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Since last fall, we have repeatedly flagged the private credit sector’s growing vulnerabilities.

Earlier coverage detailed how the asset class ballooned into a $2-3 trillion opaque market after banks retreated from riskier lending, only to face a wave of high-profile defaults (First Brands, Tricolor), surging redemptions that forced gates at major vehicles, rising PIK usage, and AI-related risks to software-heavy portfolios.

In February, the red flag got about as red as it gets...

• Private Credit Rocked By UBS Shock Outlook: Record "Cascading Defaults" And Widespread Contagion

But, as a wave of private-credit providers unleashed their PR teams - and the story slipped off the lips of the TV talking-heads - it remains top of mind for traders, as we most recently noted:

• Private Credit: The New Junk Bond Market

• Private Credit’s Problems Just Got Real 

• 777 Partners and the End of Private Credit, which highlighted insurance-sector contagion risks from PE/private-credit-controlled insurers and the difficulty of raising fresh capital.

Which leads us to a new story this morning from The Financial Times which underscores that the pressure is no longer contained.

“Strain is spreading across private credit portfolios, with some of the largest funds taking writedowns and warning about problem loans as the industry faces its biggest challenge in almost a decade,” the FT reports.

An analysis of Solve data shows that the value of troubled loans held by some of the biggest private debt investors has reached levels last seen in 2017, when the industry was dealing with a hangover from an oil price crash.

Loans placed on non-accrual status by the 20 largest publicly traded business development companies (BDCs) climbed to a median 2.8% of their cost in the second quarter, up from 2% at the end of March.

The non-accrual demarcation signals that borrowers have either stopped making payments or that a fund believes a borrower may soon default.

David Golub, co-chief executive of Golub Capital, told investors earlier this month that there was “elevated credit stress” as the industry grappled with a rise in defaults and problem loans.

“We’re in a credit cycle,” Golub said.

“Others denied it for a while. I don’t think there’s a lot of denial any more.”

Fitch Ratings warned last week that private credit defaults had hit a new record in July.

PitchBook LCD data showed the biggest publicly listed BDCs shrank again in the second quarter as funds were hit with impairments and as sales and repayments of loans outpaced commitments on new deals. Listed vehicles managed by KKR and Blue Owl, as well as Apollo’s MidCap Financial, were among those in which repayments outstripped new lending. FS KKR Capital Corp reported that 7.1 per cent of its loan book was troubled in the second quarter - still far above the industry average.

Much of the pain is concentrated in loans extended between 2020 and 2021, when rates were near zero and private equity valuations were elevated.

Higher borrowing costs have “starved some businesses from investing,” said Bryan High of Barings.

“They are using all the cash they are generating to pay interest to lenders and so growth for some businesses wasn’t as strong as it could be.”

Concrete examples include Blackstone and KKR marking down their loan to software group Medallia (Blackstone’s fund marked it at less than 50 cents on the dollar at end-June, down from 60 cents in March) after Thoma Bravo handed the business to lenders. Ares wrote down its loan to Cornerstone OnDemand, while Blackstone and KKR took over dental services company Affordable Care after default.

Industry titans acknowledge that bankruptcies and restructurings are moving back toward long-term averages.

“We are… conserving our capital, maintaining ourselves in a more defensive and risk-averse posture,” said Armen Panossian of Oaktree’s credit arm.

“We really want to be able to lean into the market on the back of what we think will be more volatility… Beneath the surface, there’s cause for concern.”

Others remain more sanguine.

Craig Packer of Blue Owl said “credit metrics are healthy and the issues we are managing remain isolated.”

Jim Miller of Ares noted that borrowers were in “solid” shape with interest coverage and leverage “generally consistent with our five-year average.”

Yet the FT confirms our ongoing warnings that some of this optimism “belies the complicated picture ahead,” particularly for software companies facing uncertain durability of growth amid the AI shift, and for funds still digesting the 2020–21 vintage.

The sell-off in BDC share prices has been sharp - KKR and BlackRock vehicles down more than 15% over the past year, Apollo’s down 14.5% - leaving some funds “priced for death,” according to Oppenheimer analyst Mitchel Penn.

BlackRock’s TCPC sold a $523 million block of loans and is exploring options that could include winding the vehicle down; KKR’s troubled vehicle has waived some incentive fees.

Penn’s research showed that on average over the past five years, bottom-quartile funds generated returns on equity below the yield on a 10-year Treasury.

“Underwriting wasn’t as good as it should have been,” he said. “They weren’t as picky.”

Taken together with our earlier reporting on redemption pressure, opacity, and early defaults, the FT data shows the credit cycle is firmly underway and the situation continues to deteriorate.

This latest report from The FT update builds on our prior observations: underwriting standards loosened during the boom, higher rates are now “starving” cash-flow coverage for many borrowers, and the liquidity mismatch between semi-liquid vehicles and illiquid loans is amplifying pressure.

The bottom-line is simple: the situation in private credit continues to worsen.

Authored by Aldgra Fredly via The Epoch Times,

The Department of Justice (DOJ) filed an opening brief on Aug. 17 seeking to reinstate human smuggling charges against Kilmar Abrego Garcia after a district court found the prosecution to be vindictive.

U.S. District Judge Waverly Crenshaw Jr. dismissed the charges against Abrego Garcia on May 22, ruling that prosecutors brought the case against him in retaliation for his legal challenge to his wrongful removal to El Salvador last year.

In an Aug. 17 brief, the DOJ asked the U.S. Court of Appeals for the 6th Circuit to reverse the ruling, saying the prosecution against the Salvadoran national was made “based on the evidence, the law, and [prosecutors’] firm belief that there is proof beyond a reasonable doubt” that Abrego Garcia committed the crime.

“The government believed that Abrego had committed human smuggling, that he was ‘a member of the gang MS-13, a designated foreign terrorist organization, and that his return to the United States would pose a threat to the public,’” the DOJ said in the brief.

“Although his deportation had removed that threat and supported closing the criminal investigation, the deportation now had to be undone, at least temporarily. So the United States had a clear legitimate interest in prosecuting Abrego upon his return.”

The department said the lower court ruling marked “a dramatic expansion of the power of courts” to dismiss serious criminal charges based on subjective assessments of a prosecutor’s motivations and accused the district court of interfering with the executive branch’s authority and duty to protect the public from potential threat.

The Epoch Times reached out to Abrego Garcia’s legal representative for comment but did not receive a response by publication time.

Abrego Garcia, who illegally entered the United States in 2011 and stayed in Maryland, was accused of being a member of a foreign terrorist organization, the MS-13 gang. He was deported to El Salvador in March 2025 alongside other deportees despite a 2019 immigration court having issued a withholding of removal—which legally barred his deportation to his home country—because of concerns for his safety.

The Salvadoran national was subsequently returned to the United States in June 2025 under a Supreme Court order after the DOJ acknowledged an administrative error in his deportation.

He later faced charges of immigrant smuggling stemming from a 2022 traffic stop, to which he has pleaded not guilty. Abrego Garcia has also denied claims that he was a member of MS-13.

Crenshaw ultimately dismissed the human smuggling charges in May, saying that objective evidence has shown that “absent Abrego’s successful lawsuit challenging his removal to El Salvador, the government would not have brought this prosecution.”

The DOJ appealed the dismissal in June.

Ukraine has launched another massive overnight drone wave on Russia. While this is nothing new or unusual, the number of drones concentrated specifically on the Moscow region was much larger than prior attacks.

Over 600 drones were sent on Moscow and the surrounding region overnight into Tuesday morning, Mayor Sergei Sobyanin said. It ranks among the single largest assaults on the capital of the war. Regional reports say it's the largest drone attack on Moscow of the last two years.

At least 180 of the drones were confirmed downed over the Moscow region alone - possibly more - with emergency crews responding to several crash sites, including at another Wildberries warehouse near Moscow.

Authorities cited that at least three people were injured in the assault, including a 10-year old girl. Smoke has been seen rising over residential and construction areas in social media photographs.

At least 5,000 homes or businesses are reported to be without power in the wake of the overnight strikes, regional energy provider Mosoblenergo has said.

The Associated Press has cited at least 800 Ukrainian drones launched across the whole country, as part of the same broader attack. The report further indicated:

The overnight attack started a fire at a warehouse of Wildberries, Russia’s biggest online retailer, in an industrial zone. Ukraine has repeatedly targeted the company, which it says helps supply the Russian military, an allegation Moscow denies.

Wildberries said its facility sustained "insignificant damage."

The online retailer, widely seen as the 'Russian Amazon', has seen its logistics hubs frequently targeted over the past month.

Purported video of military & security outposts desperately trying to repel the inbound drone attack:

It's crazy in Moscow.
All four airports are currently closed.

It's also incredibly loud in various districts as Russia's air defence tries to land a few more drones on its people. pic.twitter.com/qMz1JRadF5

— Tim White (@TWMCLtd) August 18, 2026

EuroNews observes that seven out of ten of the company's biggest warehouses have been it and suffered serious damage, enough to take them offline: "Seven logistics hubs belonging to Wildberries, Russia's largest online retailer, have now been struck and knocked out of action since the campaign began in July."

While none of this has substantially changed Russian forces' ground momentum along the front lines, the Institute for the Study of War has said that the aerial campaign is effectively pressuring the Kremlin, given the steady economic setbacks and devastation.

"Moscow simply does not have enough air-defense coverage to shield every piece of infrastructure in its rear, even ten of its most valuable commercial sites," the ISW assessment concluded. However, nothing has indicated that President Putin is ready to change course - instead we are seeing things steadily escalate on both sides.

Authored by Travis Gillmore via The Epoch Times,

Newly declassified intelligence emails reveal that decisions were made by National Security Agency (NSA) leadership to block reports of Chinese influence in American elections from reaching President Donald Trump.

Four pages of emails, all dated March 13, 2020, were released on Aug. 18 by the White House Government Transparency Task Force.

According to one email—written by an unidentified NSA employee following a meeting about intelligence reporting foreign efforts to target the 2016 and 2020 presidential elections in the United States beginning in 2014—internal concerns were raised about the agency’s suppression of the reports.

“We did not know why we were here, trying to defend the election and identify threats to it, if we were unable to actually report what those threats were because of issues like this,” the NSA employee wrote.

According to another email, NSA analysts had proposed releasing the reports in 2018.

Task force officials are digging through files to determine why evidence of the Chinese Communist Party’s attempts to influence the elections was not passed on to the president, Congress, and some intelligence leaders, including then Director of National Intelligence John Ratcliffe, now CIA director.

Certain aspects of the reports on the Chinese election influence were censored because “it was judged that some of the details regarding the 2016 election were ‘sensational’ and so required a limited distribution [redacted],” an NSA analyst wrote, noting that colleagues tried for 16 months to get the information published.

“People higher in the chain than us—including but not limited to people at ODNI [Office of the Director of National Intelligence]—time and again failed to make real decisions in a timely manner,” they said.

Intelligence officers were told in February 2020 that the office approved the report, and analysts prioritized its delivery, but the NSA deputy director blocked its release, according to the documents.

George Barnes served as NSA deputy director from 2017 to 2023.

“[The deputy director] explained that he was concerned that releasing the [redacted] at this time—in the current political climate, with an acting [director of national intelligence (DNI)] who had been tasked … to ‘clean house’ in the intelligence community, and with an administration that is suspicious of the [intelligence community] and aggressive in removing anyone who stand in their way—would damage NSA’s credibility,” the analyst wrote, referring to Trump appointee Richard Grenell, who became acting DNI on Feb. 20, 2020.

The analyst said the deputy director was concerned that releasing the information could be viewed as political in nature because of the two-year delay.

“I lacked the courage to point out that we, [redacted], had processed the information in a timely manner, and the delay in releasing it was due in part to decisions and inaction on the part of people in the room,” the analyst wrote.

According to the analyst, the deputy director also sought to keep the NSA’s reputation separate from the CIA, FBI, and ODNI—agencies he perceived “had been tarred as hosting or being part of the ‘deep state.’”

The analyst said the deputy director thought publishing the report would “destroy that trust.”

“He felt the questioning of NSA that would ensue would have ramifications on the credibility of NSA reporting overall and would result in morale problems among the broader NSA workforce, a la when the [redacted],” the analyst wrote.

Other elements of the gathered intelligence were excluded from reporting because it would have been impossible to conceal the identity of members of Congress, the analyst said. Such cases require special approval, as dictated by the “Gates Procedures,” established by Robert Gates, former director of Central Intelligence, in 1992.

Newly declassified National Security Agency documents include emails between intelligence officers about decisions made at higher levels to not share information with President Donald Trump, released by the White House Government Transparency Task Force on Aug. 18, 2026. Courtesy of the White House

Given the circumstances of the discussion, the other analyst deduced that disclosure was unlikely, writing in the memo: “In light of our experience with the [redacted], we would consider ourselves lucky” if new intelligence reporting regarding the 2020 election was distributed before election day.

The meeting concluded with the deputy director suggesting “exploring maybe a ‘crazy idea’ like using” an unidentified redacted process to share intelligence “so that the analysts there who needed to see this information could have access to it without it having to be serialized.”

Politicized Intelligence

A senior White House official briefed a small group of reporters, including The Epoch Times, on Aug. 16 about the upcoming release, emphasizing the politicization of intelligence gathering and reporting revealed by the documents.

“It shows that a very high-ranking official, a deputy director of the NSA at the time, made clear he wasn’t intending on sharing some of the intelligence about China and other election threats because of various political statements,” the official said.

“That’s the highest official thus far we have seen mentioned, who seemed to have some awareness that information would not be being sent to the president and to Congress and to policymakers about election interference or election security and election vulnerabilities.”

The internal emails came to light because they were forwarded to a civilian ombudsman tasked with overseeing intelligence community shortcomings.

Investigations Continue

More documents are under scrutiny by task force members, and new releases are expected soon, according to the administration official.

He said that in a few months, the task force is expected to release a “full body of evidence” detailing that there was “extensive intelligence about the vulnerabilities of the election system” gathered by U.S. intelligence agencies during the period between 2019 and 2021-22.

“But for some reason … the intelligence agencies just made a decision not to brief it to the people who could potentially implement policies that would address the vulnerabilities,” the official said.

Voting machine integrity was also of concern to the intelligence community, according to the official, with five foreign nations found to be capable of hacking U.S. election machines.

“The notion that we would go six years without fixing a known vulnerability is something that we’re all eager to solve,” he said.

The task force expects to release more details about some of the vulnerabilities in the coming weeks.

Prior revelations related to the suppression of intelligence reports include evidence that information was intentionally kept out of presidential daily briefings and declassified FBI documents. Then-FBI agent Nikki Floris wrote to a colleague that she “was basically running a shadow government across the FBI at one point” after successfully blocking the release of certain reports.

The Epoch Times reached out to the NSA for comment but did not receive a response by publication time.

By Michael Every of Rabobank

The Heat You Feel Isn't Just The Summer Sun

There is a lot of geopolitical heat out there right now; and markets may get burned by it.

The 60-day US-Iran Memorandum of Misunderstanding has lapsed, with Trump and Iran both rejecting any extension while claiming control of Hormuz. In our view, the US is unlikely to restart major military action until after the November midterms. (Note the US just awarded a $23bn contract to Raytheon to accelerate annual Tomahawk missile production to over 1,000 from the current 60 alongside a $59bn Lockheed Martin deal to ramp up Patriot interceptor output from 600 to 2,000.)

Trump’s threat to bomb Oman is public diplomacy matching what Tehran threatens privately to ensure Muscat doesn’t close off the southern Hormuz passage allowing ship-to-ship oil shuttling that, according to the US, is seeing significant flows. The Saudis are now offering to sell oil near Oman; a sign they may be copying the UAE. That doesn’t help with refined products, where the US will announce steps to boost refiners’ throughput: by running at 120% of capacity?

Diesel crack hits record $102. This is absolutely unprecedented.

Industrial economy either grinds to a halt or consumers about to be hit with the biggest energy pass through in history pic.twitter.com/OtAdgrCvb3

— zerohedge (@zerohedge) August 17, 2026

However, as previously argued, relative energy calm incentivises Iran to escalate sooner. Israeli intel claims Tehran has achieved a remarkable recovery in its ballistic missile production by ignoring the needs of the civilian economy; the Wall Street Journal reports Iran is preparing to foment unrest in the Gulf, cut undersea internet cables, further destabilize the Red Sea via the Houthis, and move troops into Kuwait to force the US into a boots-on-the-ground game. Despite US efforts to stabilize Lebanon (by disarming Hezbollah) and Gaza (by disarming Hamas), the above dynamic could destabilize the entire Greater Middle East region.  

Meanwhile, tensions remain high on the Russia-Ukraine front. Speculation is that after the Duma elections on September 18-20, Putin may escalate via mobilization and closing the border; far less likely, a tactical nuclear strike; or a move vs. a Baltic state. The latter would aim to test NATO’s Article 5 resolve within Europe and from the US. This could be coordinated with Iran.

North Korea may also send another 50,000 men to Ukraine. That’s as China-friendly South Korean President Lee is proposing an end to the war with the North, arguably why Trump called to scale back scheduled joint military drills. In reality, that claim was too close to their start to make any difference, but was Trump warning Seoul or helping its bid to restart talks with the North while thinking of Ukraine? We shall see – but simplistic takes of the US ‘walking away from Asia’ are categorically wrong when looking across other news and developments - including Japan revising its national security doctrine after Putin visited the Kuril Islands, which Moscow has held since the end of WW2, to send Tokyo a warning message.

Last week, we had news that the US set ‘ideological loyalty tests’ for NATO members, including asking about stances on Iran. As Bloomberg put it, this “would upend the post-WW2 transatlantic relationship, which was built on US military guarantees that superseded many political disagreements.” Yet NATO’s website states it was created to: “Deter Soviet expansionism”; “Forbid the revival of nationalist militarism”; and “Encourage European political integration.” That is ideology – and Soviet expansionism was global. One can argue the US is -- rudely -- pushing Europe and Canada to look at new ideological threats, globally and towards integrating with it – albeit on its terms.

Matching that, last week saw a US report naming European countries among those helping China to trans-ship goods to avoid US tariffs.

As Canada braces for 50% US tariffs, the geostrategic logic is clear: either a common external tariff vs. China and trans-shipment, or a higher US tariff vs. those who refuse. Likewise, the US is now telling global partners they cannot be part of its critical minerals and chip/AI Pax Silica and also be members of China’s World Artificial Intelligence Cooperation Organization. That’s as the EU’s Mistral has adopted a Chinese AI as the core of its latest model.

As warned for years, the US looks like it’s going to force others to take sides – as will China. That includes US institutions: the Pentagon just ordered 30 US universities to scrutinise their ties with Chinese research partners; and Google just announced it will stop making its Pixel products in China from next year.

For markets, Middle East military escalation is likely to see further spikes in global energy prices; if Russia escalates in tandem, things are worse – potentially vastly more so; and throw uncertainty in Asia into the mix and things are even more volatile. As previously flagged, if the global energy complex were to see a serious crisis, pressure would build for more radical actions than anything the US is likely to announce today on refiners. Geopolitical market fragmentation would be a real risk (i.e., from NAFTA to NAPHTHA) as Bloomberg notes ‘The Americas' Challenge to Middle East Oil Won't Let Up’.

The above backdrop obviously needs massive increases in defense spending and ‘just for me’ vs. ‘just in case’ (forget ‘just in time’) thinking on top of fragmentation risk in goods trade even more evident for tech and defense-adjacent AI. That is zero-sum and inflationary before, for some, it can become more cooperative and deflationary. As one example, copper is in a new supply crunch as the realization sinks in that there isn’t enough of it physically to address the claims being made on it financially.

This is all happening when most economies are already carrying far too high a level of public debt. Against this, US 30-year bond yields today are 5.31%, the highest since July 2007; UK 30-year Gilt yields are 5.84%, the highest since May 1998; German 30-year Bunds are 3.74%, the highest since August 2007;

Japanese 30-year JGBs are at 4.12%, the highest since that maturity was introduced in 1999, and vs. around 0.65% during Covid.

At the same time, the FT reports that private credit is under strain as troubled loans swell to levels last seen in 2007 – just before the Global Financial Crisis; and the Nikkei Asia claims Japan's life insurers' have unrealized bond losses nearing $200bn (or around 4% of GDP) as yields rise.

In the old world order, it would be a matter of time until central banks stepped in to calm things, “because markets.” How can they do so now: with “rate cuts!” that steepen the curve more and an EM-style shift to bills from bonds? Or with rate hikes in an economy that needs to spend much more? Or with yield curve control? Or with rhetoric? Or with prayer?

In our new world disorder, Japan just had to lean on the US to get JPY back down temporarily to help get yields lower; yet it’s slipping again at 159.53 today. If the BOJ were to raises rates to support JPY, could its life insurers suffer even more?

Worse, the way the US helped out Japan saw a hyperbolic FT op-ed arguing the US dollar and US Treasuries are no longer the global reserve FX and reserve assets that we like to think of them being. It may not be true, but if it were, how do we price anything in a suddenly crumbling system?

Once the geopolitical situation is calmer, or has a clear winner, let’s talk again.

Until then, yes, it’s hot out there - and it’s not just the summer sun. Try not to get burned.

A top regional Trump envoy has said the US is "deeply concerned" after major new Israeli airstrikes on Syria overnight, following months of an absence of such attacks, and in the context of the broader Iran conflict.

The Syrian government and US Envoy to Iraq and Syria Tom Barrack said the attacks hit Abu al-Duhur military airfield in Idlib province in northwestern Syria. Barrack blasted it as an unnecessary escalation that threatens regional stability.

Additionally the Syrian Foreign Ministry of the new Sharaa/Jolani government blasted the "unjustified act of aggression" and "flagrant violation of Syria's sovereignty and territorial integrity."

While the Israeli government has not officially owned up to the operation, or provided any details, an unnamed senior Israeli told Fox News that "Highly sensitive intelligence was shared with the United States in advance, at the most senior levels of the various agencies and bodies."

"Al-Sharaa understands that he cannot operate like the previous Syrian regime, which maintained proxy forces. It's possible that he didn’t understand what was going on, or didn't know." Fox added that the official could not provide additional details "due to the highly classified nature of the intelligence."

The statement is odd given its suggestion is that Iran-linked forces were still operating inside Syria (based on the reference to the "previous Syrian regime" and its proxy forces). 

However, Idlib had throughout the entirety of the war been a hotbed of Sunni al-Qaeda linked activity. The post-Assad ruling faction in Damascus previously had the northwest province as its very headquarters, where Jolani got his start commanding Nusra Front which morphed into Hay'at Tahrir al-Sham.

The idea that Iran-linked militias would somehow be operating there 19 months after Assad's exit in December 2024 is strange and unlikely.

But ultimately it remains unclear why Israel conducted the strikes, and what the precise high level target may have been.

Amb. Barrack added to his statement: "The United States continues to believe that restraint and engagement offer the more constructive course. We encourage all parties to prioritize logical discourse over further military incidents."

Secondary explosions reported and filmed at the airbase location...

The site that was struck by Israel, the Abu Al Duhur military base in Idlib continues to burn and reports of secondary explosions are being reported.

Syria claims that the runway was struck only but runways don’t burn nor explode hours after the initial bombardment.
Something… https://t.co/pJVQNbJufE pic.twitter.com/oWVsVrtEpl

— Scharo Bajalan (@ScharoBajalan) August 18, 2026

Things in Syria have been mostly quiet of late; however, there's still a sporadic conflict in the south, where Israeli troops occupy territory significantly beyond even the Golan Heights.

At the same time, Israel is sure to be alarmed by a fresh statement out of Syria's foreign ministry saying it aims to keep nuclear material that was already in the country in its custody, subject to IAEA monitoring and guarantees.

Meta Platforms is facing a critical juncture in its battle over youth online safety. Just weeks after suffering a massive legal defeat in New Mexico, the parent company of Facebook and Instagram is now defending itself in a California federal court against a bipartisan coalition of 29 states. The states say Meta deliberately designed its platforms to addict children and harvested their data in violation of federal law.

The California Showdown

A sweeping multistate trial opens Tuesday in Oakland, California, overseen by U.S. District Judge Yvonne Gonzalez Rogers. Attorneys for Colorado, California, New Jersey and Kentucky - leading a bipartisan group of 29 states - will deliver opening statements. Those four states' claims about addictive design and deceptive marketing are what this trial tests, while all 29 states are involved over data-harvesting claims. 

Interestingly - the eight-person jury hearing the case won't actually decide it. Rogers empaneled it in a purely advisory capacity, which is rare. The jurors will answer specific questions she selects, and she is free to disregard their findings entirely when she issues her ruling after the trial concludes in October, Reuters reports.

The states argue that features like infinite scroll were purposely engineered to keep young users hooked, that Meta misled the public about the safety of its platforms for adolescents, and that the company improperly collected and monetized children's personal data in violation of federal law.

The financial exposure is the largest of any case Meta has faced. The company has warned that maximum statutory penalties could theoretically reach $1.4 trillion, while the attorneys general have indicated they may seek around $200 billion.

A Reuters/Ipsos poll released last week found that 85 percent of Americans believe social media can be addictive for children.

Beyond money, the coalition wants nationwide structural changes: age restrictions, deletion of algorithms and AI models built with children's data, elimination of infinite scroll and notifications, strict time limits for young users, and an algorithm retuned to prioritize well-being over engagement. Meta CEO Mark Zuckerberg and Instagram head Adam Mosseri are both expected to testify, alongside former employees and outside experts.

What Happened In New Mexico

The multistate trial arrives on the heels of a devastating legal blow in New Mexico. On Aug. 6, State Judge Bryan Biedscheid ruled that Meta had created a public nuisance and ordered the company to pay $567 million into a youth mental health fund, allocating $420 million to treatment, $90 million to screening and assessment, $33 million to prevention and awareness, and $15 million to referrals and care coordination over five years. The award followed a $375 million penalty a New Mexico jury imposed in March for violations of the state's Unfair Practices Act.

The award fell well short of New Mexico's request. The state had sought $1 billion toward a $3.7 billion plan to expand children's mental health services.

"The Court finds that the weight of the evidence presented demonstrates that Meta's platforms are a cause of and substantial contributing factor to the youth mental health crisis in New Mexico."

Biedscheid compared the platforms to a polluting factory, writing that the harms "do not stay contained" but migrate "to the real world" and burden families, schools, hospitals and law enforcement.

The order, a win for New Mexico Attorney General Raul Torrez, also imposes five years of operational changes: monthly limits on teen use of Facebook and Instagram, restrictions on notifications, tighter controls on adult contact with minors, safeguards for AI chatbots, and enhanced review of child sexual abuse reports. Meta must file written progress reports twice a year. The template is now sitting in front of the 29-state coalition.

Meta's Defense

Meta plans to appeal the New Mexico ruling and maintains that the attorneys general in the California trial are chasing an "outlandish payout" without proof of actual harm. "We remain confident in our record of protecting teens online and will continue to defend ourselves against claims that misrepresent the facts," the company said after the New Mexico decision.

The company argues it has invested heavily in creating a safe environment for teens, employing child safety experts and deploying technology to root out predators and harmful content. Company spokespeople have characterized the state lawsuits as an attempt to penalize Meta for industry-wide problems, such as the complexities of age verification.

The litigation traces back to 2021, when whistleblower Frances Haugen testified before the U.S. Senate and provided internal documents indicating Meta knew its platforms could harm young users but prioritized engagement over safety.

Meta is not alone. Alongside Snap, TikTok parent ByteDance and YouTube parent Alphabet, it faces more than 3,000 federal lawsuits consolidated before Rogers and another 3,300 pending in Los Angeles state court. Eight states, including Tennessee and Arkansas, opted out of the federal case and filed in their own courts. Tennessee's trial is already underway.

Meta has told investors that legal and regulatory blowback over youth safety "could significantly impact our business and financial results."

Nvidia has confirmed reports that it is financially backing SoftBank's massive data center at the Portsmouth Site in Pike County, Ohio, with up to $105 billion in financing, a securities filing revealed on Monday.

The project, led by SB Energy, is set to be fully leased to OpenAI. The facility could grow to 10GW, making it the world's largest data center, but Nvidia will initially support the first 4.25GW, DataCenterDynamics reported.

In a LinkedIn post, Nvidia CEO and founder Jensen Huang confirmed that his company would partner with SB Energy to help secure land, power, and shell (LPS) capacity at the Department of Energy (DOE) site. 

The GPU giant will provide a $105bn backstop for the project, helping lower debt costs, similar to previous SPV project financings and reusing the structure popularized by Meta in late 2025 with its Project Beignet off balance sheet structure to fund its massive Hyperion data center . It had initially planned to support as much as $250bn, but faced investor pushback over the extent of the risk.

As a reminder, META is already neck deep in off-balance sheet debt. Here is a schematic of its $27.3 billion SPV with Blue Owl "Project Beignet" for the Hyperion data center. None of this touches META's balance sheet.

Expect hundreds of billions of these in 2026 https://t.co/794EgSiiZ9 pic.twitter.com/7hMyVW6Lno

— zerohedge (@zerohedge) January 29, 2026

Nvidia will also invest $1.5bn in SB Energy, down from a reported $3bn. The SoftBank subsidiary, which is preparing for an IPO, is set to build 10GW of new power generation, including 9.2GW of natural gas generation, to power the facility. This will provide up to 8GW of total IT load.

SB Energy and SoftBank also plan to invest at least $4.2bn in new regional grid infrastructure through a partnership with AEP Ohio they say is designed to protect ratepayers.

"Nvidia is supporting the LPS infrastructure at Ports-Pike for approximately 4GW over a 20-year term, securing a site on which Nvidia compute will be exclusively deployed," Huang said.

"Our support is limited to defined portions of lease and power payments, along with a specified residual-value commitment — not the full cost of the site or all of the tenant’s obligations. The guarantee will become effective in phases as data centers are placed in service between 2028 and 2030. As OpenAI makes lease payments and capacity comes online, Nvidia's remaining exposure declines."

Huang said that most companies will secure LPS independently, and then buy Nvidia gear, but that leading AI labs are "growing faster than their balance sheets and long-term credit profiles can support.

Ports-Pike will not only exclusively feature Nvidia GPUs, but also the company's full-stack DSX AI factory platform, including CPUs, networking, and infrastructure software. Over 20 years, it is expected to feature multiple generations of Nvidia gear.

"Each generation of Nvidia AI factory systems deployed at Ports-Pike could represent approximately 1.5 million Nvidia GPUs, or approximately $150 billion to $200 billion in Nvidia revenue," he said.

The company may yet decide to secure the remaining capacity of 3.75GW at the site.

Huang claimed that the deal was not an example of circular financing, an accusation the company has increasingly faced as it has funneled its profits back into the AI companies that buy its hardware.

"Nvidia uses its scale and long-term visibility to secure Ports-Pike to host Nvidia compute," he said. "This is the same discipline we apply to supply-chain management: we secure critical inputs when we have visibility into customer demand and when doing so enables long-term productive capacity."

Following another disappointment in existing home sales in July, weak homebuilder sentiment, and plunging housing starts, pending home sales tumbled for the second month in a row in July (-2.3% MoM vs 0.0% exp - below thew worst forecast), dragging sales down 2.5% YoY - the biggest annual drop since April 2025...

This decline matches the second-worst reading in data back to 2001...

“The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings,” NAR Chief Economist Lawrence Yun said in a statement.

“Home prices are at record highs so houses for sale are sitting on the market longer, and fewer buyers are bidding above the asking price than a year ago, though there are large local market variations.”

All four major US regions experienced a decline in demand during the month.

An index of pending sales in the South, the nation’s biggest home-selling region, decreased 2.2% to the lowest level since January 2025. Pending sales dropped 4.7% in the West.

As a reminder, because houses typically go under contract a month or two before they’re sold, the pending home sales data tend to be a leading indicator of closings that are captured in the monthly previously owned home sales reports.

Translation - this is terrible news building on an already ugly situation in the US housing market.