News

Please see below, an article from EPIC Investment Partners which discusses the recent revision to the US labour-market data release. Received this morning – 20/02/2026

Investors had an extra week to brace for January’s employment report after a partial government shutdown delayed its release until 11 February. The headline figure — 130,000 new non-farm payrolls — appeared to signal resilience, comfortably above expectations of around 70,000. Yet rates markets were conspicuously unmoved. Two-year Treasury yields barely shifted and fed funds futures continued to imply further easing later this year. The message from fixed income was clear: the headline was not the story.

The significance of this release lies in the annual benchmark revision incorporated into January’s report. The revision lowered the payroll employment level for March 2025 by 898,000 — the largest downward adjustment since 2009 — forcing a reassessment of labour-market performance over the past year. What had been presented as modest but steady expansion now appears considerably weaker. Cumulative job growth for 2025 was revised down from 584,000 to just 181,000, reducing the average monthly gain to 15,000. In retrospect, the labour market’s apparent resilience through 2025 was materially overstated.

That revision reshapes the policy narrative. Monetary settings through 2025 were calibrated against an economy believed to be generating steady employment gains. The revised data suggest labour demand had already cooled substantially. For bond markets, the question is not whether January beat expectations, but whether policy remains restrictive relative to a labour market that has been softer for longer than acknowledged.

The composition of January’s gains reinforces this interpretation. Of the 130,000 jobs added, 124,000 came from health care and social assistance. Health care alone accounted for 82,000. Outside these largely non-cyclical sectors, hiring was subdued. Financial activities contracted by 22,000 positions and federal employment declined by 34,000. Manufacturing and retail were broadly flat. The expansion, such as it is, appears concentrated in sectors supported by demographic trends and public expenditure rather than broad-based private demand.

The household survey adds a further layer of caution. The unemployment rate edged down to 4.3 per cent, yet remains close to levels that, under the Sahm Rule framework, have historically coincided with recession risk once sustained. Multiple jobholding continues to rise, with nearly 8.8m Americans working more than one job. Because the establishment survey counts positions rather than individuals, this dynamic can bolster payroll growth even as underlying household conditions tighten.

Technical factors may also have flattered the headline. Seasonal adjustments and revisions to the birth-death model complicate comparisons with prior months. Weather disruptions arrived after the survey reference week, limiting the drag typically seen in January data. None of these distortions invalidate the report, but they do caution against reading too much into a single print.

For the Federal Reserve, holding the policy rate at 3.50 to 3.75 per cent, the margin for manoeuvre is narrowing. Inflation remains above target, yet the benchmark revision implies that labour-market slack may be greater than previously assumed. The yield curve’s continued inversion reflects expectations of slower growth rather than renewed overheating.

January’s report therefore does not resolve the growth debate; it intensifies it. The headline suggests resilience. The revision suggests fragility. For fixed income investors, the central issue is calibration. If labour demand was already weaker in 2025 than believed in real time, the risk is not that the economy is accelerating — but that policy is still set for conditions that no longer exist.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Alex Kitteringham

20^th February 2026

Please see the below market update from W1M Waverton, received this morning, 19/02/2026:

What happened? 

While headlines were dominated by geopolitics, actions in Venezuela along with rhetoric towards Iran and Greenland, global equities had a positive start to the year as US economic data surprised on the upside, supported by resilient corporate earnings. Oil prices rose more than 10% in sterling terms amid rising Middle East tensions, while gold gained over 20% before selling off sharply towards the end of the month. UK government bond yields remain relatively high compared to American or EU peers, reflecting a degree of political uncertainty.

What did we do?

In fixed income, we retained a preference for UK government bonds (gilts) over corporate debt given a view, shared by the Bank of England, that inflation is moderating towards target levels and that means gilts can appreciate in value (assuming political stability). In equities, we hold around 50 stocks based on a  3-5 year thesis for each name. We continue not to hold all the biggest US technology stocks, being conscious of valuations but find good ideas around the world. During the month, we added a position in Grab Holdings which is the leading food delivery and ride hailing app in ASEAN (the “Uber of Southeast Asia”).

In real assets, after a very strong run in gold prices, we took some profits and introduced some derivative based protection strategies in case volatility increased; we remain positive on gold, and other metals such as copper and uranium, but as active investors, we take the opportunity to take profits when we think it is a good time to do so.

What do we expect now?

We remain positively positioned in the equities we select because the big picture, growth and interest rate trajectories, remain supportive. Real assets offer diversification and inflation resilience. Bond markets, expecting modest US and UK interest rate cuts in the next year, have upside and we retain a preference for UK government bonds (gilts) relative to corporate debt. Proprietary protection strategies are a valuable and distinctive component of our portfolios in an uncertain world. After a volatile 2025, given geopolitical events already this year but also the many opportunities which exist,  in our view the need is clear for investors to be properly diversified, global and active.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Andrew Lloyd

19/02/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 17/02/2026. 

Three themes driving investor sentiment

Software sell-offs, U.S. inflation and U.S. labour market data, we break down the latest market drivers.

Key highlights

• Markets flip from AI winners to ‘anti-AI’ stocks: Consumer staples, energy, and healthcare rally as investor anxiety peaks.
• RELX results expose market confusion: Companies with proprietary data are AI enablers, not victims of disruption.
• Political risks rise: U.S. tariff rebellion, UK leadership crisis, and Japan’s Liberal Democratic Party (LDP) supermajority reshape market dynamics.

To AI or not to AI? That is the question…

Source: LSEG Datastream

The equity market continues to exhibit bipolar tendencies and that was characterised last week by a continuation of the anti-AI trade (stocks which are seen as being immune to disruption by AI). Many of these, ironically, have been last year’s laggards: consumer staples, energy, healthcare.

It’s not unusual for out of favour areas to rebound quickly, this is the so-called ‘pain trade’, whereby the market seems prone to perform in a way that causes the maximum pain to the most people. This is why looking at investor positioning is particularly important. But the last few years seem to have experienced particularly abrupt waves of anxiety and euphoria.

Another factor explaining the ‘pain trade’ is changes in market structure: the rise of retail investors, more passive investors, and increased use of thematic investments create pools of money which then ebb and flow, seemingly on vague narratives.

And then there are coincidental factors − increasing tensions over Iran have contributed to a rising oil price. But still, uncertainty over the effect AI will have on the market for stocks, products, and people is vast.

OECD data shows economists are broadly bullish on AI’s productivity impact − McKinsey projects annual gains of 3.4% in optimistic scenarios. Yet we face a paradox: despite two years of U.S. productivity acceleration, growth remains modest and far below the internet boom era. This gap reflects the ‘Solow Paradox’ − innovations often take years to show up in official statistics due to adoption costs, learning curves, and implementation delays. The high productivity growth in the internet boom was coincidental, reflecting benefits from the 1990s growth of personal computers, office applications, and globalisation, rather than the rudimentary websites, which were just starting to generate revenues (and not profits).

However, it seems the AI benefits have arrived earlier than previous innovative waves and early market signals suggest they are already having real impact. Jobs data shows early career hiring collapsing in AI-exposed roles (software developers, customer service), and employer surveys reveal 32% expect workforce reductions from AI − double those expecting growth.

The tension is clear: markets expect major disruption, but productivity gains have not yet materialised at scale.

RELX results highlight the controversy

A company which was in the crosshairs and reported earnings last week was RELX.

The company reflects the market psychosis perfectly: an AI beneficiary a year ago, it has lately been seen as an AI loser, despite no change in operational performance or strategy. The broad potential AI benefits stem from automating certain workflows, many of which RELX facilitates and where hundreds of software companies compete, but RELX is positioned upstream of this disruption.

RELX controls the proprietary content and data that makes AI tools more valuable, not less. Their algorithms that have accumulated over decades, judgements, and interpretations are embedded into their 300+ specialised workflow tools. Its tool Protégé, for example, is distributed through twenty-five partner platforms like Harvey AI. It already runs on Claude, so if Claude gets better, Protégé gets better. RELX doesn’t compete in the crowded workflow software market; it enables it.

This is crucial. As AI drives productivity by automating repetitive tasks across law, publishing, and scientific research, demand for expert-curated, proprietary content increases. Large law firms using 100+ software tools still need RELX’s specialised data and judgement layers to make those workflows meaningful and defensible.

So, although Google’s search was initially seen as being disrupted by AI, instead Google search is now seen as an enabler of Google’s Gemini AI model. And just as DeepSeek was seen as a threat to AI model and hardware providers, instead it’s an enabler of greater use of AI.

The pace of change is extraordinary, and the uncertainty is high, but the market missteps will be many. Companies solving this productivity challenge need trustworthy, specialised content and interpretations that AI cannot easily replicate. So, companies like RELX should be attractive with 90% proprietary data accumulated and domain expertise giving them a moat as essential infrastructure for the AI productivity transformation, not victims of it.

Politics give and take from markets

There were some interesting political happenings last week which impacted markets. The least directly impactful was the House of Representatives (the House) joint resolution ending the emergency tariffs on Canada. It’s not directly impactful because nothing will come of it. The bill will likely be passed by the Senate and will then go to the president’s desk, where it will be vetoed.

The president can veto any piece of legislation coming from Congress. However, Congress can force the legislation through if it obtains a two thirds super majority. There’s no real prospect of that happening because the vote was largely along party lines and only managed to narrowly pass because six Republicans joined with the Democrats in an afront to the president.

These acts of self-harm with the ruling party are unhelpful in a mid-term year, but they reflect the way in which tariffs are unpopular in specific districts, something which will be reflected in November when the full House and a third of the Senate are up for election. Currently there is an estimated 84% chance that the Republicans lose the House to the Democrats, but the margin of loss matters, creating a huge incentive to keep the economy strong in this election year.

Japanese Prime Minister Sanae Takaichi enjoyed a much easier ride as her Liberal Democratic Party (LDP) and its coalition partner, the Japan Innovation Party (Ishin), achieved a strong victory in the lower house election with LDP alone securing the two-thirds supermajority. This allows them to override the upper house and initiate constitutional amendments.

Markets reacted positively to the election results with equities and the yen both rising. Nick Gwee of our Asia team says the two key pillars of Takaichinomics are: new measures against rising prices and strategic investment in select sectors.

Areas they expect to benefit under the strong LDP mandate include defence, AI semiconductors, and nuclear energy. Consumer stocks should also benefit as private consumption potentially improves as the government weighs in on inflation.

The UK leadership crisis

Source: Bloomberg

In the UK, the last fortnight has seen some volatility in gilts, which is due to the fragility of Prime Minister Sir Kier Starmer’s leadership.

There has been scandal surrounding his appointment of Peter Mandelson as ambassador to the U.S. The revelations − which centre around Mandelson’s links to Jeffrey Epstein, and leaks of sensitive government information − rattled sterling and gilt yields due to concerns a new Labour prime minister might increase fiscal spending. Though markets have retraced these moves, political risk remains elevated, and the prime minister’s position is precarious.

A leadership contest could still materialise following local elections in May, potentially reigniting volatility. Prediction markets still believe there is a high chance that the UK will have a new prime minister by the end of this year, and financial markets would prefer it to be Wes Streeting rather than Angela Rayner, who comes from the left of the party. But either option could be seen as a positive if the current financial framework remained and was adhered to, so the decision on whether to change the chancellor and if so who to, would be the key decision.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

18/02/2026

Please see below article received from EPIC Investment Partners this morning.

The 2026 refinancing “maturity wave” represents a structural headwind for the US economy that many investors still mischaracterise as a contained commercial real estate problem. In reality, it is a system-wide credit recalibration. The bulk of these loans were originated in 2021, when policy rates were pinned near zero and capitalisation rates compressed to generational lows. Five-year maturities now collide with a radically different regime: higher base rates, wider credit spreads, and materially lower office and secondary retail valuations. Even modest declines in appraised values translate into significant loan-to-value breaches, creating a multi-billion-dollar equity gap that sponsors must bridge in a far less forgiving capital market.

Unlike prior cycles, the macro backdrop offers limited relief. The Federal Reserve cannot swiftly ease policy without risking renewed inflation pressures, meaning refinancing occurs at structurally higher coupons. Debt service coverage ratios that once looked conservative now screen as impaired. Extend-and-pretend is becoming policy by necessity, not choice.

The deeper risk is the gradual “zombification” of regional and community banks, which collectively hold a disproportionate share of commercial property exposure. This is not a 2008-style solvency shock; it is a profitability and confidence squeeze. Unrealised losses on securities portfolios, layered atop rising non-performing loans, constrain balance sheet flexibility. In response, underwriting standards tighten across the board. Credit that would otherwise fund small business expansion, inventory builds, or capex is rationed. The result is a crowding-out dynamic: local economic multipliers weaken even as headline equity indices such as the S&P 500 appear resilient, buoyed by asset-light mega-caps with limited reliance on bank lending.

Municipal finances compound the drag. Falling commercial assessments erode property tax bases in major cities, pressuring budgets already strained by post-pandemic migration trends. Service cuts and deferred infrastructure spending risk reinforcing vacancy cycles, embedding a negative feedback loop between real estate values and urban competitiveness.

Private credit has emerged as the marginal provider of liquidity, but at materially higher spreads and with tighter covenants. While this capital prevents disorderly liquidation, it effectively reprices risk across the corporate landscape, siphoning cash flow toward debt service rather than productivity enhancing investment. The 2026 maturity wall, therefore, is less a singular cliff event than a prolonged constriction, an incremental tightening of financial conditions, diverting resources from innovation to balance sheet repair, subtly but persistently capping US growth potential.

Please check in again with us soon for further relevant content and market news.

Chloe

17/02/2026

Please see the below article from Tatton Investment Management detailing their discussions on what has happened in global markets over the past week. Received this morning 16/02/2026.

Anxiety under the surface

At a global index level, equities look calm but the AI winners and losers theme is raging below the surface. Last week, realized index-level volatility dropped, but single stock-level volatility stayed high.

Leveraged traders are targeting companies vulnerable to AI displacement. Those with high ‘price-to-book’ ratios were punished. UK wealth manager St James’s Place lost 13% after Altruist released an AI tax tool for investors. The big firms with large technical departments are under threat, but smaller firms have greater opportunity to compete. That’s good news for small business, but probably won’t affect small-cap stocks until the dust settles.

In the meantime, companies might react to share price falls with cost-cutting layoffs. That puts highly valued employees at risk, dampening a crucial source of consumer demand. The US labour market was surprisingly strong in January (130,000 jobs added) but that’s already out of date. Initial jobless claims spiked last week, and fear is that the old labour market stasis (little hiring but no firing) will tip into layoffs. That disrupts the strong US growth narrative.

Alphabet’s 100-year sterling bond issuance is encouraging, proving there’s demand for long-term debt in the UK market. UK growth data was mild for December but full-year growth (1.3%) was better than expected a year ago. Some fear that a change in Labour leadership might mean a loosening of the budget deficit, but bond markets still expect a tight fiscal policy with an emphasis on lower interest rates – as the BoE looks set to deliver.

The US Congressional Budget Office upped its long-term debt and deficit forecasts, partly due to Trump’s likely fiscal expansion this year. The need for tariff revenue will see the president veto congress’s anti-tariff bill on Canada, but there’s still a Supreme Court ruling dangling over the White House, putting further pressure on US bonds. We discuss the big non-US winners below.

The Takaichi Trade

Japanese stocks surged after Prime Minister Takaichi’s landslide election win. Both voters and investors appreciated her message of growth over caution and the continuation of Abenomics (fiscal and monetary stimulus alongside structural reform). The late Shinzo Abe’s eponymous reforms boosted long-term corporate profitability, which has now fed into wage rises, stronger domestic demand and higher growth. Even with US tariff headwinds, Japanese exports (particularly to the rest of Asia) are benefitting from a cheap yen, while the tech sector is booming. This will keep benefitting Japanese consumers, who have plenty of room to lower their savings rates.

Stocks have rallied under Takaichi, but Japanese Government Bonds (JGBs) and the yen have suffered. Amid last month’s JGB yield spike, we wrote that the JGB market has similar structural weaknesses to the UK gilt market before the Liz Truss episode (gilts are mainly held by pension funds; JGBs are mainly held by insurers), but this isn’t Japan’s Truss moment. Fiscal fears triggered the gilt selloff in 2022, whereas it’s actually strong Japanese growth pushing up JGB yields. Indeed, JGBs and the yen strengthened post-election because international investors want to buy into Japan’s long-term growth (and holding unhedged JGBs is a good way to do that).

Takaichi says her spending plans won’t raise Japan’s debt-to-GDP because GDP will rise – but the bigger risk is that the spending isn’t needed. Private sector growth is strong; extra government investment might just stoke inflation and force the BoJ to raise rates. This is a risk, but we think Takaichi’s spending will be milder than she says for this reason.

Asian trade is so important to Japan, so Takaichi’s antagonism toward China is another risk. But both Japan and China have often favoured economic pragmatism in recent decades, so we still think Japan’s long-term prospects are bright.

Emerging markets benefit from regionalisation

EM stocks have outperformed all others in the last year, despite Donald Trump’s trade disruptions.

EMs altogether account for more than half of global GDP in Purchasing Power Parity (PPP) terms. That doesn’t guarantee economic power, though, as currencies rarely converge to PPP rates even in the long-term. There’s two broad reasons for this: the lack of arbitrage and the dominance of financial markets. Arbitrage is limited by trade barriers and general non-equivalence (how do you compare a Himalayan tea house with a central Manchester hotel?), while financial market dominance means that countries with higher valued assets (e.g. developed countries) have higher valued currencies.

Trump’s policies arguably make PPP matter more. A weaker dollar always helps EM companies with dollar debts, but the general sense of riskier US assets makes EM assets less risky by comparison. Plugging the US trade deficit also stops the outflow of dollars, which stops the retuning inflow into dollar assets. Meanwhile, Trump’s desire to rebuild manufacturing capacity means a greater equivalence of goods: If American and Chinese manufacturers are selling the same cars, the main difference will be the price.

Regionalisation in the last decade has created regional trading blocs – and by far the biggest, in PPP terms, is Asia. Its growing importance is driving new politics: China is now trying to present itself as a reliable alternative to the US, and is showing a little more restraint against Taiwan and the South China Sea.

Beijing has a strong incentive to make its financial markets more attractive to foreigners (more transparency and fewer interventions), but you don’t have to buy Chinese assets to invest in Asia’s growth story – as Japan and Korea have shown. We think regionalisation will make EM assets more attractive in the long-term.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

16/02/2026

Please see below article received from Brooks Macdonald this morning.

What has happened?

Equity markets fell sharply, led once again by technology. The S&P 500 dropped -1.57% in its third straight decline, while the NASDAQ (-2.03%) and the Magnificent 7 (-2.24%) also saw meaningful losses. Investors continued to focus on the potential scale of AI‑driven disruption, which contributed to a series of pronounced single‑stock moves. Cisco (-12.32%) was among the worst performers following earnings, and several other names across the index posted double‑digit declines—an unusually broad reaction. The selloff extended into financials, with the KBW Bank Index down -3.21%, and even traditionally defensive assets such as gold (-3.19%) and silver (-10.67%) came under pressure. Bitcoin also fell (-2.92%), adding to a generally risk‑off tone.

AI concerns intensify across industries

Fears around the impact of AI continued to ripple through multiple sectors. CH Robinson Worldwide (-14.54%) declined sharply after a small AI logistics company claimed it had helped customers scale freight volumes by several hundred percent without additional staff, triggering a -6.64% drop in the Russell 3000 trucking index. Commercial real estate faced renewed pressure as CBRE (-8.84%) fell for a second day following comments from its CEO that fewer office workers in an AI‑enabled future could reduce long‑term office‑space demand. The weakness broadened beyond tech and AI‑exposed segments. S&P Financials fell -1.99%, while the equal‑weighted S&P 500 dropped -1.31% from a record high. Europe’s STOXX 600 (-0.49%) also edged back from recent peaks.

Europe’s leaders debate economic direction

In Europe, attention centred on the leaders’ summit in Belgium, where policymakers discussed competitiveness, industrial strategy, and the balance between regulation and support. President Macron backed a ‘Buy European’ approach for strategic sectors, while Germany’s Merz and Italy’s Meloni emphasised deregulation to boost growth. Appetite for additional joint borrowing remained limited, with Merz reaffirming that shared debt should be reserved for exceptional circumstances. In the UK, gilts outperformed after Q4 GDP came in softer than expected at +0.1% (vs. +0.2% expected), leaving annual growth at +1.3% for 2025. Markets responded by pricing in a slightly more dovish Bank of England path, with the 2‑year yield falling to 3.60% and the 10‑year yield moving down to 4.45%.

What does Brooks Macdonald think?

Market attention now turns to today’s US CPI release, which arrives at a delicate moment for rate expectations. Investors still anticipate further cuts under the new Fed Chair, but recent stronger‑than‑expected data (including the robust jobs report earlier this week) has introduced fresh uncertainty. A hotter inflation print today would add to those doubts, especially given that the current quarter is already benefitting from the fiscal impulse of the Trump tax cuts. The CPI data could play a bigger role in shaping near‑term market sentiment, as it will help determine whether recent volatility reflects a temporary adjustment or the beginning of a more sustained reassessment of inflation risks and policy trajectories.

Bloomberg as at 13/02/2026. TR denotes Net Total Return.

Please check in again with us soon for further relevant content and market news.

Chloe

13/02/2026

Please see today’s Daily Update from EPIC Investment Partners below:

The combination of current global vehicle oversupply and increasingly sophisticated balance-sheet management has reshaped the economics of the automotive sector. As demand cools and electric vehicle production continues to outpace absorption in several major markets, manufacturers are under growing pressure to defend margins, protect brand positioning and maintain headline pricing.

One response has been the expanded use of pre-registration and cross-border redistribution strategies. Vehicles are registered domestically, reclassified as “used” despite minimal mileage, and removed from new inventory tallies. This supports reported production-to-sales ratios and helps sustain advertised Manufacturer’s Suggested Retail Prices (MSRPs). However, it can also widen the gap between reported sales and genuine retail demand. In the United States, for example, light-vehicle sales are forecast at approximately 15.8 million units this year, yet industry registration data indicate that a meaningful portion of those units may never reach private buyers in the conventional sense. Instead, they are redirected to fleet channels, overseas markets or other secondary outlets to relieve domestic stock pressure.

When export and fleet channels become constrained, inventory concentration becomes a more acute financial issue. Large pools of unsold vehicles require storage, often in logistics hubs exposed to seasonal weather risk. While insurance cover against catastrophic damage is standard industry practice, the scale of surplus inventory has increased the financial sensitivity of such events. Losses arising from verified weather incidents are processed through established insurance mechanisms, sometimes providing faster cash recovery than prolonged discounting campaigns in a soft retail market. This dynamic underscores how closely operational decisions, geography and risk transfer have become intertwined.

For consumers, the broader consequence is pricing rigidity at the new-vehicle level and volatility in the used market. With average transaction prices in the US approaching $50,000, negative equity has become more prevalent; recent data suggest that roughly 29% of trade-ins carry outstanding finance exceeding the vehicle’s value, with an average shortfall of just over $7,000.

The key insight is that reported sales volumes alone no longer capture underlying market health. Inventory composition, pre-registration trends, export flows and insured asset exposure now play an equally critical role in assessing the sector’s true equilibrium.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Andrew Lloyd

12/02/2026

Please see the below article from EPIC Investment Partners received this afternoon 11/02/2026.

Rock, paper, scissors

Following the silver price crash in the first few days of February when the paper derivatives market drove the Comex silver strike price down by 26% in 24 hours, given the structural global shortage of silver, surely this presented an opportunity to buy physical silver at attractive levels? I therefore set out to add to my holdings of the metal.

My first port of call was the Royal Mint, but the site displays the message ‘Email me when in Stock’ for both silver bars and bullion coins. Perhaps I would have more success with other bullion dealers that provide access to product from smaller secondary mints. Finally, I found a small amount of Swiss 10 ounce bars and Britannia coins on offer from Atkinsons Bullion providing the buying opportunity I sought. However, nobody appeared to have explained to the metals dealers that silver on the Comex and the London Metal Exchanges was now quoted at a little over $70 an ounce. None seemed to have accepted that the price of an ounce of silver was now below $100. Of course, the answer was that the price of the rock bore little relation to the games being played and price manipulation in leveraged paper derivatives. I did buy the small amounts on offer but at prices near or above the highs seen quoted at the end of last year and nowhere near the current LME screen price. The physical rock was only available in tiny volumes at prices at least 25% above the quoted paper price. As of today, I can find none.

This will not end well. March is a major delivery month. Information on open interest in silver derivatives is publicly available and the arithmetic points to an approaching crisis. The data from Comex is extraordinary. In every month of 2025, the number of futures contracts called for delivery was over twice that of the previous year, and a total of 474 million ounces versus 202 million over the entire twelve month periods. So the trend was already highly visible and it has become obvious that the Comex is no longer used primarily as a hedging mechanism – it is increasingly used by industry and trade buyers as a mechanism to access wholesale deliveries of metal. Scroll forward to January 2026 and 49.4 million ounces were called for delivery, four times the 11.8 million January 2025 figure. January is not a major delivery month and these numbers show that market participants are not prepared to risk waiting for March, the next major delivery month.

Four days into February 2026, deliveries of 18.72 million ounces had already been made, a sum exceeding the whole of February 2025, with 98% of open interest being called for delivery, compared with the previously typical 5%-10%. Over the past three years, March open interest has risen from 24 million ounces in 2024, to 80 million in 2025, to 429 million at the time of writing. Some of this will roll forward to May, but we should expect a large proportion to be called. If March simply only matches 2025 with 25% called for delivery, the Comex must deliver 125 million ounces of silver. The more likely percentages of 50% or 70% would require deliveries of 214 million and 300 million ounces respectively.

I am sorry to bombard readers with numbers, but Comex registered silver inventories do tell a very worrying story. Last October, the freely deliverable silver at the exchange amounted to 167 million ounces, and by 22 January this year, this had fallen to 114 million and has since dropped further to 103 million. The pace is accelerating, and by March delivery (from 27 February), Comex inventories are likely to be under 100 million ounces. Using the most conservative estimates, this leaves a shortfall of 20 million ounces, but using less conservative assumptions it is quite possible that the shortfall could be as much as 200 million ounces of silver. The maths doesn’t work, and even on the slender chance that the Exchange survives the March delivery commitments without defaulting, May’s open interest is already above 132 million and July’s 88 million.

Although these figures move daily, it is hard not to conclude that the writing is written indelibly on the wall – the highly leveraged silver derivatives market has been exposed by the Exchange’s lack of tangible metal to back contracts and is therefore insolvent. Similar dynamics are evident within the gold markets, but supply constraints are much less acute. The structural industrial silver deficit is growing, and above ground stockpiles are exhausted. Over 70% of silver is mined as a byproduct of copper, lead and zinc and it will take years if not decades before we can expect to see any meaningful increase in supply – and of course by then, more silver will be required just to keep pace with the growth in demand for what is now globally acknowledged to be a critical mineral. Truth will out in the end, but the successful short term manipulation of the paper price was intended to shake out nervous holders and allow traders to square their books. The most reliable exposure to silver remains the physical metal and ETFs with 100% designated metal backing each share, the Sprott Silver Trust (SPLV). Silver mining equities also offer leveraged exposure to the rise in the price of the metal.

Readers might wonder why they should worry about what is happening within a relatively small, opaque and complex silver derivatives market, but the recent volatility provides a warning. What I describe above has a parallel with the 1980 Bunker Hunt bankruptcy, but never before against a background of an acute supply shortage of a critical metal upon which a frightening proportion of the modern world relies. What we have learned is that even derivatives offering traders, consumers and producers hedging facilities in a relatively small underlying market, comes fraught with danger. The silver experience calls into question the safety of other series within the $600 trillion derivatives markets.

The silver price crash was precipitated by the market’s increased margin requirements that, in a reaction to rocketing prices, forced participants to put up more cash or sell down their positions. A move from a 15% to an 18% margin requirement doesn’t sound much – until you impute the enormous amounts of leverage employed by many market participants. The 2008 subprime mortgage crash was not caused just by poor lending criteria, but by massively leveraged structures that contained these assets. Today, as well as the example provided by the recent silver manipulation, which itself threatens to provide a systemic shock to the banking system, we have the private debt markets showing signs of stress, auto loan bankruptcies and worryingly leveraged AI data centre investments. So there were already enough ‘known unknowns’ to concern investors, quite apart from the relatively small silver derivatives markets that have exposed the financial system to systemic risk. By itself, the bullion banks with leveraged short positions and even an insolvent Comex can be bailed out either by higher prices (tempting eligible holders within the Comex vaults to trade), or by a central bank with an infinite capacity to print Dollars. But this episode does call into question the trust required to sustain larger and even more highly leveraged derivatives markets.

To dodge the bullets, precious metals stackers should stick to ownership of the rock and eschew the paper. If you do not hold it, you do not own it.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

11/02/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 10/02/2026.   

Markets respond to political turmoil

We examine how markets have reacted to political developments in Japan and the UK as well as the impact of AI.

Key highlights

• More U.S. workers are let go…: The Challenger Report, which summarises U.S. job cut announcements, showed an increase in job cuts.
• … but AI’s not to blame: Despite concerns over AI-related job losses, the Challenger Report showed that AI has only accounted for 3% of layoffs since 2023.
• Software stresses: The software industry saw a sharp share class decline over fears AI can replace many applications.

A rapidly disrupted world

Source: Challenger Report

Not all of the disorder stems from government, but some does; specifically, the controversy over U.S. Immigration and Customs Enforcement (ICE) agents causing fatalities. This has seen U.S. Congress deny funding to the Department of Homeland Security (DHS), which funds ICE. A compromise has been reached but it will be short lived, with DHS funding due to expire on 13 February.

The compromise came too late for some of last week’s anticipated jobs data releases, which have been delayed as a result. It’s a shame, because jobs growth has been slowing this year, and the interest rate outlook is uncertain. Compounding concerns, the week saw a further step up in the anxiety investors are feeling over the effects of AI on companies and workers.

However, some jobs data was released last week – including the Challenger Report, which summarises job cut announcements. The report showed an increase in U.S. job cuts.

There have been various reasons for layoffs over the last year, a lot of which related to federal spending cuts under Elon Musk’s Department of Government Efficiency (DOGE). But technology job losses, specifically in software, have been a regular feature.

It may seem ironic that the technology sector can bear the brunt of technological advances, but digital industries remain the most vulnerable to digital disruption. The Challenger Report has been tracking how many job losses are associated with AI, but the numbers have been comfortingly small. Since 2023, AI has been cited as the reason for just 3% of layoffs, although it’s likely job losses in other categories are at least partly enabled by AI.

The lack of hard jobs data came as Anthropic, one of the four main foundational AI models, released a series of products designed to deliver efficiencies in various industries. A document review and analysis plugin for legal documents was interpreted as a threat to existing legal data services from RELX and Thomson Reuters. The new plugin overlaps significantly with some review and drafting workflows but doesn’t seem to disrupt the companies’ crown jewel assets − their validated data sources.

Source: LSEG Datastream

Similar stresses were seen in software, which saw sharp share class declines over fears that AI could replace many applications. The controversy investors are struggling with is whether AI is a tool for the software industry or an existential threat.

Early evidence suggests the former, and was validated to some extent by comments from Sundar Pichai, CEO of Alphabet. He pointed out that 19 of the top 20 Software as a Service (SAAS) firms were using Gemini (Alphabet’s AI model).

Either way, this seems like good news for Alphabet, but the stock sold off last week despite delivering record profits and performing strongly on most metrics. Amazon’s results were also good but were received even more poorly.

The anxiety for both companies seems to be related to plans for capital investment. While the investment still seems to be supported by demand, and therefore doesn’t echo the speculative investment of the technology, media and telecommunications (TMT) bubble era, it nevertheless represents an increase in capital intensity for the hyperscalers, which will depress profitability going forwards. What investors don’t know right now is whether that increase in costs will be justified by even greater increases in revenue.

It’s worth remembering that this time a year ago, the release of the Deep Seek large language model, which seemed much more efficient than the existing foundational models, caused significant sell-offs in AI hardware providers (such as Nvidia).

A year before that, AI was seen as an existential threat to Google’s search business. Since then, Google has emerged as one of the greatest beneficiaries of AI.

Looking back, those times represented attractive investment opportunities. The same could well be true for software and legal data companies today. The bigger question is what it would take for the market to regain confidence in the value of these businesses, just like it was able to do for the hardware companies and Alphabet itself.

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Charlotte Clarke

11/02/2026