AI Infrastructure Doubts Drive Tech Selloff as Fed Signals Pause and Energy Demand Surges
Wall Street closed a jittery week with stocks under pressure as a technology selloff intensified questions about the profitability of the massive artificial-intelligence buildout. Tech weakness weighed on the S&P 500 even as most of its constituent shares gained, while the Nasdaq 100 slipped 1.5 percent. A gauge of chip giants dropped for an eighth straight day, the longest retreat since 2008. CoreWeave Inc. sank 10 percent, resuming a rout fueled by worries over whether the enormous expansion of AI infrastructure has outrun the ability of companies to generate adequate returns on their investments. Fawad Razaqzada at Stonex Trading and Forex.com observed that the week’s price action suggested the market debate was beginning to shift. The question is no longer simply how large the AI opportunity can become, but how profitable the enormous investment required to realize it will ultimately be. Demand for chips and computing capacity remains strong, yet investors also need to see adequate returns on the vast sums being committed to data centers, power generation, networking and other infrastructure. There are some signs these concerns are spilling into credit markets. That creates a difficult combination for the AI trade: higher interest rates reduce the present value of future cash flows while simultaneously increasing the cost of financing the infrastructure needed to support the next phase of AI growth. A renewed advance in oil prices also weighed on sentiment, lifting Treasury yields. Federal Reserve Chairman Kevin Warsh did nothing to dispel expectations that the central bank will hold rates steady this month during a moderated discussion Friday morning in Bangkok.
While angst around funding AI has been building for months, CoreWeave has drawn outsized attention as an early entrant in the business that has been heavily reliant on the high-yield debt markets to finance its buildout. With Treasury yields elevated and inflation remaining stubbornly high, the cost of that financing is rising fast. The biggest tech corporations, known as hyperscalers, are veering toward $1 trillion of annual capital spending, according to Bloomberg Intelligence. Much of that is debt funded. While the biggest tech companies mostly have high-grade credit ratings, fund managers are asking more questions about junk-rated borrowers like CoreWeave. Yardeni Research noted that the AI buildout has become a major engine of US economic growth, but doubts about future returns are pushing up borrowing costs, potentially constraining access to capital and ultimately slowing investment spending. Still, the firm notes that hyperscalers’ strong balance sheets and cash flow generation make their spending plans relatively insensitive to higher borrowing costs.
CoreWeave’s Volatile Path Exposes AI Trade Tensions
CoreWeave has become caught in a tug of war between investors who see rising bond yields as a potential rally killer for the AI trade and those who think demand for computing power will make those concerns seem passe before long. The cloud-computing services provider’s shares plunged 20 percent in the first three sessions of the week, including more than 15 percent on Wednesday, as its debt tumbled to levels that typically indicate distress. On Thursday morning, the cost of protecting CoreWeave bonds against default rose to the highest intraday level on record, while swaps priced in a more than 60 percent chance of a default within the next five years. By Thursday afternoon the sense of panic appeared to be alleviating as the stock bounced into the green with Jensen Huang, chief executive of Nvidia Corp., which is a CoreWeave shareholder and supplier, expressing confidence in the company. In addition, Deutsche Bank called the selloff a buying opportunity. The shares ended the day up 5.9 percent, their best performance in over a month. On Friday the stock fell as much as 9.4 percent and is on track for a weekly drop of more than 20 percent, its biggest since November. Thomas DiFazio, exchange-traded fund strategist at Roundhill Financial, described the macro backdrop as having created a sell-first, ask-questions-later market. In the short run it is hard to say with a straight face that the all-clear is here.
As a so-called neocloud provider, CoreWeave is at the heart of the infrastructure buildout needed to develop artificial intelligence technology. The safety of its debt is a key issue for investors because its spending on building data centers is being funded by issuing bonds. All of which has led to a bumpy ride for CoreWeave shares. The stock is up more than 50 percent since its troubled initial public offering in March 2025 that had to be backstopped by Nvidia. But it is down 12 percent this year and 66 percent since hitting a peak in June 2025, and it is less than $30 from its debut price. The upside remains pretty obvious as demand for AI computing services continues to outstrip supply, and there are few signs that dynamic is going to change any time soon. Deutsche Bank analyst Brad Zelnick, who has a buy rating on the stock, is urging investors to snap up the shares before they fully rebound. CoreWeave has a strong customer base, established record of execution, backlog conversion and leading infrastructure performance. While more capital will be needed, this can happen at a steady pace and is backed by robust customer backlog. Of course CoreWeave was not alone in this week’s selloff. The Philadelphia Stock Exchange Semiconductor Index, known by its ticker SOX, has dropped 9.7 percent this week, leaving it down 22 percent from a June peak. Server makers Dell Technologies Inc. and Hewlett Packard Enterprise Co. have both fallen sharply. CoreWeave is considered one of the riskiest stocks in the AI trade because of its heavy reliance on high-yield debt to finance its data centers. The company secured investment-grade ratings for its chip-backed debt for the first time in March and the goal is to keep winning similar ratings, co-founder Brannin McBee told the Financial Times on Wednesday, which underscores how much more CoreWeave plans to borrow. The company’s close relationship with Nvidia could provide a source of capital if its market access tightens, according to Bloomberg Intelligence analyst Robert Schiffman. But Huang pushed back against that idea on Thursday, saying there is no need for a bailout. CoreWeave’s strength is improving every day, Huang told Bloomberg at an event in Stockholm. I am optimistic. Their cost of capital is actually decreasing. Even with all the risks posed by higher interest rates and the stratospheric level of AI spending, the fundamental backdrop remains encouraging, according to Matt Bartolini, global head of research strategists for State Street Investment Management. We are still very early on in the AI capex cycle, so rates will not be the barrier that is hard to jump over, but it does change the calculus behind the continued issuance of debt and ensuring whether the financing of that debt can be met with credible growth in the future. The secular demand story is what is funding the capex cycle, and demand is likely to continue irrespective of what is happening with rates.
Nscale’s Operational Struggles Highlight Neocloud Execution Risks Ahead of IPO
The challenges facing neocloud providers extend well beyond CoreWeave. Nscale, a British data-center developer spun out of a cryptocurrency mining operation in 2024, is seeking to raise up to $3 billion in an initial public offering as soon as this month, just as investors are growing increasingly wary of the risks of this AI buildout. The company has amassed more than $103 billion in contracts and has an all-star board including former Meta Platforms Inc. Chief Operating Officer Sheryl Sandberg and former OpenAI executive Fidji Simo. Yet its IPO filings show Nscale had built less than 1 percent of its overall targeted capacity measured in gigawatts through August, leaning heavily on leasing from other providers to meet its contractual obligations. Bernstein analysts estimate that only 35 percent of the data center capacity that has been announced in North America will get built, and they include Nscale in their list of 10 developers with the least credible pipeline based on build stage, track record, tenant quality and regulatory risk. Nscale declined to comment, citing the quiet period ahead of a planned IPO. It is aiming for a valuation of as much as $35 billion.
In the Norwegian village of Glomfjord, just north of the Arctic Circle, construction of a flagship site is six months behind schedule, set back by leaks in the cooling system, local regulations, construction delays and a fire. So far only 6.4 megawatts of the intended 30-megawatt data center is up and running. The facility is being built for ByteDance, and delays meant Nscale racked up millions of dollars in penalties, which were negotiated into better terms on new contracts rather than paid outright. The liquid cooling system kept leaking because of a poor choice of sealant and a problem with a filter. Workers had to switch off server rows on several occasions to refill cooling fluid after finding it spurting onto the floor. The system was replaced in June but had another significant leak in September due to human error. Nscale had said the facility would run on hydropower but depended on diesel generators for the cooling systems until May. In December the fire department responded when a transformer began to burn after a high-voltage cable left outside for six months failed when connected to power, creating an electrical arc that melted metal and set fire to insulation. The Norwegian Directorate for Civil Protection later found 10 safety violations, including failure to ground exposed components or properly register its electricians. The case was closed in September after issues were resolved. The data center lacks a comprehensive video monitoring system; employees physically check each rack every hour. Employees complained of being overworked without proper training or health and safety standards. The Norwegian Labour Inspection Authority found inadequate records of who was working on the site. Nscale has since fixed the recordkeeping. At a larger project in Narvik, round-the-clock construction is underway to meet a 2027 deadline, an unusual arrangement given Norwegian labor laws. At Glomfjord and Stavanger, a contractor supplied technical staff who in turn subcontracted through CloudBrothers, which included illegal noncompete clauses in employment contracts. After union complaints, Nscale severed ties with the contractor in Stavanger and renegotiated at Glomfjord to eliminate subcontracting.
Power bottlenecks, equipment malfunctions and local opposition have affected sites in Portugal, the UK and the US as well. In Portugal, Nscale took over rooms at a colocation site and brought Nvidia GPUs but faced delays that led to paper penalties with Microsoft, later negotiated into future contracts. When Microsoft gained access earlier this year the backup power system was not ready, and the diagnostic platform had not been fully integrated with Microsoft’s ticketing system, leading to high-urgency tickets for nearly every glitch. Nscale briefly lost track of a delivery of 1,000 transceivers, each potentially worth more than $2,000, because it lacked a reliable receiving system until this year; the parts were eventually found in a storage room where trash was kept. An Nscale site near London announced as flagship sovereign AI infrastructure may not get a grid connection until the early to mid-2030s. In Korgen, Norway, the grid operator warned that new capacity for a planned 250-megawatt facility was unlikely before 2037. Nscale wrote that without increased grid capacity, projects of several hundred megawatts will not be possible and investments risk moving to other countries. In Texas, part of a converted bitcoin mining site is now live, nearly doubling GPU deployments from the 25,000 mentioned in the S-1 filing. Chief Executive Officer Josh Payne has emphasized vertical integration—own the land, the power, the data center, the chips and the software—as a competitive advantage that reduces risk for customers. Yet many locations do not yet meet that definition, and the company relies on two customers, Microsoft and Anthropic, for about 85 percent of its contracts. Anthropic has agreed to spend about $44.6 billion for dedicated AI chip infrastructure at the Monarch campus in West Virginia, but Nscale disclosed it had not secured the financing nor any long-term agreements with chip suppliers needed to fulfill the contract. Anthropic can back out of parts of the contract without penalty if tranches are delivered late. Olivier Darmouni, a financial economist at HEC Paris, described the aim for vertical integration as too ambitious for a startup. If there is any sand in the wheel, big hyperscalers are going to privilege their own data centers and back out of leases, and investors in Nscale will end up holding the bag. Gartner estimated that just 20 percent of neocloud providers will remain independent by 2030. Borrowing costs for the industry are rising after almost $500 billion in new debt was priced this year to fund AI infrastructure. Last week an Australian data center firm abandoned plans for its IPO after would-be investors turned skittish. Similar struggles have hit others: Oracle is trucking in fuel for a massive data center in New Mexico because a gas pipeline is behind schedule, a judge halted construction on a Google data center in Minnesota after environmental review challenges, and a CoreWeave facility in Texas was delayed for months due to bad weather and permitting problems. At the Monarch campus, heavy rains flooded denuded land, sending water and mud into neighboring homes; Nscale said it would pay cleanup costs, was found to have violated its stormwater permit, put up a flood protection fence that later broke and flooded a homeowner’s backyard. Opposition is mounting, with some 45 projects valued at $68 billion blocked or delayed by local pushback between April and June this year according to Data Center Watch. In Norway, left-wing politician Sofie Marhaug said international tech companies are drawn to cheap renewable energy and cool climate but do not have Norway’s best interests in mind, using natural resources without moving jobs from Silicon Valley. Local mayor Grethe Anita Andersen hopes to secure at least 40 jobs in Glomfjord. The floating hotel Kalmar, once used to detain migrants, arrived to house hundreds of construction workers for the site that has booked out most hotels in town since August.
Fed Holds Expectations Steady as AI Registers as Near-Term Demand Shock
Federal Reserve Chairman Kevin Warsh did nothing to dispel market expectations that the US central bank will hold interest rates steady when it meets at the end of the month. In a moderated discussion Friday morning in Bangkok at the International Monetary Fund’s annual meetings, Warsh made no remarks on monetary policy or his outlook for the US economy apart from reiterating that the Fed will deliver price stability. We made very clear that we would deliver price stability, and we removed a dose of accommodation about a month ago, Warsh said. I do not prejudge meetings. I do not believe in saying now what I might do at the meetings that we have in the balance of this year. Investors pared their bets for a rate hike at the central bank’s Oct. 27-28 policy gathering. The odds, which were hovering around 27 percent before Warsh spoke, dropped below 15 percent following his remarks. Stocks extended gains and the dollar edged lower. Derek Tang, an economist at Monetary Policy Analytics, wrote that it was clear he was not going to deliver anything that the market could latch on to as hawkish. The Fed raised interest rates by a quarter percentage point in September, the first hike since 2023. It was backed by all 19 policymakers, and a majority also saw another increase as likely this year. Warsh said on Friday that the world has broadly conformed to our expectations since the last meeting of the Federal Open Market Committee in September. A few key officials in recent weeks reiterated that additional rate hikes may be needed but emphasized they have time to gather economic data before acting again. Goldman Sachs Group Inc. economists led by Jan Hatzius wrote that alongside other recent comments from FOMC participants, Warsh’s comments indicate that the FOMC is set to pause in October, adding that they expect a final hike in December.
Warsh repeated his bullish views on artificial intelligence, calling it the most important innovation in the global economy during his lifetime. But he also warned that it may be driving demand in the near term. The Fed chief said that as a central banker he is taking the new technology seriously but also soberly, responsibly. It is obviously hitting the demand side of the economy before it is going to hit the supply side of the economy. If you are a central banker, you are in the business of trying to ensure stable prices and full employment, you have got to recognize this as a shock. While it is a positive supply shock in the medium term, Warsh argued, it is driving increases in aggregate demand now and the impact on employment is uncertain. Some of Warsh’s colleagues have expressed similar concerns, even questioning whether the surge in investment that is buoying the AI build-out could lead to an overheating of the economy. Warsh also announced that his task force on productivity and jobs—which is grappling with the implications of AI—will hold a field hearing in the San Francisco Bay Area on Nov. 16. It is one of five task forces Warsh convened that will present recommendations to the Federal Open Market Committee late this year or early in 2027.
Energy Markets Reflect AI Power Hunger as Clean Additions Set Records Alongside Gas Expansion
The same AI-driven demand that is fueling data-center construction and shaping Federal Reserve thinking is also reshaping US energy forecasts. The US is on track to install record amounts of clean energy this year and next as developers race to claim expiring federal tax credits and as soaring data-center electricity demand stimulates growth. But the same data-center boom is also driving a major expansion of natural gas, undercutting the climate benefits of the renewables buildout. The findings are part of BloombergNEF’s latest US Clean Energy Market Outlook, released Friday. When we look at the picture holistically, we still see data center growth as a tailwind to renewable energy, but it is tainted by the growing gas pipeline, said Hall Welborn, an author of the report. BNEF expects the US to add a record 89 gigawatts of clean energy this year and to surpass that level in 2027. The surge is coming even as developers contend with more expensive financing, trade barriers and uncertainty over equipment costs and availability. At the same time, 67.8 gigawatts of new gas-fired power could be added through 2030. With just 14.3 gigawatts of gas generation slated to close over that period, the pipeline would amount to a substantial net increase. The rapid growth of artificial intelligence and data centers is increasingly shaping US energy forecasts. BNEF now expects installed data-center capacity to reach 118 gigawatts in 2030, which is 52 percent higher than its projections made only last December. Average data-center power demand could reach 120 gigawatts by 2035, roughly five times current levels, with AI-related computing responsible for nearly half. A significant portion of new data centers will be powered by on-site natural gas systems. While the US is the world’s largest supplier of the fossil fuel, all that demand is going to tax domestic supply, and BNEF expects the industry to swing from surplus production to a deficit as soon as 2028. Yet the boom is also improving the outlook for clean-energy projects. BNEF revised up by 15 percent its forecast through 2036 for onshore wind additions, to 99.7 gigawatts, partly in light of data-center demand.
Chinese chipmaker CXMT Corp. reported a surge in preliminary profit and sales during the first nine months of the year after global demand for memory sent prices of the components soaring. The domestic memory-chip leader said that preliminary net income will amount to 131 billion yuan to 132.5 billion yuan ($19.6 billion to $19.8 billion) in the period, compared with a net loss of 5.3 billion yuan in the first nine months of last year. Preliminary revenue is expected to reach 265 billion yuan to 270 billion yuan, versus 32.1 billion yuan last year. The broader memory-chip field has seen a boom in demand that has sent sales and stock prices skyrocketing. The artificial intelligence build-out has contributed to shortages across the industry, driving up prices of memory components. CXMT also has steadily expanded capacity and advanced product research and development. The company has boosted output per wafer and is using capacity more efficiently. In addition, Chairman Zhu Yiming proposed that the company buy back 1 billion yuan to 2 billion yuan of shares. CXMT recently said it has achieved a breakthrough in chip technology that rivals like Samsung Electronics Co. had pursued for years. The company plans to roll out a new type of semiconductor with increased memory density thanks to its self-developed new architecture.
Russian Disinformation Campaign Targets US Midterms with AI-Generated Videos and Bot Amplification
Russian disinformation operators are deploying an army of bots to inflate view counts of fictitious posts about celebrities and Democratic candidates ahead of the US midterm elections. AI-fabricated video clips of well-known actors and musicians—including Robert De Niro, Julia Roberts and Cher—attacking Democrats began appearing on X in early September, some urging people to join a campaign dubbed #AllDemocratsAreCriminals. Scores of other clips have made false allegations of corruption and improprieties by Democratic candidates. Social media researchers have attributed the posts to a Russian state-backed operation known as Matryoshka, or Operation Overload, which floods social media with clips purportedly from established media outlets. Bloomberg News reviewed 130 videos and doctored newspaper front pages targeting the US midterms published by this network from Sept. 10 to Oct. 9, most of them flagged by anonymous disinformation research group Antibot4Navalny. US-based research groups Graphika and dTeam corroborated and supplemented the narratives. One clip carrying an ABC News logo alleged that James Talarico, the Texas Democrat running for Senate, paid OnlyFans models. Another, with a CBS News logo, claimed the Internal Revenue Service had discovered Georgia Democratic Senator Jon Ossoff owns eight undeclared properties. Talarico’s spokesperson has denied the candidate paid any OnlyFans models, and there is no evidence the IRS discovered any undeclared Ossoff properties.
The Matryoshka videos appear to get tens or hundreds of thousands of views on X. But Antibot4Navalny researchers exclusively shared archived snapshots of posts with Bloomberg showing how view counts are being manipulated by a network of automated accounts, called bots, to manufacture the illusion that many of the fabricated stories are popular. Russia has used social media to influence US elections since 2016, when it sought to undermine confidence in the voting process and damage Hillary Clinton’s presidential campaign, according to US intelligence assessments. But its tactics have evolved over the past decade, from exploiting divisions across the political spectrum to focusing solely on attacking Democrats, who have been more supportive of Ukraine than Republicans. Unlike previous elections, when it focused on presidential campaigns, Russia is trying to spread false stories about Democrats in numerous races nationwide, including 29 of the 36 running for governor and 20 of the 35 vying for Senate. The Office of the Director of National Intelligence shared a report with Congress in recent weeks warning that foreign adversaries are using artificial intelligence to spread disinformation online ahead of the midterm elections and that Russia is the most active in using digital tools to undermine confidence in election integrity. A spokesman for the Kremlin did not immediately respond to a request for comment. AI has made it increasingly cheap and quick to produce fakes, allowing campaigns like Matryoshka to try to overwhelm social media and sow doubt about what can be trusted online. It is the disinformation equivalent of drone warfare.
Antibot4Navalny, which has been tracking Russian bot activity since 2018, first identified the influence campaign after noticing social media posts beginning in September 2023 that sought to undermine Western support for Ukraine and draw mainstream media into amplifying false claims. It named it Matryoshka after the Russian nesting dolls, because each day an account that tried to spread the previous day’s fake story posts a new one. The research group does not disclose its location or any individual identities. Russian users on Telegram first shared some of the fabricated content, according to a 2024 report by Viginum, the French government agency monitoring foreign digital interference. It is evolving with the technology and is more sophisticated as a result, said Darren Linvill, a professor at Clemson University in South Carolina and co-director of its Media Forensics Hub. They are actively trying to fish for more engagement. The number of views for Matryoshka posts can jump as high as 200,000 within the first hour but then quickly plateau, a phenomenon flagged by Antibot4Navalny researchers. Organic view counts usually follow a growth curve rather than a spike and abrupt flatlining. Most of the accounts that posted the fabricated videos have only a few followers and were dormant for years. Reposts and likes made up a tiny fraction of views. Ukrainian President Volodymyr Zelenskyy said on Oct. 12 that his country’s retaliatory strikes on Russian data centers had resulted in a drop in bot activity on social media. But Graphika and AntiBot4Navalny say they have seen no evidence of a decline in Kremlin-linked bot activity on social media since the strikes started Oct. 8. What declined, they said, was automated web-crawler traffic on Yandex, Russia’s main search engine.
Russian operators pump out five to 10 narratives every weekday, often between 9 a.m. and noon Eastern Time, and take breaks on weekends. Most posts tag the social media accounts of mainstream news organizations. Matryoshka operatives also have bombarded fact-checking organizations with emails urging them to investigate the fake posts in an apparent bid to generate media coverage. Matryoshka posts share common characteristics and follow a unique distribution pattern: fake video reports impersonating media outlets; long-dormant accounts suddenly repurposed to post one or two videos; tagging and emailing media organizations; and multiple posts on the same day around a single theme. Most videos run for roughly a minute and use clips and text to tell simple but outlandish tales. Each day appears to have a different theme. On some days, celebrities accuse Democrats of leading their children to gender transition. Other waves of videos suggest Democratic candidates are engaged in embezzlement, child abuse or murder. Sometimes they hop onto breaking news—most recently, allegations that Democrats were behind the FlyDubai terrorist attack. The operation’s focus shifted to Europe for five days during the period that Bloomberg tracked. Several posts pushed fabricated claims about Ossoff and Talarico, two of the most prominent Democrats in close races. One clip on Sept. 11 pretending to be from CNN claimed Ossoff called for halting all military aid to Israel and redirecting resources to Ukraine. While Ossoff has voted to block specific weapons sales to Israel over concerns about civilian deaths in Gaza, he has supported continued US military aid. Another video alleged Talarico would deny benefits to Hasidic parents who do not allow their children to undergo gender transition. That claim is false. A single post that displayed both videos got 35,000 views according to X’s count, despite being planted by an account with only 35 followers that previously had posted only in Japanese. The stories about Talarico paying OnlyFans models and Ossoff owning undeclared properties illustrate the artificial view count spikes. Uploaded on Sept. 29 alongside another clip that falsely accused Alabama Democratic Senate candidate Everett Wess of committing sexual assault, the post got 50,839 views and only one retweet within 20 minutes of being published according to snapshots archived by Antibot4Navalny, then less than 700 views in the following three hours. Views do not normally drop off a cliff, said Linvill.
X, owned by Elon Musk, has taken steps to crack down on what it calls coordinated inauthentic behavior. It suspended 80 percent of the accounts seen by Bloomberg promoting Matryoshka content about the midterms. The platform removed 10 other accounts after Bloomberg flagged them. But even as accounts are suspended, new ones take their place. While Matryoshka also plants stories on other platforms such as BlueSky and TikTok, it most frequently posts on X. As much as X keeps taking them down, we always see a new crop, said Jean le Roux, a senior investigator at Graphika. X is curbing the spread and the reach of these campaigns, but they are still there. X did not respond to emailed questions. It said in an Oct. 14 post that it had suspended more than 13,000 accounts involving suspected foreign influence operations linked to Iran, Russia and China that targeted US political conversation. While most Matryoshka posts have failed to gain real traction, a few have broken through. The Institute for Strategic Dialogue examined 135 pieces of content on social media between January and March 2025 that it attributed to Matryoshka and found one that garnered 4 million views: a video made to look like it was from E! News that falsely claimed the US Agency for International Development paid celebrities to travel to Ukraine. Musk and Donald Trump Jr. each reposted the clip. Most of the Matryoshka clips targeting the US midterms exhibit the hallmarks of coordinated activity by networks of bots. A Sept. 24 video still on X alleges Minnesota Democratic Senator Amy Klobuchar, who is running for governor, received $72 million in suspicious donations—more than five times the amount she has actually raised according to campaign filings. By X’s count it got 155,300 views, two likes and no retweets. Many Matryoshka clips try to portray the Democrats as extreme on transgender issues, a theme that piggybacks on Republican Party messaging in several midterm campaigns. Some promote a false narrative that Democrats are paying celebrities to promote transgender rights. One posted on Sept. 22 falsely said the New York Times revealed that Taylor Swift accepted $500 million to support the Democratic Party and gender transition in exchange for a series of concerts before the November election. It was published alongside a similar and also false story about singer Billie Eilish. The post got 75,600 views within 30 minutes of being uploaded and then quickly tailed off. Even though they are not actually making an impact on the US midterms or the way people vote, they are probably still going to use this as a kind of a measure of success within Russia to report back to say how effective the campaign was, Graphika’s le Roux said. They rely so much on those inflated metrics to prove their success.
European Union Advances Arctic Surveillance Amid Rising Great-Power Competition
The European Union will launch an Arctic surveillance program in 2027, part of a broader push to improve regional ties and counter growing US and Russian ambitions. The surveillance effort is included in the EU’s new Arctic strategy, seen by Bloomberg and set for release next week. The pilot program will extend the EU’s satellite systems, Copernicus and Galileo, to detect Arctic threats across land and sea. The EU will also establish an Arctic Cable Hub to protect undersea cables, which enable vital digital services and have become a target of Moscow-linked sabotage elsewhere. The updated Arctic strategy reflects the EU’s security-first shift since Russia invaded Ukraine in 2022 and Donald Trump returned to the US presidency in 2025. A prior version of the Arctic strategy, from 2021, focused on cooperation, climate action and indigenous people. Since then the Arctic has become battleground for global influence as climate change opens up new shipping routes, drawing attention from Russia, the US and China. Increasing Arctic shipping activity in an inherently harsh and poorly charted environment substantially escalates the risk of catastrophic accidents, severe marine pollution, and hybrid interference, the text reads. Russia in particular is asserting itself. Moscow is steadily rebuilding its Arctic military footprint and using the region to ship sanctioned fuel. Similarly, China’s ambitions in the European Arctic are growing, while it deepens its partnership with Russia. Trump also has his sights on the Arctic, making repeated threats earlier this year to seize Greenland—a territory of EU member Denmark. The push deeply rattled the transatlantic alliance before Trump backed down, eventually reaching a deal to increase local US military presence. The document avoids criticizing the US, only stating that a predictable partnership is central to European and transatlantic security. The EU has spent several years bolstering its presence in the Arctic. European Commission President Ursula von der Leyen has visited Greenland twice since 2024, opening a local EU office and announcing €200 million ($225 million) in investments. In its upcoming strategy the EU will commit to holding regular Arctic summits and organizing jointly financed projects with regional partners. A commission spokesperson declined to comment.
Alberta Separatists Face Skeptical Voters Ahead of Referendum
Leaders of the movement for Alberta to separate from Canada have a simple foundational argument for voters: independence will make you wealthier. A republic of Alberta, they say, would be able to keep more of its oil and gas wealth for its own people, unencumbered by the far-away, allegedly corrupt federal government in Ottawa. But the secessionists are not winning their case. Albertans will vote Monday in a referendum that asks whether they would like to begin a process to separate from Canada, or stay a province. Recent polls have shown a big lead for the remain side. Support for the independence path is sitting around 25 percent, largely unchanged since Premier Danielle Smith, a conservative, called the vote in May. The issue has dominated Alberta politics for the past year, casting a shadow over the province of 5 million people even as its economy hums along with the surge in crude prices. One thing all sides seem to agree on: the nine years of Prime Minister Justin Trudeau’s rule were tough times for the resource-abundant province. Oil prices crashed in 2015 just as he was taking office, and his environmental policies contributed to the cancellation of a number of projects that would have helped Alberta’s economy. Prime Minister Mark Carney, who was raised in Alberta, has taken a markedly different approach. His government has repealed or loosened Trudeau-era rules that restrict fossil-fuel development and is putting its own financial muscle behind a new pipeline capable of shipping an additional 1 million barrels a day via the west coast. Carney sought to rally the stay-in-Canada vote in Calgary. A vote against Canada is a dangerous bluff that will lead to years of deep uncertainty and lost opportunities for Albertans and for Canadians, he told a crowd Thursday evening. His promises have raised expectations in the energy sector and have taken some of the wind out of the separatists’ campaign. But the pro-Canada side has also been given a boost by a series of reports that have created significant doubt about whether Alberta really would be better off on its own. A study commissioned by the provincial government and done by the University of Calgary contemplated different economic scenarios. Even if things went smoothly, secession would mean an immediate hit to Alberta’s economy. Annual wages per person would fall by C$1,200 ($846) and gross domestic product would decline by 2.2 percent in the short term, before improving over the long haul. But there is another possibility. If an independent Alberta had difficulty negotiating a settlement with the rest of Canada and had trouble establishing the credibility of its own currency, the result could be economically calamitous. Alberta’s GDP might fall by 10 percent, with workers seeing their wages tumbling to C$5,500 below what they would be earning within Canada. Recovery would be long and painful. It is a scenario where Alberta’s economy could be weaker and its finances much worse, not just immediately but for many years to come.
One challenge for the separatists’ cause is that Alberta is already, on paper, perhaps the most prosperous part of Canada. As a province that produces more than 4 million barrels of oil a day—most of it exported to the US—it enjoys natural resource revenues that are the envy of other regions. Incomes are higher. Its residents have one of the lowest top rates for income tax of any Canadian province, and it is the only one without a provincial sales tax. Yet Albertans also cite affordability as a major worry. Their real disposable incomes have declined over the past decade and are now lower than in neighboring British Columbia, according to Charles St-Arnaud, chief economist at Servus Credit Union. The average Albertan has not seen an improvement in purchasing power for 10 years. And that creates frustration because you would expect that you would be better off gradually year after year and it is not happening. While Alberta still has the highest GDP per capita, in real terms it is 11 percent lower than in 2014. Employment rates have fallen from around 70 percent in 2012 to 64 percent today, affecting mainly younger people and older men, a cohort that is more likely to support separation. That decline in relative prosperity coincided with the Trudeau years, but at least some of it has to do with the end of an oil-sands building boom after the 2015 price crash. Separatists point to the high costs of some federal policies and the potential opportunities in keeping the province’s energy riches within its borders. Alberta is an economic powerhouse, we are the only growing region of the country—and we are growing despite laws from Ottawa that would hold us back, separatist organizer Keith Wilson said on a debate panel. Mitch Sylvestre, a leader of the Alberta Prosperity Project, has pointed to oil-rich nations in the Persian Gulf as a model for what an independent Alberta could be—suggesting it could enjoy low taxes, monthly checks from the state to citizens and a superior healthcare system. A group called Let Alberta Decide says the province’s residents send C$20 billion more to Ottawa a year than they get back in services. Its website has a counter that increases at a rate of C$634 per second. A particular pain point is the federal government’s equalization program, which redistributes tax revenues to poorer regions. Albertans contribute more because of their relatively higher incomes. A program like equalization exists in almost all federations in the world, said Trevor Tombe, an economist at the University of Calgary, because there are always poorer regions that need to maintain basic services. Canada’s equalization formula could be improved, but no matter what alternative program you have in mind, Alberta would not be a receiving province because we are the richest, highest-income province. Separatist groups say an independent Alberta would be able to lower taxes and run a budget surplus by keeping all the tax currently collected by the federal government. But in some cases their fiscal plans assume an easy transition and do not factor in things like Alberta assuming a portion of Canada’s federal debt. The Calgary Chamber of Commerce has been vocal in its opposition to separation. It has released a series of reports, including a survey that found many business owners are ready to leave the province if the separation movement gains traction. Alberta’s economy depends on trade, and separation would potentially create new barriers for the landlocked province. Now is not the time to leave the safety of Canada, particularly given Carney’s change of direction on energy development, said Deborah Yedlin, the chamber’s chief executive.
Insurance Accounting Maneuver Draws Regulatory Scrutiny
On paper it was supposed to be a six-month loan. In December 2018 one of sports mogul Mark Walter’s insurance companies sent $40 million to an undisclosed borrower. But rather than collect payment when the loan matured the following June, Delaware Life Insurance Co. rolled the debt into another six-month loan—and then another, and another. As of last December the insurer still had not collected the debt, one of dozens of short-term financings that have lingered for years. The rollovers are part of an accounting maneuver that helped Walter’s insurance companies sidestep regulations while directing billions to his other businesses, according to a Bloomberg analysis of the holdings and a person with knowledge of the strategy. The move helped them reduce their required risk-based capital—the minimum cushion they must hold against the chance investments sour. The insurers now face parallel inquiries from the US Department of Justice and the Securities and Exchange Commission, focused on their failure to disclose that more than $20 billion of loans had gone to affiliates, including the 2018 deal. The lapse raised new questions about capital management and prompted ratings firms to lower their outlook on the companies’ financial strength. The insurers’ handling of short-term assets is a red flag for the regulators, the rating agencies, for the policyholders and the agents selling the product, said Alton Cogert of Strategic Asset Alliance. Our friends on Wall Street are really good at looking at those rules and saying, how do we get extra juice? Group 1001, the parent company through which Walter owns Delaware Life and sister firm Clear Spring Life and Annuity Co., declined to comment. It has said its capital position remains strong and that it plans to sharply reduce its holdings of affiliated assets, including short-term investments, by year-end. Walter, the owner of Major League Baseball’s Los Angeles Dodgers, did not respond to a request for comment sent to his TWG Global holding company.
As chief executive officer of Guggenheim Partners, Walter helped pioneer Wall Street’s takeover of the life insurance industry in the wake of the 2008 financial crisis. He and other new entrants pushed insurers into more opaque and illiquid private credit assets, boosting returns while exposing the industry to new risks. Policymakers have known about the potential of rolling short-term investments to sidestep capital rules since at least 2019. That was when staffers at the National Association of Insurance Commissioners pointed out that insurers could get better capital treatment by disguising risky long-term investments as short-term ones. For volatile long-term investments such as stock or unrated loans, capital rules can require insurers to set aside 30 percent to guard against potential losses. But for certain short-term investments the charge can be as low as 0.39 percent, no matter how risky the asset. That is more favorable than investment-grade corporate bonds issued by the likes of Procter & Gamble Co. or Walmart Inc. NAIC staffers drafted a rule change that would impose steeper capital charges on short-term debts that rolled repeatedly. But it did not apply to reverse-repurchase transactions, the kind of debt Walter’s insurance companies used most frequently for the strategy. And after pushback from the industry, an NAIC working group adopted a narrower version of the measure that applies in even fewer situations. In recent years the amount of money Walter’s insurers devoted to the strategy ballooned. By 2025 the companies held $5 billion of short-term investments, or about 9 percent of total invested assets—among the largest proportions of any US insurance group. The industry average is less than 1 percent. It is not unusual for insurers to exploit accounting loopholes, said Tom Gober, a former Mississippi insurance examiner and a critic of industry risk-taking. But this one I had not encountered before, because I do not look at short-term investments that often. You would think there would not be any hanky panky there. Virtually all of the short-term assets are loans to firms controlled by Walter, typically through limited-liability companies with no public profile. About $2.3 billion of the total had simply been rolled from loans involving the same LLCs in the previous year. Some of it dated back almost a decade. The insurers do not have to report the nature of the investments or how risky they are. If the full $2.3 billion of assets that rolled between 2024 and 2025 were the riskier types, the strategy could have reduced risk-based capital requirements by more than $600 million compared with booking them as long-term assets. Companies that free up extra capital can use the money to expand or to pay dividends to their owners. The rolling strategy was used to get lower capital charges for assets that might not be able to secure an investment-grade credit rating, or any rating at all. The interest rates Walter’s insurers earned on the short-term debt fluctuated from year to year, showing that the terms were not automatically renewed every time the debt rolled over. In 2025 the payouts ranged from 6 percent to 9 percent annualized. Among the longest-lived short-term assets was that $40 million loan from 2018. It was a reverse repurchase, meaning Delaware Life handed over cash in exchange for collateral, which the borrower agreed to repurchase with interest at the end of the term. The collateral for this loan was a shell company called Erikson AH LLC. Little is publicly known about Erikson. A document on file in the Delaware Secretary of State shows it was formed in 2016 by a lawyer in Walter’s family office. Despite the connection, Delaware Life reported for years that Erikson was not affiliated—meaning it was not controlled by Walter. Only after it received a subpoena from federal prosecutors this year did the company acknowledge that virtually all of its short-term assets are indeed affiliated with Walter, including Erikson.
Biotech IPO Draws Strong Reception as RNAi Developer Surges
City Therapeutics Inc., an early-stage developer of RNAi-based drugs, jumped 28 percent after raising about $200 million in an upsized US initial public offering. Shares of the company, which counts Arch Venture Partners and Fidelity Management & Research among its investors, opened at $23 each in New York, above the IPO price of $18. City sold 11.1 million shares after marketing 9.72 million shares for $17 to $19 each. The trading gives the Cambridge, Massachusetts-based firm a market value of roughly $1.19 billion, based on the outstanding shares listed in its filings. City is developing RNAi-based drugs to treat thromboembolic diseases and Stargardt disease, an inherited macular degenerative disease in children and young adults. The firm’s lead product is in an early-stage trial, and other product candidates are in preclinical development or drug discovery. City expects to report data from the phase 1 study this year. The offering follows investors’ warm welcome to peer gene therapy developer Adarx Pharmaceuticals Inc., which raised about $446 million in its debut last month. New entrants in biotech and pharma have raised $8.2 billion this year, versus $1.3 billion in the corresponding period in 2025. City has strategic collaborations with Bausch + Lomb Corp. and Biogen Inc. to advance RNAi therapeutics for diseases of the eye and the central nervous system, respectively. John Maraganore, the founding chief executive officer of RNAi drug developer Alnylam Pharmaceuticals Inc., co-founded City and serves as its executive chair. City had a net loss of $53.4 million on collaboration revenue of $6.4 million in the six months ended June 30, 2026, compared with a net loss of $24.3 billion on revenue of $5.6 million a year earlier. City has raised $238.8 million in private funding since it was founded in 2023 through June 30. Arch is expected to control about 27 percent of the company after the offering, while Fidelity will have a 7.6 percent stake. The offering was led by Goldman Sachs Group Inc., Jefferies Financial Group Inc., Stifel Financial Corp. and Oppenheimer & Co. Shares trade on the Nasdaq Global Market under the symbol CTY.
