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Covering Feb 18
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What matters today
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1 US–Iran “guiding principles” agreed in Geneva — Oman-mediated indirect talks produce framework for nuclear negotiations; Iran signals willingness to suspend enrichment 3–5 years; demands sanctions relief; both sides to exchange draft texts; Khamenei warns of sinking US warships; USS Abraham Lincoln in range; Strait of Hormuz briefly closed for IRGC drills
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2 US accuses China of secret 2020 nuclear test — State Dept reveals seismic data from Kazakhstan detecting magnitude 2.75 “explosion” at Lop Nur test site; China denies; CTBTO says events too small to confirm; US signals it may resume testing on “equal basis”; New START expired Feb 5
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3 Markets edge higher, FOMC minutes ahead — S&P 500 +0.1% to 6,843; Dow +0.1% to 49,533; Nvidia +1.2%; Goldman +2.9%; Palo Alto Networks −2% on weak guidance; rally faded into close after strong midday gains; VIX −4.3% to 20.3; DXY firms above 97
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4 Carney launches $6.6B “Buy Canadian” defence plan — targets 70% domestic defence procurement (up from 43%); 125,000 new jobs over a decade; reviewing F-35 in favour of Saab Gripen-E; calls US dependence an “addiction”; proposes EU–CPTPP trading bridge; Canada CPI eases to 2.3%
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01
\nMarket Snapshot
\nClose Feb 18
\nMarket Snapshot
\nClose Feb 18
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| INDEX / PAIR | LEVEL | DAY CHG | SIGNAL |
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| S&P 500 | 6,843 | +0.1% | ▲ Modest gain; rally faded into close |
| Dow Jones | 49,533 | +0.1% | ▲ Goldman +2.9%; Boeing −1.2%; 3M −2.2% |
| Nasdaq Composite | 22,578 | +0.1% | ▲ Nvidia +1.2%; PANW −2.1%; AMD −2.1% |
| Russell 2000 | 2,647 | Flat | ▶ Barely changed on the day |
| S&P/TSX Composite | 32,897 | −0.5% | ▼ Tue close; gold miners −2.6%; energy drags; banks support |
| DXY (Dollar Index) | 97.25 | +0.1% | ▲ Firmer ahead of FOMC minutes |
| USD/CAD | 1.381 | Flat | ▶ CAD soft on commodity weakness; CPI 2.3% |
| WTI Crude | $62.33 | −0.9% | ▼ Iran deal hopes ease supply fears |
| Gold | $4,878 | −0.6% | ▼ Risk-on; Iran talks ease safe-haven bid |
| US 10Y Treasury | 4.08% | +3bp | ▲ Firmer ahead of FOMC minutes; PCE Friday |
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02
\nConflict & Stability Tracker
\nConflict & Stability Tracker
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US–Iran NuclearACTIVE
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“Guiding principles” agreed in Geneva; Iran enrichment suspension offer 3–5yr; two US carrier groups converging on region; IRGC drills close Strait of Hormuz; Khamenei warns of sinking warships; B-2 strike history invoked
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Nuclear Arms ControlELEVATED
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New START expired Feb 5; US reveals seismic evidence of China 2020 Lop Nur nuclear test; China denies; 600+ warheads, 1,000+ by 2030; US signals resumption of testing on “equal basis”; tri-lateral treaty proposals rejected by Beijing
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Latin America Boat StrikesELEVATED
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3 strikes on Monday kill 11; death toll 145 in 42 strikes since Sept; first simultaneous Pacific & Caribbean strikes; USS Ford redeployed to Middle East; Democrats War Powers measures blocked; UN and legal critics intensify
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US–Canada TradeWATCHING
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Carney’s $6.6B Buy Canadian defence plan signals de-Americanization of procurement; F-35 review in favour of Saab Gripen-E; EU–CPTPP bridge proposed; 70% domestic target from 43%; Canada calls US dependence “addiction”
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03
\nFast Take
\nFast Take
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BREAKINGUS–Iran agree “guiding principles” in Geneva; Iran offers 3–5yr enrichment suspension in exchange for sanctions relief; both sides to exchange drafts; Khamenei warns US warships could be sunk; USS Abraham Lincoln and Ford converging on Gulf; Strait of Hormuz briefly closed for IRGC drills; WTI −0.9% to $62.33 on easing supply fears
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NUCLEARState Dept Asst Sec Yeaw reveals Kazakhstan seismic station detected magnitude 2.75 “explosion” at China’s Lop Nur on June 22, 2020 — says “very little possibility it is anything but an explosion”; China used decoupling to mask signature; CTBTO says events too small to confirm; Pentagon: China has 600+ warheads, 1,000+ by 2030; US signals resumption of testing
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MARKETSS&P 500 +0.1%, Dow +0.1%, Nasdaq +0.1% — markets rallied strongly mid-session but gains faded into the close ahead of FOMC minutes; Nvidia +1.2% after Meta data centre chip deal; Goldman +2.9%; Garmin +16% on earnings beat; Palo Alto Networks −2% on weak Q3 guidance despite earnings beat ($1.03 vs $0.94 est); AMD −2%; Genuine Parts −15%; FOMC minutes due later today; VIX −4.3% to 20.3
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DEFENCECarney announces $6.6B Buy Canadian defence industrial strategy in Montreal; targets 70% domestic procurement (from 43%); 125,000 jobs over decade; reviewing F-35 purchase in favour of Saab Gripen-E (manufacturable in Canada); 50% boost to defence exports; proposes EU–CPTPP trading bridge; Trump signs competing “America First” arms transfer executive order
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LEGALUN Human Rights Council panel says Epstein files depict “global criminal enterprise” and acts that may meet threshold of crimes against humanity; 1.4M+ documents archived; judge blocks ICE from re-detaining Abrego Garcia — says govt made “one empty threat after another”; DHS spokesperson McLaughlin resigns amid scrutiny over contracting ties
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CANADACanada CPI slows to 2.3% in January (from 2.7% in Dec), below 2.4% consensus and BoC’s 2.5% forecast; core measures also ease; TSX −0.5% on gold/energy weakness; Barrick −2.6%, Enbridge −4.2%; Shopify +3% on rate-cut hopes; Carney returns to BC one week after Tumbler Ridge mass shooting
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04
\nDevelopments to Watch
\nDevelopments to Watch
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US–Iran Nuclear Talks: “Guiding Principles” Agreed
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GEOPOLITICS • HIGH IMPACT
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The second round of indirect US–Iran nuclear talks in Geneva concluded Tuesday with both sides claiming meaningful progress. Iranian Foreign Minister Abbas Araghchi said negotiators reached broad agreement on “guiding principles” that will serve as the framework for future negotiations, and that both sides agreed to exchange draft texts before a third round. Three Iranian officials told media that Iran had indicated willingness to suspend nuclear enrichment for three to five years and to join a regional consortium for civilian-grade enrichment, in exchange for the lifting of financial and banking sanctions and the oil embargo. The talks were mediated by Oman. The military backdrop remains intense: the USS Abraham Lincoln carrier strike group is positioned near Iran with F-35s and F-18s within striking range, and the USS Gerald R. Ford is transiting from the Caribbean to the Middle East. Iran closed portions of the Strait of Hormuz during the talks for Revolutionary Guard drills, and Supreme Leader Khamenei warned that Iran possesses weapons capable of sinking US warships. Trump said he would be involved “indirectly” and referenced last June’s joint US–Israeli strikes on Iranian nuclear facilities: “We could have had a deal instead of sending the B-2s.” Oil fell on the progress, with WTI settling 0.9% lower at $62.33.
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China Nuclear Test Allegations: New Seismic Evidence
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ARMS CONTROL • HIGH IMPACT
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Assistant Secretary of State Christopher Yeaw revealed new details at the Hudson Institute on Tuesday supporting the US allegation that China conducted an underground nuclear test at the Lop Nur test site on June 22, 2020. Yeaw said a seismic station in Kazakhstan measured a magnitude 2.75 “explosion” approximately 450 miles from Lop Nur, and that the data were inconsistent with either mining blasts or earthquakes. He alleged China used “decoupling” — detonating a device inside a large underground chamber to reduce seismic signatures. The CTBTO confirmed detecting two small events 12 seconds apart but said they were too small to determine cause with confidence. China, which has signed but not ratified the CTBT, denied the allegations. The revelations come days after New START expired on February 5 with no successor. The Pentagon estimates China has over 600 operational warheads and projects more than 1,000 by 2030. A senior State Department official signalled the US would resume nuclear testing on an “equal basis” with Russia and China, raising the spectre of a global testing resumption for the first time since the 1990s.
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Palo Alto Networks: Software Sell-Off Deepens
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MARKETS • MEDIUM IMPACT
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Palo Alto Networks shares fell approximately 2% on Wednesday despite beating Q2 fiscal 2026 estimates, with adjusted EPS of $1.03 (vs $0.94 expected) and revenue of $2.59 billion (+15% YoY). Shares had plunged as much as 9% intraday before partially recovering. The sell-off was driven by weak Q3 earnings guidance of $0.78–$0.80, well below the $0.92 consensus, though revenue guidance of $2.94–$2.95 billion topped estimates. Full-year EPS guidance was cut to $3.65–$3.70 from $3.80–$3.90, largely reflecting dilution from the $25 billion CyberArk acquisition closed earlier this month. CEO Nikesh Arora pushed back on the broader AI-versus-software narrative, telling analysts he was “confused why the market is treating AI as a threat to at least cybersecurity.” The results deepened the sector-wide software rout, with the iShares Expanded Tech-Software Sector ETF now down more than 23% year-to-date as AI tools from companies including Anthropic and OpenAI intensify fears of business model disruption. AMD also fell nearly 4% on Wednesday, adding to the bifurcation between AI hardware winners and software losers.
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Berkshire Hathaway 13F: Buffett’s Final Filing
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MARKETS • HIGH IMPACT
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Berkshire Hathaway’s Q4 2025 13F, disclosed Tuesday evening, marks Warren Buffett’s final portfolio filing as CEO before handing the role to Greg Abel on January 1. The headline move: a new $352 million position in The New York Times (5.1 million shares), Berkshire’s first media investment since selling its newspaper holdings in 2020. NYT shares rose approximately 4% in after-hours trading. On the sell side, Berkshire continued trimming its once-dominant Apple stake (down to 228 million shares from 238 million, an estimated $2.7 billion sale), reduced Bank of America by a further 50.8 million shares (~$2.7 billion), and slashed Amazon by 77% to 2.3 million shares. Proceeds funded additions to Chevron (up to 130 million shares from 122 million), Chubb (+8.7%), and new positions in Domino’s and Lamar Advertising. The portfolio ended Q4 at $274.2 billion in US-listed equities. Net sales continued for a thirteenth consecutive quarter, reinforcing the valuation-driven caution that defined Buffett’s final year. Berkshire’s annual report and Abel’s first shareholder letter are due February 28.
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Carney’s $6.6B Buy Canadian Defence Strategy
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CANADA • HIGH IMPACT
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Prime Minister Mark Carney formally unveiled Canada’s long-awaited defence industrial strategy at CAE in Montreal on Tuesday, a $6.6 billion plan to wean the country off US arms dependence. The strategy targets raising the share of defence contracts awarded to Canadian firms from 43% to 70% within a decade, creating up to 125,000 new jobs and increasing defence exports by 50%. Carney described the US partnership as an “addiction,” noting that 75 cents of every federal defence dollar currently goes to American suppliers. The F-35 stealth fighter purchase ($27 billion) is under review, with the government eyeing the Saab Gripen-E, which the Swedish company says can be manufactured in Canada. Carney also proposed a bridge between the EU and CPTPP trading blocs, positioning Canada as “broker” given its membership in both. The strategy arrives days after Trump signed a competing “America First Arms Transfer Strategy” executive order aimed at boosting US weapons exports. At NATO’s 2025 summit, Canada committed to spending 5% of GDP on defence by 2035, with 3.5% on core military and 1.5% on related security expenditure.
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Epstein Files: UN Declares “Crimes Against Humanity”
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LEGAL • HIGH IMPACT
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A panel of independent experts appointed by the UN Human Rights Council stated Monday that the recently released Epstein files suggest the existence of a “global criminal enterprise” engaged in “systematic and large-scale sexual abuse, trafficking and exploitation” of women and girls. The panel said the crimes may “reasonably meet the legal threshold of crimes against humanity.” As of February 18, over 1.4 million documents have been archived. The fallout continues to accelerate globally: high-profile resignations include Peter Mandelson from the UK House of Lords, Slovakia’s Miroslav Lajčák as national security adviser, and Joanna Rubinstein from Sweden for UNHCR. Deputy AG Blanche stated there would be no additional prosecutions, drawing bipartisan criticism. The experts pushed back on suggestions to “move on,” stating that failure to investigate “risks undermining legal frameworks aimed at preventing and responding to violence against women and girls.” House members Khanna and Massie have threatened contempt proceedings if compliance with transparency requirements does not improve.
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Latin America Boat Strikes: Deadliest Day of 2026
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SECURITY • MEDIUM IMPACT
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US Southern Command announced Monday’s strikes on three vessels in the eastern Pacific and Caribbean Sea killed 11 people, the deadliest single day of the campaign in 2026. Two boats carrying four people each were struck in the Pacific, and one with three aboard in the Caribbean. It was the first time the military attacked targets on both sides of the Panama Canal simultaneously. The death toll has reached at least 145 in 42 known strikes since September 2025. No evidence was provided that the vessels were carrying drugs. SOUTHCOM released a 39-second video showing boats being destroyed, with people visible on two vessels before the explosions. The campaign operates under Joint Task Force Southern Spear, which Trump established last fall. Democrats have sought War Powers resolutions to halt the strikes, but Republicans have blocked all votes. The USS Gerald R. Ford, previously deployed to the Caribbean for the Maduro operation, is now transiting to the Middle East. Trinidadian families of earlier victims have sued the US government.
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Abrego Garcia: Judge Blocks ICE Re-detention
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IMMIGRATION • MEDIUM IMPACT
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US District Judge Paula Xinis ruled Tuesday that ICE cannot re-detain Kilmar Abrego Garcia, the Salvadoran man who became a flashpoint in the immigration debate after being mistakenly deported to a megaprison in El Salvador last year despite a court order preventing it. Xinis found the 90-day detention window had expired and that the government “made one empty threat after another to remove him to countries in Africa with no real chance of success.” She noted the administration had ignored the one country — Costa Rica — that had consistently offered to accept him as a refugee. After the Supreme Court ordered his return, Abrego Garcia was brought back in June and immediately charged with human smuggling. He has pleaded not guilty and has a vindictive prosecution hearing in Nashville next week. DHS has accused him of MS-13 ties, which his lawyers deny. Also Tuesday, an immigration judge blocked the deportation of Mohsen Mahdawi, a Columbia graduate detained over pro-Palestinian advocacy, in another rebuke to the administration’s immigration enforcement.
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Canada CPI Eases; BoC Path Shifts
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MACRO • MEDIUM IMPACT
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Canadian inflation slowed to 2.3% in January, below the 2.4% consensus and the Bank of Canada’s forecast of 2.5%, with core measures also edging lower. The data reinforced expectations that the BoC could begin easing monetary policy later this year after prior consensus had shifted toward a potential hike. The TSX fell 0.5% to 32,897 on the day, though that was driven by commodity weakness rather than the inflation data. Gold miners led losses with Barrick Gold down 2.6%, Agnico Eagle off 1.6%, and Wheaton Precious Metals lower by 2.4%. Energy shares also softened, with Enbridge down 4.2% and Suncor losing 1.4%, as oil fell on US–Iran progress. In contrast, banks provided support (TD +0.4%, Scotiabank +0.8%) and Shopify gained over 3% on rate-cut expectations. The Canadian dollar was largely flat against the US dollar at approximately 1.381, held down by commodity pressure despite the constructive inflation print.
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FOMC Minutes & Fed Policy Outlook
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MONETARY POLICY • MEDIUM IMPACT
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The Fed is set to release minutes from its January 28 meeting later Wednesday, at which it held rates at 3.50–3.75% in a 10–2 vote. Governors Miran and Waller dissented, preferring a 25bp cut. The minutes are expected to reveal deep internal divisions over the pace of easing amid conflicting signals: benign CPI data and a strong January jobs report (130K vs 70K expected). Markets price a June rate cut as most likely, with approximately 62 basis points of total easing in 2026, implying two quarter-point cuts and a roughly 50% probability of a third. Fed Governor Barr said Tuesday that rates should remain steady until officials gain “greater confidence” inflation is moving sustainably toward target. The dollar index strengthened above 97 ahead of the minutes. Investors also look to Friday’s PCE Price Index, the Fed’s preferred inflation gauge, and advance GDP data for further direction. Powell’s term ends in May, and Trump is expected to announce a new Fed chair in coming weeks.
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05
\nSovereign & Credit Pulse
\nSovereign & Credit Pulse
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| ENTITY | CREDIT | OUTLOOK / NOTES |
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| United States | AA+ / Aaa | Fed on hold 3.50–3.75%; 10Y at 4.08%; DHS shutdown standoff continues; fiscal trajectory under scrutiny; PCE and GDP data this week |
| Canada | AAA / Aaa | CPI 2.3% below target; BoC easing window reopening; $6.6B defence spend adds fiscal pressure; trade diversification from US accelerating |
| US Tech Sector | Mixed | AI hardware vs software bifurcation; PANW −2%, AMD −2%; Nvidia +1.2%; software ETF −23% YTD; CyberArk $25B deal dilution weighing on cybersecurity |
| US Energy | Stable | WTI at $62.33; Iran deal progress pressures crude; USS Ford redeployed from Caribbean to Gulf; Venezuela oil seizures ongoing |
| Canada Resources | Watchlist | Gold −0.6%; TSX materials −2.5%; Barrick, Agnico, Wheaton all lower; copper weakening on rising inventories; Enbridge −4.2% |
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06
\nPower Players
\nPower Players
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| NAME | ROLE | CONTEXT |
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| Abbas Araghchi | Iranian Foreign Minister | Led Iranian delegation in Geneva; announced “guiding principles” agreement; called talks “more constructive” than Oman round |
| Christopher Yeaw | Asst Sec of State, Arms Control | Revealed seismic evidence of alleged 2020 Chinese nuclear test at Lop Nur; says “very little possibility” it was not an explosion |
| Mark Carney | PM of Canada | Launched $6.6B Buy Canadian defence plan; called US dependence an “addiction”; proposes EU–CPTPP bridge; returns to BC after Tumbler Ridge |
| Nikesh Arora | CEO, Palo Alto Networks | Beat Q2 estimates but guided Q3 EPS below consensus; defended cybersecurity against AI disruption thesis; shares −2% at close (down 9% intraday) |
| Greg Abel | CEO, Berkshire Hathaway | Final Buffett-era 13F revealed new $352M NYT stake; trimmed Apple, BofA, Amazon; added Chevron, Chubb; annual report & first shareholder letter Feb 28 |
| Jerome Powell | Fed Chair | FOMC minutes from Jan meeting due today; held rates in 10–2 vote; term expires May; Trump to name successor |
| Judge Paula Xinis | US District Judge, Maryland | Blocked ICE re-detention of Abrego Garcia; accused govt of trying to “rewrite history” of case |
| Tricia McLaughlin | DHS Spokesperson (outgoing) | Resigned amid scrutiny over husband’s $220M DHS contracting ties; was vocal defender of immigration crackdown |
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07
\nRegulatory & Policy Watch
\nRegulatory & Policy Watch
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| JURISDICTION | AREA | STATUS / NOTES |
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| Federal Reserve | Monetary Policy | FOMC minutes due today; rates on hold 3.50–3.75%; 2 dissenters (Miran, Waller) favoured cut; markets price June cut; PCE data Friday |
| Bank of Canada | Monetary Policy | CPI 2.3% below forecast; easing window reopens; prior consensus had shifted to potential hike; next decision date TBD |
| US Immigration | Enforcement | Abrego Garcia cannot be re-detained; Mahdawi deportation blocked; DHS McLaughlin resigns; Noem impeachment calls intensify |
| Canada Defence | Industrial Strategy | $6.6B Buy Canadian plan; 70% domestic procurement target; F-35 under review for Gripen-E; 5% GDP defence by 2035 (NATO pledge) |
| US Arms Control | Nuclear Testing | New START expired Feb 5; US alleges China Lop Nur test; signals testing resumption; Beijing rejects trilateral treaty |
| SCOTUS | Multiple | NY congressional map dispute; California parental notification case; Alito retirement speculation; Bayer Roundup case (April 27); next arguments Feb 23 |
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08
\nCalendar
\nNext 72 hours
\nCalendar
\nNext 72 hours
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| DATE | EVENT | SIGNIFICANCE |
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| Feb 18 (Wed) | FOMC Minutes (Jan 28 meeting) | Key signal on internal divisions; 2 dissenters favoured cut; inflation vs employment debate |
| Feb 19 (Thu) | US Advance GDP (Q4) | Expected to confirm continued expansion; critical for rate path expectations |
| Feb 20 (Fri) | PCE Price Index (January) | Fed’s preferred inflation metric; crucial for June cut probability |
| Feb 20 (Fri) | Abrego Garcia hearing (Nashville) | Vindictive prosecution motion; judge ruled “reasonable likelihood” case was retaliatory |
| Feb 22 (Sun) | 4th Anniversary of Ukraine Invasion | Geneva talks concluded; global commemorations expected; potential escalation window |
| Feb 22 (Sun) | Winter Olympics conclusion (Milan–Cortina) | US–Canada hockey quarterfinals today; closing ceremony Sunday |
| Mar 17–18 | Next FOMC Meeting | Markets currently pricing low probability of March cut; June remains base case |
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09
\nBottom Line
\nBottom Line
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Today crystallized the paradox of American power in 2026: expanding on every front simultaneously while straining at every seam. In Geneva, the US brokered nuclear “guiding principles” with Iran while two carrier strike groups converged on the Persian Gulf — diplomacy backed by the explicit memory of B-2 strikes. Meanwhile, the State Department accused China of a secret nuclear test, signalled America may resume its own testing, and watched the last bilateral arms control treaty expire without a successor. The nuclear order that constrained great-power competition since the Cold War is unravelling in real time, with the US simultaneously the arsonist and the fire brigade. Markets absorbed all of this and rose modestly. The S&P 500 edged up for a third straight session though gains that reached nearly 1% midday faded to just 0.1% by the close as investors awaited FOMC minutes, even as Palo Alto’s intraday 9% plunge illustrated the brutal new math: companies that merely beat estimates but guide cautiously are being treated like failures in a market that only rewards acceleration. The software sector’s 23% YTD collapse is not a correction — it is a structural repricing of entire business models by investors who believe AI agents will replace enterprise software faster than anyone expected. North of the border, Carney’s $6.6 billion Buy Canadian strategy marks the most explicit break from US defence dependence in modern Canadian history. The F-35 review, the 70% domestic procurement target, and the framing of the US relationship as an “addiction” signal that Ottawa is treating American alliance management as economic policy, not just security policy. With Trump signing a competing America First arms order, the two closest allies are now building parallel defence industrial bases. The Epstein files continue to rewrite the rules of accountability — a UN panel invoking “crimes against humanity” language for what originated as a domestic law-enforcement matter elevates the scandal to a structural indictment of how wealth shields predation. And the boat strikes in the Caribbean and Pacific, now at 145 dead with zero evidence made public, constitute an undeclared maritime campaign that Congress has been unable to check. The through line: American power is being deployed in more theatres, with less constraint, and with more internal contradictions than at any point since the early 2000s. The markets say this is priced in. History suggests otherwise.
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This is part of The Rio Times’ coverage of North American economic and financial market developments.
Related: Brazil Morning Call | Global Economy Briefing