Edward Meir's Week in Review for Feb. 16, 2026

Meanwhile, President Trump continues to press for a deal but made it clear last week that his patience was limited and that he would like an accommodation with the Iranians within the next 10 to 15 days.

Equities

US equities had a decent week. The Dow, S&P 500 and NASDAQ all added 0.3%, 1.1% and 1.5%, respectively. However, there were notable pockets of weakness, mainly around software and private credit names. Treasury markets were extremely quiet, with yields finishing the week with negligible changes.

A good portion of the gains occurred on Friday after investors processed the momentous Supreme Court tariff decision. As readers know by now, in a 6-3 decision, the Court ruled against the Trump administration’s tariff program. At first, investors took the decision in stride, but gradually, the dollar started to weaken, giving most markets a significant boost. The decision was perceived to be a negative for both the US trade balance and America’s fiscal situation, leading to the dollar selling we saw take place.

Surprisingly, the Court did not opine on whether refunds should be issued, presumably leaving that to lower courts. We think US importers will start filing lawsuits as they seek their refunds.

In fact, Bloomberg reports that between November and January about 914 companies filed suits, including such notable names as Costco, Goodyear Tire & Rubber, Dole Fresh Fruit and J. Crew, along with Alcoa, Japan’s Yokohama Rubber and Kawasaki Heavy Industries. Among smaller firms, Ibis, which imports parts from Vietnam and Taiwan to build high-end bikes, is also seeking relief on roughly $800,000 of tariffs it paid in 2025. In total, customs authorities have collected tariffs from more than 301,000 importers across 34 million shipments entering the country through Dec. 10, according to Bloomberg. Anywhere between $135 billion–$175 billion of refunds could theoretically be refunded.

Should refunds begin to roll out, it is likely that the Court of International Trade will play a key role in administering the process as it has access to all importers of record that paid IEEPA tariffs. Because an electronic registration number is assigned to each tariff, the refund process in these instances has been administered on previous occasions. However, a trade analysis we came across suggests unless Congress mandates automatic refunds through the CIT, the fallback option would be for companies to file claims or lawsuit, as they seem to be doing. It is not certain how many more businesses will go through the trouble if this proves costly or protracted. We will have to wait and see what the lower courts have in mind for refunds, something Treasury Secretary Bessent also said he is waiting for.

Even if refunds are approved, figuring out who gets what is not going to be easy, especially if importers have made deals with suppliers or end-users to “split the tariffs.” In that case, they may be under a moral obligation (if not a legal one) to reimburse a portion of the refund. In other cases, there are multiple corporate entities that paid the tariffs, which will also be problematic to sort out.

However, all the talk of tariffs suddenly falling by the wayside dissipated hours after the Supreme Court decision came out. In a press conference, Trump said that he would impose 10% tariffs under Section 122 of the Trade Act of 1974. The next day on social media, he threatened to raise it to 15%.

Court challenges could surface here as well, as some importers might argue that the US has been running trade deficits for decades now, with tariffs not making much of a difference. This was true last year when tariffs rose significantly, only for the US trade deficit to come in virtually unchanged from 2024 levels (about -$900 billion).

Imposing one-size-fits-all tariffs of 15% under Section 122 will restrict Trump from imposing individual tariffs, which is what he ultimately prefers. As a result, the administration will eventually move toward Section 301 tariffs. These can be imposed on countries at various levels on the basis of “unfair” trade practices. In fact, 301 was used to impose 25%–50% tariffs on China.

So, Section 122 will buy the Trump administration time, but Section 301 will likely be the preferred model the administration will pursue. And unlike the IEEPA statutes, both 301 and 122 should survive court challenges. Note that these involve a greater degree of congressional oversight and are more tedious to implement.

Finally, we should mention nothing will change for either steel or aluminum which operate under Section 232. If anything, the administration could try to channel a few more imports under the 232 umbrella, but doing so could open up additional legal challenges.

Macro readings

GDP

Q4’25 GDP numbers came in at 1.4%, well below the 3% expected. At one point, Q4 estimates were running as high as 5.2% (as per the Atlanta Fed), so the 1.4% figure was rather disappointing. Growth in calendar year 2025 came in at 2.2%, well below the 2.8% achieved in 2024 and the slowest expansion since 2020. Growth was hurt in part by the October government shutdown, but a decline in government spending during the quarter (almost 17% y/y) also contributed, knocking nearly 1.2% off the headline number.

A measure of consumer and business spending known as “final sales to domestic purchasers,” which strips out trade, inventory and government spending flows, rose at an annual rate of 2.4%. That’s the slowest since Q1’25. For the year, the reading was up by 2.5%, below the 2.9% seen in 2024.

Business investment was a bright spot throughout 2025, although it was very skewed by the significant spending on AI. Housing remained weak in both the fourth quarter and the full year. Consumer spending rose at a 2.4% rate in Q4, slightly lower than Q3 levels.

Although consumers reined in spending on big-ticket items in Q4, their outlays on services largely held up. But more households dipped into savings to finance their spending, with the personal saving rate declining to 3.6% in Q4 from 4.2% in Q3.

Inflation

December inflation numbers, as measured by the Fed’s favored PCE index, came in line with estimates. The index rose by 0.4% on the core rate, as expected, but ran a little higher on the overall rate (at 0.4% versus the 0.3% expected, prior 0.2%.) The year-over-year rate came in at 2.9%, up from 2.8% in November.

PCE inflation, and not the CPI or PPI, is the metric the Fed prefers to gauge progress towards its 2% inflation target. So the fact that we are still hovering around 3% will likely prompt the Fed to keep rates unchanged when it meets again next month. We should note, however, that the central bank will receive another set of PCE numbers (for January) before it meets next.

Personal spending

Personal spending rose by 0.4% in December, double what was expected. The figure is in line with the prior month’s increase. Personal income came in at +0.3%, in line with estimates.

Home sales

December new home sales came in at 745,000 (consensus 714,000, prior 758,000). The weakest sales growth was concentrated in the South, which is the nation’s largest new home market. Separately, the weekly MBA mortgage application index came in at +2.8%, an improvement over last week’s 0.3% decline.

Consumer sentiment

The February University of Michigan consumer sentiment index clocked in at 56.6 (consensus 57.3) but proved not to be much of a factor in influencing the markets.

Production

December industrial production rose by 0.7%, almost double the consensus forecast. A healthy 0.6% increase in manufacturing output — the biggest since February 2025 — and a boost in utility output were both instrumental in the IP increase.

Other news

Deal with Indonesia

Indonesia and the US finalized a trade deal that will lower US duties on Indonesian imports to 19% from 32%. Still, many Indonesian products will be exempt, including palm oil, coffee and cocoa. In turn, Indonesia will eliminate tariffs on over 99% of US exports. It will also agree to import US goods and services totaling $38 billion, half of which will consist of energy while a quarter will be made up of US agricultural goods.

Indonesia will also remove non-tariff barriers and restrictions on the export of critical minerals and increase cooperation with US companies “mining, processing and downstream production of minerals, including rare earths.” Importantly, the accord calls for the Indonesians to “prevent excess production from foreign-owned processing facilities and ensure that foreign-owned industrial parks and processing facilities are subject to the same taxes, laws, quotas and legal requirements as other companies”. (This is going to be a tricky clause to enforce given the significant Chinese investment in the country.)

Indonesia will also make $10 billion of direct investments into the US. There were many other provisions contained in the deal (too long to list here) but suffice to say that while all this sounds good from the US point of view. Enforcement, monitoring and follow-through are going to be the key determinants as to whether the accord succeeds.

Japanese investment

The Trump administration announced three projects valued at $36 billion that will be financed by Japan. The projects are an oil export facility in Texas, an industrial diamonds plant in Georgia, and a natural gas power plant in Ohio. The projects are the first under Japan’s $550 billion investment pledge under recent trade accord, but Reuters reported it is “unclear how much of the projects’ costs would be funded by Japanese entities and under what conditions. Under an earlier… agreement, profit from the projects was due to be shared 50/50 between the US and Japan until Japan’s initial investment costs were recouped, after which profit would be split 90/10 in favor of the US,” Reuters notes.

Canada in talks

Canada is leading discussions between the EU and 12 nations in the Indo-Pacific region to form one of the world’s largest economic trading blocs that ultimately could comprise up to 40 countries. An agreement would have members lowering tariffs on one another while sharing supply chains.

France-India relations

French President Macron and India’s PM Modi upgraded their relations to a “Special Strategic Partnership” during a three-day visit by the French president to India last week. The two sides promised to increase cooperation in defense, trade, and critical materials. Germany’s Chancellor will also be in China soon as the US’s key trade partners hurriedly try to expand into other markets.

Eurozone PMI

The Eurozone flash Composite PMI came in at 51.9 in February from 51.3 in January, marking the 14th consecutive month of expansion. The manufacturing PMI jumped to 50.8 from 49.5 given a recovery in factory orders (to 50.9 from 49.2.) Services PMI nudged up to 51.8 from 51.6.

Also encouraging, Germany’s business growth accelerated to a four-month high in February. Germany’s composite index rose to 53.1 from 52.1 in January. German service activity rose to 53.4 from 52.4, while the manufacturing index breached the 50.0 threshold for the first time since June 2022.

But German investor morale fell unexpectedly to 58.3 in February, coming in well below the 65 expected. Companies cited weak domestic demand (59%), rising labor costs (59%), uncertain economic policies (58%) and high energy and raw material prices (48%) as key risks, according to the survey.

The German Chamber of Industry and Commerce highlighted a rather stunning statistic on Germany’s relative growth, noting that since 2019, the global economy has grown by 19%, the US by 15% while Italy grew by 6%, but Germany, has “been treading water since 2019, with 0.2% growth”, a chamber spokesman told Reuters.

This week’s US macro readings

It will be a fairly light week in terms of macro releases.

Monday brings us December factory orders (expected at 0.2%, last 2.7%).

Tuesday, we get the S&P Case Shiller home price index for December and February consumer confidence readings (expected at 87.5, last 84.5).

Thursday, we get weekly initial claims (expected at 215,000, last 206,000).

Friday, we get the January producer prices (expected at 0.3%, last 0.5%). The core PPI is expected to come in unchanged from last month (at 0.4%.) December construction spending also comes out Friday (expected at 0.1%) as does the February Chicago PMI. China returns from its 10-day holiday this week as well.