FT : Eight former UK energy ministers call for U-turn on oil and gas

Eight former UK energy ministers call for U-turn on oil and gas
Cross-party group says current policy is worsening power security while doing little to cut global emissions

Eight former UK energy ministers have called for the government to curb restrictions and taxes on the North Sea oil and gas industry, arguing that current policy is worsening energy security while doing little to cut global carbon emissions.

The cross-party group — which includes former Tory energy secretary Amber Rudd and one-time Labour business and energy secretary Lord John Hutton — expressed their “deep concern” over the decline of UK oil and gas production. 

“The premature curtailment of domestic production is not primarily the result of geology but of policy decisions made by both Labour and Conservative governments,” they said in a letter to Prime Minister Sir Keir Starmer. “Energy security is national security. Without urgent reform we will become increasingly reliant on imported liquefied natural gas.”

They called for the government to end sooner the windfall tax on the oil and gas sector and to drop the ban on new exploration licences in the North Sea.

“With such substantial resources still available to the UK, it makes no sense at all to pursue policies which will only increase our energy imports,” former Tory energy minister Charles Hendry told the FT. “We are calling on the Government to allow new drilling licences that will maintain UK energy security, protect jobs, generate revenue and attract investors back to the North Sea.”

The letter adds to calls on the UK government to change course on the North Sea, including from industry lobbyists, the GMB industrial union and the Tony Blair Institute think-tank. 

The current government has stopped the issuing of new exploration licences as part of its push towards lower-carbon energy sources to tackle climate change, although some projects linked to existing fields are still being allowed. Labour ministers have also extended a windfall tax introduced in 2022; it will now end in 2030 unless prices fall below a certain threshold before then. 

Labour argues that the North Sea is in natural decline after decades of production and it is trying to help the sector evolve by moving into areas such as offshore wind and carbon capture. Energy secretary Ed Miliband has also said that increasing drilling in the North Sea would not cut bills as energy prices are set on the international market. Supporters of Labour’s policies also argue that Britain should set an example in showing how to shift from oil and gas to renewable energy.

But critics say the policies have accelerated the natural decline of the ageing North Sea basin, leaving the UK vulnerable and more reliant on imports because it still uses oil and gas for about 75 per cent of its total energy needs. 

Even if Britain were to reach net zero by 2050, the country is still expected to use some fossil fuels, with the emissions captured and stored.

The letter’s signatories also include Graham Stuart and Greg Hands, energy ministers in the last Conservative government; Brian Wilson, Labour energy minister in the early 2000s; Tim Eggar, who was a Tory energy minister in the 1990s and later chaired the North Sea Transition Authority Regulator until 2024; and Fergus Ewing, former energy minister in the Scottish government.

Rudd, the former UK energy secretary who also signed the letter, is currently on the board of Centrica, the FTSE 100 owner of British Gas, Britain’s second largest household energy supplier.

Hendry is a distinguished fellow of the Atlantic Council Global Energy Center, a non-profit organisation that has received funding from various states, foundations and corporations including the US and UK governments and oil companies Chevron and Exxon.

As well as calling to reverse the licences and the windfall tax, the former ministers also want the government to give Equinor and Shell permission to develop two giant new oil and gasfields, Rosebank and Jackdaw. The previous government awarded permission, but this was quashed by a court which said the climate impact had not been properly considered. 

A government spokesperson said its plans for the Energy Profits Levy would give “the sector and its investors the long-term certainty to plan, invest and support jobs”, adding: “We are also making sure the North Sea has a prosperous and sustainable future through record investment that helps deliver the next generation of skilled jobs while growing the clean energy industries of the future.”

FT Lex : AI models, like capitalism, are best served with a conscience

AI models, like capitalism, are best served with a conscience
Some companies think users would prefer products with morals pre-installed

Imagine a car that won’t let the driver go above the speed limit. It sounds simple enough, yet there isn’t much demand for a machine that takes moral decisions away from the user. Even Tesla’s speed limit-obeying “Sloth” model is optional; users of its self-driving cars can also go full “Mad Max”.

In the world of AI, some companies think customers would prefer products with morals pre-installed. Take Anthropic, whose Claude chatbot is trained to “have good values”. This is making Anthropic unpopular in some quarters. The US Department of Defense has protested against limits that would disallow self-directed lethal strikes or mass snooping on citizens — a dispute that on Friday was headed towards a tense stand-off.

Rivals are, meanwhile, trying to undermine Anthropic’s safety-first creds, which it exhibits through a “constitution” that tells Claude to prioritise safety, ethics and helpfulness in that order. OpenAI’s Sam Altman has branded the company “authoritarian”. Elon Musk, founder of xAI and the Grok chatbot, called it “misanthropic” for what he claims is bias against white men, among others.

Do customers care? After all, Anthropic’s real growth driver, accounting for some 80 per cent of revenue, is selling tools to corporate users focused mainly on efficiency and profit. Whether the AI would push the nuclear button, as researchers at King’s College suggest it sometimes would, is of little direct import to such customers.

Investors certainly don’t think Anthropic’s ethical stylings a hindrance. The company just raised money at a $350bn valuation and may seek to go public later this year. The effectiveness of Claude Code, its programming aide, has helped knock $1tn off the combined value of S&P 500 software stocks this year. Anthropic’s claim that Claude can code in COBOL, a clunky language used in IT mainframes, shaved $30bn off IBM’s market capitalisation in a single day.


There is one area where a bot’s integrity does matter today: hallucinations. Peter Gostev of AI evaluation outfit Arena has published a “bullshit benchmark” that tests whether models challenge nonsensical questions or simply respond with more hogwash. Anthropic’s scored best; some of OpenAI’s were among the worst. Even then, that may have more to do with a model’s quality of analysis than its inherent views on truthfulness.

The shift to agentic AI — bots that don’t just assist but actually execute tasks and exert judgment — will raise the stakes. As AI gets more humanlike, and its role within the company gets more senior, how it responds to complex challenges and conflicts will matter more. When is it better to ignore a command? When could pursuing a short-term goal lead to longer-term problems? When is it OK to tell the boss to “shove it”?

For better or worse, it’s really no different to what companies seek in their employees. For less critical and more process-driven jobs, employers seek workers who follow rules. At senior levels, where an individual’s actions can affect the value of the whole firm, good judgment in unusual situations becomes valuable, and commands higher pay.

Of course, whether a company’s fundamental view of “ethical” will correspond with Anthropic’s is up for debate. One day an agent will be asked to do something bad for the world but good for a company’s profit. A model that puts a premium on good behaviour ought to be more valuable; in the real corporate world, one that prized shareholder value even more would no doubt clean up.

FT : Greg Abel tells Berkshire investors its cash pile is not a retreat from dea

Greg Abel tells Berkshire investors its cash pile is not a retreat from dealmaking
New chief executive publishes his first letter to shareholders after Warren Buffett’s retirement

Berkshire Hathaway’s new chief executive Greg Abel on Saturday said that he was committed to retaining the $1.1tn conglomerate’s fortress-like balance sheet, and that its massive cash holdings did not signal a retreat from dealmaking.

Abel used his first letter to shareholders to underscore his investment bona fides and his commitment to the principles that predecessor Warren Buffett had long extolled.

Abel, who took over in January, cast himself as a steward of Buffett’s legacy and signalled that the company’s investment philosophy was not changing.

He told shareholders that Berkshire had been active in evaluating new investments and that it would remain a key port of call when companies wanted to sell. The Nebraska-based conglomerate would be “an asset, not a risk, to America and the global financial system”, he wrote.

“Our balance sheet is a strategic asset to be deployed at the right time,” he wrote. “It allows us to act decisively, invest when others are tentative or fearful, and stand firm when financial storms roll through.”


The 63-year-old said share repurchases would remain an “important capital allocation option” and the company would not pay a dividend so long as he and the board believed Berkshire could generate shareholder value with that capital.

Berkshire’s cash levels stood at $373bn at year-end, a record when excluding the value of Treasuries it had previously bought but had not yet paid for.

“Many times in Berkshire’s history, some observers have suggested that our substantial cash position signals a retreat from investing,” Abel wrote. “It does not.”

He pointed to Berkshire’s $9.7bn purchase of the chemicals business of Occidental Petroleum, which it completed earlier this year, as well as its agreement to buy pest control business Bell Laboratories.

“There will undoubtedly be incremental opportunities to deploy our owners’ capital without compromising Berkshire’s resilience,” Abel wrote. “My role is to ensure our liquidity levels and capital deployment remain intentional and deliberate.”

He added: “We will always aim for ownership of productive businesses over US Treasuries.”


Investors and analysts traditionally scour Berkshire’s annual letters for insights into how the so-called Oracle of Omaha saw the world. In the past they were filled with Buffett’s personal anecdotes. He also used the missive to highlight key Berkshire staff, including Abel, which shareholders saw as an indication of an individual’s star rising within the notoriously decentralised company.

Abel said that Buffett continued to come into the office five days a week and was “available to us”. But he has begun to reshape Berkshire’s corporate headquarters. The company last year hired its first internal legal counsel and announced a top executive from Berkshire’s energy business, the unit Abel rose up through, would become its next chief financial officer later this year.

One of Buffett’s investment deputies, Todd Combs, departed for JPMorgan Chase as part of the reshuffle. Abel noted that the stock portfolio Combs had built was now being partially overseen by the company’s investment manager Ted Weschler.

“At Berkshire, equity investments are fundamental to our capital allocation activities; responsibility ultimately resides with me as CEO,” he wrote.

The letter struck a less folksy tone than Buffett often did. Abel’s writing was straightforward, occasionally straying into corporate jargon, including when he detailed the push to improve railroad operator BNSF’s operating margins.

He continued Buffett’s tradition of using the letter to highlight mistakes and areas in which the dozens of businesses owned by Berkshire needed to improve. He also detailed the cash generation of many of the company’s subsidiaries, which touch vast parts of the US economy and financial system. Investors have in the past complained about the limited disclosure Berkshire provides on these units.


Macrae Sykes, a portfolio manager at Gabelli, which is invested in Berkshire, said the letter “showed humility, expressed clarity in communication and confidence in his role”.

“Technically a gold medal for annual letter review of corporate businesses,” Sykes said, noting Abel touched on all of Berkshire’s core businesses. “Shareholders should be convinced he has a comprehensive understanding” of the business, he said.

The letter accompanied fourth-quarter results that showed Berkshire’s operating earnings had weakened, falling 30 per cent from the year before to $10.2bn, as its insurance division’s profits slumped.

Net income fell 2.5 per cent from the year earlier to $19.2bn. For the full year, net profits were down 25 per cent to $67bn.

Echoing Buffett’s past remarks, Abel cautioned investors not to draw conclusions from the net figures, which are impacted by the rise and fall in value of its $298bn stock portfolio.

The results were hit by writedowns of Berkshire’s stakes in oil and gas major Occidental Petroleum and packaged foods giant Kraft Heinz, which knocked $8.3bn off full-year profits.

Abel characterised the investment in Kraft as a “disappointment”, adding “our return has been well short of adequate”. Berkshire is considering exiting its stake in the foods group, which it played a key role in creating.

He said the overall results “underscored the durability of our operating businesses, while also reflecting the fact that we have opportunities for further improvement”.

He noted that Berkshire’s insurance businesses were experiencing intensifying competition as capital poured into the industry from private investment groups, which had weighed on pricing. Berkshire has traditionally cut back its underwriting activity when the insurance premiums it can earn are not attractive, a stance Abel said remained a core principle.

Berkshire also continued to sell off part of its equity portfolio, which includes multibillion-dollar stakes in companies like Apple and American Express. The company trimmed the portfolio by $3bn in the final three months of last year, taking its stock sales since it began disposing of positions in 2022 to $187bn.

Abel does not plan to provide quarterly earnings commentary, which Buffett has long eschewed. But he said he was keen for shareholders to get “to know, over time, more of the Berkshire team”.

He said he would be joined on stage at the company’s annual meeting in May by several top executives, including Ajit Jain, who runs Berkshire’s insurance operations, BNSF chief executive Katie Farmer and Adam Johnson, who was recently elevated to oversee the company’s consumer products, services and retailing units.

“Warren is obviously a very hard act to follow,” he wrote.

WSJ : Berkshire’s Abel Pledges to Follow Buffett’s ‘Framework’

Berkshire’s Abel Pledges to Follow Buffett’s ‘Framework’
The December quarter marked Warren Buffett’s last as Berkshire CEO, a role now occupied by his longtime deputy

  • Greg Abel, Berkshire Hathaway’s new chief executive, outlined a vision in his first letter to shareholders that embraces Warren Buffett’s strategy.
  • Berkshire Hathaway reported a 2.5% drop in quarterly profit and a 30% decline in operating earnings.
  • The company ended 2025 with a record $373.1 billion in cash and Treasury bills, a 4% increase from three months earlier.

Berkshire Hathaway’s BRK.B 0.45%increase; green up pointing triangle new chief executive laid out a vision for the conglomerate that signaled he would stick with what worked for his predecessor, Warren Buffett.

“Berkshire’s culture and values form the basis of our operating framework, which shapes the strategy we pursue and the choices we make as we build Berkshire,” Greg Abel wrote in his first letter to shareholders. “As CEO, the framework governs how I lead every day.”

Abel reiterated the many virtues that made the company unusual, and unusually successful, during Buffett’s long run: a decentralized model that gives its business managers autonomy, a vast stock portfolio overseen by the CEO, a reliably profitable insurance empire and a reluctance to buy back Berkshire shares or offer a cash dividend.

“Berkshire is a unique conglomerate, intentionally designed to allocate capital rationally and efficiently,” Abel wrote. “We are committed to strengthening the great legacy built by Warren Buffett and his business partner Charlie Munger, ensuring it endures through our commitment to excellence.”


Abel also confirmed to shareholders that Buffett is still involved in Berkshire’s operations, writing that the Oracle of Omaha is in the office five days a week and available to consult on matters from underwriting insurance to dealmaking. But Abel also made clear that he was now fully serving as Berkshire’s top executive, overseeing not only the company’s many businesses but also its stock portfolio.

“At Berkshire, equity investments are fundamental to our capital allocation activities; responsibility ultimately resides with me as CEO,” wrote Abel.

Abel said that investment manager Ted Weschler is responsible for about 6% of Berkshire’s portfolio, including a portion that was overseen by Todd Combs, another investment manager, who recently decamped to JPMorgan Chase.

Macrae Sykes, portfolio manager at Gabelli Funds, said he was pleased that Abel reiterated that he will stick to the tenets of Berkshire’s investing philosophy. And Abel’s writing style, while lacking Buffett’s trademark wit and humor, was enjoyable, he said.

“I was pleasantly surprised,” said Sykes.

Berkshire reported a 2.5% drop in quarterly profit after the company earned less from its insurance operations.

Net income fell to $19.2 billion, or $13,349 per Class A share equivalent, from $19.69 billion, or $13,695 per Class A share, in the year-earlier period.

Berkshire ended 2025 with a record $373.1 billion in cash and Treasury bills after accounting for a payable for purchasing some of the short-term government debt, a 4% increase from three months earlier. The company refrained from repurchasing any of its own shares during the quarter, marking the sixth-straight period in which it didn’t buy back any stock.

“Many times in Berkshire’s history, some observers have suggested that our substantial cash position signals a retreat from investing. It does not,” Abel wrote.

Buffett, 95 years old, unveiled plans in May to hand off his role as Berkshire’s longtime CEO to Abel at year-end. The company synonymous with Buffett’s corporate stewardship and savvy investing stepped into a new era in January with Abel’s ascendance.

“Warren,” Abel wrote in the letter, “is obviously a very hard act to follow.”

In laying out the agenda for this year’s annual meeting, Abel confirmed one notable change: Buffett won’t be on stage. The first of two question-and-answer sessions with investors will feature Abel and Ajit Jain, the head of Berkshire’s insurance powerhouse. The second will feature BNSF CEO Katie Farmer and Adam Johnson, Berkshire’s newly appointed president of consumer products, service and retailing businesses.

Operating earnings, which exclude some investment results, fell 30% to $10.2 billion from $14.53 billion. Profits from insurance underwriting and investment income declined, while Berkshire reported higher earnings from its BNSF railroad operations and its manufacturing, service and retailing businesses.

Buffett has said that operating earnings are the better measure of the company’s performance. Accounting rules require Berkshire to include unrealized gains and losses from its giant investment portfolio when it reports net income, meaning that short-term fluctuations in the stock market can cause big swings in quarterly income.

Berkshire’s Class A shares reached a record high of $809,350 on May 2, right before Buffett announced he was stepping down as CEO. The shares have since dropped 6.5%, closing Friday at $757,000. In that same period, the S&P 500 index rose 21%.

For the year, Berkshire was a net seller of stocks.

WSJ : The Big Bet on European Defense Stocks Is Getting Expensive

The Big Bet on European Defense Stocks Is Getting Expensive
More money for military spending likely will mean more political interference and bad news for margins

Forget AI. The big trade last year was to buy the idea that Europe has finally woken up to the need to spend big to defend itself.

But, after the best year ever for German defense stocks, investors now face the question of whether the trade is already over.

For those who haven’t been paying attention, start with the case for investing in defense. Fracturing geopolitics and concern about U.S. defense guarantees have combined with Russia’s assault on Ukraine to push European politicians, led by Germany, to commit to massive increases in military spending. The nationalistic shift and threats to supply chains have persuaded Europe to break with its traditional willingness to rely on foreign military suppliers, too.


And not just Europe. “There’s been a fundamental shift in priorities away from economic efficiency and globalization towards national security and resilience,” says Thomas Mucha, geopolitical strategist at Wellington Management.

Given all the extra money likely to come into defense companies, how could their stock prices not beat the market?

There are two risks: price and politics, where a lesson from the fall of the Berlin Wall should induce caution. Prices have soared, so a positive outlook for defense spending is already reflected in the jump in stocks.

Sure, Germany’s spending has risen from just over 1% of gross domestic product a decade ago to more than 2% last year, with plans to rise to 3.5% before 2030. But German defense stocks—dominated by the tank maker Rheinmetall—more than tripled in the first nine months of last year, before easing a little.

Profits will rise a lot, but they need to. The German sector trades at 38 times forecast earnings, up from 20 times at the start of last year and far above the 15 times of the German market as a whole.

The politics argument is that as governments spend a lot more on defense, they will want to control how much of that leaks out again in the form of profits for shareholders. That’s especially the case when companies are likely to be much more reliant on domestic sales than in the recent past.

“We’re talking about large public spending which will most likely be under scrutiny,” says Vincent Mortier, chief investment officer at Amundi. “The bigger they grow, the more there will be” political pressure on margins, he says.

Here we come to the lesson from the fall of the Berlin Wall. U.S. weapons manufacturers actually performed better in the years since the end of the Cold War than during it. That’s despite U.S. military spending plummeting from around 7% of the economy in 1988 to about 3.7% today, as politicians spent the peace dividend elsewhere.


From just before the Wall fell to now, the “guns” sector had the third-best total return out of 49 U.S. sectors defined by Kenneth French, a Dartmouth finance professor. It came in behind software and microchips. Aerospace, where major defense stocks including Boeing sit, also did well, coming in sixth.

But from 1963 to 1988 the double splurge in spending for Vietnam and the Cold War did little to help military stocks. They came in 25th. At the top were the sectors that might be more associated with a peace dividend: tobacco (“smoke” in Prof. French’s definition), “fun,” “meals” and “soda.”

This counterintuitive ranking wasn’t because the period included the Swinging Sixties. It’s politics. For all the left-wing concern at the time about the military-industrial complex, profit margins were much lower in the 1980s than since 2010. They hit their highest in 2022, in data going back to the early 1980s.


Some of the post-1989 margin improvement is because companies were allowed to merge, although that has been true of other sectors. Some of it is because corporate taxes came down. But I would argue a lot is because companies increasingly sell to foreign customers that have less ability to extract lower prices by pointing to fat profits. Smaller domestic military budgets also reduce the need for companies to kowtow to politicians by maintaining unprofitable operations in their districts or supporting civilian projects.

Investors betting on how much of the peace dividend will return as spending on defense should also focus on how much of it will be allowed to flow through to shareholders of arms manufacturers, especially in Europe. Guns might be less lucrative than you think.

>>> Barron's WeekEnd Summary

Cover:
-AI is transforming financial markets by enabling certain utilities to benefit from tech giants investing in power for AI data centers. These data centers require enormous electricity, and utilities are negotiating deals that obligate tech companies to cover their energy costs, even amidst political pressure and consumer backlash. President Trump emphasized that major tech firms must provide for their power needs to prevent increased electricity prices for consumers. As a result, utilities expect consumers to save around $100 annually, while they secure long-term revenue. However, the existing electrical grid is at risk of overload, with projections of potential shortages for data-center developments by 2028.

Interview:
-Jim Paulsen, though self-described as a "retired Grampa," continues to engage deeply with economic analysis through his Substack newsletter, Paulsen Perspectives, which he initiated in February 2024 after retiring from a 40-year career as a chief investment strategist, primarily at Wells Fargo and the Leuthold Group. Now free from corporate constraints, he enjoys exploring the emotional and mathematical aspects of trading, contributing to his appeal as a writer for nearly 7,500 subscribers with regular posts on topics such as bond yields, consumer confidence, and sector rotation. In a mid-February conversation with Barron’s, Paulsen expressed a bullish outlook on the markets despite a recent downturn in tech stocks and artificial intelligence, citing the current low levels of confidence among consumers and private sector leaders as historically favorable indicators for investment. He acknowledges a persistent worry about potential downturns, particularly concerning the year 2026, yet maintains that the prevailing pessimism presents a compelling case for being invested.

Tech Trader:
-Nvidia's recent fiscal fourth-quarter earnings received praise from analysts, highlighting "generational growth at inspirational valuation." Despite strong results and a booming AI data-center buildout, Nvidia's stock fell 5.5%, trapped in a sideways movement since October. Concerns include growth deceleration, with sales growth having peaked at 265%, and increasing competition from companies like Meta and major cloud providers developing their own chips. Nvidia's substantial $95 billion inventory commitment raises risks, and limitations in the data-center boom may impact hyperscalers’ capital expenditures. Additionally, Nvidia's investments in the AI start-up ecosystem, while substantial, may not significantly impact its overall sales of $216 billion in fiscal 2026 or the projected $350 billion this year.

The Trader:
-Financial stocks are facing challenges due to concerns over private credit, heightened inflation as indicated by January's producer price index, potential U.S. military actions against Iran, and increased import tariffs. A significant focus is on corporate earnings, particularly profit margins. Nvidia's earnings call did not show signs of slowing data-center growth, but its gross margin guidance slightly exceeded estimates. Moreover, the aggregate gross margins for S&P 500 companies, excluding financial and real estate sectors, have decreased to about 45%, down from over 47% in 2021. This decline is critical as gross margins are indicative of a company's future earnings potential; lower margins often imply reduced profitability per product or service and may signal decreasing demand and growth, despite net margins potentially appearing stable due to cost-cutting strategies.
-The S&P 500 has a new dividend yield leader, Conagra Brands, with a yield of 7.6%, following LyondellBasell Industries’ recent dividend cut. This title is a double-edged sword, attracting income-seeking investors while raising questions about the sustainability of such a high yield. Conagra faces challenges, including competition from cheaper generics and a projected sales decline of 3.1% for the fiscal year ending in May, with a further 1% drop expected the following year. Nonetheless, the company shows promise with growth prospects in the high-protein frozen foods segment. Conagra's shares have increased by 8.6% in 2026, benefiting from a market shift toward staples and real-economy stocks.

Features:
-The recent bidding war for Warner Bros. Discovery highlighted key dynamics in the media landscape, notably benefiting Netflix, which chose to withdraw from the acquisition after Paramount Skydance made a higher offer. Paramount's winning bid of $31/share in cash values Warner Bros. at $81B plus approximately $29B in assumed net debt, raising concerns that it may be a costly victory. Following Netflix's decision, its shares surged by 22% to $96, as investors welcomed the news that the company would avoid absorbing over $50B in new debt that could have disrupted its growth narrative. Analysts predict further potential gains for Netflix, which previously traded at $103 before the bid was announced, especially considering the significant $2.8B breakup fee it will receive.
-On December 16, an anonymous account on Polymarket placed a $68,000 bet on Kevin Hassett being nominated as the next Federal Reserve chair, sparking speculation about insider knowledge. Stand CEO Edward Ridgely noted that insiders sometimes influence prediction markets, citing a notable bet on Taylor Swift's engagement prior to its announcement. Although Hassett was ultimately not nominated, Polymarket's social media has highlighted numerous potential insider transactions, with about half resulting in payouts. Polymarket’s CEO, Shayne Coplan, acknowledged the benefits of insider transactions while addressing ethical concerns. As scrutiny grows over dubious trades, a recent example involved a $30,000 bet on Venezuelan President Maduro's ouster before his capture, leading to proposed legislation against federal workers participating in prediction markets.

Europe:
-Novo Nordisk is reducing the prices of Ozempic and Wegovy in the U.S. by 34% and 50%, respectively, to a new monthly price of $675, effective January 1, 2027. This move comes as Novo faces a 56% decline in its stock over the past year and a further drop of 2.5% following the announcement, after a previous 16% decrease. The price cuts also apply to Rybelsus and are unprecedented in the U.S. market, as Novo competes with Eli Lilly for weight-loss market share. Additionally, the company shared that its experimental drug, UBT251, has shown promising results in a Phase 2 trial in China, with an average weight loss of 19.7% after 24 weeks, alongside improvements in waist circumference, blood glucose, blood pressure, and lipid levels compared to a placebo.

Emerging Markets:
-No update

Commodities:
-The rare-earth industry remains dynamic, highlighted by MP Materials' recent quarterly report that showcased better-than-expected earnings yet led to a slight decline in stock value. The company reported EBITDA of $39.2M on sales of approximately $53M, surpassing Wall Street's forecasts of $34M EBITDA and $60M in sales. The drop in share price to $58.87 came despite the positive profit margins, attributed to the implementation of a price protection agreement with the Department of Defense, which safeguards a price of $110/Kg. for key rare-earth products, although these payments are not counted as revenue. MP's strategy involves transitioning from selling intermediate products to higher-value rare-earth materials, evidenced by its sales figures of rare-earth oxides and neodymium-praseodymium (NdPr) alloys. The report noted a rise in NdPr prices, which are now above the $110 threshold, signaling a potential shift in pricing dynamics influenced by increased demand from various sectors. Canaccord analyst George Gianarikas maintained a 'Buy' rating on MP stock, reflecting confidence in the company's performance and future growth, assigning a price target of $60. Despite fluctuations in stock and market responses, the company is seen as making significant progress in a crucial sector.

Streetwise:
-Artificial intelligence is predicted to make many white-collar jobs obsolete, potentially causing mass layoffs, reduced spending, defaults, a stock market crash, a mortgage crisis, and decreasing housing values. This scenario, presented by Citrini Research as a theoretical retrospective from 2028, sparked temporary investor panic. Despite the concerns, Keith Lerner from Truist Wealth advises stock buyers to focus on long-term investment rather than worst-case scenarios. The current market poses challenges in identifying investment opportunities, particularly as AI stocks decline. A screening of the S&P 500 for stocks with recent "Buy" upgrades revealed potential buys, often viewed favorably if they lack ties to AI narratives.

Foreign Affairs : What It Will Take to Change the Regime in Iran

What It Will Take to Change the Regime in Iran
The U.S. Military Must Go Big—and Then Let Iranians Do the Rest

By Behnam Ben Taleblu
Foreign Affairs — February 27, 2026
Behnam Ben Taleblu is Senior Director of the Iran Program and a Senior Fellow at the Foundation for Defense of Democracies.


Key Takeaways
• The Islamic Republic is at its weakest point since 1979, but limited strikes or decapitation operations (the “Venezuela model”) will not bring it down—the regime is too institutionalized and would close ranks rather than fracture.
• The U.S. should launch a comprehensive air campaign targeting Iran’s air defenses, missile arsenal, nuclear sites, political institutions, and the full chain of command of its security forces (IRGC, Basij, police) across all provinces.
• The goal is not a U.S. ground invasion but to degrade the regime’s repressive apparatus enough for the Iranian people—who have already demonstrated their willingness to sacrifice—to finish the job and reclaim their country.

The Islamic Republic of Iran is, quite possibly, at its weakest point since its founding, in 1979. In June, Israeli and U.S. attacks destroyed its uranium enrichment capacity and many of its air defense systems. In December and January, the country experienced the most widespread domestic uprising since the birth of the Islamic Republic. Throughout, it has faced spiraling economic and environmental crises that it cannot fix. None of these events has knocked out the Islamic Republic. But there is no doubt it is down.

Now, U.S. President Donald Trump is threatening to attack the country. He has made it clear he has little tolerance for the regime’s efforts to rebuild its nuclear program or the extraordinarily brutal way it cracked down on protests. “If Iran violently kills peaceful protesters, which is their custom, the United States of America will come to their rescue,” he said last month. “We are locked and loaded and ready to go.” The president has since amassed U.S. air and naval assets in the region, and he is considering a variety of strike options.

But that doesn’t mean major attacks are guaranteed. In fact, thus far, the administration’s decisions raise more questions than they answer about what Washington aims to achieve and how. Right now, Trump is practicing gunboat diplomacy, hoping that the threat of force will coerce the Islamic Republic into making a nuclear deal better than the one he left in 2018. If that fails, he is mulling decapitation operations or limited strikes in order to get the regime to bend.

It is easy to see why the Trump administration is prioritizing diplomacy and limited strikes. The Islamic Republic may be weak, but it is still lethal and capable of harming U.S. forces and civilian targets throughout its region. The president, meanwhile, has repeatedly proved reluctant to start a protracted military campaign. But the reality is that after decades of trying and failing to change Tehran’s behavior with sanctions, sabotage, and, more recently, one-off strikes, the time has come to go big. The regime is simply too ideological to be cowed by a few rounds of bombing. The Iranian people, meanwhile, have made it more than clear that they are ready to transform their country. The United States can and should help them by using its military power to neutralize the Islamic Republic’s military capabilities and degrade its repressive domestic apparatus.

Such measures could inspire the masses of Iranians who took to the streets in December and January to do so again. Just this week, Iran witnessed smaller-scale campus protests, showing that animosity against the regime very much remains. If regular protests resume, American military power could level the playing field between the street and the state, giving the country’s demonstrators a chance to succeed.

DEAL OR NO DEAL

The Trump administration may have threatened Iran with major military action. But there are reasons to think that, for now at least, it might have other ideas. For starters, the president’s comments on Iran this year have oscillated between threats of war and the imperative of a nuclear agreement. “Hopefully Iran will quickly ‘Come to the Table’ and negotiate a fair and equitable deal,” Trump wrote on Truth Social in late January. “I would rather have a Deal than not but, if we don’t make a Deal, it will be a very bad day for that Country,” he posted a month later. During the February 24 State of the Union address, Trump declared that although his “preference is to solve this problem through diplomacy,” he would “never allow the number one state sponsor of terror … to have a nuclear weapon.”

Tehran claims the two sides have made progress in their talks. But thus far, Iranian officials have, expectedly, refused to give up core elements of their nuclear program, so there is reason to think that Trump will be compelled to attack—even as the two countries continue to negotiate indirectly. If past is prologue, he will keep such action short and sharp. In his first term, for example, the president ordered the assassination of Qasem Soleimani, a prominent commander in Iran’s Islamic Revolutionary Guard Corps (IRGC), with a drone strike in January 2020. In June 2025, he directed the use of massive ordnance penetrator bombs against Iranian enrichment facilities. And the recent extraction of Venezuelan president Nicolás Maduro from Caracas by U.S. military forces took place in the span of one evening. Notably, Trump has cited the Maduro operation while threatening Iranian Supreme Leader Ali Khamenei. “Like with Venezuela,” the president said in a Truth Social post describing Washington’s naval buildup around Iran, the U.S. military is “ready, willing, and able to rapidly fulfill its mission, with speed and violence, if necessary.”

But a quick, one-and-done operation is extremely unlikely to down this regime, even if it succeeds in killing Khamenei. The Islamic Republic may have once been a sultanistic state built on the personal cult of its founding supreme leader, Ayatollah Ruhollah Khomeini. But over the last three decades, Khamenei (Khomeini’s successor) has institutionalized his rule and his regime both by empowering loyalists throughout a considerably larger state bureaucracy and by supporting competing power centers. As a result, the Islamic Republic looks more like a series of pillars than it does a pyramid, with a powerful deep state made up of security officials with their own vested interests in maintaining the regime.

Seen in this light, many of the leaders and veterans of the IRGC are less Khamenei’s subordinates than his partners. Indeed, it is unclear to what extent the 86-year-old Khamenei is actually running the regime day-to-day. The Islamic Republic, for example, made remarkably quick military decisions during the 12-day war with Israel in June, when Khamenei was likely in a bunker and, according to a New York Times report, not using electronic communications. It did so even after many senior IRGC officers were killed in just one night by Israeli attacks.

The Venezuela model, in other words, will not work in Iran. In fact, a singular and spectacular strike on Khamenei might have the opposite of its intended effect. Rather than fostering division and thus jeopardizing the regime, remaining officials would be more likely to close ranks, at least initially. They would keep the system running and try to seek revenge.

GOING BIG

To some analysts, the fact that limited strikes will fail is reason enough to think twice about employing the military. “Iran will not cave to major demands simply because of a bombing campaign,” wrote Nate Swanson, a former White House adviser on Iran, in a cautionary Foreign Affairs piece. “An attack by the United States on Iran could result in unexpectedly deadly retaliation—and a much longer and potentially damaging conflict.” Unless Iran is bluffing, this analysis is correct. But it is not a compelling reason to avoid using the military. Iran is the world’s foremost state sponsor of terrorism, one of the most outright anti-American governments in the world, and the country with the largest ballistic missile arsenal in the Middle East. Nearly a half century of experience has shown that the Islamic Republic will not meaningfully moderate any of this behavior or treat its citizens any better. Washington now has a historic opportunity to bring down the regime, and it cannot pass it up out of fear. Indeed, the fact that Iran would almost certainly escalate in response to a limited U.S. strike is all the more reason to go big from the beginning and avoid settling into the kind of gradual escalation that turns wars into quagmires. Washington cannot let Tehran dictate the pace or terms of the conflict.

None of this means that the United States needs to launch a massive ground invasion and single-handedly topple the regime. In fact, part of why Washington should strike now is that Iran’s own people are prepared to do much of the work themselves. For the past decade, while the United States has treated “regime change” as a pejorative term, unarmed Iranians have increasingly taken to the streets to seek systemic change in what has become a national uprising. Today, it is clear that Iranians are willing to make tremendous sacrifices to get rid of their leaders. That is why the regime had to kill at least 30,000 people, according to the estimates of human rights groups, to put down the most recent protests, and why some Iranians have nonetheless continued to demonstrate in the weeks since. Iranians therefore do not need U.S. troops to march into Tehran. What they need is for the American military to weaken the regime enough for them to succeed.

A one-and-done operation is extremely unlikely to down the Islamic Republic.

Trump can start by having the U.S. intelligence community carry out covert operations designed to pave the way for kinetic activity. Intelligence operatives, for instance, should surge secure communications technology, including satellite Internet devices, into the country so that Iranians can still have Internet access even if their government cuts off domestic service. The administration should also authorize information operations aimed at undermining the resolve and cohesion of Iran’s security forces. Finally, the administration should direct the intelligence community to identify and help Iranian security forces that are willing to defect.

Then, the United States can proceed with airstrikes. It should begin by suppressing and destroying the regime’s air defenses to gain aerial superiority. Doing so shouldn’t be all that complicated, given Israel’s success in knocking them out in past rounds of fighting. But there are platforms the Israelis did not suppress or destroy, and others that Iran has repaired. Afterward, Washington should move against the long pole in the tent of Tehran’s deterrence: its formidable ballistic missile arsenal. Iran can use these weapons to complicate the United States’ approach by inflicting damage on military assets, regional energy infrastructure, maritime shipping, and even on civilian targets in Israel. Rather than wait for Iran to launch large volleys of these projectiles in hopes of overwhelming U.S. and allied defenses, Washington must collapse the network of subterranean bases where medium- and short-range ballistic missiles are kept, which Iranian officials have long hailed as “missile cities.”

To be clear, the United States and, potentially, its partners will sustain losses from Iranian missiles. But by preemptively striking and destroying these bases, Washington can help limit the damage from any Iranian counterattack. If Tehran disperses its mobile launchers after bringing them above ground, the United States should dedicate real-time intelligence, surveillance, and reconnaissance assets to identify their locations and strike them, as Israel did during its 12-day war. (Israeli estimates claim that the country’s attacks on these launchers reduced the regime’s firing capacity by at least 33 percent.) From there, the United States can handicap Iran’s future missile capacity by targeting production facilities, which open-source intelligence suggests are located in or near the cities of Isfahan, Khojir, Parchin, Semnan, and Shahroud.

Degrading Iran’s missile infrastructure will do more than make it easier for Washington to conduct the rest of its military campaign. It could also help ordinary Iranians. Drastic as it might seem, some regime supporters have floated using missiles against Iran’s own people. Likewise, if the Islamic Republic’s missile and nuclear infrastructure is destroyed and its contents entombed, the regime’s representatives will have less leverage when negotiating with U.S. officials or protesters over a political transition. For that reason, the United States would be wise to attack Iran’s remaining nuclear sites, especially as the regime is moving to harden or rebuild them.

PAVING THE WAY

Still, hitting Iran’s missile and nuclear program is unlikely to help Iranian demonstrators in the near term. To do that, Washington should also target the regime’s political institutions and security installations, both as a means of inspiring protesters and to make it harder for the Islamic Republic to coordinate and effectively suppress demonstrations.

Some American analysts might object to targeting Iran’s political institutions as a violation of the country’s sovereignty. But Iranians would likely welcome such a campaign. The country’s people are highly nationalistic, but they are nonetheless looking abroad for help in their fight against the regime. During the latest round of protests, for example, Iranians made English-language videos describing their plight. Others named streets in Trump’s honor, in hopes of getting the president’s attention. When Trump subsequently promised that help “is on the way,” he raised their expectations and likely fostered continued protests. As one demonstrator told The Wall Street Journal in a text message, “We’re all staring at the sky, hoping Trump will bomb us, just to destroy Khamenei and his regime.”

Trump failed Iranians then. But he can correct course now. He could begin to help them by striking state institutions that have ordered or supported the crackdown on Iranians such as the office of the supreme leader, the Ministry of Intelligence, the IRGC counterintelligence directorate, as well as institutions that enabled the regime to shut off the Internet. Washington should also use overt and covert means to blind, impede, and militarily pick apart Iran’s wartime command-and-control structures—including those on the supreme national security council, the defense council, and the armed forces’ general staff. The United States could then move to targeting bases and command centers housing other parts of the IRGC, the Basij paramilitary (whose members patrol Iran’s streets and put down protests), and the so-called special units of the country’s law-enforcement forces, who handle crowd suppression. Finally, if Washington determines that Iran’s proxy foreign militias are entering the country to slaughter demonstrators—as appeared to happen during the last round of protests—it should not hesitate to use force against them. These militias, after all, are already designated by the U.S. State Department as foreign terrorist organizations and already have the blood of Americans and U.S. allies on their hands.

Such actions will probably eliminate many key regime officials, including even Khamenei. In striking this wide variety of targets, the United States would show Iranians that it wants to change Iran for the better, not just limit the damage the regime can do to foreign adversaries. Washington should hit these sites even if key officials and leaders are not there. Doing so will still reduce the regime’s repressive capacity, impede continuity of government operations, and send a strong signal that can motivate the Iranian people.

Washington must fracture the Iranian regime.

As it carries out strikes, the United States will need to reduce the regime’s capabilities all across the country, not just in Tehran. That means U.S. officials should target every IRGC and Basij provincial command and battalion headquarters, as well as the command centers belonging to Iranian police forces. Doing so would inspire further protests while making it harder for the regime to suppress them. Nothing is likely to galvanize Iranian protesters more than seeing local security forces come under attack.

Finally, the United States must be prepared to use not just bombers and advanced fighter jets but lower- and slower-flying drones and aircraft, which could provide close air support to crowds squaring off against regime militants. Such attacks would help the United States take out mid- and lower-level commanders, drilling down on the chain of command of Iran’s security forces. It might also prompt these officials to retreat. As rank-and-file Iranian forces begin worrying about their survival, their instinct for self-preservation might kick in and override lingering loyalty to their units and commanders. Iran’s security services, in turn, might finally fracture.

This fracturing would be the key to how Iranians finish off the regime. As the Islamic Republic’s forces are sandwiched between U.S. airstrikes and popular pressure, they will have every incentive to either lay down their weapons or flip and join with the protesters. In the latter case, they might bring their guns with them, transferring coercive power to the street. Both outcomes could embolden demonstrators to press their advantage. They might take over police stations and occupy government and municipal buildings. With the security forces out of their way or actively helping them, protesters could seize state television, radio, and other communications platforms and broadcast the end of the Islamic Republic. Such an outcome would have parallels to the 1979 revolution: the Islamic Republic celebrates February 11 as “Islamic Revolutionary Victory Day” because it is the day when the Iranian armed forces declared their neutrality, effectively abandoning the existing government and handing the country over to its revolutionary masses.

The collapse of the Islamic Republic would, of course, be turbulent. Many analysts fear that Iran would simply get a new strongman, possibly someone who rises up from the ashes of the IRGC. But that is far from foreordained. Newly empowered protesters could use their new platforms to call for the country’s large civilian bureaucracy to keep working in order to maintain government functions. They might also bring in Iran’s exiled opposition leaders, who have been planning for and could help lead a transition. For Washington to eschew military options out of fear of instability would thus be to make the perfect the enemy of the good. The real source of destabilization in and around Iran, after all, is not the prospect of regime change. It is the Islamic Republic itself.

ONE WAY OUT

When Trump was asked about what an acceptable “endgame” with Iran would be, he replied: “to win.” After decades of Iran’s unabated anti-Americanism and hostility, it should be clear to all that winning means toppling the Islamic Republic. The regime is the arsonist behind many of the Middle East’s fires and a terror to its own citizens. Washington should employ sustained military force in order to break it and thus pave the way for Iranians to take back their country.

That doesn’t mean helping take down the Islamic Republic will be easy. The United States will run into significant challenges. It will encounter unknown variables, including the resilience of Iranian security services when facing American firepower and the Trump administration’s own risk tolerance once it encounters difficulty. But at this point, bold action is the only way to break the current dynamic. The United States has both the capacity and the capability to weaken the Iranian government while mitigating the resulting dangers. The Iranian people have the drive and determination needed to finish off the regime. Together, the two have everything they need to win and make a new Iran.