Yardeni Raises Odds of US Market Meltdown to 35% on Iran War

Yardeni has raised the probability of a market meltdown to 35% for the rest of the year, up from 20% previously. At the same time, he slashed the odds of a meltup — a rally driven more by investor enthusiasm than underlying fundamentals — to just 5% from 20%. (…)

“The US economy and stock market are stuck between Iran and a hard place currently. So is the Fed,” Yardeni wrote in a note. “If the oil shock persists, the Fed’s dual mandate would be stuck between the increasing risk of higher inflation and rising unemployment.” (…)

His base case remains intact. The so-called “Roaring 2020s” scenario, which envisages a decade of robust and sustainable US growth fueled by rapid productivity gains, still carries a 60% probability through the end of the year.

The outlook is better over the coming decade. Yardeni assigns an 85% chance of a continuation of the Roaring 2020s. He also sees a 15% chance of a “stagflating 1970s redux.”

“If investors start expecting stagflation, a bear market is more likely,” he wrote.

The WSJ account omitted these other comments:

According to Polymarket.com, the odds of a recession this year jumped to a three-month high of 34% on Friday from 21% on Wednesday, February 25, just before the war started. We started to see trouble ahead last week on Tuesday, when we predicted a 10%-15% correction in the S&P 500 because of the war. Now we can’t rule out a bear market and even a recession. It all depends on how long the Strait will be closed, obviously. (…)

We are also tracking Polymarket.com for the odds that the House of Representatives will flip from a Republican to a Democratic majority. It wasn’t looking good for the Republicans even before the war.

It also isn’t looking good for the stock and bond markets. Both the S&P 500 and Nasdaq are likely to fall below their 200-day moving averages on Monday

 

The 10-year US Treasury bond yield has been remarkably subdued, between 4.00% and 4.25%, over the past year. Soaring oil prices are likely to disturb that calm, sending the yield higher. Commodity price indexes excluding crude oil and petroleum products are likely to tumble on recession fears. Even the price of gold has stumbled because the oil shock has boosted the dollar’s foreign exchange value. (…)

BTW: Prediction markets, the flavor of the moment, see the chances of a swift conclusion as having ebbed swiftly over the last week, and now put a 48% probability on the notion that there still won’t be a ceasefire by the end of next month.

Iran has identified Trump’s Achille’s heel: affordability and the stock market.

• US average gasoline prices have already shot up 16% to $3.44.

• Worse still, crop prices are on the rise with further room to surge should the war persist. The Iran situation is stalling access to the country’s low-cost urea and ammonia facilities, vital for agricultural fertilizers, which account for about 5% and 11% of global trade in fertilizers, respectively. This assumes much of their infrastructure survives the bombardment. So far, urea prices have shot up by about 25% since the outbreak of war (…). Roughly 45% of global urea trade is sourced from producers with manufacturing sites in the Persian Gulf and shipped to major import regions, including India, Europe and Brazil, via the Strait of Hormuz. The commodity is benefiting from an additional lift from rising prices of natural gas, a crucial element in fertilizer production. (John Authers)
• Food prices, in particular, became a big issue in the last presidential election, and have appeared to be coming under control. A reversal would be unwelcome.
• Prices for chemical fibers such as polyester and acrylic — oil byproducts used in garment manufacturing — have risen more than 10% since the US and Israel started strikes on Iran over a week ago, according to seven apparel manufacturers in southern and eastern China interviewed by Bloomberg News. Fiber suppliers are now adjusting prices once or even twice a day to keep pace with volatile crude markets, the manufacturers said. (Bloomberg)
• Suddenly, US oil imports from Canada (4.4Mb/d) are welcome… While the US produces a record amount of its own light oil, its refining complex (especially on the Gulf Coast and in the Midwest) is heavily geared toward the heavy crude specifically supplied by Canada.
• G7 to discuss joint release of emergency oil reserves

February Employment: What the Jobs Report Giveth, It Taketh Away

Solid job growth in January gave way to a 92K decline in nonfarm payrolls in February. Private payrolls fell by a similar 86K, the largest decline in private employment since December 2020. Some of this weakness can be attributed to one-off factors, such as poor weather and strikes. But even excluding these factors, February employment growth along with downward revisions to the prior two months leaves job growth weak. (…)

Today’s data will challenge what was a growing view among Fed officials that the labor market is stabilizing, and the Iran conflict further compounds the outlook. Ultimately, the Federal Reserve cannot do much to combat higher inflation from a supply-side oil price shock. Yet, the inflationary impact of the conflict in Iran makes it harder to be a dove at the moment. (…)

The contraction came on the heels of downward revisions to January (-4K) and December (-65K), leaving the three-month average pace of job growth at a meager 6K last month compared to 73K headed into this report.

There were some idiosyncratic factors at play. Approximately 31K nurses and other healthcare professionals were on strike in February, underpinning the 19K job decline in the healthcare & social assistance industry which has been the stalwart of overall job growth. With the strike already ended, these workers will be back on the payroll in March, leading to a commensurate lift to healthcare hiring in next month’s report. Elsewhere, back-to-back harsh winter storms restrained hiring in weather-sensitive industries, such as construction and leisure & hospitality, where payrolls slipped. Federal government payrolls also continue to decline, albeit the pace of contraction is slowing. (…)

With a lower run-rate for job growth, it is becoming less unusual for payrolls to veer into negative territory at times, particularly when there are temporary factors that reduce hiring.

ING:

(…) Essentially, the jobs market is just treading water with payrolls trending at around 50k per month. The job concentration risk point still holds though. Three sectors (government, leisure & hospitality and private education & healthcare services) are still responsible for all job creation over the past three years. All other sectors combined (essentially the bulk of the US economy) have lost 460k jobs since December 2022.

Cumulative job increases since December 2022

We know that there are more unemployed Americans than there are job vacancies and this is now depressing wage growth. Average earnings did rise 3.8% year-on-year in today’s report, but that is likely due to lower wage workers not being able to get to work and not being reported and skewing the reported earnings in favour of higher-earning office workers who could work from home.

The broader measure of wage growth within the employment cost index risks dropping below 3% YoY and we already know that real household disposable incomes are flat lining. The surge in energy costs, particularly for gasoline, that we expect over the next few weeks in response to global market moves, means that we could see real disposable incomes turning negative. That risks creating an intensifying headwind for growth in the second half of the year.

While higher energy costs are inflationary and make near-term rate cuts look less probable, it also puts more pressure on consumer finances and can ultimately be demand destructive. This can push core inflation pressures lower over the medium to longer term. Therefore, we argue the story is one where rate cuts are delayed rather than removed from forecasts. We have pushed our Fed rate cut forecasts from June and September to September and December.

This chart supports ING’s view on wages. The ECI-wages is a more accurate measure of wage trends. It was +3.4% YoY in Q4’25 and on a downtrend.

Aggregate payrolls (employment x hours x wages) from the BLS data are up 4.4% YoY in February, roughly in line with the past year, but it all comes from wages per BLS inflated numbers.

Normalizing job growth to 50k per month and reducing wage growth to 3.0%, aggregate payrolls would be rising 3.5% YoY, well below 1.0% in real terms, vs +1.5% in 2025.

I had warned on February 16 that January’s +130k job growth was artificially high (birth-death model, seasonal adjustments). It was only revised down 4k but note that December was initially revised down 2k before Friday’s –65k cut.

At best, the US labor market is at stall speed. The unemployment rate rose from 4.3% to 4.44% but, absent the decline in the participation rate, unemployment would be closer to 5%.

As KKR notes, “despite reshoring and Fed cuts, the Goods sector remains in a recession. All told, Goods jobs were -25,000. Every sector was negative: Mining/Logging, Construction, Durable Goods, and Non-Durable Goods”

Trump’s Achille’s heel is also the economy’s. With only wages fueling income growth, slowing to around 3.0-3.5%, and inflation potentially pushing above 3.0%, growth in real spending power is close to zero.

Add a weak stock market and the top tier will suddenly merge with the majority of Americans already hurting.

Retail Sales Start Year on Decent Note, February Looks Weaker

(…) While overall retail sales slid 0.2% during the month, when you strip out some of the more volatile components the control group measure of sales rose 0.4% with some modest upward revisions to the prior months of data. This suggests goods consumption started the year on a good note given this component tracks more closely with overall goods spending, as the excluded components (autos, gas, building materials & restaurants) are included elsewhere within GDP or through other source data.

One big note of caution though is that these data are even more backward looking than usual as the government continues to catch up on data releases following the historic shutdown last Fall. Retail spending in February looks a bit weaker. High-frequency data on credit card spending from Bloomberg show a weaker average year-ago pace of spending registered in February as historic winter weather across the Northeast and other parts of the country likely dented consumption.

As far as January is concerned, most of the weakness in headline sales can be traced to sales at auto dealers and gasoline stations. Vehicle unit sales slipped to their lowest pace since late 2022 in January. Meanwhile the drop in gasoline sales reflects a decline in retail gasoline prices specifically with the average daily price at the pump down about six-cents/gallon from December.

Source: U.S. Department of Commerce and Wells Fargo Economics

This weakness was somewhat offset by a pop in sales at building material stores, which was also likely at least partially price related, as the consumer price index for tools, hardware & outdoor equipment has been strong in recent months. Restaurant sales slipped 0.2% in January, which isn’t an encouraging sign for broader services spending, but isn’t overly worrying either, as high-frequency credit card data suggest some stabilization in restaurant spend after a drop-off toward year-end.

That said, we’re not looking for much improvement in broad retail come February. Incoming data suggest some softness in activity, including: poor weather, subdued credit card spending, and weak orders activity reported by retail purchasing managers. Leisure & hospitality employment also slipped materially during the month, though there was some stabilization in travel-related measures of data like hotel occupancy and TSA throughput.

With tax refunds running ahead of last year’s averages, we should start to see more cash flow materially support spending come March. One big caveat here is how the conflict in Iran evolves and its impact on domestic retail gasoline prices.

Consumers are fairly sensitive to gas prices and the average price of a gallon of gasoline is already up by twenty-five cents in the first week of March compared to the average registered in February on the national level. Higher prices will boost these nominal retail figures, but would translate to lower real, or inflation-adjusted consumption. More cash flow stemming from higher average refunds is a factor we expect to offset spending weakness this year, but higher prices at the pump may dent confidence or sap up some of those funds.

Source: U.S. Department of Commerce and Wells Fargo Economics

A less positive spin would point out that total retail sales were flat in both December and January and only up 0.2% for Control Sales. Goods inflation was up 0.1% leaving real sales roughly unchanged in December/January.

EARNINGS WATCH

From LSEG IBES:

491 companies in the S&P 500 Index have reported earnings for Q4 2025. Of these companies, 72.7% reported earnings above analyst expectations and 22.4% reported earnings below analyst expectations. In a typical quarter (since 1994), 67% of companies beat estimates and 20% miss estimates. Over the past four quarters, 78% of companies beat the estimates and 16% missed estimates.

In aggregate, companies are reporting earnings that are 4.8% above estimates, which compares to a long-term (since 1994) average surprise factor of 4.4% and the average surprise factor over the prior four quarters of 7.6%.

Of these companies, 72.6% reported revenue above analyst expectations and 27.4% reported revenue below analyst expectations. In a typical quarter (since 2002), 63% of companies beat estimates and 37% miss estimates. Over the past four quarters, 71% of companies beat the estimates and 29% missed estimates.

In aggregate, companies are reporting revenues that are 2.0% above estimates, which compares to a long-term (since 2002) average surprise factor of 1.3% and the average surprise factor over the prior four quarters of 1.7%.

The estimated earnings growth rate for the S&P 500 for 25Q4 is 14.1%. If the energy sector is excluded, the growth rate improves to 14.6%.

The estimated revenue growth rate for the S&P 500 for 25Q4 is 9.2%. If the energy sector is excluded, the growth rate improves to 10%.

The estimated earnings growth rate for the S&P 500 for 26Q1 is 12.8%. If the energy sector is excluded, the growth rate improves to 13.8%.

Trailing EPS are now $275.67. Full year 2026e: $316.69. Forward EPS: $315.89e. Full year 2027e: $367.81.

Amazingly, S&P 500 revenues rose 9.2% in Q4’25, beating an already strong forecast of 7.3%. All sectors beat!

Earnings estimates keep rising:

Encouraged by corporates:

Although things may be changing as we speak…

Based on today’s pre-opening of 6650, the forward P/E is 21.0.

The 200-d moving average is at 6582.

Oil, AI, and S&P 500 earnings

From Goldman Sachs:

Following the launch of military operations in the Middle East over the weekend, the S&P 500 has sold off by 2%. The historical impact of geopolitical risk shocks on equity prices has typically been short lived. During seven spikes in the Geopolitical Risk Index since 1950, the S&P 500 fell by an average of 4% during the first week. On average equities rebounded to their levels prior to these shocks within the subsequent month, but the range of historical outcomes has been wide.

The direct impact of modestly higher oil prices on GDP growth and inflation should be limited. Brent crude oil jumped by 27% this week to $93 per barrel. Our economists’ rule of thumb is that a sustained $10/barrel increase in oil would reduce 2026 GDP growth by about 10 bp and boost core CPI by less than 5 bp.

Likewise, the net effect of higher oil prices on S&P 500 EPS should be roughly neutral, but with variation across industries. Higher oil prices directly benefit the earnings of Energy firms, but are a headwind for industries that rely on oil as an input, such as airlines, and industries exposed to consumer spending. These fundamental relationships are consistent with industry rotations during historical oil price spikes.

For US equities, the bigger risk is a sustained period of severe oil disruption that weighs on economic growth. Every 1 pp change in real US GDP growth corresponds to a 3-4% change in S&P 500 EPS in our top-down model.

In addition to the trajectory of oil, S&P 500 earnings will depend on the trajectory of AI investment and monetization. The Energy sector’s share of S&P 500 earnings has declined to 4% today from 15% 20 years ago and almost 30% in 1980. Even combined with the earnings weights of the oil-sensitive Consumer Discretionary (8%) and Consumer Staples (5%) sectors, the group accounts for less than half the collective S&P 500 earnings contribution from Information Technology (25%) and Communication Services (13%). (…)

Consensus estimates suggest NVDA alone will account for 24% of S&P 500 EPS growth in 2026. During the last few months, hyperscaler capex guidance and the earnings outlooks for chip and memory stocks have both surged higher. For the group of seven stocks, GS equity analysts have raised their collective 2026 EPS growth forecast by 9 pp to +41%, with increased earnings for the chip companies more than offsetting headwinds to hyperscaler earnings from increased depreciation.

We estimate that AI investment and AI cloud services accounted for about 25% of S&P 500 EPS growth in 2025 and will account for roughly 40% of EPS growth in 2026. This boost should decline to approximately 25% in 2027.

Productivity and Unit Labor Costs Increase More Than Expected

Nonfarm productivity increased by more than expected in Q4 (+2.8%, quarter-over-quarter annualized), and the year-over-year rate increased by 0.4pp to +2.8%.

Unit labor costs—compensation divided by output— increased by more than expected in Q4 (+2.8%, quarter-over-quarter annualized), and the year-on-year rate was unchanged at +1.3%. Compensation per hour accelerated to an annualized pace of 5.7% in Q4 (vs. 3.3% in Q3), and the year-on-year rate increased by 0.3pp to 4.1%. Our wage tracker stands at 3.6% annualized in Q4 (vs. 3.5% in Q3) and 3.5% year-over-year (vs. 3.8% in Q3).

Productivity growth was revised up by about 0.6pp on average in each quarter between 2024Q2-2025Q3, largely as a result of the benchmark revisions to payroll growth that lowered the level of employment in March 2025 by 898k and an additional 147k in April through September 2025.

We suspect that much of the benchmark revision reflected the exclusion of unauthorized immigrants from the QCEW source data, leading the productivity statistics to be overstated by 0.3-0.4pp in 2024Q2-2025Q3. Since 2019Q4, labor productivity has grown at an annualized rate of 2.2%, or 2.0-2.1% after adjusting for the QCEW distortions and other measurement issues in the productivity statistics, a much stronger pace than the 1.5% average pace in the pre-pandemic cycle. (Goldman Sachs)

US Considers Requiring Permits for Nvidia, AMD Global AI Chip Sales

Nvidia Corp. has long been the world’s AI kingmaker. Now, the Trump administration is considering taking a formal role in the industry that would include similarly sweeping powers.

Officials at the US Commerce Department have written draft regulations that would restrict AI chip shipments to anywhere in the world without American approval, giving Washington broad control over whether other countries can build facilities for training and running artificial-intelligence models — and under what conditions.

The proposed rule — which could change substantially or be shelved entirely — would require companies to seek US permission for virtually all exports of AI accelerators from the likes of Nvidia and Advanced Micro Devices Inc., a global expansion of curbs that currently cover around 40 countries, according to people familiar with the matter. (…)

Companies — and in some cases, their governments — would have to seek Washington’s blessing to buy the precious accelerators. How Trump’s team decides to dole out those licenses would then determine whether countries are able to build critical digital infrastructure, technology that many world leaders see as key to economic growth, corporate competitiveness and military sovereignty. (…)

Shipments of up to 1,000 of Nvidia’s latest GB300 graphics processing units, or GPUs, would undergo a fairly simple review with certain exemption opportunities. Companies building bigger clusters would need preclearance before seeking export licenses. They could face conditions such as disclosing their business models or allowing the US government site visits, depending on the specifics of the data centers in question.

For truly massive deployments — more than 200,000 of Nvidia’s GB300 GPUs owned by one company, in one country — the host government would have to get involved. The US would only approve such exports to allies that make stringent security promises and “matching” investments in American AI, the people said, noting that the draft rule doesn’t specify an investment ratio. (…)

A big unknown is how much money the US would expect from countries like France or India, which also have ambitions to build large data centers of 1 gigawatt or more. Another factor is how Trump may wield chip curbs in broader diplomatic negotiations, especially as he recalibrates his tariff strategy. Last year, the president threatened semiconductor export controls in retaliation for digital services taxes that have been imposed in places like the European Union.

“We do not really like the idea of potentially tying AI access to trade negotiations (or to any other of Trump’s assorted whims), which such a move clearly opens a door to,” longtime Bernstein chip analyst Stacy Rasgon wrote of the draft rule. (…)

Foreign leaders are broadly uncomfortable subjecting their tech futures to Washington’s whims. But when it comes to computing power, they have little choice. Countries can either import chips from American companies like Nvidia, the market leader by a wide margin, or Chinese firms like Huawei Technologies Co., which makes less-powerful chips in much smaller quantities but has global ambitions. And lest they consider the latter, Washington has issued a warning that using Huawei AI accelerators anywhere in the world could violate American trade restrictions.

Tariffs Are Lower and Businesses Are Racing to Take Advantage Race is on to speed up shipments, step up production and secure refunds

Michael Burns made a bet that the Supreme Court would strike down some of the Trump administration’s tariffs. Now it is paying off.

Burns, who owns the auto-products maker ValvoMax, decided to hold parts for the company’s oil-change kits in India back in October, hoping a court ruling would lower the tariff bill.

Once the court ruled that some tariffs were illegal, Burns jumped into action, telling the factory to ship the parts as soon as possible, before rates changed again.

“This is a big win for me, even if I don’t get the refund,” said Burns, who expects to pay $15,000 instead of $50,000 in tariffs on the shipment, valued at roughly $100,000. “For a small-business owner, that’s a lot of money.”

Companies that have been feeling the pinch from import duties over the past year are scrambling to capitalize on the Supreme Court ruling, even as it has sparked a fresh wave of uncertainty.

Some quickly made the decision to accelerate shipments to take advantage of the new, lower tariff rates. Others are looking to speed up production of essential items or rethinking pricing strategies. Businesses are also totaling up their tariff bills—and taking steps to boost their chances of securing a refund. (…)

“We are getting May ship dates out of China, so the race against time begins,” said Chief Executive Officer Matt Dortch, who hopes to get goods into the U.S. before the current 10% tariff rate expires in July. (…)

Some companies are putting off planned price increases. Alchemy Merch, a Phoenix-area maker of custom enamel pins, patches and other apparel accessories, decided in December that it would raise prices this year after absorbing added tariff costs in 2025. It had planned to formalize the changes with an email to customers in February, but has been holding off.

Owner Greg Kerr said he would still have to raise prices if tariffs remained at 10% or 15%. He is still trying to sort out the impact of the court decision and the timing of any price increase. “I have everything prepped for the price raise, but I haven’t implemented it because I’m still trying to bide my time to see what happens,” he said.

Alchemy absorbed about $40,000 in tariff costs last year instead of passing those charges on to customers. (…)

• Bessent says global 15% tariff starts this week, predicts Trump duties will return to old levels later this year

There will be a rush to import as much as possible before. It probably has already begun.

China’s Annual Economic Plan Highlights Tech Push, Market Stability

(…) Authorities signaled a firmer determination to put China’s years of deflation — and missed price targets — behind. The government aims to boost consumer prices by around 2%, and this year’s goal is “feasible,” Li said.

“By better balancing total supply and demand, we will steer general price levels back into positive territory and produce a reasonable, modest rebound in consumer prices to facilitate a virtuous cycle in the economy,” Li said.

Last year, the premier only pledged that the general price level will “stay within an appropriate range.”

But monetary easing may be less urgent this year, as Li promised only to “flexibly and effectively” employ instruments including reductions in the required reserve ratios and interest rates. That’s a toning down from his vow a year ago to “make timely cuts.”

Long a priority of President Xi Jinping, the 2026 report featured plenty of pledges on advanced technology and manufacturing.

After a 2025 promise to “improve self-reliance and strength,” this year the government is determined to move “faster” to achieve the same goals. Initiatives will be launched to “drive high quality development in key manufacturing chains.” Research will be boosted. “National advanced manufacturing clusters” are envisioned.

Also included: Support for the development of a vibrant open-source artificial intelligence ecosystem. The government additionally pledges steps to “improve AI governance.” New infrastructure projects will be launched to build computing clusters while coordinating the development of computing capacity and electricity supply. (…)

This year, Li provided more specific guidance on how the government plans to rein in excess capacity and “thoroughly address rat-race competition.”

Beijing will draw up regulations on developing a unified national market. Local governments will be given “lists of do’s and don’ts” for attracting investment. The awards of tax breaks and fiscal subsidies will be regulated. Pricing reforms for public utilities and services will be “steadily advanced.”

Preparing for a spike in trade tensions with the US weeks after Donald Trump’s return to the White House, last year’s report called for “exploring new markets” while aiming to stabilize foreign commerce. The result: a record $1.2 trillion trade surplus despite Trump’s tariff hikes.

The priority this year: Keeping trade volume “stable” and “refining its mix.” There’s also a call for “boosting imports to promote balanced trade.” (…)

The authorities will “work to stabilize the real estate market” this year, versus a proposal to “make continued efforts to stem the downturn and restore stability” in the 2025 report.

The special local government bond quota — a program to support cash-strapped provincial and other administrations — stays unchanged from 2025 at 4.4 trillion yuan ($637 billion). But when it comes to how to use the funds, Li omitted mention of purchases of land and unsold homes from developers — an initiative that’s made little progress, mainly due to concerns about low returns on investment. (…)

• PBOC Adviser Warns Long Road Ahead for China’s Consumption Pivot

China’s effort to pivot its economy toward consumer spending will take a long time, according to a central bank adviser, even as Beijing adopts a softer growth target to signal a greater focus on rebalancing its growth drivers.

Huang Yiping, a member of the monetary policy committee at the People’s Bank of China, told Bloomberg TV on Friday that investors should temper expectations for “aggressive” stimulus as the government doesn’t see itself in a “crisis time.” (…)

“Consumption can only be boosted through a gradual process. You can’t expect that the government does something through macro policy and consumption picks up dramatically,” Huang said in an interview. “If you look at the experience of other East Asian economies, successful ones like Japan, consumption’s share in GDP increased over a very long period, like three to four decades.” (…)

The government announced limited direct support to households, while maintaining a focus on developing “new productive forces” such as AI and high-tech manufacturing. (…)

Charts Show ‘Rupture’ With Canada Under Trump’s Tariffs

(…) Exports to the US tumbled by 5.8% last year as Canada recorded its widest trade deficit in data going back to 1988, outside of one year during the Covid-19 pandemic. The decline was driven by lower volumes of vehicles, steel, aluminum and forestry products, all of which are subject to US sectoral tariffs.

The hit to Canadian exports has dragged down growth, with real gross domestic product expanding by a modest 1.7% in 2025, the lowest rate of annual growth since the economy shrank in 2020.

Doug Porter, chief economist at Bank of Montreal, said the economy has still fared better than many had feared, largely because US tariffs apply only to a small share of Canadian exports, leaving Canada with one of the lowest effective US tariff rates in the world. Strong fiscal support from the federal government and Bank of Canada rate cuts also played supporting roles. (…)

The trade war’s damage is especially evident in manufacturing, where output shrank by 2.6% last year. “So make no mistake, it was a tough year for the economy, but it did manage to stay out of recession,” he said.

On a balance-of-payments basis, Statistics Canada reports that exports to countries other than the US reached a record last year, rising 17.2% annually. A strong run-up in gold prices contributed to that.

Excluding gold shipments, exports to countries outside of the US rose 10.4% annually on a customs basis, showing gains beyond price-driven gold flows. That was partly driven by the expanded Trans Mountain pipeline, which has significantly boosted oil shipments to Asia.

Canada has also been buying less from the US. Imports from the US fell by 2.9% last year. (…)

The trade war’s damage is not strictly economic. It’s also produced a political rift between the two countries not seen in modern history.

Many Canadians have found ways to respond to Trump’s tariffs in their personal lives, choosing to boycott American products and avoiding traveling to the US.

Last year, the number of Canadian-resident return trips from the US fell by about 25%, while trips overseas were up 9.2% compared with 2024. Total visits to the US fell to a record low outside of the Covid period.

Trump’s occasional musings about Canada’s sovereignty, including the suggestion that it should become a 51st state, have also pushed many Canadians to become distrustful of the US. A recent poll by Nanos Research Group conducted for Bloomberg found more than half of Canadians believe the US poses the greatest security threat to the country. (…)

In the fourth quarter of last year, Canada allocated the highest share of federal government investment to weapons systems since at least 1961.

Carney also signed a deal with China in January to lower tariff barriers and welcome Chinese joint-venture auto investment — an unthinkable step before Trump returned to the White House. (…)

Other companies have learned to roll with the trade punches — cutting costs or reorienting their business. “We look at trade flows, trade lanes constantly changing,” Pauline Dhillon, chief executive officer of Cargojet Inc., told analysts last week. “We have seen a decrease in the China to North America markets, but an increase from China to Europe. We’re also seeing an increase from Canada to Latin America and Canada to South America.”

Hegseth Boasts of ‘Historic’ Campaign Against Iranian Military

Defense Secretary Pete Hegseth said the US and Israel are on the cusp of taking complete control of Iran’s airspace as he laid out plans to step up attacks deeper in the country as its defenses are destroyed.

“Iran’s capabilities are evaporating by the hour,” Hegseth told a press conference. “While American strength grows fiercer, smarter and utterly dominant, more bombers and more fighters are arriving just today.” (…)

He said the US had seen a drop-off in attacks from Iran, including a 73% decline in in drone attacks and an 86% fall in ballistic missile launches.

From various reports:

“Shoot the archer instead of the arrows”

As of March 6, 2026, reports indicate that Iran has lost approximately 300 ballistic missile launchers since the onset of the war.

Estimates suggest Iran has lost roughly 60% to 75% of its total launcher force in a matter of days.

The loss of these launchers has led to an 86% to 90% decrease in the volume of Iranian ballistic missile launches compared to the opening day of the war.

On March 6, the Israeli military reported destroying an additional six launchers in overnight strikes

Beginning of the end?