to sell its Bitcoin mining business, including its digital flare mitigation operations, to NYDIG.

Bitcoin miners pivot to AI

NYDIG’s renewed push into Bitcoin mining comes as other miners are increasingly pivoting toward AI and cloud computing as shrinking margins in mining push them to diversify revenue streams.

Earleir this year, MARA Holdings acquired a 64% stake in French infrastructure company Exaion, giving the company a foothold in AI services. Other miners, including Hive, Hut 8, TeraWulf and Iren, are also repurposing mining facilities into data centers, while some, such as CoreWeave, have fully transitioned into AI-focused infrastructure.

Tyler Durden Mon, 04/20/2026 - 11:45

DoJ Opens Criminal Probe Into Meatpacking Cartel As Food Stocks Slide

Shares of Tyson Foods and Smithfield Foods fell in late-morning trading in New York after The Wall Street Journal reported that the Justice Department's antitrust division has opened a criminal probe into major meatpackers.

The report follows President Trump's push for an investigation into meatpackers as supermarket beef prices remain near record highs.

Criminal antitrust cases are typically brought for alleged price-fixing, collusion, or bid-rigging. While the DoJ previously disclosed an investigation into beef companies after Trump called for action, it had not provided details on whether it was criminal.

In early November, Trump publicly stated, "I have asked the DOJ to immediately begin an investigation into the Meat Packing Companies who are driving up the price of Beef through illicit collusion, price fixing, and price manipulation."

"We will always protect our American ranchers, and they are being blamed for what is being done by majority foreign-owned meat packers, who artificially inflate prices and jeopardize the security of our nation's food supply," Trump continued.

Beef prices at supermarkets have soared to record highs after years of drought, and elevated input prices led to the smallest U.S. herd in a generation. Trump's tariffs on Brazil, a major beef exporter, have also curbed imports.

Also, last year, Trump suggested the U.S. would buy Argentine beef to increase domestic supplies and curb higher prices for Americans. This, in turn, angered U.S. cattle ranchers.

Shares of top publicly traded meatpackers, including Tyson Foods and Smithfield Foods, fell after the WSJ report hit.

Tyson Foods

Smithfield Foods

Rep. Thomas Massie (R-Ky.) has pointed out that "Four meat packers control 85 percent of the meat processed in the U.S."

Meanwhile, Senate Democratic Leader Chuck Schumer (D-N.Y.) and 12 other senators have proposed legislation that would force the nation's largest meatpackers to break up their operations across beef, pork, and poultry.

Related:

• The Problem Of The Meatpackers

• Drought Engulfs 60% Of U.S. As Farmers Begin Spring Planting

The DOJ's criminal investigation into beef companies comes as the Trump administration attempts to push forward with affordability policies as the K-shaped economy continues hammering the working poor.

Tyler Durden Mon, 04/20/2026 - 11:30

Tomorrow's Testimony: Kevin Warsh To Walk Tightrope On Rates, Inflation And Fed Independence

President Donald Trump’s nominee to lead the Federal Reserve, Kevin Warsh, will appear before the Senate Banking Committee on Tuesday at 10AM ET in what is shaping up to be one of the most politically charged confirmation hearings in the central bank’s modern history.

Warsh, a former Fed governor who has spent years criticizing the institution as directionless and in need of “regime change," now has the chance to outline his vision for remaking the world’s most powerful central bank. But he faces a delicate balancing act: signaling loyalty to Trump’s push for lower interest rates while reassuring markets, lawmakers, and global observers that he will safeguard the Fed’s independence and keep inflation in check.

The hearing arrives against a backdrop of extraordinary tension. Trump has repeatedly attacked current Chair Jerome Powell, attempted to fire Fed Governor Lisa Cook (a move now before the Supreme Court), and backed a Justice Department criminal probe into Powell and the Fed over a $2.5 billion headquarters renovation project. Powell has called the investigation politically motivated.

Markets continue to price in meaningful confirmation risk. As of this writing, Polymarket currently assigns roughly 33% odds that Warsh will be confirmed in time to replace Powell when his term expires on May 15.

//--> //--> //--> Kevin Warsh confirmed as Fed Chair by May 15?
Yes 33% · No 68%
View full market & trade on Polymarket

ANZ Research expects him to affirm his commitment to the Fed’s independence and resistance to political pressure on rates, while arguing that strong productivity growth - aided by artificial intelligence - and the government’s deregulation agenda are structurally disinflationary forces that could support easier policy over time. Warsh has long described the Fed’s roughly $6.7 trillion balance sheet as “bloated” and views its reduction as central to restoring a sound monetary policy regime.

Warsh, 56, served on the Fed Board of Governors from 2006 to 2011, the youngest person ever appointed to the role at age 35. A Stanford public policy graduate and Harvard Law alum, he previously worked in mergers and acquisitions at Morgan Stanley and as an economic policy adviser in the George W. Bush White House. During the 2008 financial crisis, he acted as the Fed’s key liaison to Wall Street, helping navigate the Bear Stearns and AIG rescues.

After leaving the Fed, Warsh became a vocal critic, arguing the central bank had strayed from its core mandate through over-reliance on complex models, opaque communication, excessive regulation, and a bloated $6.7 trillion balance sheet that distorts markets. He has long called for shrinking that balance sheet to reduce moral hazard and free up resources for the real economy.

His views appeared to evolve in 2025 as Trump’s return loomed and Powell’s term wound down. In July interviews on Fox Business and CNBC, Warsh advocated for rate cuts, citing potential productivity gains from artificial intelligence, deregulation, and housing disinflation. He has argued that aggressive quantitative tightening (QT) could offset the stimulative effect of lower rates, allowing the Fed to ease policy without reigniting inflation.

The Economic Backdrop: Iran War Fuels Inflation Uncertainty

Warsh’s testimony comes at a fraught economic moment - as the US-Israel war on Iran has driven a sharp surge in energy prices, pushing up inflation and prompting the Fed to pause further rate cuts after three reductions in late 2025. The federal funds rate currently stands at 3.5%–3.75% - with officials largely expected to hold steady at their next meeting.

Wholesale prices jumped 4% in the latest month, with energy costs up sharply. Fed officials, including Governors Christopher Waller and others, have stressed a “wait-and-see" approach, noting that a swift resolution to the conflict could reopen the door to cuts later in 2026 - but prolonged disruptions risk embedding higher inflation.

Warsh has previously pitched a multi-pronged case for eventual rate cuts centered on productivity surges and balance-sheet reduction. Analysts say he may argue for lower rates a year out while cautioning against premature easing now.

Political Hurdles Cloud Confirmation Path

Even as the hearing proceeds, Warsh’s path to confirmation remains uncertain. Sen. Thom Tillis (R-N.C.), a key Republican on the Banking Committee, has repeatedly vowed to block any Fed nominee—including Warsh—until the DOJ probe into Powell is fully resolved. Trump has signaled he wants the investigation to continue.

Democrats are united in opposition. Sen. Elizabeth Warren (D-Mass.), the committee’s top Democrat, met with Warsh last week and emerged with “new concerns," citing incomplete financial disclosures. All 11 Democratic members of the panel have called for delaying the hearing until the DOJ investigations end.

Senator Elizabeth Warren Photographer: Al Drago/Bloomberg

Warsh’s financial disclosures, released earlier this month, show joint assets with his wife, Jane Lauder (of the Estée Lauder fortune), totaling at least $130 million - $192 million or more, depending on valuation ranges. He has pledged to divest conflicting holdings if confirmed, but transparency questions persist.

What to Watch Tuesday

According to Bloomberg, lawmakers from both parties are expected to press Warsh on:

• His commitment to Fed independence - how will he respond to Trump pressuring him on rates?
• How he hopes to shrink the balance sheet without disrupting money markets or liquidity.
• Banking regulation amid a broader deregulatory push.
• Greater Fed-Treasury coordination.
• Updates to the Fed’s economic models and public communication.

Experts like former Kansas City Fed President Esther George have welcomed Warsh's ideas but stressed the need for clarity to preserve credibility. European Central Bank President Christine Lagarde recently warned that perceived political interference anywhere undermines global central bank trust.

Investors will scrutinize every word for signals on future policy. A misstep - either appearing too deferential to Trump or too dismissive of inflation risks - could roil bond markets and push long-term yields higher. Deutsche Bank chief U.S. economist Matthew Luzzetti noted that Warsh must thread the needle: outline a credible path to lower rates over time while forcefully defending independence. Luzzetti also points out that Warsh's argument for rate cuts is driven by a belief in disinflationary forces from deregulation and AI. 

Although we have not heard from Warsh recently, his comments prior to his nomination indicated support for rate reductions based primarily on a forecast that anticipates strong disinflationary forces from deregulation and AI. While we expect he will maintain this narrative about the economy, recent developments have weakened the case for lower rates – labor-market data have stabilized, PCE inflation has surprised to the upside, and the war in Iran poses further upside risks to inflation. -Matthew Luzzetti, DB

Powell’s term ends May 15. Whether Warsh is in place by then hinges on resolving the Tillis standoff and navigating Senate dynamics. Republicans are growing impatient with the delay, with some quietly urging the administration to drop the probe.

Warsh has described the Fed as needing fundamental reform to better serve its dual mandate of price stability and maximum employment. Tuesday’s hearing will reveal whether senators believe he is the right person to deliver it—or whether the institution’s independence will emerge intact from one of its most turbulent periods. The stakes, as one political scientist put it, could hardly be higher.

Tyler Durden Mon, 04/20/2026 - 11:10

Schrodinger's Strait, Schrodinger's Market

By Benjamin Picton, Senior Market Strategist at Rabobank

Erwin Schrodinger famously proposed a thought experiment to illustrate the apparent absurdity of quantum mechanics when applied to the macroscopic world. In the theoretical experiment, Schrodinger’s eponymous cat, contained in a box with a radioactive atom, a Geiger counter and a vial of poison, exists in a state of superposition whereby it is simultaneously both alive and dead until the box is opened.

And so it is with the Strait of Hormuz, which exists in a state of both openness and closedness until a ship actually attempts the transit.

On Friday Iranian Foreign Minister Araghchi posted on X that the Strait was “completely open” to all commercial vessels for the duration of the 10-day ceasefire between Israel and Lebanon. Markets reacted swiftly, the S&P500 rose 1.20% to close at a new all-time high and the Brent crude front future fell more than 9% to settle at $90.38/bbl – its lowest weekly close since the war began. Even dated Brent (the physical oil price for immediate delivery) fell by more than 15% to $98.95/bbl – its lowest level since March 11th, which was the immediate aftermath of Trump’s comment that the war in Iran is “very complete”.

The all important dated brent is plunging pic.twitter.com/rPRiOMp0BV

— zerohedge (@zerohedge) April 17, 2026

However, the joy of financial markets has now turned to ash in our mouths as the Iranian Revolutionary Guard Corps moved to re-establish (or re-assert?) the closure of the Strait. Several vessels were turned back over the course of the weekend and two were fired upon by the IRGC, prompting the Indian government to summon the Iranian ambassador to protest. Al Jazeera reports that more than a dozen ships attempted to transit the Strait in the brief time that it was open – including 8 successful transits of oil and gas tankers – but shipping had ground to a standstill again by Sunday.

And rejected: the two tankers taking the neutral route, Minerva Evropi and Nissos Keros, have turned around; the Sanmar Herald which appears to be taking the Iran-sanctioned Larak island route is proceeding. https://t.co/aceBI7ki0B pic.twitter.com/gmkM37iA1U

— zerohedge (@zerohedge) April 18, 2026

Also on Sunday, the US Navy seized the MV Touska, an Iranian-flagged cargo ship that had been attempting to break the blockade en-route from Gaolan in China to the Iranian port of Banda Abbas. After a 6-hour radio standoff, the USS Spruance fired its main gun to disable the Touska’s propulsion systems before the vessel was boarded by US marines, marking the first known use of force in enforcing the blockade. The Washington Post reports that Gaolan is a known port of origin for sodium perchlorate, the primary oxidizer in solid rocket fuel for Iranian ballistic missiles.

U.S. Marines depart amphibious assault ship USS Tripoli (LHA 7) by helicopter and transit over the Arabian Sea to board and seize M/V Touska. The Marines rappelled onto the Iranian-flagged vessel, April 19, after guided-missile destroyer USS Spruance (DDG 111) disabled Touska’s… pic.twitter.com/mFxI5RzYCS

— U.S. Central Command (@CENTCOM) April 20, 2026

Thus, the seizure of the Touska marks a potential point of escalation for both sides. The IRGC has nominated lifting the US blockade as a red line for opening the Strait, which they say would need to be done under Iranian auspices, and the US has threatened secondary sanctions against any country that provides Iran with weapons.

Unsurprisingly, markets this morning are once again repricing the status of the Strait and the diminished prospect for a peace agreement ahead of the expected expiry of the US-Iran ceasefire on Wednesday. Brent crude has opened 7% higher, high beta FX is being sold sharply, and US equity futures are pointing to losses of ~0.8% at market open.

IRGC commander Vahidi is reported to have said that the Strait will open “by order of the [Supreme] Leader, not by the tweets of some idiot” in an apparent reference to Araghchi, highlighting the divisions between the IRGC and the civilian government in Tehran. US Senator Lindsey Graham has summarized the situation succinctly by tweeting “the guy in the suit (Araghchi) is not in charge. It’s the guys with the guns (the IRGC) who are in charge.”

Unfortunately, the US has been negotiating with the guys in the suits. This may be what Donald Trump was referring to when he previously said that regime change has already taken place. This also means that the progress that US negotiators have reportedly made with Iranian chief negotiator Ghalibaf are likely subject to an IRGC veto.

Ghalibaf himself has been issuing defiant tweets over the weekend peppered with oil trading advice and mini tutorials on how to use a Bloomberg terminal to effectively ‘monitor the situation’. One suspects that these are ghost-written by the IRGC in a similar fashion to the proclamations of Mojtaba Khamenei, who still hasn’t been seen since the war started.

Vibe-trading digital oil is like vibe-hedging in treasuries during Hormuz risk-off. Both share one house of cards that works on paper.
Difference: oil at least has Dated Brent. Treasuries? Vibes all the way down.

EUCRBRDT Index GP

— محمدباقر قالیباف | MB Ghalibaf (@mb_ghalibaf) April 19, 2026

With Wednesday’s ceasefire expiry looming as a critical risk event for markets, the Wall Street Journal reports that Vice President J.D. Vance is set to lead a fresh round of peace talks with Iran in Pakistan on Tuesday. Awkwardly, there is no confirmation so far that the Iranians will turn up. Multiple outlets are citing Iranian state media reports that Iran will not be attending the talks due to the unreasonableness of US demands and the ongoing blockade of Iranian ports. Meanwhile, the US has been moving more and more military assets toward the region, including the Gerald R. Ford and George H.W. Bush carrier strike groups.

So, while we have Schrodinger’s Strait we also have Schrodinger’s market where we are simultaneously in the grip of the largest energy shock in history (according to the IEA) with physical shortages of loads of things needed for 21st century life, but this is also incredibly bullish and stock indices remain close to all-time highs.

Wrapping your head around this paradox might approach the impenetrability of quantum mechanics.

* * *

Tyler Durden Mon, 04/20/2026 - 10:50

The post We Don’t Need Billionaires, and We Can Structure the Market So We Don’t Have Them appeared first on CEPR.