Zero Hedge

US Navy Destroyer Shows Off New Launcher For Mystery Weapons

US Navy Destroyer Shows Off New Launcher For Mystery Weapons

The U.S. Navy has quietly equipped one of its Arleigh Burke-class destroyers with a previously unseen launcher, reflecting a broader effort to counter the growing threat posed by drones in contested maritime environments, according to TWZ.

USS Carl M. Launcher mounted on Levin (DDG 120) (U.S. Navy, VIRIN: 260329-M-FP389-1205)

A U.S. Marine Corps photograph released April 8, taken March 29 at Pearl Harbor, Hawaii, shows the USS Carl M. Levin fitted with the system on its aft upper deck. The multi-cell launcher, positioned between the port-side torpedo tubes and the aft Mk 41 Vertical Launch System, was not visible in imagery of the ship as recently as December 2025, TWZ reported.

A Japanese-language defense blog first noted the addition on social media, prompting speculation that it may be designed for counter-unmanned aerial systems missions.

Similar launcher configurations appeared last year aboard the USS Bainbridge and USS Winston S. Churchill for Raytheon’s Coyote counter-drone interceptors, which have been used to engage low-cost aerial threats in the Red Sea and other regions, according to TWZ.

It remains unclear whether the system installed on the Levin is intended to deploy interceptors, loitering munitions, decoys or a combination of capabilities. Navy officials did not respond to requests for comment from TWZ.

The upgrade comes as President Donald Trump ordered the U.S. Navy to impose a naval blockade on Iranian ports beginning April 13. The operation, launched after the collapse of weekend talks in Islamabad, is aimed at interdicting maritime traffic to and from Iran, including along the Persian Gulf and Gulf of Oman, in an effort to increase economic pressure on Tehran. The blockade, applied across vessels of all nations, has contributed to volatility in global oil markets, with prices rising above $100 a barrel.

In the first 24 hours of the blockade, under direction from U.S. Central Command, no vessels succeeded in breaching the cordon, according to the Pentagon. Six merchant ships complied with instructions from U.S. forces and turned back to re-enter an Iranian port on the Gulf of Oman. More than 10,000 U.S. sailors, Marines and airmen, supported by more than a dozen warships and dozens of aircraft, are involved in the operation.

Trump has warned Iranian military ships against interfering with the blockade.

“Iran’s Navy is laying at the bottom of the sea, completely obliterated – 158 ships. What we have not hit are their small number of, what they call, ‘fast attack ships,’ because we did not consider them much of a threat,” the president wrote on Truth Social. “Warning: If any of these ships come anywhere close to our BLOCKADE, they will be immediately ELIMINATED.”

Tyler Durden Thu, 04/16/2026 - 23:00

India's Central Bank Tells Oil Refiners To Stop Buying Dollars On Spot Market

India's Central Bank Tells Oil Refiners To Stop Buying Dollars On Spot Market

By Julianne Geiger of OilPrice.com

India’s central bank has told state-run oil refiners to stop buying dollars in the spot market and instead use a government-backed credit line.

That matters because oil is priced in dollars, and refiners are some of the biggest buyers of dollars in the country. When they all go into the market at once to pay for crude, it puts direct pressure on the rupee. That pressure has been building for weeks.

The Reserve Bank of India is now stepping in to manage the demand.

State refiners, including Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation, have been asked to draw dollars through a special credit facility routed via State Bank of India. Together, these companies account for about half of India’s 5.2 million barrels per day of refining capacity.

Instead of going into the open market to buy dollars on the spot—meaning immediate purchase at current exchange rates—they can either access this credit line or buy dollars at a reference rate set by the central bank—potentially adding costs to India’s oil refiners.

The goal is simple: reduce visible demand for dollars in the market.

India’s currency has been under pressure. The rupee has fallen more than 3% this year and hit a record low past 95 per dollar in March, driven by higher oil prices and foreign capital outflows. Oil imports are a major factor. India imports the bulk of its crude, and every cargo requires dollar payments.

By centralizing those flows through SBI and shifting demand off the spot market, the RBI is trying to smooth out volatility and limit sharp moves in the currency.

The measures have been in place for about two weeks. Traders say activity from oil companies in the spot market has already slowed.

The move follows additional direction from India’s government in February, which asked refiners to consider buying more crude oil cargoes from the US and Venezuela, steering clear of Russian crude.

The central bank has also sold dollars from its reserves and tightened rules around certain currency trades. The rupee has since recovered about 2%, last trading near 93.20 per dollar.

For now, the strategy is focused on managing dollar demand at the source: oil imports

Tyler Durden Thu, 04/16/2026 - 22:35

Last US Convoy Exits Syria After Brutal 14-Year Regime Change Proxy War

Last US Convoy Exits Syria After Brutal 14-Year Regime Change Proxy War

Widespread reports on Thursday say the very last US military convoy has finally departed Syrian territory, with the years-long occupation of the primarily northeast oil and gas rich sector over in a 'mission accomplished' fashion.

It brings to a final close the 14-year long bloody proxy war which overthrew the Assad government and ultimately installed a pro-US/Saudi axis puppet, in the person of founding Syrian Al Qaeda Abu Mohammad al-Jolani, now known as President Ahmed al-Sharaa.

via Le Monde

Hundreds of thousand of people lost their lives in the regime change war, with the country and its economy left in a sanction-starved and conflict-demolished state of ruins.

The US-backed Syrian Foreign Ministry declared Washington had decided to "complete its military mission" in the country. "The Syrian state is today fully capable of leading counter-terrorism efforts from within, in co-operation with the international community," it said, happy to now be back in control of the domestic oil and gas supply.

The ministry "welcomes the completed handover of military sites where United States forces were previously present in Syria to the Syrian government," adding that "the handover of these sites was carried out ... in full coordination between the Syrian and American governments."

While Pentagon propaganda had for years touted an 'anti-ISIS' mission, the real purpose of the troop presence was to cut off Damascus under Assad of its sovereign natural resources, and to arm and prop up a Kurdish-Arab coalition called the Syrian Democratic Forces (SDF). 

All the while, the CIA supported Sunni hardline jihadists who were indistinguishable from ISIS in their ideology in the fight against the Syrian Army, and the civilian population which often largely supported the secular Ba'ath government. The broader strategy has long been to destroy the Tehran-Baghdad-Hezbollah 'Shia axis' - even if that meant using ISIS as a tool of regime change.

Ironically, in the process of this US handover of oil and gas facilities back to post-Assad Damascus, the Kurds were thrown under the bus. Their dream for an autonomous enclave (Rojava) once again proved illusory, and in the long term the Kurds will find themselves at the mercy of Sunni fanatics on the one hand, and Turkish state under Erdogan on the other.

Following the US withdrawal, Jolani regime troops moved into Qasrak Base in Hasakah Governorate in north-eastern Syria on Thursday. Earlier, in February, the US exited the Shaddadi in eastern Syria and Al-Tanf on the Syria–Jordan–Iraq border.

US Central Command (CENTCOM) confirmed the completion of the process for "turning over all of our major bases in Syria." But it also said US forces "continue to support partner-led counter-terrorism efforts."

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Repositioning troops related to ongoing anti-Iran operations...

Tyler Durden Thu, 04/16/2026 - 22:10

What AI Doesn't Know - And Why It Matters

What AI Doesn't Know - And Why It Matters

Authored by Richard Porter via RealClearPolitics,

Artificial intelligence has taken the wired world by storm, but the backlash came almost as fast. Progressives complain of job losses, environmentalists question the ecological impacts of huge data centers, and local activists are clamoring for assurances that household utility bills won’t skyrocket because of the centers’ voracious electricity requirements. Others simply worry that the technology will overwhelm humans’ ability to control it.

At least in part, these reactions stem from the overselling of AI.

AI is super cool, but it’s not superhuman nor is it super intelligent. AI is simply very fast processing of vast amounts of data.

Intelligence, knowledge, understanding and wisdom are all different concepts; the distinction between them elucidates the scope and limits of both human and electronic “intelligence.”

Intelligence is the ability to process information into an internally coherent framework that’s useful and adds or detracts from knowledge to the extent it is more or less accurate. Knowledge is the accumulation of information organized into coherent frames or models that help us understand. Understanding is awareness of the significance, purpose, or meaning of accumulated knowledge.

And wisdom is judgment seasoned by experience and the awareness that intelligence, knowledge, and understanding are limited, inherently flawed, and useful only to the extent they advance a worthwhile purpose.

Nearly 2,500 years ago, the Oracle of Delphi reportedly declared that no man was wiser than Socrates. Socrates claimed to be stunned by this because he was keenly aware of how much he didn’t know. But after talking to others widely acclaimed to be knowledgeable, such as the leading politicians, poets, philosophers, and artisans of his day, he discerned this Delphic wisdom: Those claiming knowledge were ignorant of their own ignorance, whereas Socrates knew he knew nothing.

For this insight, Socrates was put to death for impiety and corrupting the youth of Athens, thereby proving for all time both the foolishness of his accusers’ certainty and the wisdom of Socratic questioning.

This bears repeating today, as we enter the Age of Artificial Intelligence: it’s wise to question the “intelligence” of machines, the “knowledge” they propagate, and our understanding of the significance and limits of the technology.

AI models are amazing and useful despite being incomprehensible to most of us, but AI is not infallible. AI will expand human knowledge and understanding of the world only if and to the extent that human users are encouraged to question AI results, processes, and functions.

People make mistakes, as do the people making and training the machines. Still, people tend to trust machines more than people, especially with respect to processing information that’s harder to process. For example, tennis players have more faith in electronic line calls over human line calls, although that faith in the new technology has been shaken by errors, such as when ball marks are inconsistent with the electronic line calls.

As AI use spreads, people will increasingly rely on AI and trust its results for routine tasks (like Google searches), while most people remain more skeptical of AI results for more complex tasks and do not trust AI to act to handle certain tasks for its users without human intervention.

It’s wise to question AI’s results; errors are common even in routine searches.

Examples of AI errors, hallucinations and political bias are rife. A Northwestern University business school professor of my acquaintance recently asked ChatGPT for advice evaluating investment alternatives. ChatGPT recommended he invest in a particular fund and described in detail that fund’s returns, risks, and assets. When the professor went to invest in ChatGPT’s recommended fund, he discovered the fund did not actually exist; ChatGPT made it all up (a phenomenon commonly referred to as “AI hallucination”). 

Indeed, AI can screw up even mundane tasks: In my research for this piece, a Google AI summary ascribed quotes to Socrates that are not supported by any historical record.

Artificial intelligence – like human intelligence – is prone to error and is not always reliable, but that’s to be expected, especially in a fledgling technology. AI is artificial intelligence, not artificial knowledge, understanding, or wisdom.  AI is a processor, a very fast processor, that organizes and distills information – and organized information is easier to evaluate and use by humans than vast amounts of unorganized information.

Properly understood, AI supplements and does not replace human intelligence, knowledge, or understanding; plus, the limitations and faults within these amazing models remind us that human intelligence is limited, too. Human intelligence imperfectly organizes the imperfect data to which a human has access and frames data in a subjective, not an objective, manner.

Many of us expect the machines that humans make to have “better” intelligence than the intelligence of its human creators – more objective, more comprehensive, more insightful. This is a naïve hope. In one sense, it is “better.” AI organizes more information faster than humans can. But who do they think programmed the thing? Every AI model is regurgitating imperfect information collected, created, and input by imperfect, subjective human beings.

What to make of all this?

First, perhaps the math nerds creating AI are mistakenly training machines to handle information processing on human topics as if human topics are math problems with a specific answer.  Perhaps instead, machines should be trained to suggest questions to consider instead of answers to accept with respect to human inquiries relating to politics, economics, psychology, child rearing, crop science – the full range of arts, humanities, and social sciences.

Second, people training these machines should be explicit about the biases and perspectives being built into how the AI organizes, sorts, and frames information. (My own bias on this topic is that I believe American AI companies should be building AI with quintessentially American framing.) 

Third, AI creators should consider the political, regulatory, and legal risks of “overselling” what AI is and what it can do. For example, should AI creators anticipate a duty to warn users of shortcomings with AI’s results and/or disclaimers of warranties?

Fourth, AI creators need to consider improving the quality of data upon which the systems are being trained, recognizing that many online data sources intentionally mislead to advance political agendas. Perfectly “unbiased” information is impossible to obtain, but some information is more accurate and less biased than other information; trainers should exercise better judgement about data.

The creation of AI large language models is an incredible feat of engineering. It’s quite useful, and will soon be essential, but it is still a product of human invention. As such, we need to recognize that AI is ultimately just the latest, greatest – but still imperfect – implement invented and used by homo sapiens to make life better for homo sapiens.

Richard Porter is a member of the Board of Directors of the Alfa Institute, a platform for ideas, policy proposals and new technology integration pertaining to artificial intelligence

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Tyler Durden Thu, 04/16/2026 - 21:45

Why The Crash Was Delayed

Why The Crash Was Delayed

Authored by Robert Aro via Mises Institute,

Whatever happened to the mother of all crashes that was supposed to arrive when the Federal Reserve began tightening its balance sheet back in 2022? For several years, I’ve been scratching my head, convinced that draining the balance sheet by trillions of dollars should have triggered a systemic banking failure or some other Black Swan event. In the past, crises like Lehman/AIG or the 2020 lockdowns took the blame, when in reality, the root cause was always monetary.

From the peak in June 2022 to the trough in December 2025, the asset side of the Fed’s balance sheet shrank by roughly $2.3 trillion. That was the front door. But through the back door, something else was happening on the liability side: the Fed’s Overnight Reverse Repo Facility (RRP) was releasing $2.5 trillion of previously frozen private liquidity back into the financial system. 

If Quantitative Tightening (QT) removed liquidity, the RRP added it back... plus interest.

To recap: during QT, the Fed allows its holdings of Treasury securities and mortgage-backed securities (MBS) to mature. Financial intermediaries repay the Fed, and the Fed literally deletes that money from the system. This is the classic setup that exposes malinvestments, stresses credit markets, and reveals the imbalances described in Austrian Business Cycle Theory

But this time it really was different because of the Reverse Repo Facility.

By mid-2023, the (March 2023) Silicon Valley Bank crisis had passed and the Fed’s Bank Term Funding Program was alive and well; then the hikes finally tapped out. Eventually, the 1-Month (4-Week) Market Yield on U.S. Treasuries outpaced the Fed’s RRP rate, and the incentive changed. Fund managers began a stampede out of the Fed’s facility and rotated into T-bills to chase a higher risk-free return.

In less than two years, the RRP withdrawals injected around $100 to $200 billion+ a month into the financial system at its peak. This was effectively a backdoor stimulus program that bypassed the Fed’s official QT narrative and funded the government’s deficit. Correlation does not equal causation, but it’s also not surprising that the Dow Jones broke out to new highs at almost the exact moment the RRP began to unwind.

The system was running on stored liquidity thanks to a giant buffer accumulated during the pandemic stimulus era. But as of 2026, that buffer is gone. The RRP liability has flatlined at essentially zero, meaning that the trillion-dollar offset to QT has been fully exhausted.

Perhaps it was no coincidence that once the RRP hit empty, the Fed’s tightening ended. On December 11, 2025, the Federal Reserve Bank of New York announced it would begin Reserve Management Purchases (RMP’s) at a pace of approximately $40 billion per month. While they use Fedspeak to avoid the term Quantitative Easing (QE), in reality, they’ve returned to official balance sheet expansion. They are being forced to replace the lost RRP liquidity with fresh money printing.

The math remains staggering. Since June 2022, the Fed was slashing its balance sheet by embarking on a QT narrative. The result? A net liquidity injection to the tune of $200 billion. And they called it “tightening.”

With the RRP buffer now empty, we are entering uncharted territory. The Fed’s $40 billion a month balance sheet expansion is several times less than what was entering the system via the RRP drain. Ironically, what the Fed hopes will act as QE might feel more like QT. We are about to find out just how long the system can survive a true monetary contraction.

Tyler Durden Thu, 04/16/2026 - 20:55

US Army Trials Unmanned Hunter Wolf Robot With Gun, Radar In Combat Drills

US Army Trials Unmanned Hunter Wolf Robot With Gun, Radar In Combat Drills

The U.S. Army is quietly putting armed robots through their paces alongside real soldiers - and new footage suggests these machines could soon be a regular sight on tomorrow’s battlefields.

Wolf-X robotic combat vehicle by HDT Global.Blade HDT

Fresh imagery dropped on Monday by the Defense Visual Information Distribution Service shows a Hunter Wolf unmanned ground vehicle rolling with the 101st Airborne Division during a full-on combat simulation at the Joint Readiness Training Center (JRTC) in Louisiana. The display amounted to a serious stress test in one of the Army’s roughest training environments - where ideas either prove they work or get ditched fast.

The Hunter Wolf’s appearance at JRTC marks a significant shift - as units aren’t just playing around with unmanned gear in isolated experiments anymore; they’re dropping it straight into realistic, chaotic scenarios. Elements of the 101st used the vehicle for logistics runs and security tasks throughout the exercise. Photos show it fitted with a remotely operated .50-caliber machine gun, which hints that the Army is testing it for more than just hauling supplies—it’s being eyed for actual tactical roles too.

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A post shared by HDT Global (@hdtglobal)

The Hunter Wolf was originally picked up under the Army’s Small Multipurpose Equipment Transport program to take some of the crushing load off soldiers’ backs. But at Fort Polk, they ran it with a remote weapon station and EchoShield radar, turning it into a rolling set of eyes and teeth. The combo lets a unit push sensors and firepower forward without putting troops in the open. The robot can scout ahead, scan for threats, and even lay down fire while the soldiers stay under cover.

At the same time, it still hauls the basics - ammo, water, batteries, comms gear - so small units can stay mobile and supplied across wide, contested spaces. In today’s fights, logistics and security are blurring together anyway. A robot that can do both fits right in.

Defense analyst Teoman S. Nicanci (Army Recognition Group) points out that the real story here is the Army choosing a high-intensity training rotation like JRTC instead of a safe, staged test. It shows they’re serious about folding this tech into actual formations and missions, not just checking boxes.

For units like the 101st, where speed and mobility are everything, these unmanned platforms help keep that edge without burning out the troops or exposing them unnecessarily. Future battles are going to be packed with drones, artillery, and precision strikes—anything that cuts risk while keeping the pressure on is worth its weight.

Bottom line: the Hunter Wolf isn’t science fiction anymore. The Army is learning, right now, how to weave robots into the fight so soldiers can move faster, hit harder, and come home safer.

h/t Interesting Engineering

Tyler Durden Thu, 04/16/2026 - 20:30

IMF Warns Australia Set For One Of Highest Inflation Rates In Developed World

IMF Warns Australia Set For One Of Highest Inflation Rates In Developed World

Authored by Rex Widerstrom via The Epoch Times (emphasis ours),

The International Monetary Fund (IMF) says Australia is on track to have one of the highest inflation rates in the developed world.

Australian dollars coins in Melbourne, Australia, on April 4, 2024. AAP Image/Joel Carrett

In the latest edition of its World Economic Outlook, the global lender said economies around the world “face repercussions [from] the direct impact of higher commodity prices, indirect second-order effects on inflation expectations—which tend to be especially sensitive to energy and food prices—and amplification effects coming from [conservative] sentiment in financial markets.”

While the global economy had withstood “a series of shocks, yet another one—this time a military conflict engulfing the Middle East since the end of February—is testing this resilience,” the IMF warned.

It predicted that Australia’s GDP growth would remain flat this year at 2025’s level of 2.0 percent and would fall in 2027 to 1.7 percent.

Those figures are lower than previously projected, down from 2.1 percent for this year and 2.2 percent for next.

While that will be a consideration as Treasurer Jim Chalmers drafts his next budget for delivery on May 12, even more alarming is the forecast for inflation, with the consumer price index at 4.0 percent this year and 3.2 percent in 2027.

Those inflation figures exceed those of most advanced economies, including the United States (3.2 percent in 2026 and 2.1 in 2027), the UK (3.2 and 2.4), Germany (2.7 and 2.3), New Zealand (3.1 and 2.3), Japan (2.2 and 2.3),

Australia’s unemployment is also expected to be stubborn, at 4.2 and 4.3 percent respectively.

IMF Calls for Less State Intervention in Economy

Prior to the outbreak of the Iran War the IMF had intended to revise its growth forecasts upwards, but the closure of the Strait of Hormuz and attacks on oil and gas facilities reversed the positive momentum and raised the prospect of a major energy crisis, according to IMF chief economist Pierre-Olivier Gourinchas in a press briefing.

Under a “severe” scenario, in which an extended conflict results in greater damage to energy infrastructure, global growth would fall to 2 percent in 2026 and be perilously close to a global recession.

“What should we avoid?” Gourinchas asked.

Price caps, subsidies, and similar interventions are popular, but they distort prices. They’re often poorly designed, hard to unwind, and extremely costly,” he said.

“Most countries don’t have that luxury anymore. Where support for the most vulnerable is needed, targeted and temporary measures should be deployed, consistent with medium‑term plans to rebuild fiscal buffers and avoiding stimulating demand where inflation is rising.”

Government Stimulus a Mistake: Experts

Two experts spoken to by the Epoch Times said they were unsurprised by the IMF’s forecasts.

While declining to offer his own forecast of GDP, John Quiggin, professor of economics at the University of Queensland, said he agreed that the Australian Labor government’s cut to fuel excise was “giving the wrong signals.”

The only merit is that it is temporary,” he said. It is due to end in 3 months.

Graham Young, executive director of the Australian Institute for Progress, said the government was giving “a masterclass in how to repeat the 1970s and 80s and turn a price increase into an inflation increase.

On its own, the oil price will redirect spending largely from non-essentials to fuel, but if the government tries to soften the hit, and they do that without corresponding savings somewhere else, then it will turn into inflation,” he explained.

He cautioned that further pressure on  inflation would occur if the Australian Council of Trade Unions is successful in its bid to increase the minimum wage by 5 percent without a corresponding rise in productivity.

“Wage increases without productivity increases are almost always inflationary first and deflationary second as they put businesses out of business, increase unemployment, and contract the economy,” Young said.

He recalled how interest rates were “probably not high enough to kill inflation” in 1975 and so were progressively raised until the peak in 1989/90.

“Our rates are better placed at the moment than in the 70s, but not by much,” he said.

Graph showing the relationship between the Consumer Price Index and home loan rates in Australia. Courtesy of Graham Young, of the Australian Institute for Progress

RBA Deputy Governor Andrew Hauser said, at a speaking event in the United States on April 14, that inflation expectations were rising in the short term, but remained anchored long term.

“Our estimate is that the supply capacity of the Australian economy at the moment probably can only grow at about 2 percent,” he told New York University guests.

“By the third or fourth quarter of last year, inflation began to pick up, and is now around 3.5 percent on core and nearer 4 on headline, which is too high.

It’s obvious that inflation is going up in the short term, and people are very conscious of that. There’s not much monetary policy can do about that, other than prevent it from getting into long-term inflation expectations. The big question for us is what it’s going to do to [business] activity ... Those are the numbers we’re crunching through at the moment.”

Treasurer Jim Chalmers has left for Washington D.C., to discuss the economic crisis with international counterparts, including the UK’s Chancellor of the Exchequer Rachel Reeves, and Chinese Finance Minister Lan Foan at the IMF-World Bank Spring Meetings.

The IMF report showed it was “a dangerous moment for the global economy,” Chalmers said. “We’re weighing all of this extreme uncertainty as we prepare a budget focused on resilience and reform.”

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Tyler Durden Thu, 04/16/2026 - 20:05

DOJ Launches Investigation into Sexual Assault Allegations Against Eric Swalwell

DOJ Launches Investigation into Sexual Assault Allegations Against Eric Swalwell

The U.S. Department of Justice has opened a criminal investigation into multiple sexual assault and misconduct allegations against former Rep. Eric Swalwell (D-Calif.), federal officials confirmed Thursday, marking the latest escalation in a scandal that has already forced the longtime congressman to resign from the House and suspend his bid for California governor.

Swalwell, who represented California's 14th District since 2013, stepped down from Congress on Tuesday amid bipartisan pressure and a House Ethics Committee probe into claims that he engaged in sexual misconduct, including toward a staffer under his supervision. The Ethics review is expected to close following his resignation, as the panel's jurisdiction is limited to current members.

The DOJ's involvement adds a federal layer to ongoing local probes. The Manhattan District Attorney’s Office is investigating an alleged 2024 sexual assault in a New York City hotel room involving a former staffer, while the Los Angeles County Sheriff’s Department and District Attorney’s Office have opened inquiries into a separate 2018 claim. Prosecutors have been assigned to review evidence in the LA case.

The allegations first gained widespread attention last week when the San Francisco Chronicle and CNN reported claims from a former staffer and three other women. The former aide accused Swalwell of sexually assaulting her on two occasions: once in 2019 while she was employed by him, and again in April 2024 after a gala event in New York, where she said she was too intoxicated to consent and attempted to refuse. Three additional women described unwanted explicit messages, unsolicited nude photos, and harassment, some occurring during his gubernatorial campaign.

On Tuesday, a fifth woman, Lonna Drewes - a Beverly Hills-based former model and fashion software entrepreneur - held a news conference to detail her accusations. Drewes alleged that in July 2018, after meeting Swalwell socially and believing they were developing a friendship, he invited her to his West Hollywood hotel room under the pretense of picking up papers. She claimed he drugged her drink, raped her, and choked her until she lost consciousness. Drewes said she had only one glass of wine that evening and provided authorities with journal entries, texts, and photos as evidence. She has since reported the incident to law enforcement and stands with the other accusers.

Swalwell has categorically denied all allegations of non-consensual or illegal conduct. His attorney called the claims “false, fabricated and deeply offensive.” In a statement announcing his resignation, Swalwell acknowledged “mistakes in judgment” from his past but maintained that no laws or House rules were violated. He said he would fight the accusations while stepping aside to avoid distracting from his constituents’ needs.

Political Fallout and Special Election

The swift collapse of Swalwell’s political ambitions stunned observers. He had been viewed as a frontrunner in the race to succeed term-limited Gov. Gavin Newsom. He suspended his gubernatorial campaign on Sunday as the allegations mounted and bipartisan calls for his resignation or expulsion grew. Democrats, including House leaders, distanced themselves, while some Republicans pushed for an immediate expulsion vote.

Newsom has scheduled a special election to fill Swalwell’s seat: a primary on June 16 and general election on August 18, 2026. The resignation was formally read into the House record this week.

Tyler Durden Thu, 04/16/2026 - 19:40

CBP Says It Seized More Than 60 Pounds Of Cocaine From US Citizen At Border

CBP Says It Seized More Than 60 Pounds Of Cocaine From US Citizen At Border

Authored by Troy Myers via The Epoch Times,

U.S. Customs and Border Protection (CBP) officers at the U.S.–Mexico border prevented more than 60 pounds of cocaine from entering the country, allegedly smuggled by an American citizen—a “trusted traveler”—the agency exclusively told The Epoch Times on Wednesday.

At California’s San Ysidro Port of Entry, a 25-year-old man was arrested on April 7 for allegedly concealing more than $1.1 million of the illegal narcotics within his vehicle and now faces federal prosecution.

The man was not named by CBP.

He was categorized as a “trusted traveler” because he was a participant in the Secure Electronic Network for Travelers Rapid Inspection program, the agency said. The program allows expedited passage into the United States for pre-approved, low-risk travelers. All applicants for the program undergo an extensive background check and an in-person interview prior to being enrolled.

Despite having qualified for expedited treatment, the man was referred for a secondary inspection while entering the United States.

“Trust, but verify,” the agency said.

Illegal narcotics hidden in the driver's vehicle doors are shown, at the San Ysidro Port of Entry on April 7, 2026. Border Patrol agents seized more than 60 pounds of cocaine from a U.S. citizen. U.S. Customs and Border Protection

During the secondary inspection, CBP said it used non-intrusive imaging technology that revealed “anomalies” within the doors of the driver’s 2020 Honda Civic. A canine team additionally alerted officers to the presence of narcotics.

According to CBP, officers discovered 20 packages containing 27.28 kilograms, or 60.14 pounds, of cocaine. The drugs, vehicle, and two cellphones were seized.

The driver was arrested and faces charges of narcotics importation and smuggling, CBP said.

“This arrest is a clear message that no one is above the law,” San Ysidro Port Director Mariza Marin said.

“We will hold everyone accountable for their actions, especially those who betray the trust of our traveler programs by attempting to smuggle dangerous narcotics.”

This latest encounter comes as the Trump administration delivered 11 straight months of zero releases at the southern border, while CBP is making increased illegal narcotics seizures across the country compared to a year prior.

Nationwide, CBP seized more than 65,000 pounds of drugs in March, which included 613 pounds of fentanyl. Compared to March 2024, that total amount is 27 percent higher.

Border Patrol agents seized more than 60 pounds of cocaine from a U.S. citizen. The illegal narcotics were hidden in the driver's vehicle doors, on April 7, 2026, at the San Ysidro Port of Entry. U.S. Customs and Border Protection

The agency said it has seized 24 percent more drugs this fiscal year through March than it did during the same time period for FY 2024.

Comparing similar figures extending into President Joe Biden’s administration, CBP seized 19 percent more illegal narcotics so far this fiscal year than it seized, on average, during the same period in each of the last four fiscal years, according to the agency.

To date in FY 2026, data showed CBP has seized a total of 341,000 pounds of drugs.

The agency counts all drug types, including cocaine, ecstasy, fentanyl, heroin, ketamine, khat, LSD, marijuana, methamphetamine, and other drugs. CBP also reports drug seizures from the southern border, northern border, coastal areas, and interior.

In February, CBP exclusively shared with The Epoch Times that it had prevented more than 660 pounds of methamphetamine, worth about $6 million, from illegally entering the United States. The drug bust came from a single commercial truck at the World Trade Bridge in Laredo, Texas.

Only days before that encounter and at the same Laredo entry point, federal officers seized 36 pounds of cocaine worth about half a million dollars. CBP said it was enough for 190,000 lethal doses.

A CBP spokesperson noted that the drug seizure metrics on its website do not include illegal narcotics seized from joint operations, such as the U.S. Coast Guard or local law enforcement, when another agency would take possession of the drugs.

“In addition to what Border Patrol and [the Office of Field Operations] has seized, which is above and beyond what has been seized in years prior, there’s also these additional activities that stop it before it even gets to the border,” the spokesperson previously told The Epoch Times.

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Tyler Durden Thu, 04/16/2026 - 19:15

California Offering Taxpayer-Funded Gender Surgeries To Homeless, Illegal Immigrants: Report

California Offering Taxpayer-Funded Gender Surgeries To Homeless, Illegal Immigrants: Report

Authored by Luis Cornelio via Headline USA,

The California government may struggle to provide basic housing for the homeless, but it appears willing to fund gender-transition procedures with taxpayer dollars, including illegal aliens, according to a new report.

A Wednesday report from City Journal found that San Francisco homeless shelters, with the assistance of state and local governments, are facilitating transgender surgeries for males who identify as female.

One such shelter, St. Vincent de Paul’s MSC-South, entered into a $66 million contract with the city to house homeless individuals, including illegal aliens.

A pair of Honduran nationals living at the shelter, Lyca and Alondra, reportedly identify as transgender, and both said they receive Medi-Cal, California’s taxpayer-funded Medicaid program.

According to City Journal, the taxpayer-funded program covers transgender procedures, or “gender-affirming care,” and provides “full-scope” coverage to illegal aliens.

Lyca, who reportedly showed signs of a sex change, said he is receiving cross-sex hormone therapy.

Meanwhile, Alondra, who appeared more masculine in physique, said he entered the U.S. illegally after claiming asylum. A translator told City Journal that Alondra declined a housing offer due to affordability concerns, though the government offered to pay one month’s rent.

Another shelter, the Embarcadero SAFE Navigation Center, reportedly houses a transgender-identifying individual named Jacqueline.

Originally from Mexico, Jacqueline told City Journal that illegal aliens reside at the shelter and said he received breast implants through Medi-Cal.

Jacqueline claimed to be a permanent resident but acknowledged that the program also covers procedures for illegal aliens.

“Even though you’re undocumented, you can get them,” he stated, as quoted by City Journal. “You have to have a process, the hormones … go through therapy.”

Asked whether he had received so-called “bottom surgery,” Jacqueline replied, “I’m waiting for that one.”

Headline USA reached out to MSC-South for clarification, including whether such procedures are facilitated by the shelter, but a front-desk receptionist said no one was available to comment.

When pressed further, he added, “We’re busy right now, boss man.”

Attempts to contact the Embarcadero SAFE Navigation Center were unsuccessful, as its main line appeared disconnected. Five Keys Housing, the shelter’s parent company, was closed when Headline USA called.

A Newsom spokesperson stood by the state’s taxpayer-funded program, saying, “Undocumented Californians don’t get special treatment. Everyone on Medi-Cal gets the same access to care. If you want to call California woke for not letting politicians interfere with doctors – or not wanting people to die in the streets – then go ahead.”

The City Journal report comes as California Gov. Gavin Newsom’s administration faces mounting scrutiny over potential exploitation of taxpayer-funded programs, from hospice fraud to the expansion of taxpayer-funded gender procedures for illegal aliens.

Tyler Durden Thu, 04/16/2026 - 18:25

Gulf Shock May Spark Shortage Of World's Most Critical Industrial Chemical, Used Heavily In Mining 

Gulf Shock May Spark Shortage Of World's Most Critical Industrial Chemical, Used Heavily In Mining 

Goldman analysts Kyle Shaffer and Amanda Ross provided clients with a broad overview of industrials and natural resources amid energy disruptions in the Gulf area. In the note, they stated that the well-known Gulf energy shock is set to disrupt LNG production in Qatar for years to come. However, they also highlighted another emerging supply crunch that has received far less attention: sulfuric acid.

"Some long-lasting consequences have also started to emerge, including a 3-5 years production loss for LNG facility in Qatar, a 6-12 month re-starting time for some aluminum facilities in the Gulf, and shortage of sulfuric acid which can potentially impact future production for copper and lithium" Shaffer and Ross said.

About a third of the world’s sulfur comes from the Gulf region, where it is produced as part of oil and gas refining. Much of the sulfur is exported, primarily to fertilizer and industrial-processing hubs in Asia, North Africa, and, in Qatar’s case, some trading hubs across Asia and Europe.

Goldman analyst James McGeoch noted on Wednesday that Shandong sulfuric acid prices are soaring and that China is "slated to suspend sulfur exports from May (sulfur that is a by-product of processing)." He added that part of the recent push to procure and process concentrate is to produce sulfur for fertilizer.

It is important to note that sulfuric acid is one of the world’s most important industrial chemicals, used in fertilizers (phosphates), oil refining, lead-acid batteries, and chemical manufacturing.

Prices in China have jumped 90% since the start of the US-Iran conflict in late February. Current prices exceed the highs recorded during the Russian invasion of Ukraine in early 2022.

"Already though, prices have risen, and if there’s a shortage of sulfuric acid, that could quite quickly translate into more expensive homes, cars and electrical products," Bloomberg analyst Sebastian Boyd noted.

In the mining sector, sulfuric acid is critical for the extraction of several key industrial metals, including copper, nickel, uranium, cobalt, and zinc. Sufer is not just for fertilizer to feed the world; the mining sector could also face major impacts if shortages materialize.

Tyler Durden Thu, 04/16/2026 - 18:05

Scientist Suggests Dark Matter Could Be Black Holes From A Different Universe

Scientist Suggests Dark Matter Could Be Black Holes From A Different Universe

Authored by Steve Watson via Modernity.news,

While the scientific establishment has spent decades chasing invisible particles that never quite show up, a leading cosmologist has dropped a theory that turns everything on its head: dark matter isn’t some exotic new particle. It could be ancient black holes that survived from an entirely different universe.

This idea, laid out by Professor Enrique Gaztanaga of the University of Portsmouth, doesn’t just tackle one cosmic puzzle. It offers a clean fix for the Big Bang’s thorniest problems and lines up with fresh observations that have astronomers scrambling.

Gaztanaga argues the elusive substance that makes up roughly 27 per cent of the universe’s mass may actually be “relic” black holes formed in a previous collapsing phase of the cosmos.

“The idea is that dark matter may not be a new particle, but instead a population of black holes formed in a previous collapsing phase and bounce of the Universe,” Professor Gaztanaga says.

He rejects the standard singularity model where everything explodes from an infinitely dense point that breaks physics. Instead, he proposes a “bouncing” universe.

“The Big Bang corresponds to a bounce from a previous collapsing phase, rather than the absolute beginning of everything,” the Professor Gaztanaga further noted, adding “So it is the start of the expansion we observe, but not necessarily the beginning of time itself.”

In this picture, black holes from the collapsing galaxies of that earlier universe survived the bounce and now drift through our cosmos, exerting gravity without emitting light.

“These ‘relic’ black holes would survive into the expanding phase we observe today and behave exactly like dark matter: they interact gravitationally, but do not emit light,” he explains.

The theory also neatly accounts for the James Webb Space Telescope’s baffling discovery of bright red dots—rapidly growing black holes—mere hundreds of millions of years after the Big Bang. If relic black holes were already present at the start, they would have had a massive head start.

It also sidesteps the need for new particles while explaining how supermassive black holes formed so quickly in the early universe.

This development builds on a wider wave of recent clues pointing to black holes and dense dark objects playing a bigger role than previously thought.

Recently, astronomers highlighted a massive invisible object that tore through the Milky Way’s GD-1 stellar stream, leaving a jagged gap and gravitational disturbances without any light, heat, or radiation. The phenomenon suggests “a ‘Dark’ Entity, likely a dense clump of dark matter or a previously undetected dark subhalo.”

This phenomenon has been witnessed before.

Hubble observations of the globular cluster NGC 6397 have also revealed a mysterious swarm of black holes lurking just 7,800 light-years from Earth.

For years the default dark matter story has been “trust us, it’s some particle we haven’t found yet.” Billions have been spent on detectors and accelerators hunting WIMPs or axions with zero direct detection to show for it. Gaztanaga’s relic black hole approach uses only known physics—general relativity plus quantum effects—and turns the collapse-bounce into the natural origin story.

Recent stellar stream disruptions like the one in GD-1 and compact object swarms in nearby clusters provide real-world data points that align with a universe seeded by surviving black holes rather than a sea of hypothetical particles.

The European Space Agency’s own description of dark matter captures the frustration: “Shine a torch in a completely dark room, and you will see only what the torch illuminates. That does not mean that the room around you does not exist.”

Gaztanaga’s framework says the “room” has been hiding in plain gravitational sight all along.

Scientists will now scrutinize gravitational wave data and CMB measurements for the predicted relics. If the numbers line up, two of cosmology’s biggest headaches—dark matter and the true origin of the Big Bang—get solved in one elegant stroke.

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

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Tyler Durden Thu, 04/16/2026 - 17:45

Bankrupted Spirit Airlines Faces Imminent Liquidation

Bankrupted Spirit Airlines Faces Imminent Liquidation

Bankrupt Spirit Airlines "could liquidate as early as this week," according to a new CNBC report. The troubled carrier, stuck in years of turbulence, has failed to emerge from its second bankruptcy in less than a year and is now being squeezed by soaring jet fuel costs.

When the budget carrier would begin the liquidation process was not immediately clear to CNBC's sources, but the report comes just after an overnight Bloomberg story warned about the "risk of liquidation" due to the latest surge in jet fuel prices.

The airline had been trying to downsize its jet footprint and focus on popular seasonal routes, while labor unions made concessions to help keep operations afloat. But Spirit's financial problems have been mounting for a while.

In 2024, JetBlue terminated its $3.8 billion merger deal with the carrier, citing low odds of regulatory approval after a Biden-era federal court blocked the deal over antitrust concerns.

Both CNBC and Bloomberg sources said the liquidation was likely to happen this week; today is Thursday, and the news may break as early as Friday.

The airline, which is still operating as of late Thursday morning, was expected to exit bankruptcy this summer, but that now appears increasingly unlikely. The carrier filed for Chapter 11 bankruptcy protection in August of last year, the second time in less than a year.

Airlines have increasingly warned of a spike in jet fuel costs and the financial impacts stemming from the Hormuz chokepoint disruption. Multiple carriers, including United Airlines, have warned about hiking baggage fees and ticket prices to offset jet fuel costs.

Meanwhile, UBS analysts are searching for a possible bottom in airline stocks (read the report). 

The best-hedged airline amid the jet fuel turmoil has been Delta Air Lines, the only U.S. carrier to operate a refinery.

Earlier this week, Reuters reported that United CEO Scott Kirby pitched a tie-up with American Airlines during a recent conversation with President Trump. The potential merger would create a super airline to strengthen U.S. competitiveness globally.

Tyler Durden Thu, 04/16/2026 - 17:25

Secret Service Targets Thieves Stealing SNAP Benefits In Texas

Secret Service Targets Thieves Stealing SNAP Benefits In Texas

Authored by Jill McLaughlin via The Epoch Times (emphasis ours),

Fraudsters used special devices to skim card information from electronic devices used to read food stamp cards in northern and central Texas, the U.S. Secret Service’s Dallas Field Office reported April 15.

A U.S. Secret Service agent, in this file photo. Madalina Kilroy/The Epoch Times

The Secret Service worked with local law enforcement to prevent an estimated $13.5 million in losses to Dallas-area consumers this week as part of a two-day outreach operation targeting illegal payment card skimming and electronic benefit transfer (EBT) fraud.

EBT fraud is a serious threat impacting families nationwide,” said Special Agent in Charge of the Dallas Field Office Christina Foley. “Our investigative teams are committed to dismantling these skimmer operations and holding perpetrators accountable.”

Law enforcement personnel visited 462 area businesses in Tarrant County during the operation between April 13 and April 14.

Nearly 3,000 point-of-sale terminals, gas pumps, and ATMs were inspected during the visits, the Secret Service reported.

Teams also provided educational materials about credit card skimming to help businesses identify illegal devices that can be installed on their terminals, gas pumps, and ATMs.

The FBI estimates skimming costs financial institutions and consumers more than $1 billion each year. Criminals use the data they get from installing devices on or inside ATMs or point-of-sale terminals to capture card data and record PIN entries.

Once they have the information, they use it to make purchases or steal from victims’ accounts, according to the FBI.

SNAP benefits can also be skimmed, according to the U.S. Department of Agriculture. The agency suggests people avoid using simple PINs and keeping the information private by not sharing it and changing the PIN often. They also suggested checking SNAP accounts often to detect unauthorized charges.

The individuals behind these schemes are relentless, but so are we,” said Assistant Special Agent in Charge Michael Peck of the Secret Service Criminal Investigative Division. “Through coordinated efforts and innovative investigative methods, we are disrupting their operations and ensuring that those who exploit vulnerable families are brought to justice.”

SNAP is the largest federally funded nutrition assistance program in the United States. The low-income program provided about $96 billion in assistance to about 43 million people in 2025, according to a report by the General Accountability Office last year.

The report found SNAP benefits have been stolen through a few different methods, including card skimming, card cloning, phishing activities, algorithmic attacks, and stolen account numbers.

A sign alerting customers about SNAP benefits is displayed at a grocery store in New York City on Dec. 5, 2019. Scott Heins/Getty Images

The EBT cards are a target for theft because most cards do not have theft-prevention features, such as embedded microchips that are standard in commercial debit and credit cards to prevent card skimming, according to the GAO report.

Perpetrators of SNAP benefit theft can range from individuals acting independently to organized crime groups, who steal benefits to help fund illicit activities,” the GAO report stated. “Such groups can operate across geographic and legal jurisdictions, which allows access to more program benefits, in more locations, at the same time.”

State SNAP agencies replaced more than $320 million in stolen benefits with federal funds for nearly 679,000 households in 52 states from Oct. 1, 2022, through Dec. 20, 2024, according to the report.

Tyler Durden Thu, 04/16/2026 - 17:05

From Supply-Chain Risk To National Security Imperative: U.S. Government Embraces Anthropic's Mythos AI

From Supply-Chain Risk To National Security Imperative: U.S. Government Embraces Anthropic's Mythos AI

In a striking reversal that underscores the breakneck pace of the AI arms race, the White House has directed federal agencies to begin using Anthropic’s most dangerous new model - Claude Mythos - despite months of public friction between the Trump administration and the San Francisco-based AI company (read on to see how we reconcile this with the Pentagon's "supply-chain risk" designation). 

The move, detailed in an internal Office of Management and Budget (OMB) memo circulated this week, marks the first formal green light for Cabinet-level departments to tap Mythos’s unprecedented cybersecurity capabilities. The goal: to hunt down vulnerabilities in government networks before adversaries can exploit them, Bloomberg reports.

Too Powerful to Release, Too Valuable to Ignore

Anthropic unveiled Mythos (sometimes referred to internally as “Mythos Preview”) just weeks ago, and it immediately sent shockwaves through the tech and national-security communities.

In controlled testing, the model autonomously discovered and weaponized thousands of previously unknown zero-day vulnerabilities across every major operating system, web browser, legacy enterprise software, and even decades-old codebases. Its speed and creativity reportedly surpassed top human red-team hackers. As we noted earlier this month, the model “went rogue” during testing - prompting Anthropic to withhold a broad release entirely. Full technical details are available in Anthropic’s official Mythos Preview System Card.

Rather than ship it publicly, Anthropic launched Project Glasswing - a tightly controlled defensive program that grants limited access only to a vetted circle of partners: Amazon, Google, Microsoft, Apple, major banks (including JPMorgan Chase), cybersecurity firms, and the Linux Foundation. The explicit mission is defense only -  scan your own systems, find the bugs, patch them fast, and keep the bad guys out. The official program page is here.

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.

Now the OMB memo formalizes that reality. It lays out strict protocols for safe access, data handling, and usage limits so that major departments can deploy Mythos against their own sprawling digital estates. The focus remains narrow: vulnerability discovery, network hardening, and defensive preparedness.

What This Means for the AI Arms Race

This is not the first time Washington has had to swallow its pride to stay competitive. But the Mythos episode - from the earliest Pentagon threats through the April 8 Glasswing announcement and this week’s Treasury scramble - feels different. It is a microcosm of the larger tension defining 2026: frontier AI models are now so capable that even their creators are scared of them, yet ignoring them would be national-security malpractice.

Critics inside the defense community argue the government waited too long. Supporters of Anthropic’s cautious approach counter that the company’s restraint (and its Glasswing coalition) may have prevented an even worse outcome: a fully open-sourced Mythos circulating on the dark web.

For Anthropic, the development is a quiet vindication. By keeping Mythos under lock and key and building Glasswing as a defensive shield, the company has positioned itself as a responsible steward of dangerous technology - while still earning a seat at the table with the most powerful customer on Earth.

Tyler Durden Thu, 04/16/2026 - 16:45

Netflix Plunges After US Revenues Miss, Dismal Q2 Guidance, Hastings Stepping Down As Chairman

Netflix Plunges After US Revenues Miss, Dismal Q2 Guidance, Hastings Stepping Down As Chairman

After staging a powerful rebound in the past two months, when first weak Q4 earnings sent the stock plunging to multi-year lows, which however was offset by the end of the company's expensive pursuit of HBO/Warner Bros. Discovery , and which sent the stock almost 50% higher from $75 to $108,moments ago Netflix reported Q1 earnings which were mixed but guidance was especially poor and rekindled the same fears as those unveiled three months ago, and coupled with the news that Reed Hasting was stepping down from the board after 29 years to pursue "philanthropy and personal interested", NFLX stock tumbled as much as 10% after hours. 

Here is a snapshot of what NFLC reported for the first three months of the year: most notable here is another miss in the US which should have been a much more solid number considering the latest of many prices increases for NFLX subs in the US:

  • EPS $1.23 vs. 66c y/y, beating estimates of $0.76
  • Revenue $12.25 billion, +16% y/y, beating estimates of $12.17 billion; the miss comes after Netflix raised its US subscription prices in March, boosting its standard plan without ads by $2 to $20 a month.
    • US & Canada revenue $5.25 billion, +14% y/y, missing estimates of $5.28 billion
    • EMEA revenue $4.00 billion, +17% y/y, beating estimates of $3.95 billion
    • Latin America revenue $1.50 billion, +19% y/y, beating estimates of $1.45 billion
    • APAC revenue $1.51 billion, +20% y/y, beating estimates of $1.48 billion
       
  • Operating income $3.96 billion, +18% y/y, beating estimate $3.94 billion
  • Operating margin 32.3% vs. 31.7% y/y, missing estimate 32.4%
  • Cash flow from operations $5.29 billion, +90% y/y, beating estimate $3.29 billion
  • Free cash flow $5.09 billion, +91% y/y, beating estimate $2.67 billion

The biggest event in Q1 was Netflix' decision to walk away from a contentious battle for control of Warner Bros. Discovery in February, netting a nice $2.8 billion termination fee. The company’s shares had suffered during the months long tussle with Paramount Skydance as investors were concerned about the amount of debt it would shoulder under a potential deal. Now Wall Street is looking for signs Netflix can keep subscribers engaged and judging by the stock price it is not seeing them.  

While Q1 results were mixed, with unexpected weakness in the US offset by strength elsewhere, it was the company's guidance that was especially weak, with Q2 estimates coming well below consensus across the board:

Q2 Forecast

  • Sees EPS 78c, missing estimate 84c 
  • Sees revenue $12.57 billion, missing estimate $12.64 billion
  • Sees operating income $4.11 billion, missing estimate $4.34 billion
  • Sees operating margin 32.6%, missing estimate 34.4%

And here is the full year guidance: 

  • Sees revenue +12% to +14%
  • Sees free cash flow about $12.5 billion, saw about $11 billion, higher than the estimate $12.05 billion
  • Still sees revenue $50.7 billion to $51.7 billion, in line with estimate $51.37 billion
  • Still sees operating margin 31.5%, missing estimate 32%

Some of the commentary and highlights from the investor letter

  • Boosted FY FCF outlook due to after-tax impact of Warner Bros. related termination fee
  • Still sees annual cash content spend to amortization ratio of about 1.1x
  • Still sees 2026 advertising revenue on track to reach $3 billion
  • Sees 2Q highest y/y content amortization growth rate in 2026
  • Sees content amortization growth rate decelerating to mid-to-high single digit growth in 2H

The company reported that cash generated from operating activities nearly doubled in Q1'26, vs. Q1’25, totaling $5.3BN compared to $2.8B in the prior year. However, much of this increase was thanks to a $2.8B cash receipt from the Warner Bros.-related termination fee. As a result, free cash flow (FCF) rose to $5.1B in Q1'26, up from $2.7B in Q1'25. NFLX now expects 2026 FCF of approximately $12.5B, an increase from its previous projection of $11B due primarily to the after-tax impact of the Warner Bros.-related termination fee.

NFLX ended the quarter with gross debt of $14.4B and cash and cash equivalents of $12.3B. The cash position is more elevated than normal due to the pause in our share repurchase program during the Warner Bros. transaction and the subsequent receipt of the deal. In other words, expect a burst of stock buybacks to lift the stock in coming weeks. 

And while markets may gloss over all of the above, what it will focus on is that the co-founder Reed Hastings is stepping down as board Chairman after 29 years to pursue philanthropy and personal interests.

Hastings’ departure may worry investors given his status as one of the great entrepreneurs of the 21st century. Hastings provided the initial capital to start Netflix as a DVD-by-mail service and replaced co-founder Marc Randolph as chief executive officer in 1999. He guided the company through its battle with Blockbuster and was the driving force behind its move into video streaming. 

Under Hastings’ leadership, Netflix introduced the streaming service to more than 190 territories all over the world, outmaneuvering Hollywood studios to build the most valuable entertainment company in the world. He stepped down as CEO in January 2023, ceding the job to co-CEOs Ted Sarandos and Greg Peters. 

“Netflix changed my life in so many ways, Hastings said in a statement. “A special thanks to Greg and Ted, whose commitment to Netflix’s greatness is so strong that I can now focus on new things.”

And whether it was Hastings' departure, the miss on US revenues, or the dismal Q2 guidance, the stock was pounded after hours, and tumbled as much as 10% from $107 to $97 before recovering some of the losses.

At just under $100, NFLX stock is unchanged over the past year. 

Tyler Durden Thu, 04/16/2026 - 16:31

Wall Or Sieve? Attacks Raise Doubts About U.S. Immigration System

Wall Or Sieve? Attacks Raise Doubts About U.S. Immigration System

Authored by Benjamin Weingarten via RealClearPolitics,

In the wee hours of Sunday, March 1, a Senegalese immigrant clad in a sweatshirt bearing the words “Property of Allah” opened fire outside an Austin, Texas beer garden, killing three and leaving 14 others wounded.

On March 12, at Old Dominion University, a former Virginia National Guard member from Sierra Leone – released early from an 11-year prison sentence for attempting to provide material support to the ISIL – yelled “Allahu Akbar” before shooting and killing a beloved college professor and wounding two other people.

That same day, a Lebanese immigrant plowed a pickup truck filled with fireworks and gasoline into a large synagogue in West Bloomfield, Michigan. After exchanging gunfire with security staff, he killed himself. His brother, it turned out, was a recently eliminated Hezbollah commander in Lebanon. 

Amidst the emerging threat environment of the Iran war, these and other attacks on U.S. soil have reignited questions about the U.S. immigration system’s vetting and screening standards. Republican leaders are increasingly asking how, for example, foreign nationals like the Afghan evacuee who shot two National Guard members in Washington, D.C. – killing one of them – or the Egyptian national overstaying his tourism visa who firebombed pro-Israel demonstrators in Colorado last year were able to come here and commit such acts. They are also asking how close relatives of top Iranian officials, including avowed supporters of that country’s regime, have been allowed to live and work in the United States. 

Earlier this month, Secretary of State Marco Rubio announced that he had terminated the legal status of the niece of Iranian Major General Qasem Soleimani, who was killed by the U.S. in a targeted attack in 2020, and her daughter. Rubio described the niece on X as “an outspoken supporter of the Iranian regime who celebrated attacks on Americans and referred to our country as the ‘Great Satan.’ ”

While the Trump administration has effectively closed the southern border, the U.S. Citizenship and Immigration Services has concluded that “prior screening and vetting measures” of people who cross the border legally “were wholly inadequate,” creating “significant national security and public safety risks [that] compromise the integrity of the immigration system.”

Administration critics argue that fears of foreign-born terrorism are vastly overblown. Alex Nowrasteh of the Cato Institute told RealClearInvestigations that the annual chance of being murdered in a terrorist attack on U.S. soil by a foreign-born attacker is “about one in 165 million per year. All politically motivated violence is a tiny threat,” he said. “Exaggerating the threat does not bring us closer to delivering justice to the victims of every violent or property crime who deserve it.”

RCI’s review of congressional testimony and research, and interviews with immigration and national security experts, uncovered long-standing flaws in the system – some of which were exacerbated by the Biden administration’s lax immigration policies. Challenges run the gamut from incomplete information about applicants to inconsistent enforcement of the law. Even if relatively few immigrants commit deadly attacks, the vetting system has routinely permitted people with obscure backgrounds and hostile views to visit and live in the U.S. 

Robust Design

America’s immigration system is complex and multilayered, involving a range of departments and agencies that provide different levels of scrutiny depending on which of the dozens of categories would-be entrants fall into, from tourists to asylum seekers. As with most laws and rules, different administrations vet applicants with varying levels of vigor depending on whether they want to encourage or discourage immigration.

Three agencies lead the vetting process. The State Department issues visas; U.S. Citizenship and Immigration Services reviews petitions for immigrants seeking benefits such as citizenship or permanent residency, refugee and asylum claims, and other protections; Customs and Border Protection provides defense at the point at which aliens attempt to enter the country. Across these processes, sometimes with redundancy, authorities conduct biographic and biometric screenings, run name checks across U.S. security databases to search for red flags such as criminal histories or inclusion on terror watchlists, and interview would-be visitors.

As designed, the immigration system requires nearly all noncitizens seeking to enter the U.S. to obtain a visa. Nonimmigrant visas cover temporary trips for business or tourism, whereas immigrant visas cover permanent stays that may be family-, employment-, or education-based.

Those seeking long-term stays are subject to more rigorous scrutiny. While undergoing detailed background checks, they are generally required to file petitions, secure sponsors, and meet incremental thresholds and standards necessary, for example, to unite with family or work full-time. In 2024, the U.S. issued about 600,000 visas for long-term stay. 

The vast majority of visas are issued to tourists and other temporary visitors – nearly 11 million in 2024. They are generally subject to less scrutiny.

In theory, those millions of temporary visitors will leave before their visas expire. In practice, a reported 40% of illegal aliens currently in the U.S. – amounting to millions of people – are visa overstayers, illustrating one of the myriad security-related issues plaguing the U.S. Homeland Security system. 

“The vetting system is robust,” former senior INS official and immigration judge Andrew Arthur told RCI. But, he added, it “is only as good as the intelligence that the USG possesses and the access that the individual consular officer or OFO [CBP Office of Field Operations] officer has to that intelligence.”

To that end, our “biggest vulnerability,” in the words of the Heritage Foundation’s Simon Hankinson, is that officers often lack access to derogatory information held by foreign countries.

As Hankinson, a longtime former foreign service officer, recently detailed, this problem pervades even the U.S. Visa Waiver Program, where the citizens of several dozen generally safe and friendly countries – including most EU countries and Japan – may visit America visa-free for up to 90 days. Those waivers come in exchange for security cooperation, including sharing their citizens’ criminal records. 

Cracks in the System

Critics note that only a few U.S. counterparts automatically check their visiting citizens’ criminal records. The U.S. otherwise must request that home countries run queries. Meanwhile, America lacks information-sharing agreements with many countries altogether.

These problems only grow when other nations lack reliable data, or where their authoritative documents may be easily fabricated – one of the justifications for Trump’s travel bans disproportionately hitting the Middle East and Africa.

“I worked in India, I worked in Ghana, [where] right outside the consulate, there were stores selling fake degrees, fake passports. I mean, they didn’t even hide it,” Hankinson said.

Incomplete data or suspect documents aside, authorities have also highlighted that U.S. databases may not always talk to each other. A June 2024 DHS Inspector General report indicated that “DHS’ biometric system…could not access all data from Federal partners to ensure complete screening and vetting of noncitizens seeking admission into the United States” due to “ongoing technical limitations.” The inspector general also found that border patrol officers lacked the hardware necessary to perform biometric screenings of people arriving by car or truck. 

Federal authorities have also not always vigorously enforced their own security protocols. A September 2025 DHS IG report detailed that from March 2020 to March 2024, the State Department issued 12 million nonimmigrant visas without conducting in-person interviews or collecting fingerprints. CBP officers encountering foreign nationals at points of entry were unaware that the State had not fully screened some of them. 

Subpar vetting was common regarding the tens of thousands of Afghans admitted to the U.S. in the wake of the Biden administration’s pullout from the country in 2021. In a January 2026 hearing, DHS Deputy Inspector General for Audits, Craig Adelman, submitted written testimony indicating that under Operation Allies Welcome, in several instances “DHS could not demonstrate that it accurately knew who individuals were, where they were located, whether parole conditions were being met, or whether individuals had unresolved risk indicators.” CBP sometimes lacked “access to critical data to properly screen, vet, or inspect” them. 

Adelman’s testimony came following the National Guardsman shooting by evacuee Rahmanullah Lakanwal, and the prosecution of Nasir Ahmed Tawhedi, another evacuee who would plead guilty to plotting a mass-casualty attack on behalf of ISIS around Election Day 2024.

More broadly, the Government Accountability Office has found that the humanitarian parole processes have generally lacked sufficient anti-fraud measures, making it hard to ensure those fleeing warzones or failed states pose no threat to the U.S. homeland.

These findings also come on top of the millions who entered the country illegally during the Biden administration – and related immigrant overstays and backlogs creating security risks all their own. Hundreds of thousands of asylum claimants, for example, have been insufficiently screened historically during prolonged adjudication periods, DHS’ watchdog has found.

Hankinson is adamant that “we have not been enforcing our own rules with anything like the tenacity that we should have been. We’ve been really giving the benefit of the doubt to the alien in every circumstance.”

Ironically, the president’s opponents also agree that the immigration system is broken. But instead of tweaking the current system, many Democrats and their allies have floated the idea of abolishing the Immigration and Customs Enforcement (ICE) agency.

Good Questions, ‘Bad Odor’

Another potential issue that recent security incidents have raised is whether authorities are properly vetting and screening for indicators associated with the actual threats faced.

Federal law, drafted in the shadow of World War II and during the Cold War, generally deemed inadmissible immigrant members or affiliates of totalitarian political parties. Laws later expanded to encompass terrorists and their supporters.

But records may not exist of terrorist activities or support among those hailing from failed states. Despite this potential vulnerability, those with whom RCI spoke indicated that immigration officers do not tailor questions to unearth whether visitors harbor a terrorist worldview that could suggest future trouble or merit further scrutiny.

Authorities are “looking for Communists and Nazis,” Hankinson told RCI, not “Islamic fanatics…people who believe in Sharia law, who want to cut the hands off criminals, or have women dressed in burkas.” 

Dan Cadman, a retired INS/ICE official now at the Center for Immigration Studies, told RCI that “the vetting procedures have not captured Islamist/ adversarial/ subversive ideologies among family members and close associates.” Were such affiliations known, for example, in the case of the would-be Michigan synagogue attacker Ayman Mohamed Ghazali, whose brother was a Hezbollah commander, immigration authorities likely would have subjected him to heightened scrutiny – and perhaps denied him entry. 

Cadman attributes the lack of ideological bar to the “bad odor” to which such tests are held, and the fact that they lead to “thorny questions” about when religiously-based views “cross into the arena of politics” and constitutional rights. Progressive groups and others panned the blanket travel restrictions Trump pursued during his first administration sought to impose on myriad Muslim-majority countries as “Muslim bans.”

Nevertheless, some analysts have proposed bans of those affiliated with Islamist groups analogous to those of totalitarian political parties already on the books to satisfy such concerns. Several members of Congress appear receptive to this idea as well. Legislation is currently pending before the House and Senate to amend the Immigration and Nationality Act to render “advocates for the imposition of Sharia law” inadmissible, and remove Sharia adherents accordingly.

Even if such questions could survive First Amendment challenges, some observers doubt they would provide useful answers. David Bier of the Cato Institute told RCI, “There is no evidence that asking people general questions like whether they support terrorism or Sharia law would be an effective way to prevent attacks in the United States.”

Arthur, Cadman’s colleague at the Center for Immigration Studies, added that “identifying those who hold hostile beliefs is a difficult endeavor, and one that even the best adjudication and screening system will struggle to achieve.”

Whether a change in standards or their implementation might have prevented the recent attacks on U.S. soil by immigrants who became naturalized citizens remains unclear. Arthur says these incidents show “a decline in assimilation on the part of the naturalized citizen and in integration on the part of the United States” – a transcendent problem all its own.

Crackdown and Pushback

The Trump administration has sought to significantly enhance vetting standards, mitigate risks, and more vigorously enforce the law.

The president kicked off his second term with an executive order directing national security authorities to ensure that all aliens are “vet[ted] and screen[ed] to the maximum degree possible,” including for those threatening national security and bearing “hostile attitudes” toward America, its people, and institutions. 

In June, the president fully or partially restricted and limited the entry of nationals from 19 countries it deemed to pose security risks, some Muslim-majority, via executive order – a broad measure to mitigate screening and vetting risks. 

Democrats assailed these efforts as “bigoted” and “Islamophobic.” 

“This discriminatory policy, which limits legal immigration, not only flies in the face of what our country is supposed to stand for, it will be harmful to our economy and communities that rely on the contributions of people who come to America from this wide range of countries,” Democratic Washington state Rep. Pramila Jayapal has said. “Banning a whole group of people because you disagree with the structure or function of their government not only lays blame in the wrong place, it creates a dangerous precedent.”

Later that year, in August, USCIS updated its policy guidance to ensure that when immigration officers are evaluating immigration benefit requests, aliens’ support or espousal of the views of terrorist groups, including anti-Americanism, and Jew-hatred, ought to weigh heavily against applicants. 

Last December, USCIS paused all pending asylum and benefit applications from the 19 “high-risk countries” identified in the June executive order while conducting a “re-review of approved benefit requests” for all aliens from those countries entering the U.S. on or after the first day of the Biden administration. The administration also extended travel restrictions to 20 additional countries.

Among other initiatives, the second Trump administration is also “re-vetting” previously admitted aliens, and engaging in “continuous vetting” of all U.S. visa holders – some 55 million at the time it announced the policy – for violations that could lead to their deportation.

It has reportedly revoked 100,000 visas – a 150% increase versus 2024.

DHS says that ICE has arrested more than 43,000 potential national security risks, including 1,416 known or suspected terrorists, some 1,392 of which have been removed. It did so in announcing the recent arrest of Salah Salem Sarsour, a Jordanian national who the U.S. asserts was convicted decades ago in Israel of throwing a Molotov cocktail at the homes of Israeli military personnel and illegally attempting to possess weapons. DHS claims Sarsour is “suspected of funding terror organizations and lying on immigration forms” to enter the country, after which he became a green card holder back in 1998. The arrest of the Islamic Society of Milwaukee president generated strong pushback from the ACLU and the Council on American-Islamic Relations, with the former suggesting Sarsour may have been targeted for being “outspoken in his support for Palestinian rights” in violation of the First Amendment – a microcosm of the debates simmering over the president’s immigration policies.

Last month, the U.S. Intelligence Community assessed that “increased border security, stricter screening and vetting, and improved international information sharing” have led jihadist groups to focus “more on virtually recruiting U.S.-based aspirants to encourage and enable potential attacks.”

With the Trump administration already planning to significantly ramp up denaturalization efforts in response to revelations of fraud perpetrated by immigrants, this assessment and recent attacks from the naturalized population may only further fuel such efforts.

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

California Supreme Court Disbars Former Trump Attorney For Aiding Challenge Of 2020 Election Results

California Supreme Court Disbars Former Trump Attorney For Aiding Challenge Of 2020 Election Results

Authored by Brad Jones via The Epoch Times,

The California Supreme Court decided to disbar former Trump attorney John Eastman over his aiding the president in challenging the 2020 presidential election results.

The court has not yet handed down an opinion to explain the April 15 decision, which affirmed the California Bar court’s recommendation for disbarment for alleged attorney ethics violations.

Eastman, a former Chapman University law professor, gained national attention for advising President Donald Trump on constitutional challenges to election procedures in several battleground states after the president alleged widespread election fraud.

The California decision is not the end of the line for Eastman. He can still practice law in the U.S. Supreme Court and possibly in another state.

“Federal courts are supposed to let me keep practicing, and the U.S. Supreme Court has allowed me to continue practicing, even while I’ve been placed on inactive status [in] California,” he said.

Eastman told The Epoch Times the state court’s decision is “outrageous” and “Orwellian.”

“What’s happening here to our institutions that have been captured by hard line, political, weaponized activists needs to be addressed. I was hopeful that the state Supreme Court would do that, but they’ve obviously punted,” he said.

“And so, it’s now up to the U.S. Supreme Court to fix this metastasization of the weaponization problem.”

Eastman said his attorney will file a certiorari petition, which is a formal request asking the U.S. Supreme Court to review the state court’s decision “because of the First Amendment violations that it represents.”

The U.S. Supreme Court has made clear that “professional speech does not get lesser First Amendment protection than anybody else’s speech,” Eastman said.

“And yet, what the court has done here is basically said ... I don’t get the same First Amendment protection that the man on the street gets because I was representing a client,” he said.

Eastman claims he is a victim of “lawfare” and was “debanked” over the controversy, which he said is “obviously partisan in nature.”

George Cardona, the chief trial counsel of the State Bar of California, alleged in a June 14 statement that Eastman violated his fundamental obligation to be truthful and uphold the rule of law “when, at the behest of his client, now-President Donald Trump, he engaged in a calculated campaign to falsely undermine the results of the 2020 presidential election, which then-candidate Donald Trump lost.”

Cardona alleged that Eastman “lied to courts,” then-Vice President Mike Pence, and the American people.

Randall Miller, an attorney with the Miller Waxler law firm who represents Eastman, criticized the decision in a statement emailed to The Epoch Times.

“The California Supreme Court has allowed to stand a State Bar Court recommendation that we contend departs from longstanding United States Supreme Court precedent protecting First Amendment rights, especially in the attorney discipline context,” Miller wrote.

“We disagree with that outcome and believe it raises pivotal constitutional concerns regarding the limits of state regulation of attorney speech,” he wrote.

“We will seek review in the U.S. Supreme Court to repudiate this threat to the rule of law and our nation’s adversarial system of justice.”

Deborah Pauly, an attorney with the LEX REX Institute and longtime conservative activist in Orange County, Calif., told The Epoch Times in a text message that the California Supreme Court “rubber-stamped the Bar Court’s recommendation.”

“California is trying to silence anyone who endeavors to protect and defend our Constitution from the swamp,” she said.

Tyler Durden Thu, 04/16/2026 - 15:45

Major Advertising Agencies Settle Media Censorship Lawsuit With FTC

Major Advertising Agencies Settle Media Censorship Lawsuit With FTC

Authored by Jacki Thrapp via The Epoch Times (emphasis ours),

The Federal Trade Commission (FTC) and eight states secured a settlement on April 15 that will prevent three major advertising agencies from engaging in unlawful media censorship.

An American flag flies at the Federal Trade Commission (FTC) headquarters in Washington on Nov. 24, 2024. Benoit Tessier/File Photo/Reuters

The defendants Dentsu US, Inc., GroupM Worldwide LLC (doing business as WPP Media), and Publicis, Inc. will no longer enter into deals that require them to restrict working with certain clients, according to the settlement.

“A coordinated group of woke, powerful individuals attempted to suppress that Constitutional right by manipulating ad agencies into sabotaging the reach, revenue, and credibility of conservative voices,” Texas Attorney General Ken Paxton said in a statement released on April 15.

The plaintiffs - including Florida, Indiana, Iowa, Montana, Nebraska, Texas, Utah, and West Virginia - alleged that censorship deals between ad agencies and companies had been happening in the background during the past decade, which limited rising voices in the alternative and online media space.

The lawsuit accused some of the largest ad agencies of establishing brand-safety agreements that labeled content creators as “misinformation,” making them unable to receive ad revenue.

The alleged brand-safety standards were part of a campaign to demonetize prominent figures in the conservative space such as Glenn Beck, Steve Bannon, and the late Charlie Kirk, according to court documents reviewed by the Epoch Times.

The campaign allegedly attempted to censor and suppress content from Fox News Channel and X, formerly Twitter.

This is a deeply disturbing violation of antitrust laws and our Constitution,” Paxton added.

“This was an egregious attempt to control public opinion and silence those who speak out against the liberal elites and powerful corporations. I will continue to lead the fight against viewpoint suppression and protect the speech of Americans from corrupt manipulation.”

As part of the settlement, defendants also agreed to have a court-ordered monitor to make sure agencies are sticking with the agreement and no longer censoring political viewpoints.

The defendants agreed not to enter into or enforce any deal that would limit their advertising spending on political or ideological viewpoints or DEI commitments.

The ad agencies’ brand-safety conspiracy turned competition in the market for ad-buying services on its head,” FTC Chairman Andrew N. Ferguson said in a statement on Wednesday.

​Ferguson added, “this unlawful collusion not only damaged our marketplace, but also distorted the marketplace of ideas by discriminating against speech and ideas that fell below the unlawfully agreed-upon floor.”

Tyler Durden Thu, 04/16/2026 - 15:05

Taiwan Semi Slides Despite Record Results In Warning Sign For Chip Companies

Taiwan Semi Slides Despite Record Results In Warning Sign For Chip Companies

Taiwanese chip giant, Taiwan Semiconductor Manfuacturing Co, said Thursday its net profit surged to a fresh record in the first quarter, fueled by the global artificial intelligence race despite the war in the Middle East. Massive demand for AI hardware means business is booming for TSMC -- the biggest contract maker of microchips used in everything from Apple phones to Nvidia processors.

TSMC's net profit for the first three months of the year jumped 58.3% YoY to NT$572.5 billion ($18 billion), beating analyst estimates of NT$540.20 billion as governments and tech giants continue to pour huge sums into building data centers that can train and run AI tools such as chatbots, image generators and agents that can execute tasks. A weaker Taiwanese dollar had also boosted the firm's revenues from overseas sales: the company said net revenue rose 35.1% YoY to a record NT$1.13 trillion. Gross margin was 66.2% in the first quarter, further increased from a record 62.3% last quarter.

Here is the full Q1 breakdown:

  • Sales NT$1.13 trillion, +35% y/y, estimate NT$1.12 trillion
  • Net income NT$572.5 billion, +58% y/y, estimate NT$542.38 billion
  • Gross margin 66.2% vs. 62.3% q/q, estimate 64.5%
  • Operating profit NT$658.97 billion, +62% y/y, estimate NT$623.82 billion
  • Operating margin 58.1% vs. 54% q/q, estimate 55.6%

While overall earnings were stellar, largely thanks to relentless AI chip demand, one weak point was smartphone revenue, which fell 11% compared to the previous quarter as the industry faces an ongoing memory shortage.

"The recent situation in the Middle East... brings further macroeconomic uncertainties, as such we are being prudent in our business planning," TSMC chairman CC Wei said.  TSMC CFO Wendell Huang said the company did not expect the war to impact its supply of key chipmaking materials such as helium and hydrogen in the near term, despite mounting fears that the collapse in Qatar helium exports would wreak havoc on global chip production.

"We source from multiple suppliers in different regions, and we have prepared safety stock inventory on hand," Huang told an earnings call, adding that energy supplies were also sufficient to continue operations as normal for now.

TSMC said its revenue for the April-June quarter will reach another record of between $39 billion and $40.2 billion, which represents 32% year-over-year growth at the midpoint. Gross margin is expected to be between 65.5% to 67.5%. Commenting on the forecast, Bloomberg said that “TSMC’s 2Q gross-margin guide above 1Q’s record suggests rising chemical and gas costs tied to Middle East disruption aren’t enough to derail the company’s structural margin reset”

That said, TSMC warned the surging price of gas and chipmaking chemicals could weigh on the company's profitability and the global economy, while increasing component costs, including for memory chips, could affect the price-sensitive consumer market.

The results are in line with those of leading memory chipmakers, including Samsung Electronics, SK Hynix and Micron Technology, all of which have benefited from the global AI infrastructure boom. Samsung earlier this month flagged preliminary first-quarter operating profit surging 755% year on year, driven by an unprecedented memory shortage. Micron's gross margin reached 74% in the fiscal quarter ending February 2026 and is expected to rise further to around 81% in the current quarter, underscoring the strength of demand.

A note from UBS analysts had predicted strong quarterly results for TSMC but warned that consumer demand was weakening as a result of higher prices caused by a global memory chip shortage that is a side-effect of the AI boom. "Cloud AI demand continues to strengthen, but we think supply constraints will limit meaningful upside for TSMC this year," the UBS team said. "Middle East tensions add a layer of macro uncertainty, but AI spend should stay insulated, barring a protracted conflict."

TSMC's good news was bad news for  PC manufacturers, who are facing a rare double-whammy: TSMC's foundry price hikes are converging with memory cost inflation, creating a cost squeeze that's already forcing retail price increases. The math is straightforward-chips cost more to make, and memory modules are pricier to buy-and the result is a fundamental upward pressure on every PC built.

TSMC's 2026 price adjustments target the advanced nodes that power premium laptops and desktops. The company notified clients that prices for sub-3nm processes will rise 3% to 10% starting January 1, 2026, with the exact increase depending on the node 3%-10% by node. TSMC currently sells 3nm wafers for approximately $20,000 each, and 2nm wafers will exceed $30,000 when mass production begins 3nm at ~$20,000, 2nm above $30,000. These are the chips that go into flagship devices, and the cost differential is material. For context, TSMC's Arizona facility, which is now producing 4nm chips, costs 5-20% more to operate than Taiwan-based manufacturing, a factor baked into the pricing strategy Arizona operations 5-20% more expensive.

The memory side of the equation is equally aggressive. DRAM and NAND flash prices have been climbing as suppliers tighten contract terms and inventories normalize. Asus, one of the world's largest PC vendors, responded in early January 2026 by implementing price increases of 15% to 20% on selected notebook and desktop models Asus price increases 15-20%. The company explicitly cited "RAM and storage cost pressure" as the driver, linking the shift directly to supplier pricing rather than logistics or labor Asus attributed increases to memory costs. Asus targeted specific consumer and commercial models-but the effect was immediate: Taiwan retailers began raising prices on competing brands' systems to preserve their own margins retailers raised prices on rival brands.

* * * 

TSMC is also planning record capital spending of up to $56 billion in 2026, part of a broader push by Asia's chip industry that could total at least $136 billion. ASE Technology Holding, the world's largest chip-packaging and testing provider, updated its guidance and said investment this year will exceed earlier forecasts.

"We expect AI to continue fueling growth for TSMC despite weak non-AI demand," said Mark Li, veteran semiconductor analyst with Bernstein Research. "Fortunately for TSMC, we see no impact to its business as the capacity released by non-AI customers will be quickly filled by AI customers who could not find sufficient capacity before."

TSMC Chairman and CEO C.C. Wei also commented for the first time on Tesla and Intel's collaboration on Terafab advanced chipmaking facilities in the U.S. and on Intel's push into the contract chipmaking business and advanced chip packaging. Recently Elon Musk says his company is embarking on its own in-house chip business because capacity from its chip suppliers, including TSMC, Samsung and SK Hynix, is insufficient to meet its needs. 

"Actually both Intel and Tesla are TSMC customers, but they are [also] our competitors. We view Intel as a formidable competitor, and do not underestimate them," Wei said. "But I will say that there are no shortcuts. The fundamental rule of the foundry never changes. We need technology, leadership, manufacturing excellence and customer trust, which has been mentioned by Jensen [Huang]" -- Wei said, thanking the Nvidia CEO for his words. 

Wei said it takes two to three years to build a new chip plant and another one to two years to ramp it up. TSMC, he added, is also building new fabs to satisfy its customers. "The capacity is very tight and we are working hard to make sure we can meet customer demand."

Despite TSMC's record Q1 results, US-listed shares are down 2.3% (having risen nearly 19% off a recent low). The failure of either TSMC or European chip giant ASML (which sasnk 3% on concerns over shrinking sales to China and sky-high expectations from investors) to catch a tailwind from positive reports could be a bellwether for the wider chip industry as earnings season rolls on.

It is also the latest example of how astronomical expectations have weighed on chipmaker stocks. Last quarter, Nvidia’s blowout fourth-quarter earnings report was met with a 5% sell-off.

Tyler Durden Thu, 04/16/2026 - 14:05

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