Recap | 25 February 2026

1 day ago
10 min read

President Trump outlines priorities, emphasizes military in State of the Union address
US and Iran brace for conflict ahead of Geneva negotiations on Thursday
White House looks for tariff continuity without Congress
China seeks strategic reset with Germany, squeezes exports to Japan

Tech-led stocks rebound rewards hardware manufacturers against vulnerable AI targets
Federal Reserve officials point to extended policy hold
Consumer confidence edges higher but employment prospects dim
Oil markets prepare for supply increases, potential disruptions

With UN support, Ukraine to meet with US prior to Russia talks amid Hungary spat
India's Modi travels to Israel to reaffirm ties
Secretary of State Rubio attends Caribbean summit, addresses Cuba incident
Local elections in UK represent political bellwether

Pentagon pushes for unrestricted AI use, sets deadline for Anthropic
Reuters: Department of State pushes back on 'data sovereignty' citing risks
Federal judge restricts search of Washington Post reporter's devices
Enterprise processing demands contend with memory shortages

EDWARD VON DER SCHMIDT

| Disclaimers

Headlines

President Trump outlines priorities, emphasizes military in State of the Union address

Tuesday's State of the Union highlighted the administration's tax and immigration polices while emphasizing military themes. Citing the Supreme Court's "unfortunate involvement", President Trump committed to new tariffs that would not require Congressional approval - a subtle reinforcement of executive primacy.

In addition to stressing strict border control and touching upon economic issues, President Trump repeated his foreign policy mantra of "peace through strength". He called out slain dissidents, missile development, and nuclear enrichment as pretexts for military action in Iran, where he stated his preference for a negotiated agreement.

President Trump also reflected his expansive view of US interests in pledging to restore "American security and dominance in the Western Hemisphere".

Comment:

The priorities laid out in the State of the Union were quite clear: immigration, tariffs, and projecting US military strength.

Sources:

Trump uses longest-ever State of the Union to try to convince voters that US is 'winning so much' (AP; 2/24)
Trump makes the case for his foreign policy approach at the State of the Union (AP; 2/24)
Trump hails 'golden age' in State of the Union as voters sour on economy (Reuters; 2/24)
Takeaways from Trump's State of the Union address to Congress (Reuters)
Tariffs, 401(k)s, Shouting: Key Takeaways From Trump's Speech (Bloomberg)
Key Takeaways From Trump's State of the Union Address (WSJ; 2/24)

US and Iran brace for conflict ahead of Geneva negotiations on Thursday

Amid regional evacuation orders and calls for diplomacy before Thursday's mediation, the US and Iran prepared for armed conflict. Iran's position that it will not relinquish the right to nuclear enrichment for domestic energy programs appeared untenable, though the US' goal of preventing Iran's acquisition of nuclear weapons may have left daylight for negotiation.

Still, the US drew attention to Iran's ballistic missile programs - which have been out of scope in talks - and levied new sanctions on Iranian entities as it moved fighter jets into Israel. Reuters reported that Iran was seeking anti-ship missile capabilities from China not long after their supreme leader warned of sinking US vessels.

While public demonstrations against the government continued, succession plans remained unclear in the event of regime change.

Comment:

Thursday's negotiations will be telling as to whether the US show of force is for leverage or for real.

Sources:

Trump administration hits Iran with new sanctions as nuclear talks near (AP)
Iran accuses Trump of 'big lies' ahead of Geneva talks in face of major US military deployment (AP)
Exclusive: Iran nears deal to buy supersonic anti-ship missiles from China (Reuters; 2/24)
US-Iran nuclear talks to resume in Geneva against backdrop of military threat (Reuters)
US officials warn of Iranian threat to the US ahead of nuclear talks (Reuters)
Trump Says Iran Resumed Its Pursuit of 'Sinister' Nuclear Aims (Bloomberg; 2/24)
US Levels New Sanctions on Iran's Missile Program, Shadow Fleet (Bloomberg)
In a First, U.S. Deploys Combat Jets to Israel for Potential Wartime Mission in Iran (WSJ)
White House Says Iran Is Close to Weapons-Grade Nuclear Material. Experts Say No. (WSJ)
Tensions Rise in Iran as Protesters Face Off With Regime Loyalists (WSJ; 2/24)

White House looks for tariff continuity without Congress

US Trade Representative Greer told Fox Business News that temporary Section 122 tariffs currently at 10% would be raised to 15% in some cases. The administration intends to keep new tariffs consistent with the terms of prior trade deals.

The White House intends to lean on Section 301 tariffs (for countries with trade practices deemed unfair) and Section 232 tariffs (for industries critical to national security). Both require an investigatory process but do not need authorization from Congress.

Major trading partners including China and Europe have warned against imposing new levies that raise export taxes above those already agreed upon.

Sources:

Trump's new tariffs shift focus to balance of payments; economists see no crisis (Reuters; 2/24)
US tariff rate to hit 15% or more for some nations, Greer says (Reuters)
China says it has met US trade obligations, warns against more tariffs (Reuters)
Trump to Hike Tariff to 15% 'Where Appropriate,' Greer Says (Bloomberg)
China Warns US It Will Respond If Trade Probe Spurs New Tariffs (Bloomberg)
EU Sees US Tariffs Breaking Deal Limit on EUR4.2 Billion of Goods (Bloomberg)

See also:

Importers Begin Tariff Refund Push After Supreme Court Win (Bloomberg)
World Trade Surged in 2025 Despite Higher Tariffs (WSJ)

China seeks strategic reset with Germany, squeezes exports to Japan

China sought to establish common interests with Germany in Chancellor Merz's first visit to Beijing as head of state. Despite major policy differences - including support for Russia in its war with Ukraine - Germany is seeking to cultivate dialogue and a predictable, equitable trade partnership with China as both countries aim to diversify counterparties.

In contrast, China introduced new export restrictions on Japanese companies in a bid to curb "remilitarization", drawing a rebuke from Japan.

Sources:

China restricts exports to 40 Japanese entities with ties to military (AP; 2/24)
Despite differences, China's Xi and Germany's Merz seek to deepen ties in turbulent times (AP)
Germany's Merz hails China ties as he seeks reset with Beijing (Reuters)
Merz Calls for Patience After His First Meeting With China's Xi (Bloomberg)
China Hits Japanese Firms With Export Bans (WSJ; 2/24)
Germany Shows How Difficult It Is to Rewire Relations With China (WSJ)

Markets & Economies

Tech-led stocks rebound rewards hardware manufacturers against vulnerable AI targets

US equity indices were driven by large-cap technology names while investors continued to seek out potential targets vulnerable to AI disruption, separating data processing suppliers from information service providers.

Sources:

Nvidia and tech stocks lead Wall Street higher (AP)
Wall Street extends tech-powered rally as AI worries abate; Nvidia reports (Reuters)
Stocks Climb Late as Nvidia Rekindles AI Wagers: Markets Wrap (Bloomberg)
Housing Stocks Hit Hard by Gloomy Outlooks, Trump's Snub (Bloomberg)
Tech Stocks Rally in Front of Nvidia Results (WSJ)
The Market's AI Obsession is Starting to Bring Out the Bears (WSJ)

Federal Reserve officials point to extended policy hold

A host of Fed speakers opined on the economy and policy on Tuesday and Wednesday. While AI may increase productivity, those gains could come at the cost of higher structural unemployment (read: growth without jobs) - something monetary policy cannot address.

Fed officials continued to point to above-target inflation and the potential for it to remain higher for longer than anticipated. Combined with perceived challenges to the Fed's independence, price and credibility concerns left most comfortable with an extended pause. That said, demonstrable progress on inflation could bring a resumption of rate cuts later this year.

Sources:

Exclusive: Bostic says Fed cannot offset possible rise in structural unemployment (Reuters; 2/24)
Fed's Goolsbee: Rate cuts appropriate if inflation falls, but too soon to bet on productivity (Reuters; 2/24)
Fed's Waller doesn't expect AI to blow up job market (Reuters; 2/24)
Fed's Cook says AI triggering big changes, sees possible short-term unemployment rise (Reuters; 2/24)
Two Fed officials do not see imminent need to change monetary policy (Reuters; 2/24)
Fed's Schmid says high inflation still bigger issue facing central bank (Reuters)
Fed's Musalem: monetary policy is appropriately balancing risks (Reuters)
Fed's Bostic Says Doubts Over Independence a Major Concern (Bloomberg)
Fed's Bostic Says People Have Begun to Doubt Fed Independence (WSJ)
Kansas City's Schmid Says Federal Reserve Has Work to Do With Inflation (WSJ)

See also:

Government Bonds' Shrinking Appeal Has Cost, New York Fed Says (Bloomberg)

Consumer confidence edges higher but employment prospects dim

The Conference Board's consumer sentiment gauge for February ticked higher and brought an improvement in short-term expectations. The headline index improvements masked an increasing share of respondents viewing jobs as "hard to get".

Comment:

While growth and activity have been resilient, employment conditions appear tenuous in light of accelerating AI adoption.

Sources:

US consumer confidence improves modestly in February after cratering the first month of 2026 (AP; 2/24)
US consumer confidence improves in February; cloud over labor market remains (Reuters; 2/24)

Oil markets prepare for supply increases, potential disruptions

Steady oil trading belied underlying concerns about the potential for severe supply disruptions in the event of a conflict between the US and Iran, even with near-term crude output slated to increase.

Sources:

OPEC+ to consider 137,000 bpd oil output increase for April, sources say (Reuters)
Exclusive: Saudi Arabia boosts oil output, exports for US attack on Iran contingency, sources say (Reuters)
Oil settles little changed, supply worries persist despite large US crude stock build (Reuters)
Oil Steadies as Traders Await Upcoming US-Iran Nuclear Talks (Bloomberg)
Saudi Arabia, Iran Drive Up Oil Exports as Mideast Tensions Rise (Bloomberg)
OPEC+ Delegates Expect Group to Resume Modest Supply Hikes (Bloomberg)
Iranian Oil Loadings Scar as Regional Risks Intensify Ahead of U.S. Talks (WSJ; 2/24)
What's at Stake for Oil If Iran-US Tensions Escalate (Bloomberg)

Around the World

With UN support, Ukraine to meet with US prior to Russia talks amid Hungary spat

Following a show of support from European officials and the United Nations, Ukraine is preparing for bilateral talks with US envoys in Geneva on Thursday. Trilateral meetings with Russia may follow next week.

Ukrainian President Zelenskyy suggested that a leaders' meeting with Russian President Putin could come out of those discussions. While a framework for monitoring and post-war security has taken shape, territorial disputes over Donetsk and Zaporizhzhia have not been resolved.

Sources:

Ukrainian officials are set to meet Trump envoys in Geneva over more Russia talks (AP)
On invasion anniversary, UN says Ukraine cannot be divided (Reuters; 2/24)
European leaders vow support for Ukraine as war grinds into fifth year (Reuters; 2/24)
Zelenskiy, after speaking with Trump, says talks should lead to leaders' meeting (Reuters)
Zelenskiy, Trump Discuss Next Steps for Peace Talks in Call (Bloomberg)

See also:

Hungary's Orban stakes his reelection on anti-Ukraine message (AP)
Escalating an oil dispute, Hungary says Ukraine plans to disrupt energy system (Reuters)

India's Modi travels to Israel to reaffirm ties

Indian Prime Minister Modi met with Israeli Prime Minister Netanyahu to bolster the countries' security and trading relationship. India and Israel are also cooperating on a trade corridor to export Indian goods to Europe.

Sources:

India's Modi addresses Israel's parliament as Netanyahu touts mutual alliance (AP)
India's Modi visits Israel as US-Iran tensions mount (Reuters)
India, Israel Leaders Deepen Bond With Defense, Trade Pledge (Bloomberg)

Secretary of State Rubio attends Caribbean summit, addresses Cuba incident

Meeting with Caribbean leaders and other CARICOM officials in St. Kitts and Nevis, Secretary Rubio sought regional cooperation in combatting transnational crime.

Separately, a deadly shootout in Cuban waters threatened to inflame already-heightened US-Cuba tensions.

Sources:

Caribbean leaders gather for key summit to feature Rubio as US policy impacts region (AP; 2/24)
Cuba says 4 killed in speedboat shooting were attempting to infiltrate the country (AP)
Rubio urges Caribbean leaders to cooperate on gangs as Cuba worries grow (Reuters)
Cuba says it killed 4, wounded 6 from Florida-based speedboat that opened fire (Reuters)
Rubio Says US Will Investigate Deadly Cuba Speedboat Shooting (Bloomberg)
Cuba's Border Guard Kills Four on Florida-Registered Speedboat (WSJ)

Local elections in UK represent political bellwether

Thursday's special elections in Gorton and Denton in Greater Manchester will serve as a bellwether for Labour and UK Prime Minister Starmer ahead of broader elections in May.

Sources:

UK leader Starmer faces an electoral test after Epstein fallout shakes his grip on power (AP)
Three-way Manchester Contest Highlights Peril for Starmer in UK (Bloomberg)

Odds & Ends

Pentagon pushes for unrestricted AI use, sets deadline for Anthropic

The Pentagon reportedly demanded that Anthropic remove built-in controls from its models so that all lawful uses could be pursued without restrictions. Anthropic LLMs are used in classified networks and the company may be compelled by the Defense Production Act (DPA) or subject to designation as a supply chain risk, according to media reports.

Sources:

Hegseth warns Anthropic to let the military use the company's AI tech as it sees fit, AP sources say (AP; 2/24)
Anthropic digs in heels in dispute with Pentagon, source says (Reuters; 2/24)
Pentagon Gives Anthropic Ultimatum and Deadline in AI Use Standoff (WSJ; 2/24)
Anthropic Dials Back AI Safety Commitments (WSJ; 2/24)

See also:

Exclusive: Trump eyes Pentagon AI program for trade block's minerals pricing, sources say (Reuters; 2/24)

Reuters: Department of State pushes back on 'data sovereignty' citing risks

According to Reuters, the State Department has guided diplomats to push back on digital sovereignty initiatives, referencing security risks, civil rights implications, and the impedance of AI progress. Frameworks such as the EU's Digital Services Act have become a point of contention in relations with the US.

Sources:

Exclusive: US orders diplomats to fight data sovereignty initiatives (Reuters)

Federal judge restricts search of Washington Post reporter's devices

In a ruling edifying digital First Amendment protections, a federal court barred the Department of Justice from an "unsupervised, wholesale search" of a Washington Post reporter's devices sought in connection with a national security investigation.

Sources:

Judge bars government from 'wholesale' search of Washington Post reporter's seized devices (AP; 2/24)
Judge Rejects Government Request to Search Washington Post Reporter's Devices (WSJ; 2/24)

Enterprise processing demands contend with memory shortages

HP and Nvidia addressed memory chip shortages exacerbated by demand for AI processors, which has limited supply for consumer and mobile devices.

Sources:

HP reckons memory chip crunch will linger next year, warns of PC sales slump (Reuters; 2/24)
Nvidia delivers another quarter of stellar growth amid growing concern over AI economy (AP)

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