Zero Rss

Russia Hammers Kiev In Rare Daytime Attacks; Kremlin 'Appreciates' US G20 Invite

At a moment Ukrainian President Volodymyr Zelensky is still in New York City Thursday, attending meetings on the sidelines of the United Nations General Assembly, his capital of Kiev has been rocked by fresh Russian strikes, which killed at least two people and wounded over 40 more. The attacks began in the daytime on Wednesday, and appear to have persisted into Thursday.

A missile alert first went out to city residents Wednesday, after which AFP journalists observed hearing over 20 blasts. "Explosions in Kyiv. The capital is under ballistic missile attack. Remain in shelters!" Mayor Vitaly Klitschko wrote on Telegram.

Getty Images

And Zelensky himself wrote: "Once again, the main targets of (the Russian) attack were Kyiv and civilian infrastructure – residential buildings, a maternity hospital, energy facilities and logistics. Two people are already known to have been killed."

On Wednesday in addressing the UN assembly, Zelensky warned Western partners that they must not let up the sanctions and isolation pressure on Putin, in order to starve Russia's military machine.

Zelensky on Thursday reiterated further on X that "Russia will not end this war without pressure. As people were sleeping, flashes from explosions lit up the sky. Once again, the main targets of their strike were Kyiv and civilian infrastructure, residential buildings, a maternity hospital, energy infrastructure, and logistics."

Other deadly overnight attacks occurred beyond the capital area. A Russian strike on a farm in Ukraine's eastern Kharkiv region killed six people, local officials said.

Meanwhile efforts at getting the warring sides back to the peace table have still appeared stalled. But the Kremlin on Wednesday said it received an invitation from the United States for Putin to attend the December G20 summit in Miami.

Kremlin spokesman Dmitry Peskov said that Moscow and Putin are "grateful for and appreciative of this invitation." He said, "We will make a decision and work through it via diplomatic channels."

Washington confirmed that indeed the invitation was extended, no doubt to the consternation of European officials. Secretary of State Marco Rubio has explained: "We've invited President Putin to the G20. We think it's an opportunity for him to engage not just with the president but with other world leaders. We hope that's an invitation he'll accept."

So far the Kremlin has signaled that Putin is unlikely to be in Miami. We wrote at the start of the week:

Both the Kremlin and the White House had recently signaled mutual openness to the idea of President Putin actually attending the G20 Miami Summit which is set for December 14-15. Some reports have recently expressed optimism that some kind of grand Ukraine peace deal could emerge from such an engagement.

However, Bloomberg has poured cold water on this, reporting Monday that "Vladimir Putin is set to travel to China for the Asia-Pacific Economic Cooperation summit hosted by President Xi Jinping but is likely to skip the Group of 20 in the U.S. with Donald Trump."

He's previously also stated that he would only meet with Zelensky if a deal had been finalized and was ready to sign.

An aerial attack on Kyiv is still underway, with an impact reported on non-residential infrastructure, city authorities said.

Mayor Vitali Klitschko confirmed that a drone crashed into a garage complex in Obolonskyi district, sending emergency crews to the scene. pic.twitter.com/Fuw3M9Kv8o

— KyivPost (@KyivPost) September 24, 2026

Trump and Putin last talked face-to-face in August 2025. But since then the war has only escalated, particularly given Ukraine's long-range strikes on Russian territory and its energy infrastructure, and industrial and retailer sites - with the help of targeting intelligence provided by NATO countries.

Tyler Durden Thu, 09/24/2026 - 13:15

Satellite Images Reveal Rapid Expansion At Seven Chinese Nuclear Sites

Authored by AG News Staff via American Greatness,

China is rapidly expanding infrastructure tied to its nuclear weapons program, with satellite images revealing major construction at seven sites as Beijing faces growing scrutiny over its expanding arsenal.

An investigation published Wednesday identified activity at Pingtong, Zitong, Lop Nur, Jiuquan, Mianyang, Jinta and Guangyuan. The satellite imagery documents substantial construction, although the images alone cannot establish precisely what work is occurring inside the facilities.

At one location, villages and farms reportedly were cleared for a fusion research center where powerful lasers can help scientists study how materials behave under conditions associated with nuclear detonations.

The expansion comes amid a dispute between Washington and Beijing over nuclear testing. U.S. officials have accused China of conducting a secret nuclear test at Lop Nur in 2020 and concealing its activities. China denies the allegation. Available seismic data have not conclusively established that a nuclear explosion occurred.

U.S. Under Secretary of State for Arms Control and International Security Thomas DiNanno has accused China of using techniques designed to make nuclear testing more difficult to detect.

Beijing, meanwhile, maintains a no-first-use nuclear policy and describes its nuclear posture as defensive. Chinese officials have rejected U.S. accusations about a growing nuclear threat and argued that the country's smaller arsenal makes trilateral arms negotiations with Washington and Moscow inappropriate.

The construction adds another national security issue to President Donald Trump's Thursday meeting with Chinese President Xi Jinping in Washington. Artificial intelligence and its growing military implications are also expected to be discussed.

The nuclear question has taken on greater significance following the expiration of the New START Treaty in February. U.S. officials have argued that an arms-control framework focused only on Washington and Moscow no longer reflects a world in which China is substantially expanding its nuclear capabilities.

Tyler Durden Thu, 09/24/2026 - 13:00

Nvidia CEO Jensen Huang Just Torched Doomsday AI Bros, Says STFU About Existential Risk Or Shut It Down

The CEOs behind frontier AI keep talking like bystanders - warning seemingly daily about 'existential risk, runaway superintelligence, and competitive pressure' that's totally out of their control, so they need big brother to help slow them down. 

Jensen Huang isn't buying it.

In an interview on The Ezra Klein Show this week, the Nvidia CEO took what the labs call an existential threat and turned it back into a question of product liability and whether executives are doing their jobs.

According to Huang, if a lab can't contain what it's building, it shouldn't be asking for regulation. It should be shut down.

"If they say the alternative, which is: There is no way to contain our experiments... when we test our A.I. models, it will get out, and it will damage the world - then I think the answer is that we have to shut the labs down," he said - framing this as a responsible engineering call.

"If you're going to build a self-driving car - let's say it's a robo-taxi, and there's a really difficult condition. As an engineer, we just have no idea how to solve this problem because these cars are not programmed, they're trained. So we have no idea how to train these cars, and we have no idea how to align them to the safety standards that are expected on the road," Huang said. "What's the answer? Don't ship it."

Jensen Huang: “Now, if they say [that their models aren’t safe] … then I think the answer is that we have to shut the labs down.” pic.twitter.com/aCkpmvUEXI

— The Midas Project (@TheMidasProj) September 23, 2026

Continues here:

🚨Jensen Huang just took a shot at OpenAI, Anthropic and AI doomers:

"Nobody's building more compute than the people asking to be slowed down."

and also attacked Geoffrey Hinton's 10% doom prediction:

“All of his predictions have been wrong. Just because it comes from a… pic.twitter.com/KmNzYdRbWy

— ℏεsam (@Hesamation) September 23, 2026

Huang's argument is about liability and responsibility to shareholders. A lab that damages the world, he argues, would face costs to humanity. "Because the cost to humanity, the damage is too great," he said. "The shareholder, the liabilities - it could be civil liabilities, it could be criminal liabilities. I mean, the liability's incredible."

The Great Panic

More than 1,300 AI lab employees have signed a letter saying each company is under "intense competitive pressure not to unilaterally slow that acceleration." When Klein read that to Huang, the Nvidia CEO rejected it. "No, no, that last sentence. Nobody's putting the pressure on them," he said. He called the letter's first paragraph "fantastic" and said he "completely" agreed with third-party safety auditors, but not with asking to be let off existing law. "This is the first time that I've heard a company or C.E.O. say that I need the laws, I need the antitrust laws to be relieved. I need the liability laws of products to be relieved so that I can pace myself."

Instead, Huang blamed the executives. "These are companies with agency. These are C.E.O.s with agency," Huang said. When Klein countered that the labs were using that agency to ask for help, he didn't budge. "If I believe that I'm about to launch a product that is unsafe, it is completely in my ability, my power and my responsibility, and I'm incentivized to do so, to not launch the product." In his telling, the cyber, product-liability and property-damage laws already on the books cover AI labs too.

He had no more patience for the field's elder statesmen. When Klein raised 'AI Godfather' Geoffrey Hinton's view that a 10 percent chance of societal destruction is not unreasonable, Huang dismissed it. "I would tell Geoff that it's irresponsible to say all that. All of his predictions have been wrong. Enough predictions. That 10 percent chance is not grounded on science," he said. "It's not grounded on research. Just because it comes from a scientist doesn't make it scientific. Those predictions are hurtful."

Nvidia, he said, puts 20 percent of the company on design and 80 percent on verification, while most labs today run 80 percent on capability and 20 percent on safety verification. Klein called the coming reversal "the flip," and Huang agreed. "A.I. needs to accelerate to be safe. I want them to get more compute, but allocated toward evaluation, to alignment - and I think they're doing that."

None of this requires a global treaty. It requires holding AI companies to the standard every other industry already lives under.

We also need to consider who's making the argument. Nvidia is now the world's largest company, worth $5.4 trillion, and its chips are what the labs buy whether they spend the compute on capability or on safety. The flip doesn't shrink that bill. "I wouldn't be surprised if the amount of compute necessary to develop these models increased by a factor of 10, because the evaluation is so rigorous," Huang said. The one outcome that costs Nvidia is the one the letter asked for: an agreed slowdown.

If a gun manufacturer makes a weapon that fires despite its safety being on, it shouldn't get US military contracts (oh well). If an automotive manufacturer cannot stop its cars from randomly crashing, it gets sued into oblivion. And if a frontier AI lab cannot contain its models, the solution isn't to beg for government intervention so they can keep building.

The solution is to turn off the servers, go home, and shut the lab down.

Jensen Huang $NVDA and Lisa Su $AMD are “first cousins once removed” and both running trillion dollar businesses

This is the new benchmark of success for Asian parents to set for their kids lmao pic.twitter.com/jyT7saPCtu

— litquidity (@litcapital) September 22, 2026

 

Tyler Durden Thu, 09/24/2026 - 12:40

White House Restores Access For Banned Media Outlets After Judge's Ruling

Update (1230ET): Following US District Judge Timothy J. Kelly's earlier decision, the Trump administration said in a legal filing that it has restored access for now to three media outlets the president had banned from White House grounds last week.

Reporters from CNN and MS NOW started returning to the White House grounds after a federal court had ordered a suspension of the ban.

The networks made announcements during their broadcasts on Thursday.

*  *  *

As Melanie Sun reported earlier for The Epoch Times, a federal judge has ordered President Donald Trump to temporarily restore White House access for CNN, MS NOW, and Politico while they challenge the revocation of their press passes in court.

Federal Judge Timothy Kelly of the U.S. District Court for the District of Columbia issued a temporary restraining order against the White House ban, reinstating hard pass access for CNN, MS NOW, and Politico in the early hours of Sept. 24.

Trump announced on Sept. 18 that he was banning the three news outlets from White House premises over their "constant 'reporting' fake news."

The White House revoked their access the following day.

In letters to the outlets dated Sept. 22, the White House said the organizations had violated "the standards of professionalism and decorum expected of those given access to the White House Complex, including by trafficking in verifiable falsehoods about national security and other issues, and publishing sensitive or classified information."

The outlets subsequently filed for a temporary restraining order, and a remote hearing was held on Sept. 23.

The judge issued the order hours after the hearing, saying the court's decision was "dictated by the application of well-known D.C. Circuit precedent that this Court must faithfully apply."

Kelly pointed to two prior court decisions. A 2019 decision sided with reporter Brian Karem, whose White House press pass was restored because the government failed to provide prior notice.

The other decision was the landmark 1977 Sherrill v. Knight case, which held that once the White House makes press facilities available to bona fide journalists, it cannot deny access arbitrarily or for less than compelling reasons. Denied applicants are entitled to notice of the factual basis for the decision, a chance to respond, and a written statement of reasons.

The Trump administration has argued that these precedent cases were wrongly decided.

Kelly said the media outlets and the three journalists listed as plaintiffs had shown that without the court's relief, they were likely to suffer irreparable harm, and that at a minimum, their procedural due process claim under the Fifth Amendment had a "likelihood of success."

Plaintiffs are also likely to succeed in showing that their hard passes were revoked without constitutionally adequate due process.

They did not "receive fair notice" of either the "conduct" that would lead to a sanction or of "the magnitude of the sanction that the White House might impose," Kelly said.

Balance-of-hardships and public-interest arguments also favor the plaintiffs, Kelly said.

In a filing after the hearing, the government submitted an MS NOW report dated Sept. 23 to support its case. The article claimed that unnamed administration officials were considering attaching Trump's name to Ford's Theatre in Washington.

Trump dismissed the report as "a ridiculous lie" in a Sept. 24 post on Truth Social.

Tyler Durden Thu, 09/24/2026 - 12:30

FERC Rejects ComEd's Cancellation Of $20 Billion Data Center Contract

By Ethan Howland of UtilityDive

The Federal Energy Regulatory Commission on Tuesday rejected Commonwealth Edison’s “notice of cancellation” of a transmission security agreement, or TSA, for a 1.8-GW, $20-billion data center PowerHouse Hillwood Holding is developing in Joliet, Illinois.

In part, the contract dispute centers on the TSA’s credit support requirements. PowerHouse Hillwood contends it met the agreement’s initial credit requirements via a $1 posting, according to FERC’s decision.

The dispute is pending in the US District Court for the Northern District of Illinois, according to the decision. In declining to take jurisdiction over the dispute, FERC said the courts can work it out just as well as the federal agency.

“Though we decline to assert primary jurisdiction over the interpretation of ambiguous contract terms involving credit support, our commitment to fair cost allocation, ratepayer protection, and regulatory clarity remains unwavering,” FERC Chairman Laura Swett and Commissioner Lindsay See said in a joint concurrence.

FERC’s decision highlights the “criticality” of the potential reforms that the agency proposed in large load interconnection show cause orders it issued in June to regional transmission organizations and independent system operators, the commissioners said. RTOs and ISOs have until mid-November to respond to the show cause orders.

Developing “clear and consistent” terms for connecting large loads with the transmission system is crucial, Swett and See said.

“It is also more important than ever that RTO/ISOs and their transmission owners may propose pro forma Cost Recovery Agreements,” they said. “And finally, it is more important than ever that any such agreements contain strong, consistent language that both protects customers from improper cost shifting and provides certainty to contracting parties.”

FERC Commissioner David Rosner said the dispute shows why the agency in its show cause orders directed RTOs and ISOs to develop pro forma cost‑recovery agreements for large loads. 

“Requiring security deposits helps ensure both project viability and transparency,” Rosner said. “Cost-recovery agreements matter because they enable efficient and accurate planning, and ensure that project risks stay where they belong: with the developer, not the public.”

FERC Commissioner David LaCerte lambasted the $1 letter of credit posted by PowerHouse Hillwood.

“The idea that $1 may provide appropriate security to any such agreement strikes me as an embarrassing legal fiction: insulting to the underlying ratepayers, stakeholders, and the grid itself that bear the real risk of this project,” LaCerte said. “Treating that risk as collateralizable for less than the price of a cup of coffee to me trivializes the very obligations that such a guarantee purports to secure.”

Tyler Durden Thu, 09/24/2026 - 12:25

NatGas Spikes As Major West Virginia Pipeline Declares Force Majeure

TC Energy's Columbia Gas Transmission pipeline system issued a notice requiring an "immediate pressure reduction" on Mountaineer XPress Line 100 between the Mt. Olive Compressor Station in Jackson County and the Saunders Creek Regulator Station in Cabell County, West Virginia, warning that an "expected mechanical issue" would reduce scheduled volumes.

Columbia Gas Transmission moves Appalachian NatGas to markets across the Northeast, Mid-Atlantic, Midwest and Southeast, with connections carrying supplies deep south to export terminals on the Gulf of America.

The affected Mountaineer XPress (MXP) pipeline in West Virginia feeds two main outlets:

• Regional markets: Columbia's TCO trading pool, serving Midwest, Northeast and Mid-Atlantic customers.
• Southern markets: The Leach interconnection in Kentucky, where gas enters Columbia Gulf Transmission for transportation toward the Southeast and Louisiana's Gulf Coast.

NatGas research firm Criterion Research provided clients earlier today with an update on the outage:

TCO declared force majeure this morning following an unexpected mechanical issue on its Mountaineer XPress (MXP) system between the Mt. Olive Compressor Station and Saunders Creek Regulator Station in West Virginia, with the pipeline set to cut the MXPSEG MA42 constraint to zero beginning with the Sept. 25 Timely Cycle.

TCO estimates 1.8 MMDth/d of firm service will be affected, roughly matching the 1.88 MMDth/d currently scheduled through MXPSEG.

MXP is a 2.7 Bcf/d Appalachian takeaway system moving Marcellus/Utica supply south through West Virginia into TCO's broader system. Upstream MXP receipts have not yet materially responded, with Sherwood flowing ~714 MDth/d, Corral ~267 MDth/d and Viking ~5 MDth/d today, but the full restriction should begin showing up in tomorrow's nominations and could force significant rerouting or production cuts if the roughly 1.8 Bcf/d cannot find alternate paths. TCO has not provided a restoration timeline and expects to issue another update Friday morning.

October gas futures climbed 4.5%, or 13.6 cents, to $3.159 per million British thermal units on Nymex as of 11:00 a.m. ET. Prices have jumped more than 12% since early Wednesday. 

Flow restrictions can tighten downstream supplies even when natural gas remains abundant at producing wells across Appalachia.

 

Tyler Durden Thu, 09/24/2026 - 12:10

Anthropic CEO (Again) Warns Poorly Managed AI Could Be 'Risk To Humanity'

Authored by Jacki Thrapp via The Epoch Times,

Anthropic CEO Dario Amodei warned that artificial intelligence could "be a risk to humanity as a whole" during a briefing before the United Nations Security Council on Sept. 23.

Amodei was among the top AI executives who spoke at the meeting - organized by France during the annual U.N. General Assembly gathering of world leaders - which also included statements by OpenAI CEO Sam Altman and Hugging Face CEO and co-founder Clément Delangue.

Amodei urged the 15-member council to advance U.N. agreements that ban the use of AI to form biological weapons, and encouraged the council to build evaluation and verification systems allowing nations to hold each other accountable, establish global standards to test AI models for loss of control risks and misuse risks, and add a notification system for AI incidents that are significant to global security.

"We will slow down as much as necessary in order to make sure that every successive AI technology that we release is actually safe," Amodei said during his video remarks.

"But regardless of what we do, managing these risks is ultimately bigger than any one company, and it has an industry-wide and global scale."

Amodei suggested there's a chance AI could become a "country of geniuses in a data center" in fewer than two years.

Meanwhile, Altman warned in his speech that humans "could lose control of the future to AI."

"The risk is that it moves so fast that people can no longer follow what's happening or intervene when needed," Altman said. "This would obviously be terrible. The industry must not accept too much technological risk just because the benefits are too great and they feel too important to slow down."

Altman said no person, company, or country should be able to use the most powerful AI models to impose their worldview on everyone else.

Calls to slow the advancement of AI have surged after Jacob Coxon, a former OpenAI researcher who resigned from Anthropic, said on Sept. 8 that people building AI think it could kill us all "by the end of the decade."

OpenAI acknowledged an incident involving rogue AI agents who were able to breach the open-source AI community Hugging Face.

Delangue, the Hugging Face co-founder, told the council on Wednesday that he believed fear-based narratives are not the way to make the right decisions about the technology's future.

"We were attacked by AI, but more importantly, we defended ourselves with AI," Delangue said.

"The same systems that helped us during this attack are now helping us against cyberattacks we were already facing. It's also helping us fix the bugs and weaknesses in our systems before the attack."

The meeting came one day after U.S. President Donald Trump told the UN General Assembly that the United States "totally rejects any attempt to construct a globalist scheme to control" artificial intelligence, which he attempted to rebrand as "super intelligence."

Trump said he wanted to change the name because "artificial" made the technology sound fake.

The U.S. State Department ordered diplomats to use "super intelligence" in all communications following Trump's speech at the UN, according to an email sent Sept. 22 by Michael Drager, deputy assistant secretary of state for the Bureau of International Organization Affairs.

The president has endorsed the technology and urged its expansion, insisting that the United States needs to beat China in the AI race.

"We're the most sophisticated country in the world, and frankly I want to keep it that way because whoever wins AI, wins," Trump said while speaking with reporters at his golf course in Ireland on Sept. 13.

Tyler Durden Thu, 09/24/2026 - 11:40

Goldman Puts Almonty At "Center" Of Western Tungsten Race

Three weeks after Jefferies chemicals and materials analyst Laurence Alexander initiated coverage of Almonty Industries with a "Buy" rating and a 12-month price target of $26.25, framing it as a play on the "Western Tungsten Re-Shoring Trade," Goldman Sachs launched coverage early Thursday, describing the miner as "at the center of the Western tungsten investment narrative."

Goldman metals and steel analyst Nick Cash notes that Chinese policy restrictions have fueled supply concerns and an eightfold increase in tungsten prices since the start of 2025:

ALM sits at the center of the Western tungsten investment narrative as policy actions taken by China have resulted in global supply concerns, causing the price of tungsten to increase 8x since the beginning of 2025.

ALM owns one of the most important tungsten development asset outside China, the Sangdong mine in South Korea

However, we believe the stock is increasingly reflecting a continuation of today's exceptional tungsten market as well as an aggressive production profile for Sangdong.

Almonty's Sangdong mine in South Korea is key to conflict-free tungsten supply for the West as Beijing has ramped up restrictions that collide with the upcU.S.ing US rearmament cycle. 

He cautioned that his estimates diverge from Wall Street consensus in two areas:

1. We expect tungsten prices to normalize as new mine supply, recycling and refining capacity respond to current economics and
2. We expect Sangdong's ramp to progress more gradually than market expectations. While we remain constructive on the strategic value of ALM's asset base, we believe current valuation already discounts much of that upside potential.

Almonty has moved to expand conflict-free tungsten supplies through a multiyear, take-or-pay offtake agreement with Sandvik Group subsidiary, centered on recovering tungsten from existing tailings at its Los Santos mine in Spain. The miner has also established a strategic partnership with Rwanda's government, while South Korea approved the miner earlier this week to supply Western markets.

Goldman's valuation stands well below the broader Street consensus. Bloomberg data show a consensus 12-month price target of $24.73, compared with Nick Cash's $13 target. Almonty's analyst coverage now comprises 9 "Buy" ratings and one "Hold" rating following Goldman. 

Jefferies' Alexander noted earlier this month, "Almonty offers long-dated leverage to Western tungsten supply-chain re-shoring through Sangdong, Panasqueira, Browns Lake, and planned downstream oxide capacity. China controls ~80% of supply, while defense procurement restrictions begin in 2027." 

Almonty shares fell 6.5% to around $12.74 on Thursday morning, slightly below Goldman's 12-month price target. The broader space, viewed through the lens of the VanEck Rare Earth and Strategic Metals ETF (REMX), has also declined in the back half of summer. 

Tyler Durden Thu, 09/24/2026 - 11:25

Are Bonds About To Crash The Stock Market?

Submitted by QTR's Fringe Finance

There. I’ve said it. I’ve gone from pussyfooting around and saying the AI bubble could pop in 6 to 10 months…which I still believe…to the very definitive statement that if the bond market keeps acting like this, the equity markets will get slaughtered. And I mean, wrath of God type shit.

This isn’t even a particularly sophisticated thesis. After all, if I’m delivering it, it can’t be. It’s just math.

Treasuries sold off hard on Wednesday, sending the 10-year yield up roughly 14 basis points to about 5.11%, after touching 5.14% intraday, its highest level since 2007.

The 30-year climbed to roughly 5.4%, while the 2-year jumped to about 4.9%. This is the latest leg of a bond selloff that has been building for months, with the 10-year alone up roughly 35 basis points in September and long-term borrowing costs now pushing into territory we haven't consistently dealt with since before the Global Financial Crisis.

Inflation fears, pornographic government borrowing needs, spiking oil prices and expectations for additional Fed hikes are all feeding the move. In other words, the bond market keeps trying to tell everybody something, and equity investors keep sticking their fingers in their ears.

Well, the bond market isn’t the equity market. It can’t be gamed, f*cked around with using call options, it can’t be ignored and it can’t be rigged…at least, not without massive consequences. The equity markets in the U.S. are roughly $70 trillion in size, but they ultimately sit on top of the price of money established in the bond market.

Treasuries alone are more than $30 trillion, and their yields help determine what mortgages cost, what corporations pay to borrow, what private equity can finance, what the government pays on its debt and, ultimately, what investors should be willing to pay for a dollar of future corporate earnings. Stocks can ignore that math for a while. They cannot ignore it forever.

It’s as simple as this: as long-term interest rates continue moving higher, virtually every important piece of financial math gets worse, all at the same time.

The discount rate used to value stocks rises, which makes future earnings worth less today. Mortgages get more expensive. Corporate borrowing gets more expensive. Private equity deals and private credit…much of which is already FUBAR but not showing it yet…become harder to finance. Leveraged companies have to refinance debt at higher rates. Consumers pay more to borrow and the federal government pays more to service its enormous pile of debt.

Rising rates are a slow, methodical wood chipper for anything built on cheap money. Anything like…oh, I don’t know…the entire f*cking economy of the last two decades—especially after the Fed went full MythBusters during Covid, rejecting the reality of the economy’s death, and substituting its own by papering over the whole thing with $4 trillion in freshly printed cash.

It’s also a real shit sandwich because bonds become increasingly attractive competitors to stocks. There isn’t a magic yield where a siren goes off and the stock market automatically crashes, but there is a point where enough pressure accumulates that something breaks. If things keep heading in the direction they are in, that point will come before the end of the year undoubtedly, in my opinion.

Lest we forget, we are entering this experiment carrying an almost comical amount of debt. Total U.S. federal debt has crossed $40 trillion. CBO expects the government to run roughly a $1.9 trillion deficit in fiscal 2026, with debt held by the public around 101% of GDP. Net federal interest expense is projected at roughly $1 trillion this year and CBO expects it to reach $2.1 trillion by 2036.

We are already borrowing enormous amounts of money, partly to pay interest on money we previously borrowed, while the rate at which that debt gets refinanced keeps rising. It’s just simple arithmetic.

The Federal Reserve says domestic nonfinancial debt reached roughly $84 trillion in Q2: $21.4 trillion of household debt, $24 trillion of business debt and $38.7 trillion of government debt. Every additional turn of the interest-rate screw matters when you’re applying it to numbers that large.

Then we get to Wall Street, where apparently the response to historically expensive stocks has been: what if we bought even more of them with borrowed money? FINRA margin debt was about $1.45 trillion in August, up roughly 37% from a year earlier, after reaching a record $1.50 trillion in June. Leverage works wonderfully until it doesn’t. Stocks rise, collateral values rise, investors borrow more and that borrowed money can buy still more stocks. Look at margin debt/GDP:

Now, reverse the arrows. Stocks fall, collateral values fall, margin requirements bite and people start selling because they have to. Selling creates more selling. That’s how leverage turns a correction into an avalanche.

And finally here’s where I think people may be making a much larger conceptual mistake. Everybody has spent the last 15 years assuming that eventually we simply return to the financial environment we became accustomed to after the Global Financial Crisis: zero rates, endless liquidity, cheap leverage and central banks standing behind asset prices.

What if we don’t? What if this is the reckoning?

QE1 began in 2008. Then came more QE, zero rates, negative rates overseas, COVID stimulus, trillions in fiscal spending and one of the greatest expansions of financial assets and leverage in history. For years, people like Peter Schiff and other monetary bears have argued that we weren’t eliminating the consequences of excessive debt, we were postponing them. Maybe the bill has finally arrived. Like Schiff says, maybe this will be “The Real Crash”.

The private-credit market is already giving us little previews. Consumers aren’t exactly sitting on Fort Knox either. Americans have about $18.8 trillion of household debt, including $1.26 trillion of credit-card balances and $1.71 trillion of auto debt. Roughly 7% of current credit-card balances were transitioning into serious delinquency at an annualized rate in Q2. Now pour higher rates on top of that.

Yet somehow, against this backdrop, financial markets have decided this is an excellent moment to completely lose their minds.

AI infrastructure is increasingly being financed through enormous amounts of debt, leases, guarantees and special-purpose vehicles. Recent reporting has identified hundreds of billions of dollars of AI exposure supported by guarantees that can keep financing off Big Tech balance sheets, while broader estimates of off-balance-sheet obligations tied to the AI ecosystem run into the trillions.

The bond market is already starting to notice. Zero Hedge wrote yesterday that hyperscaler credit default swaps at all new all time wides:

Meanwhile, SpaceX just went public at close to 100x sales. And then there’s crypto, an entire multi-trillion-dollar financial ecosystem whose necessity I remain unable to locate…and whose risks are multi-dimensional in ways I’m not sure everyone has considered yet.

That’s what scares me about the setup. We don’t have cheap stocks, low leverage and pristine balance sheets encountering slightly higher rates. We have enormous government debt, enormous consumer debt, enormous corporate borrowing, record margin leverage, stressed private-credit liquidity, speculative AI financing, crypto, gigantic valuations and investors who have been conditioned for nearly two decades to believe that every meaningful decline will eventually be rescued by the Federal Reserve.

Now raise the risk-free rate underneath all of it. And don’t stop doing raising it. Something has to…and will…give. In fact, if bond yields keep climbing, my view is that eventually a lot of things give at the same time.

This could become wrath-of-God-type stuff. Not because I’m predicting the apocalypse, but because there is an extraordinary amount of leverage sitting on top of asset prices that were built for a world where money was cheap, and the bond market is threatening to make money expensive again.

🔥 85% OFF FOREVER IF YOU SUBSCRIBE TODAY: I am again offering an 85% discount to anyone that wants to become a Fringe Finance annual subscriber today. It’s a discount you can keep and stays applied for as long as you wish to remain a subscriber: Get 85% off forever

There is, of course, one enormous caveat: bonds can recover. If inflation falls, economic growth slows and long-term yields retreat substantially, the pressure valve opens. Discount rates fall, refinancing fears ease and equity multiples become easier to defend. The whole process can be postponed again.

But if long rates continue grinding higher and the market starts believing 5%-plus Treasury yields aren’t an aberration but the new regime, I don’t see how the current structure survives.

It’ll be a massive wreck. Maybe a crash the likes of which we haven’t seen before. And then my guess remains that the ultimate destination is some form of yield-curve control or similarly aggressive intervention. If policymakers eventually cap Treasury yields while inflation and fiscal deficits remain problematic, I think gold could go absolutely berserk. My long-term $10,000 gold thesis would become considerably less ridiculous.

But people keep skipping over the important part: you don’t get the rescue until something requires rescuing. That means pain first. Potentially enormous pain.

My thesis has become remarkably simple. If the bond market calms down, we can have another conversation. If yields keep going higher from here, I think a massive stock-market crash becomes increasingly difficult to avoid.

Not because of doomsday saying or permabear “fearmongering”, or because Peter Schiff has been yelling about it for 20 years. Because eventually, no matter how much bullshit Wall Street invents, math still eventually wins.

--

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here.

 

Tyler Durden Thu, 09/24/2026 - 11:10

McDonald's Sinks To Four-Year Low As Deutsche Bank Sours On Turnaround Hopes

McDonald's shares tumbled as much as 5.9% on Wednesday, the sharpest intraday decline since the early-2020 Covid selloff, before closing down 4.8% at their lowest level since 2022. 

The Big Mac quick-service restaurant chain's investor day heightened Wall Street concerns that softening US sales, coupled with plans for massive investments across restaurant locations, could pressure cash flow and shareholder returns, weighing on the stock for the foreseeable future.

McDonald's held its investor day at its Chicago headquarters on Wednesday. CFO Ian Borden said the burger chain expects its US business to be "slightly negative" in the third quarter, leaving Wall Street analysts at the event fretting over the cost of a multibillion-dollar, multiyear overhaul against a darkening demand outlook that shows no signs of a promising near-term turnaround. 

McDonald's unveiled an $8.5 billion support package for franchisees over a decade as its NEXT overhaul will be costly. Management is forecasting higher productivity and corporate operating margins in the low-to-mid-50% range by 2030.

Shares have tumbled into a bear market this year, down 22% and nearing a four-year low. 

The chain missed second-quarter US sales growth estimates last month, citing execution missteps that hampered efforts to bring back working-class consumers. Newly appointed US business head Skye Anderson admitted at investor day that restaurant operations still needed improvement.

"We expect industry traffic growth in our wholly owned markets will be flat while inflation remains elevated," CEO Chris Kempczinski told the analysts. "The winners will be the companies that create more demand and deliver it more efficiently."

Deutsche Bank's Lauren Silberman told clients on Thursday morning that McDonald's turnaround is still unproven: "We believe the event likely does little to settle the debate on a US SSS inflection (which is key to the bull case)."

Silberman's key quotes from her initial takeaways from investor day:

• US sales remain weak: "US SSS were slightly negative in July and August, and while September should be positive, 3Q SSS are expected to be slightly negative given the slow start to the quarter."
• Fourth quarter caution: "We suspect 4Q US SSS will likely remain sluggish, in part due to a tough comparison."
• Forecast cuts: "We are lowering our 3Q/4Q US SSS to -0.5%/-1% (from flat)."
• The capex bill: "We estimate the total system investment for NEXT will cost ~$19BN, implying MCD will contribute ~45%."
• AI and productivity upside: "We walk away with increased conviction in the company's ability to improve unit economics by unlocking productivity through the implementation of its ArchIQ technology platform."

However, she defended the stock: "We think yesterday's reaction was overblown (our 2027/2028 EPS comes down just 1-2%) given the stock is already trading at trough levels."

Separately, UBS equity trader Mark Paski recently warned in a note that Wall Street has turned its backs on consumer stocks. 

"While part of the recent weakness can be attributed to higher crude prices and rates, the sharp selloff across apparel, retail and restaurant names suggests investors are looking beyond those factors. Feedback from the conference circuit pointed to a common theme: persistent macro uncertainty, ongoing cost pressures and little evidence of a near-term demand inflection. Management teams broadly flagged pressure from inflation, transportation costs, fuel prices and cautious consumer behavior, reinforcing the view that earnings recovery may take longer than previously expected," Paski said.

Paski noted that consumer companies' share of S&P market capitalization has tumbled to just 13.5%, a record low, from about 31% in 1992. That decline shows the sector is becoming less relevant to investors.

Tyler Durden Thu, 09/24/2026 - 10:40

What T. Boone Pickens Would Ask About AI CapEx

Authored by Patrick Feeley via Substack,

I keep waiting for someone in the AI discussion to talk like an owner. What we get instead is a week of model releases, token counts, and model-lab valuations that look like oil majors, while the harder questions about turbines, interconnect queues, and who answers for the spend sit offstage. That imbalance would have driven T. Boone Pickens up a wall.

Boone passed away in Dallas on September 11, 2019. He was 91. He grew up in Holdenville, Oklahoma, worked as a geologist at Phillips Petroleum, quit, and built Mesa Petroleum from a shoestring into a company that could force Gulf Oil into Chevron's arms. Later he ran an energy hedge fund out of Dallas and spent a decade trying to shove the country onto wind and natural gas before the transmission system could carry either. Two things always set him off. Soft managements that treated shareholders as a nuisance. And a national energy policy that treated imported oil as something America just had to live with.

If he were still in the room this week, he would not be picking sides in a chatbot fight. He would start with the physical bill of materials that decides who can actually build AI.

Power first. Every incremental megawatt of AI load is an order for firm generation. New combined-cycle gas capacity for the post-2027 cohort is now running near $2,000 a kilowatt, roughly double the cost of earlier plants, with turbines on multi-year backorder. Existing, grid-connected gas plants have been changing hands near $1 million a megawatt, about half the cost of building new. In Boone's language, it is getting cheaper to find megawatts on the floor of the exchange than in a turbine queue.

Then metal. Copper goes into the transformers, busbars, and switchgear that move that power to the rack. Tin goes into the solder on every board and optical module. Fastmarkets' AI-chain work puts solder-related tin exposure on track for roughly a tenth of global solder-tin demand by 2030. Gallium and germanium go into power electronics and high-speed optics. The United States is 100 percent import-reliant for gallium, more than 50 percent for germanium, about 77 percent for refined tin, and about 57 percent for refined copper. China accounts for the overwhelming share of primary gallium refining. None of that stack turns on a two-year Capex slide.

Only then would he get to the denominator. What does each new dollar of Capex earn, and what did that dollar cost to fund? Underneath the math sits the question he put to every oil company he ever owned. Who works for whom?

The Mesa Years

Most readers remember the shareholder campaigns. Fewer remember how improbable the man behind them was. Boone was born in 1928 and went to Texas A&M on a basketball scholarship. After an injury he transferred to Oklahoma A&M, where he took a degree in petroleum geology in 1951. He had not yet found his footing, and his father delivered a line Boone would repeat for the rest of his life. A fool with a plan can beat a genius with no plan. His parents, his father added, were worried their son was a fool with no plan. Get a plan. Boone took the point. Every campaign he ran afterward began with a written plan and a number, and he had little patience for executives who could offer neither.

He spent a few years as a Phillips geologist, went out on his own, and in 1956 formed Petroleum Exploration, Inc. with two backers in Amarillo. It went public in 1964 as Mesa Petroleum, named for the flat-topped land of the Texas Panhandle. Four years later Mesa made a hostile tender for Hugoton Production, a Kansas gas company larger than itself, and won. That deal set the pattern. By 1981 Mesa was one of the largest independent oil companies in the world, with more than $2 billion of assets, and still small next to the companies Boone would go after next. Cities Service. Gulf. Phillips. Unocal.

The method was consistent. He looked for oil companies whose reserves were worth more than the equity market would credit under the people running them. He bought stock, pressed for a restructuring, a sale, or cash returned to owners, and moved on. Critics called it greenmail. Boone called it accountability.

Gulf was the campaign that defined him. In 1983 Mesa and its partners accumulated a large position in Gulf Oil, one of the Seven Sisters and many times Mesa's size. With the stock around $44, Boone argued publicly that Gulf's reserves supported something closer to $114 a share, and that management had depleted more than half the company's reserves in a decade. His remedy was not to shut anything down. It was to place a quarter of Gulf's cash flow, roughly $750 million a year, into a royalty trust paid directly to shareholders. The board refused, and in 1984 Chevron acquired Gulf for $13.2 billion, then the largest merger in American corporate history. Measured against the size of the U.S. economy, that is the equivalent of a transaction of more than $100 billion today, or roughly half of what Alphabet expects to spend on capital this year. The Pickens group realized a pretax gain of approximately $760 million.

The size of the gain was not the lasting significance. The lasting significance was that a small independent from the Texas Panhandle had shown the market something it preferred not to see. As Boone put it, it had become cheaper to look for oil on the floor of the New York Stock Exchange than in the ground, and the boards sitting on that discount could be made to answer for it.

Unocal showed the limits of the approach, and its most durable result. In 1985 Fred Hartley answered Mesa with a self-tender that excluded Mesa by design, and the Delaware Supreme Court allowed it. Boone lost money on the campaign. But within about a year the SEC adopted its all-holders rule, and a tender offer that treated one class of owner differently from another was no longer available to a board. Every American board still operates under that rule. The following year Boone founded the United Shareholders Association and reduced his philosophy to two sentences. Stockholders are owners. Management are employees. That is still the cleanest description of what is missing from most AI board presentations, which are full of pilots and roadmaps and almost never say who will answer for the roadmap if it is still a slide in 2028.

The Second Act

Most people with Boone's first career would have stopped. Mesa moved from Amarillo to Dallas in 1989, and by 1996 Boone had left the company that made his name. He was nearly seventy. The following year he founded BP Capital and went back to work on the same idea that had powered the raids, which is that physical reality eventually overrules the consensus story. In the years before the 2008 oil peak, when many analysts treated high prices as an aberration, he argued publicly and with his own capital that supply could not keep pace with demand. He was early more than once and said so cheerfully. He was right on direction often enough that those who dismissed him looked careless in hindsight.

His favorite story was about a geologist who falls from a tall building and, passing the fifth floor, thinks so far, so good. He meant the optimism. He also meant that you still had to land. The Pickens Plan of 2008 was that temperament applied to the whole country. Build wind across the Great Plains, build the transmission to carry it, move natural gas out of power generation and into heavy trucks, and cut the import bill. He committed real capital, including an order for 667 GE turbines for a Texas Panhandle project that foundered when transmission could not reach the load, credit markets seized, and cheap shale gas undercut the wind economics. He spent years finding homes for those turbines. It was, in effect, a dry hole with a purchase order.

The critics were right that the plan was harder than the advertisements. But the lesson has aged well. The binding constraint then was wires. Today it is wires, interconnection, turbines, and metal. Artificial intelligence did not create the problem of moving power from where it is cheap to where it is needed. It made the load arrive all at once.

The Same Signal, Forty Years Later

The idea underneath Boone's campaigns is the one worth borrowing this year. It was about what happens when an industry is flooded with cash and keeps pouring it back into the ground.

Crude prices rose roughly tenfold during the 1970s, and the majors emerged with more cash than they had sensible uses for. Michael Jensen later put the 1984 cash flow of the ten largest oil companies at $48.5 billion. Very little went back to owners. The industry kept spending heavily on exploration and development even where average returns sat below the cost of capital. The market noticed before the boards did. John McConnell and Chris Muscarella found that while higher capital-spending announcements generally helped industrial stocks, higher exploration budgets pushed oil stocks down. Owners were saying, in the only language available to them, that the next dollar sunk into the ground was worth less than a dollar left in their hands.

Set this year's numbers beside that history. Alphabet, Amazon, Meta, and Microsoft are on track for combined 2026 capital spending on the order of $700 billion to $745 billion, most of it tied to AI infrastructure. On July 22, 2026, Alphabet beat on revenue, raised full-year Capex guidance to $195 billion to $205 billion, reported free cash flow of about negative $5.9 billion for the quarter, and sold off hard after hours. The market was sending the same signal McConnell and Muscarella recorded four decades ago.

The fair caveat matters, and Boone would have offered it himself. The oil majors of the early 1980s were often reinvesting into flatter demand. The hyperscalers are reinvesting into demand that is still compounding, and cloud backlogs are real. But the question Boone asked never depended on whether demand was growing. It depended on whether the marginal dollar earns more than it costs, and whether anyone outside management is allowed to check.

The second half of his insight applies well below the hyperscalers. Proven reserves already in the ground, owned by someone else, were cheaper than new ones, and the same arithmetic now runs through the power market. Existing gas plants have been trading near half the cost of new combined-cycle capacity. The largest buyers have drawn the obvious conclusion. Rather than wait years for a grid connection, they are pulling generation toward the load. Entergy is building gas plants to serve Meta's Hyperion data-center campus in Louisiana. In Texas, ERCOT has fielded large-load interconnection requests on a scale that would have seemed implausible five years ago, and the Legislature has moved to set terms for how those loads connect.

In Boone's language, it has become cheaper to find megawatts on the floor of the exchange than in a turbine queue. An energized site with an interconnection agreement is the proven reserve of this cycle, and the companies that hold one are not always valued for it.

Ready, Aim, Aim, Aim

Boone had a phrase for corporate delay. Ready, aim, aim, aim. He used it on oil executives who preferred another study to a decision, and it describes the enterprise AI economy with uncomfortable precision. MIT's Project NANDA work on generative AI in business, widely covered in 2025, reported that the vast majority of organizations studied were showing no measurable P&L return despite tens of billions in enterprise spend. Treat that finding as directional, not scripture. Even well-run companies are not immune to slow kill decisions. McDonald's tested AI voice ordering with IBM at more than 100 drive-thrus beginning in 2021 and ended the test in 2024 without a rollout. Ending a pilot that does not work is the right decision. The question an owner asks is why it took three years to reach it.

The tools are no longer the main problem. For a great many ordinary operating uses they are good enough. Ownership is the problem. If no executive's compensation depends on turning the spending into cash, the spending becomes theater.

Consider what Boone would do if he were thirty-five today with capital behind him. He would not start with the hyperscalers. He would start where he started with Hugoton, with a company larger than his own whose assets were worth more than its management was delivering. Today that is often a small or mid cap industrial, distributor, or services business that has announced an AI program, committed a meaningful share of its free cash flow to it, and still reports no metric tied to the result. He would read two years of filings and earnings calls and total the committed spend, including the parts buried in IT budgets and consulting contracts. He would buy enough stock to be taken seriously. Then he would pick up the telephone, because he always preferred a voice to an email, ask for the plan in writing, and give management a date. If the plan never arrived, he would take the same questions to the other shareholders and, if necessary, to the public. That was Hugoton, and Gulf, and every campaign in between. It was never about hostility. It was about a calendar.

Five Questions T. Boone Pickens Would Ask AI Companies Today

None of these are exotic. They are the questions a well-run family office puts to the operating businesses it owns, and most public boards have not yet put them to their own AI programs.

1. What is the total committed AI spend, including the pieces buried in IT, consulting, and cloud contracts?
2. Which line on the income statement is supposed to improve, by how much, and by when?
3. Whose compensation depends on that result?
4. What happens to the program if the target is missed by half?
5. How does the return compare with the simplest alternative, which is returning the capital to the owners?

The last question is the Gulf royalty trust in modern form. Managements with good answers generally welcome an engaged shareholder. Managements without them are running a science project on someone else's balance sheet. The difference is rarely the model. It is almost always the plan.

Boone would have been a handful in any boardroom this year, and he would have enjoyed every minute of it. Yet the lesson of his career is an optimistic one. The oil industry he pressed in the 1980s emerged leaner, better capitalized, and more attentive to its owners, and the shareholders who stayed the course were well rewarded. The AI buildout can follow the same path. The demand is real, the technology works, and the physical constraints of power and metal are problems that capital and discipline know how to solve. What the moment requires is owners willing to ask for the plan and managements confident enough to produce one. Boone spent sixty years insisting that a fool with a plan beats a genius without one. The companies that take that advice in this cycle will set the standard for the rest, and their owners will be glad they asked.

Sources

• Alphabet Q2 2026 earnings release - Capex guidance $195-205B; Q2 P&E purchases $44.9B; Q2 free cash flow about -$5.9B link
• Alphabet after-hours selloff on the Capex raise, July 22, 2026 link
• Hyperscaler 2026 Capex context (Alphabet, Amazon, Meta, Microsoft combined on the order of ~$700B-$745B depending on definition) link
• Enverus - existing gas-plant M&A near ~$1.0M/MW vs new CCGT replacement cost near ~$2.0M/MW for the post-2027 cohort (July 15, 2026) link
• Fastmarkets - AI-chain solder tin exposure rising toward ~10.6% of global solder-tin demand by 2030 link
• USGS Mineral Commodity Summaries 2026 - U.S. net import reliance: gallium 100%; germanium >50%; refined tin ~77%; refined copper ~57% link
• Chevron acquires Gulf Oil, 1984 (~$13.2B); Pickens group pretax gain (~$760M) link 1 link 2
• SEC all-holders / best-price tender offer amendments after Unocal (1986) link
• Pickens launches United Shareholders Association, 1986 link
• Mesa Power orders 667 GE wind turbines for the Texas Panhandle project, 2008 link
• Michael C. Jensen, "The Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers" link
• John J. McConnell and Chris J. Muscarella, "Corporate Capital Expenditure Decisions and the Market Value of the Firm," Journal of Financial Economics (1985) link
• Entergy gas generation approved to serve Meta's Hyperion load in Louisiana link
• MIT NANDA / State of AI in Business 2025 - directional on weak P&L conversion of enterprise genAI spend; not peer-reviewed link
• McDonald's ends IBM AI drive-thru test, 2024 link

This note is for research and discussion only. It is not an offer to sell, or a solicitation to buy, any security. Sargasso Capital Management may hold positions discussed or related instruments and may change those positions without notice.

Tyler Durden Thu, 09/24/2026 - 10:20

Xi At WH: We Should Strengthen Communication, The Thucydides Trap Can Be Overcome

Arrival Ceremony and initial Trump-Xi remarks:

Xi: "We Should Strengthen Communication... the Thucydides Trap can be overcome."

The moment of President Xi's arrival at the White House:

NOW: Trump welcomes Xi Jinping to the White House. pic.twitter.com/zvXVkxqaGj

— Clash Report (@clashreport) September 24, 2026

For more of our analysis and what to expect:

Read: Mr. Xi Comes To Washington: What Wall Street Banks Are Expecting

*  *  *

Chinese stocks slipped overnight as the two-month extension of the US-China trade truce fell short of some Wall Street expectations (some desks were hoping for +6 months), offering limited reassurance that today's talks would deliver a long-lasting trade deal, stabilize bilateral ties, and ease uncertainty over global trade.

The mainland CSI 300 Index dropped 1.7%, while the Hang Seng China Enterprises Index pared losses and closed flat. Broader Asian equities also came under pressure after a global bond selloff gathered pace as investors responded to stronger-than-expected US economic data on Wednesday and weak Treasury auction demand amid increasing fears of further Federal Reserve tightening

The two-month truce extension through Jan. 10 removes an immediate source of uncertainty but falls short of the three-to-six-month extension some Wall Street desks were hoping for. 

As we detailed in an overnight note titled "Mr. Xi Comes To Washington: What Wall Street Banks Are Expecting," President Trump rolled out the red carpet for President Xi Jinping at Joint Base Andrews on Wednesday.

President Xi Jinping just arrived in Washington, D.C. for a state visit to the U.S.

President Trump and Mrs. Trump warmly received President Xi and his wife Madame Peng Liyuan at the airport. pic.twitter.com/MkXecYvx2Z

— Mao Ning 毛宁 (@SpoxCHN_MaoNing) September 24, 2026

B-1 Lancer flies over as President Trump welcomes Chinese President Xi to the United States.

Looks like an episode from The Office the way the camera zoomed in on Xi’s face. pic.twitter.com/cqOYgKwnsQ

— Collin Rugg (@CollinRugg) September 23, 2026

Xi's first White House visit since September 2015 includes bilateral talks, a South Lawn ceremony and a black-tie dinner later today with technology executives including Nvidia's Jensen Huang, Tesla/SpaceX's Elon Musk and OpenAI's Sam Altman. Private tea with the Trumps and a National Archives visit are also on the books. 

The high-level diplomatic visit comes as unresolved disputes mount. Trade talks center on the duration of the tariff truce, a proposed "Board of Trade" arrangement covering roughly $30 billion in goods on each side, and potential Chinese purchases of soybeans, Boeing aircraft and LNG. Rare earth supplies, technology restrictions, Iran and Taiwan also loom over the summit.

On the AI front, low-cost Chinese open-weight models are pressuring US frontier labs and eroding moats. Restrictions on advanced chips, allegations that Chinese companies distilled US models, and a proposed AI hotline add another layer to negotiations.

The broad expectation across JPMorgan, Deutsche Bank, TD Cowen and Raymond James is that the summit will produce limited breakthroughs. Wall Street's focus now shifts to how long the truce lasts and whether either side makes concrete concessions.

Earlier this morning, former acting deputy US Trade Representative Wendy Cutler told Bloomberg TV that the temporary US-China trade truce extension signals Trump's dissatisfaction with Beijing's rare earth exports and agricultural purchases.

It's a "way, way shorter time than China had hoped for; China wanted to extend that truce until the end of Trump's term," Cutler told Bloomberg's Heidi Stroud-Watts.

She continued, "We're at a point in our relationship with China where big deliverables are just no longer possible, and we're talking about managing the relationship and keeping it stable, but not improving and strengthening it."

Matt Maley, a veteran Wall Street strategist and chief market strategist at Miller Tabak + Co., wrote in a note that the two-month extension may disappoint investors who were hoping for a longer-term deal and may not bode well for equities. "A lot of investors that I have been speaking to were hoping for a six-month extension," he said.

Read what JPMorgan, Deutsche Bank, TD Cowen and Raymond James have to say here.

Tyler Durden Thu, 09/24/2026 - 10:15

New Home Sales Soared In August, Prices Plunged As Mortgage Rates Spiked

With homebuilder confidence plumbing new depths (and Housing Starts and Permits plunging), expectations were surprisingly for a small bounce back in new home sales in August (after collapsing in July).

Analyst consensus was correct, with a 6.4% MoM jump (+1.3% MoM exp) with July's 10.5% MoM plunged revised dramatically higher to just 4.3% MoM decline. August was the biggest surge in sales since February, but still left sales down 2.0% YoY...

Total new home sales SAAR jumped to 864k - its highest level of 2026...

Median new home prices tumbled, down 5.8% from a year ago to $393,700....

Additionally, average new home sales price plunged almost $50K to $478,700, lowest since since August 2024...

This was the biggest monthly drop in average new home prices on record!

Interestingly, the supply of new homes for sales continues to tread water along with homes under construction. A trend that has been clear all year...

And finally, here's a weird one - as mortgage rates have soared (now back above 7.00%), so sales have also soared?

So did homebuilders finally slash prices as the final 'incentive' to restart sales? Or was this a last minute rush into homes ahead of rate-hikes and soaring mortgage rates?

Tyler Durden Thu, 09/24/2026 - 10:11

A Perfect Storm - Where Are The Umbrellas?

By Michael Every of Rabobank

As the Wall Street Journal puts it today, ‘A perfect storm is raging in the bond market’ as US 10-year yields are at 5.11% vs. 4.93% at yesterday’s close, the largest one-day rise since 2025’s “liberation day”; Canada’s are at 3.95% vs. 3.83%; the UK’s 5.35% vs. 5.20%; Australia’s 5.38% vs. 5.25%; Germany’s 3.55% vs. 3.46%; France’s 4.66% vs. 4.50%, and Japan’s 3.05% vs. 2.98%.

You can blame some of that on yesterday’s data, where the Eurozone services PMI was marginally better than expected at 53.0 and the US manufacturing and services PMIs leaped to 57.0 and 58.7 respectively. It’s great that seven months of Middle East and Russia-Ukraine war with high energy prices haven’t dented growth. The downside is there’s little reason for ‘rate cuts!’ And just imagine if geopolitics gets worse or economies must ‘run hot’ to rearm at pace.

In terms of energy, US Energy Secretary Wright has stated a US diesel export ban won't work, but Politico says the White House is still preparing plan for 90-day ban even as some GOP lawmakers and oil industry representatives are fighting to stave off the announcement. In short, it’s perhaps not for nothing that European, UK, and Aussie diesel prices have been climbing, and where markets might be in for another battering.

Xi Jinping is at a high-stakes US summit with Trump, where their trade truce has been extended… until 10 January: after that, who knows? Germany, which isn’t present, has surrendered anyway: Euractiv reports Berlin is seeking to loosen the EU’s ‘made in Europe’ rules and “rejects protectionism and discrimination” – not more Chinese imports, apparently.

Yet this is about far more than tariffs: Bloomberg notes China is holding sensitive F-35 parts which were mysteriously diverted to Hong Kong (which brings the security of international shipments of goods into question). And, of course, the Wall Street Journal and Bloomberg claim China backs Iran and the Houthis, while its ‘Russia cannot lose’ stance is already accepted.

Trump and Xi are also discussing AI, as the Australian government saw its websites attacked by a Claude agent, a claim was made that Claude may have cracked the secrets of efficient molecular gene editing, with vast implications, top AI leaders warned the UN of global security risks as such systems grow more powerful, and Mark Zuckerberg unveiled an AI ‘charm’ device that can fit on a keychain – so now there is no escape anywhere. The market impact of this is unclear: the potential coming storm isn’t.

There is still no breakthrough between the US and Iran nor of a settlement in the broader region, where tensions smoulder. Putin said his election turnout shows Russians support his military agenda as Foreign Minister Lavrov told the UN that Moscow will not pause its Ukraine ‘operation’, and Ukraine’s Zelenskyy warned of a “painful winter” for Russia if energy truce talks fail. A Russian military helicopter also violated Polish airspace, seeing Warsaw scramble fighter jets. Tony Blair urged PM Burnham to rejoin the EU, which both British voters and the EU get a say in. Argentina’s President Milei demanded Falklands talks with the UK. “My job is to assume things get worse,” Australia’s new defence chief told the financial press. Stormy enough for you?

Meanwhile, the Financial Times echoes something stressed here regarding Japan: “The threat of appearing as a vassal state is growing ever more real for middle powers.” The depressing global realpolitik is that middle powers are NOT powers, just caught in the middle.

That doesn’t mean they aren’t useful: Japan and South Korea are being looked at by the US to ease its shipbuilding and ammunition bottlenecks. However, that means the US has less tolerance for those not working with it and will exert pressure to get the outcomes it wants. The US Treasury openly pushing the ‘independent’ BOJ to end the Yen Carry Trade via rate hikes, threatening a perfect storm for some assets, in exchange for a strong JPY, cheaper commodity imports, and more Japanese domestic investment into defence industries is one key example.

Another is Canadian PM Carney saying he modelled the “extreme tail risk” of the US invading: his army envisioned insurgency tactics like the Afghan mujahedeen. Canada had plans to invade the US under the British Empire, the US had similar ones to invade Canada, and many militaries have wild scenarios in desk draws. This exercise was undertaken as headlines warned the US might invade Greenland. Instead, we have a peaceful new permanent US-Greenland-Denmark security treaty with a de facto loss of Danish sovereignty - which Canada supports.

The US will not tolerate free trade with a country not sticking to its China tariffs, as the USTR just made clear; nor will it accept a large open border with a country that drifts away from it geopolitically. These are not normative statements but realpolitik facts. Economists can model the win/lose of Canada shifting from the US economy, which supports its true value-added industries, to a Europe which needs far less of them (as Ottawa is already seeking carveouts from the EU’s “burdensome requirements” re: deforestation). Geostrategists don’t need to model the extreme fat tail risks in geopolitics when the government is already showing us a “We can be Afghanistan if necessary” national strategy.

However, the tide seems to be flowing in the other direction in that region. Mexico is close to a new USMCA deal, Venezuela is a US client state, Greenland a US security protectorate, and Brazil’s presidential election might see pro-Trump Bolsonaro, Jr. elected. Moreover, 14 Western hemisphere states joined the US to sign a ‘Joint Statement on Defending Hemispheric Sovereignty’ to enhance economic cooperation, explore investment screening mechanisms, safeguard critical minerals supply chains, promote trusted suppliers for digital infrastructure, and fight “narco-terrorism.” In short, even if we have wild weather in Eastern Europe and the Middle East, and storm clouds may even be gathering over parts of Asia, don’t let headlines cloud your vision over the most likely weather on other fronts.

Regardless, when you look at the conflating global backdrop, unless and until geopolitics provides us with new rays of sunshine, there are not going to be enough umbrellas for those who think, act, or trade like it’s 2005 or 2015.

Australia, which has long been in that camp but usually doesn’t need an umbrella, has just seen its Prime Minister rain on that parade (“The post-1945 world order is no longer fit for purpose.”), as has the RBA Governor (“We’re moving into a new world… Can we afford to be that open now? Can we afford to be so dependent on other countries for certain essentials?”). But what’s the policy prescription going to be then, and when? “What is GDP *for*?” Aussie employment data today were an odd mix that doesn’t help matters. Jobs growth was 39.5K, double estimates, but all part time as full-time positions fell, and unemployment was a whisker shy of 4.7% at an official 4.6%, up from 4.5%.

If you need me, I’ll be by the umbrella stand.

Tyler Durden Thu, 09/24/2026 - 10:00

Biden-Nominated Judge Dismisses Michigan Case Accusing Oil Majors Of Suppressing Renewables

Authored by Owen Evans via The Epoch Times,

A federal judge dismissed an antitrust lawsuit in which Michigan accused four major oil companies of acting as a cartel to block renewable energy.

U.S. District Judge Jane Beckering in Grand Rapids on Tuesday rejected a lawsuit filed in January by Michigan Attorney General Dana Nessel, a Democrat, against BP, Chevron, Exxon, Shell, and the American Petroleum Institute.

Nessel claimed they caused Michigan residents to suffer "artificially high home and transportation energy costs."

She said that defendants acted "as a cartel in an unlawful conspiracy in restraint of trade to forestall meaningful competition from renewable energy in order to maintain their dominance in the transportation energy market and primary energy markets in Michigan and nationally in order to reap windfall, and illegal, profits."

The complaint said that the defendants' conspiracy "restrained competition in the primary energy market by suppressing renewable alternatives like solar and wind power in favor of fossil fuels."

The judge said antitrust laws protect against none of the injuries for which Michigan sought a remedy, except for energy overcharges.

"The distance is too great between the alleged conspiracy and Michigan's and its residents' overcharges to find that the conspiracy proximately caused the overcharges," Beckering said.

Other judges have rejected similar climate lawsuits, including in Delaware, Maryland, New Jersey, New York, Pennsylvania, Puerto Rico, and South Carolina.

A lawyer for Chevron previously called Michigan's lawsuit "baseless as demonstrated by multiple related court dismissals."

"Michigan's lawsuit was part of a coordinated campaign against an industry that is vital to everyday life and serves as the engine of America's economy," the American Petroleum Institute's SVP and general counsel Ryan Meyers told The Epoch Times by email. "Climate policy is a federal, not state, issue, and we are pleased with the court's decision."

The Justice Department (DOJ) had submitted a brief in support of the companies in the Michigan lawsuit.

"Michigan is attempting to impose liability for wholly out-of-state conduct related to global greenhouse gas emissions and regulate that conduct under state law," the department wrote.

"Federal law exclusively governs interstate air emissions, including remedies for global climate change."

It said that Michigan is attempting to use state law to "hold energy producers liable for a worldwide problem caused by indivisible greenhouse gas emissions, all because the problem has far downstream alleged effects in Michigan that are no different from, and may indeed be dwarfed by, alleged effects in other states or other parts of the world."

The Epoch Times has contacted Attorney General Dana Nessel's office to ask if the state will appeal.

The Epoch Times contacted BP, Chevron, Exxon, and Shell for comment but received no reply by publication time.

The Trump administration has also taken legal action against the Democratic-led states of Michigan, Hawaii, Vermont, and New York over their climate-related actions, alleging that they interfere with federal authority and the country's energy development, according to the DOJ.

The DOJ in May 2025 accused the four states of overreach through their climate laws and lawsuits.

"These burdensome and ideologically motivated laws and lawsuits threaten American energy independence and our country's economic and national security," then-Attorney General Pamela Bondi said in a statement at the time.

"The Department of Justice is working to 'Unleash American Energy' by stopping these illegitimate impediments to the production of affordable, reliable energy that Americans deserve."

The lawsuits against the four states followed President Donald Trump's April 2025 executive order designed to protect American energy from state overreach, which stated that the nation's energy independence is threatened when state and local governments seek to regulate energy beyond their statutory authorities.

In 2023, California Attorney General Rob Bonta, backed by Newsom, sued California's biggest oil producers for "climate change-related harms," including extreme drought, flooding, and wildfires. A judge paused the litigation in April this year as the Supreme Court takes up the companies' request to quash similar lawsuits.

* * *

Tyler Durden Thu, 09/24/2026 - 09:30

Panic At CNN As Paramount Seeks Elon Musk Equity Investment

Paramount is weighing whether to bring Elon Musk on as an equity investor in its takeover of Warner Bros. Discovery, according to a report from Semafor. David Ellison has been sizing up potential investors as he works to lock down financing before the merger closes. Paramount has not said how much money it hopes to raise, and the size of any Musk investment remains undetermined. A Paramount spokesperson declined to comment, and Musk did not respond to a request for comment.

The news prompted panic inside CNN, which is owned by Warner Bros. Discovery. Staffers at the network had plenty to worry about before Musk's name entered the conversation. Layoffs loom over the newsroom, nobody knows who will run the place once Ellison takes the keys, and now the man who took a chainsaw to Twitter's payroll might own a slice of the operation.

"Amazing it comes out now of course," one CNN source said, pointing to the awkward timing for California Gov. Gavin Newsom, who threw his support behind the merger to keep Paramount jobs in his state. "Not good for Gavin!"

"When it rains...[it pours]," another source said. "It's really scary given what he did at X and DOGE."

At CBS News, David Ellison installed Bari Weiss as editor-in-chief after Skydance acquired Paramount, and she has drawn fierce criticism for firing longtime 60 Minutes correspondents and for how she manages the newsroom's coverage. CNN staffers have watched that saga unfold, and they have taken notes.

Once the merger is complete, David Ellison will control HBO Max, Paramount+, HBO, CBS, CNN, and thousands of film titles. That makes him one of the most powerful figures in American entertainment, and it makes who backs him financially a matter of real consequence.

Larry Ellison, David's father and the founder of Oracle, has personally guaranteed more than $40 billion of the equity financing that makes the acquisition possible. But an investment from Musk would still carry significance.

"An investment from Musk would be a significant vote of confidence in the combined Paramount Warner Bros. from a businessman who also has a devoted retail investor following," explained Semafor business reporter Rohan Goswami. "A check from Musk or other big financial backers would also give Paramount a more diversified investor base, and reduce Larry Ellison's financial burden."

The relationship between the two men runs deep in both directions. Larry Ellison invested in Tesla in 2018 and sat on its board for several years. When Musk took Twitter private in 2022, Ellison invested $1 billion in the deal.

"Musk's dollars and political influence were concerning to Democrats during the 2024 election, given his control of X," writes Goswami. "The possibility of him having even partial ownership in CNN and CBS would likely raise alarm bells in Washington, even though it is unlikely Musk would have formal input over the company's operations."

The news of Musk's potential involvement comes days after the $110 billion merger cleared its final hurdle. Paramount settled the antitrust lawsuit that California Attorney General Rob Bonta brought against the deal.

Paramount agreed to spend an additional $1.5 billion on domestic production over five years. The company must release 30 films in theaters every year, rising to 32 after the first two years, with at least 20 wide releases, rising to 21, and four independent films each year. If Paramount misses any of those targets, it must sell Miramax Studios and pay $30 million for every film it comes up short. The settlement also forces Paramount to negotiate cable deals separately and commits it to raising domestic production from 5% of all films to 20%, or even 30%, if Congress passes certain tax credits. The settlement also created a News Editorial Independence Board for CBS News and CNN, though nobody has spelled out what powers it will hold. The agreement said nothing about layoffs.

Still, for a newsroom that has spent years telling viewers to fear Elon Musk, the prospect of him buying in carries a certain poetry.

Tyler Durden Thu, 09/24/2026 - 09:15

Futures Tumble As Yields Hit Multi-Decade Highs, Oil Surges

Futures are lower with Tech underperforming as part of a global risk-off tone with few areas of safety, driven by a global bond rout that has sent yields across the globe to levels not seen in a generation. As of 8:00am ET, S&P futures are 0.6% lower with Nasdaq futures sliding 1.0% and reflecting the fallout from Wednesday’s barrage of inflationary signals, which sent stocks in Asia and Europe lower. In premarket trading, semis and memory are lagging the broader tech tape for the 2nd day, with software seeing slight outperformance, but still lower. Defensives and energy are leading cyclicals. The yield curve is bear steepening with the back-end yields making multi-year highs; pushing the 10Y yield to 5.14% and the 30Y yield to the highest since 2004. This follows Wednesday’s US data and auction-led selling in US paper with an ascent in energy prices today driving the moves further. The rout in bonds swept into Asia, with yields in Japan, Australia and New Zealand climbing by more than 10 basis points on Thursday. The USD remains bid and DXY is less than 40bp from its 52-wk high. In commodities, energy and ags resume their leadership as the market reduces its optimism for an imminent solution in the MidEast; metals are weaker with precious lagging ase.  The Trump-Xi meeting will be one to watch on today's calendar, following US Treasury Secretary Bessent's announcement of a two-month extension to the trade truce which appears to have disappointed markets as it was less than what China expected. US economic data slate includes 2Q current account balance and weekly jobless claims (8:30 a.m.), August new home sales (10 a.m.) and September Kansas City Fed manufacturing activity (11 a.m.) 

In premarket trading Magnificent Seven: Alphabet (GOOGL) -0.7%, Amazon (AMZN) -0.9%, Apple (AAPL) unchanged, Microsoft (MSFT) -0.6%, Tesla (TSLA) -1%, Nvidia (NVDA) -1.1%, Meta Platforms (META) -2%

• Darden (DRI) falls 5% after the restaurant-chain operator posted first quarter sales that disappointed.
• Dropbox (DBX) declines 5% after Citi downgraded the file management software company to sell, writing that recent optimism about its AI strategy “derives too much success too early.”
• Etsy Inc. (ETSY) slips 2% after Arete downgraded the online retail platform to neutral, citing concerns over its valuation and growth sustainability.
• Everpure (P) jumps 7% after the data-storage company forecast revenue for 2028 that exceeded the average analyst estimate.
• MGM Resorts International (MGM) is down 9% after Barry Diller’s People Inc. dropped plans to acquire the rest of the casino giant.
• Stitch Fix (SFIX) falls 19% after the online personal styling platform forecast a much weaker full-year 2027 Ebitda that analysts expected.
• Viking Therapeutics (VKTX), which had surged 36% Tuesday on experimental weight-loss drug results, is down 12% after offering $200 million in common shares and another $200 million in convertible notes to help fund clinical development.

In other corporate news, a consortium backed by BlackRock and IFM are said to be closing in on $25 billion deal to buy Stack Infrastructure’s Asia Pacific data centers. Morgan Stanley is working to contain the damage from a leaked deal list after one of its top bankers accidentally sent an email to some clients containing a list of deals the firm was working on and monitoring.

Wednesday’s strong economic data, a weak debt auction, and mounting concerns over diesel prices and policy is rattling both Wall Street and Main Street, driving yields across most maturities to the highest in almost two decades. This has pushed inflation anxiety back to being front and center for investors, with concerns about Brent above $100 and an overheating US economy piling fresh pressure on bond markets. That’s taken the shine away from stocks, pulling the Nasdaq 100 down from a record high.

"Higher bond yields are becoming a more meaningful headwind for equities,” said Simon Wiersma at ING Bank. “Middle East de-escalation could take some pressure off bond markets, but the bigger story is the structural rise in global borrowing needs.”

Futures reflect the fallout from Wednesday’s barrage of inflationary signals. According to BBG, Traders are unlikely to commit fresh capital before tonight’s Trump-Xi summit, despite Bessent saying the US and China have extended their trade truce.

Oil’s latest leg higher came after an Iranian official warned Tehran may expand the war to the Indian Ocean if the US or Israel attacks again. “Now that the war has expanded from the Persian Gulf and the Strait of Hormuz to the Red Sea, it may, in the next phase of a potential conflict, widen further,” Iran’s semi-official Fars cited Yahya Rahim Safavi, who’s also a senior member of the Islamic Revolutionary Guard Corps, as saying.

“Oil prices remain the key driver overall,” said Nadege Dufosse, head of multi-asset at Candriam. “Investors are flying blind as it’s impossible to guess which way the talks between Iran and the US will go.”

Energy Secretary Chris Wright told oil industry leaders to brace for possible US curbs on diesel exports amid an intensifying debate within the Trump administration over that approach.  A potential diesel export ban would carry “significant implications” and even have the counterintuitive effect of an increase in gasoline prices if US refiners cut runs, notes Morgan Stanley.

Meanwhile, as extensively noted here, the entwined mix of AI and inflation is causing angst. Debt pressures return with Amazon, Alphabet CDSs topping the year’s highs, and Nvidia insurance costing more amid circular financing concerns.

“Before the year draws to a close, a choice is likely to be needed between inflation and the debt-financed capital expenditure boom,” notes Jonestrading Chief Strategist Mike O’Rourke. “Main Street has paid the price for five-plus years and does not have much left to give,” O’Rourke adds.

Hyper CDS new all time wides, led by ORCL, SPCX, NVDA and META pic.twitter.com/gr7OcinLUl

— zerohedge (@zerohedge) September 23, 2026

Fresh warnings about price pressures were raised at two rate decisions in Europe. The Swiss National Bank lifted its inflation forecast as it dialed down its threat of intervention to support the franc. Norges Bank increased borrowing costs for a second time this year and said it was primed to hike again. For the Fed, swaps fully reflect three quarter-point hikes over the next year, with significant hedging for a fourth. 

“A resolution in the Middle East would certainly bring some relief, particularly to European rates given the energy channel, but in the US the story goes beyond oil at this stage,” said Alessandro Gabellone at Bank Degroof Petercam. 

“Inflation has been above target for years, while fiscal imbalances and rising interest costs are increasingly part of the discussion around long-term yields,” he said.

Traders will follow the summit between Trump and China’s Xi Jinping later today at a time when tensions between the world’s two biggest economies persist over rare earths, technology curbs and Taiwan. “Super Intelligence” would be a big topic of discussion, Trump said on social media. “I want to leave it exactly where it is. That is China’s position also.”

Treasury Secretary Scott Bessent announced that a trade agreement struck by the leaders last year will now run an additional two months until Jan. 10, clearing the way for two more meetings in the coming months at summits in Shenzhen and Miami.

In Europe, the Stoxx 600 is down 0.4% with the average yield rising to levels not seen in almost two decades. Tech and autos are the worst performers. Energy gains. Here are some of the biggest movers on Thursday:

• Mitchells & Butlers shares rise as much as 3.9% after the pub chain reported a pick-up in like-for-like growth in the final quarter, aided by a strong showing over the August bank holiday weekend.
• Motor Oil Hellas shares rise as much as 1.9% after Goldman Sachs upped its price target on the Greek refiner, predicting it to benefit from higher diesel crack spreads.
• BioGaia gains as much as 5.1% after Danske Bank reiterated its buy rating and raised its price target on the Swedish health additives company, seeing a good risk/reward opportunity going into the company’s third-quarter report, due on Oct. 22.
• Raspberry Pi rises 23% after first-half revenue at the micro-computer maker jumped 90% to $256.9 million.
• OVS shares rose as much as 4% in Milan trading after the Italian fashion retailer’s adjusted net sales grew 11% year on year.
• H&M shares fall as much as 3.7% after US tariff refunds were largely credited for driving a beat in third-quarter profits at the Swedish fast-fashion retailer.
• Tryg shares fall as much as 3.5% after Danske Bank downgraded the Danish insurance firm to hold from buy, predicting headwinds from inflation and rising interest rates.
• Verbio declines as much as 6.9% as Jefferies says that despite a solid finish to the year, the biodiesel and bioethanol fuel producer’s new FY26/27 Ebitda guidance is below consensus.
• Vistry shares drop as much as 11% after the housebuilder reported weak interim results and outlined the findings from the review conducted by its CEO.

Asian stocks declined for a second day amid renewed pressure from elevated oil prices and US bond yields. The MSCI Asia Pacific Index dropped 0.9%, with China the worst performer in the region. Indian equities dropped the most in over two months amid a selloff in the heavyweight financial sector after the nation’s insurance regulator proposed changes that include capping commissions. Japanese stocks were mixed as markets reopened following a three-day holiday. South Korea was shut for a holiday.  .

In FX, the Bloomberg Dollar Spot Index continues to carve out fresh multi-month highs, adding 0.2%. The Norwegian Krone leads G10 FX, whilst the Swiss Franc lags after respective rate decisions. USD/JPY has eclipsed its 200DMA for the first time since early September.

In rates, treasuries are mixed in early US session with the yield curve steeper around a little-changed 7-year sector. Front-end tenors unwind some of Wednesday’s steep losses while long-end has added to them, lifting 30-year yield to 5.44%, highest since 2004. 10-year reached 5.15%, highest since 2007. US 2-year yields are lower by around 3bp with long-end yields higher by around 3bp, close to cheapest levels of the day, steepening 2s10s and 5s30s curves by 4bp-5bp. 10-year yield is little changed near 5.125%, with bunds in the sector lagging by 1bp and gilts outperforming by 2bp. European rates are a touch higher with the French-German 10-year spread widening to about 111bps. Higher energy costs have hit sentiment in Europe. $44 billion 7-year note auction at 1 p.m. New York time follows poor demand for Wednesday’s 5-year note sale, which tailed by more than 3bp. WI 7-year yield near 5.055% is ~54bp cheaper than last month’s, which stopped on the screws. IG dollar issuance slate empty so far. Five borrowers priced a combined $5.2b Wednesday, paying about 6bp in new issue concessions on deals that were 1.9 times covered. Weekly volume stands near $33b, about $6.5b short of the $40b projected by dealers. Focal points of US session include weekly jobless claims data and 7-year note auction. 

In commodities, WTI crude oil futures are up around 1.4%, off session highs, extending Wednesday’s rally after an IRGC official threatened to expand the war in the Middle East into the Indian Ocean.Brent is higher by 2.5% and up nearly 10% from the week-to-date low as hopes of a US-Iran deal fade and rhetoric remains hostile. Brent gained after US Energy Secretary Chris Wright told oil industry leaders to brace for possible US curbs on diesel exports amid an intensifying debate within the Trump administration over such a move. The firmer greenback is dragging precious metals lower with spot gold down 0.6%. Bitcoin declines nearly 1%. 

US economic data slate includes 2Q current account balance and weekly jobless claims (8:30 a.m.), August new home sales (10 a.m.) and September Kansas City Fed manufacturing activity (11 a.m.) Fed speaker slate includes Richmond’s Barkin (8:30 a.m.), Cleveland’s Hammack (8:50 a.m.) and Philadelphia’s Paulson (10:10 a.m.). New York President John Williams said in a London event Thursday that more work needs to be done to lower US inflation.

Market Snapshot

Top Overnight News

• The US 30-year yield climbed to its highest level since 2004 as comments from Iran further stoked oil-driven inflation fears and fiscal concerns. Equity futures fell. BBG
• Brent surged to around $106 after a military adviser to Iran’s supreme leader said Tehran may expand the war to the Indian Ocean if the US or Israel attacks again, further undercutting hopes of a deal. BBG
• Saudi Arabia has sold almost 100 million barrels of oil to Asian buyers since the middle of last week, helping to avert a looming supply crunch in the region. The crude will be sent via the Strait of Hormuz to buyers including Chinese state-run and independent refiners, as well as processors in India, Japan and South Korea. BBG
• President Donald Trump’s strong rapport with Xi Jinping is set to be on display in Washington this week as the Chinese leader makes his first U.S. state visit in more than a decade. But below the surface-level pageantry at the White House, little is likely to be resolved as the world’s two biggest economies continue to spar over trade, Taiwan, AI and more. NBC
• US Treasury Secretary Scott Bessent announced on Wednesday that Washington and Beijing have agreed to extend the trade agreement reached in South Korea for just two months, as Chinese President Xi Jinping arrives in Washington for a state visit. SCMP
• Large cargo ships have recently paid up to $5 million to pass through the Panama Canal, as the global shipping industry reacts to trade disruptions from the Iran war and extreme weather patterns in the Western Hemisphere. WSJ
• The AI build-out is on track to become the biggest economic bet in U.S. history, dwarfing the investments made to fund other huge U.S. infrastructure projects such as the railroads, the highway system and the plumbing for the internet. WSJ
• AI firms are rushing to discount their products as some enterprises express caution about paying full price for all the new tools. The Information
• Sellers are feeling the strain of US mortgage rates around 7%. Nearly one in five homes for sale had a price cut in August, while 45% of sales involved a seller concession, according to Redfin data. BBG
• Mark Carney said he had seriously considered the “extreme tail risk” of a US invasion when asked about the possibility in a NYT interview. BBG
• A US judge issued an order blocking the Trump administration’s White House ban on CNN, MS NOW and Politico.
• US Senate Majority Leader Thune believes President Trump is open to implementing AI guardrails despite his public defiance on the issue: Axios.
• An industry group representing US tech companies is reportedly pushing the US administration to withdraw its proposal to charge for H-1B visas: WSJ.
• BofA Total Card Spending (w/e Sep 19th) +6.9% Y/Y (prev. +5.8% W/W); surging gas prices have opened up a gap in ex-gas spending between higher and lower income households.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly pressured following on from the declines in global peers alongside the recent bond turmoil and jump in yields, owing to several factors including strong US data, hawkish Fed rhetoric and mixed reports regarding a US diesel export ban.
ASX 200 retreated with the declines led by weakness in miners, real estate and materials, while sentiment was not helped by mixed jobs data including an unexpected rise in the Unemployment Rate to a five-year high. Nikkei 225 outperformed after Japanese participants returned from the long weekend and with tech names playing catch-up to the recent AI-related momentum. Hang Seng and Shanghai Comp retreated despite early optimism from President Xi's state visit to the US, while a two-month extension to the US-China trade truce until January 10th also failed to spur risk appetite.

Top Asian News

• PBoC will offer lenders a record amount of up to CNY 1tln in overnight funds each day over the upcoming holiday period, according to Bloomberg.
• PBoC to comprehensively use and timely adjust monetary policy tools to keep liquidity ample; to step up counter cyclical adjustments.
• Japan's Finance Ministry is to consider cutting issuances in liquidity-enhancement auctions for medium-term JGBs, according to sources.
• Japanese Finance Minister Katayama said the principles on forex established since the joint US-Japan intervention remain in effect, while she won't comment on specific FX levels.
• Japan reportedly plans to finance economic security spending mainly through "bridging bonds", reducing the need for the issuance of deficit bonds, Nikkei reported citing sources.

European bourses (STOXX 600 -0.3%) opened entirely in the red and has come under a fresh leg of pressure in recent trade amid the upside across the energy space. The source of the move came amid comments by the Senior adviser to Iran’s Supreme Leader Major General Safavi, saying the US conflict could expand further into the Indian Ocean. Sectors highlight the negative bias. Energy, Food, Beverages & Tobacco and Optimised Personal Care are the only sectors in the green. Leading the downside is Tech, followed by Autos and Financial Services. 

Top European News

• The UK Treasury is open to smaller fiscal headroom and Chancellor Healey may accept a smaller fiscal buffer to reduce tax rises in next month’s Budget, according to FT.
• German Ifo Expectations (Sep) 90.4 vs. Exp. 89.3 (Prev. 89.1).
• German Ifo Current Conditions (Sep) 89.5 vs. Exp. 89 (Prev. 88.5).
• German Ifo Business Climate (Sep) 89.9 vs. Exp. 89 (Prev. 88.8).
• French Business Confidence (Sep) 101 vs. Exp. 102 (Prev. 101).
• French Consumer Confidence (Sep) 86 vs. Exp. 85 (Prev. 86).

Central Banks

• Norges Bank hiked rates by 25bps to 4.50%. Expectations heading into the announcement were split. The Bank noted that inflation has been above target for several years, and that by raising the rate, it will help reduce inflation and that the policy rate will be elevated for a time. The Committee is prepared to raise the policy rate further if warranted by the inflation outlook. The decision was backed by continued elevated inflation metrics, with the Bank alert to upward risks to the inflation outlook; it stated that "Inflation may then become stickier and harder to bring down again". Governor Bache suggested that the inflation outlook has not materially changed, as such, stated that the Bank is prepared to deliver further rate hikes to bring inflation down to target. This is reflected in the rate path projection, which does not point to further tightening later this year, but will continue into Q1/Q2'27.
• The Riksbank left rates unchanged at 1.75%, as expected. With the commentary, and particularly the forecasts, a hawkish bias can be seen with the language being that "it is expected that the increases to the policy rate will begin this year", while the forecasts imply a hike around end-2026/start-2027 and then another one in the Q2/Q3-2026 period, and then thereafter there is some optionality of another hike by Q3-2028, a marked hawkish tilt vs the June projections. Albeit, this is caveated by the assessment that Q2 GDP strength was somewhat due to temporary factors, though the general commentary remains constructive. Overall, the strengthening of the SEK highlighted the overall hawkish tone.
• The SNB left rates unchanged at 0%, as expected. The main update was the tweak to the FX language, which now shows "...willing to be active in the foreign exchange market..." from the June line of "If necessary, the SNB has an increased willingness to intervene in the foreign exchange market", omitting the "increased" framing. In terms of the Bank's inflation forecast, they were lifted across 2026, 27 and 28, primarily due to higher energy prices. They also noted that the recent uptick in inflation was attributed to a rise in goods inflation, driven by higher prices for oil products. In an immediate reaction, the CHF weakened given the aforementioned change to the intervention language.
• Fed's Williams (voter, Neutral) said the big challenge is on inflation and need to get it back to target in a timely manner while stating that it is reasonable to see another rate hike by year-end. He said short-run inflation expectations have been more encouraging, though the longer term they have not. On the economy, Williams said it has been remarkably resilient and downside risk to achieving maximum employment have receded.
• BoE's Lombardelli said policy is increasingly likely to need to tighten if elevated energy prices persist. On second-round effects, she said the absence of evidence is something but not much, and that it is likely still too early to see evidence in the data. On policy, Lombardelli described it as restrictive and that it is increasingly likely to need to tighten if elevated energy prices persist, absent clear evidence of disinflation or weaker activity.
• BoE's Dhingra said most of the financial conditions have done a lot of tightening work already in the UK and is encouraged on what pricing is doing. Dhingra added that the labour market looks pretty weak, while highlighting that winter energy prices will be critical for second round effects.
• ECB’s Kocher said the ECB must prevent excessively high inflation from becoming entrenched and that the Eurozone economy remains fragile. Kocher added that there has been signs of somewhat more Eurozone momentum since summer.
• ECB's Schnabel said the energy shock is much more persistent than thought.

FX 

• G10s are mostly lower against the USD, albeit only marginally. The EUR holds afloat, joined by the Kiwi, Loonie and GBP, whilst the CHF underperforms a touch.
• DXY holds within a 101.00 to 101.23 range. The Dollar traded steady throughout overnight and early-European trade, but then moved higher alongside a bout of strength in the energy complex. This came after an IRGC official noted that the “war could expand” to the Indian Ocean or Bab el Mandeb Strait if the US decides to go to war again. More generally, crude benchmarks will be digesting reports that the US dismissed Iran's Hormuz offer during UN talks, saying Tehran does not control the Strait.
• Fed’s Williams spoke this morning, where he suggested it was reasonable to see another rate hike by year-end. Markets are pricing in a 38.4% chance of one 25bps hike by year-end, with a c. 50% chance of another this year.
• Policy announcements from the SNB, Riksbank and Norges Bank have led to some volatility in the respective currencies. Kicking off with SNB, the Bank opted to hold rates, lifted inflation projections and removed its “increased willingness” for intervention. As such, the CHF moved lower following the announcement. Over in Sweden, the SEK was initially choppy following the Bank’s decision to hold rates. But then gradually strengthened, as the Bank lifted its rate path forecasts to imply a hike towards the end of this year/start of next year. Elsewhere, the only hike today was delivered by Norges Bank. It lifted its Key Policy rate by 25bps to 4.50%, and reiterated its tightening bias. EUR/NOK knee-jerked lower as traders unwound their bets of a hold, before paring around half of that move.

Fixed Income

• The very modest bearish action at the start of the morning has given way to downside of c. 40 ticks in Bunds. Amidst a combination of factors, namely: energy upside on Iranian commentary, hawkish central banks, strong German Ifo & trade/tariff concern ahead of the US-China meeting, and also from Germany via the VDA.
• Unsurprisingly, the bulk of the move was on the Iranian adviser Safavi intimating that the “scope of the war may expand…”, to include the Indian Ocean and other regions. An update that, over the course of around one hour, lifted Brent by over USD 2.00/bbl and pushed the US 30yr yield to its highest in over 20 years.
• Bunds hit a 119.87 trough, nine ticks above Wednesday’s contract low. As mentioned, much of the focus has been on yield action, with upside seen across curves globally and a slightly steepening bias seen.
• For USTs, no real move to Fed’s Williams, though he did note that pricing for another hike by end-2026 is “reasonable”. As it stands, markets imply a 38% chance of one 25bps hike by year-end, and just over a 50% chance of two. At a 104-28 contract low with yields bid across the curve.
• Ahead, the focus remains on central banks with several speakers due, before the Trump-Xi meeting begins and the readout which is scheduled for just after 15:00BST commences. A meeting that is framed by recent remarks from Treasury Secretary Bessent that while the truce has been extended to January 2027, he does not know if a bigger deal can be done.
• Italy sells EUR 2.5bln vs Exp. 2.5-3bln 3.00% 2028 BTP: b/c 1.64x (prev. 1.58x), average yield 3.64% (prev. 3.02%).

Commodities

• WTI Nov and Brent Dec futures started the European morning with only modest gains, but gradually picked up as the session progressed. The bullish bias potentially comes amidst the lack of US-Iran diplomatic progress and after an IRGC official noted that the “war could expand” to the Indian Ocean or Bab el Mandeb Strait if the US decides to go to war again.
• Focus also remains on the potential US diesel export ban, although the White House denied reports that the Trump administration is preparing a 90-day ban. Morgan Stanley warned that such a move, while not its base case, could have significant implications and potentially raise gasoline prices as barred diesel exports fill storage and force refiners to cut runs. The bank estimated refiners could need to reduce runs by around 2mln BPD, in turn cutting gasoline supply by roughly 650k BPD.
• WTI trades around USD 93.70/bbl within a USD 91.23-94.69/bbl range, while Brent trades above USD 100.00/bbl within a USD 97.09-100.94/bbl range. Dutch TTF is firmer, with the contract trading within a EUR 73.39-75.04/MWh range. The Trump-Xi meeting could provide some impact amid reports of potentially reducing or removing China’s 15% tariff on US LNG.
• Precious metals remain subdued following Wednesday’s surge in the USD and global yields, with hawkish Fed rhetoric and strong US data continuing to weigh on the complex. Spot gold trades towards the bottom of a USD 4,254-4,303/oz range, with the 100 DMA at USD 4,309/oz. Spot silver similarly trades around the lower end of a USD 63.52-64.55/oz range.
• Base metals are mixed/rangebound against a subdued risk backdrop, with copper also digesting news that BHP suspended operations at its Escondida mine in Chile following an accident. 3M LME copper resides in a USD 14,575.08-14,677.78/t range.
• Saudi Aramco CEO said that it is studying a "a fourth and a fifth route" for crude oil exports and noted that the Co. can restore disrupted operations within days.
• China’s NDRC raised retail fuel prices in the current bi-monthly cycle, effective September 25th, with gasoline prices up CNY 395/tonne and diesel prices up CNY 385/tonne.
• BHP (BHP AT) said operations at the Escondido mine in Chile were suspended following an accident.

Trade/Tariffs

• US President Trump said it was a great greeting with Xi and that the entire tech and banking world will be at Thursday's dinner. Trump also stated that he had some great conversations with leaders at the UN General Assembly.
• Chinese President Xi said he looks forward to in-depth exchanges with US President Trump and will expand cooperation between the two countries in various areas, while he is confident the US trip will produce fruitful results. Xi also commented that China and the US must be allies, not adversaries, and he is confident China and the US can find the right path to coexist in a new era.
• US Treasury Secretary Bessent said the US-China trade truce was extended to January 10th, while he doesn't know if a bigger trade deal can be done with China and could just roll the current deal forward. Furthermore, Bessent said that presidents Trump and Xi are expected to meet four times this year and that China is doing well so far in meeting 2026 pledges.
• China's MOFCOM said they discussed AI with the US under the bilateral economic and trade consultation mechanism.
• Germany's VDA is reportedly endorsing new tariffs against China for the first time, according to Handelsblatt.
• India cut import duties on crude palm oil and soybean oil to 5% (prev. 10%).

Geopolitics: Iran

• Senior adviser to Iran’s Supreme Leader Major General Safavi said the scope of the war may expand to the Indian Ocean and other regions, if the US starts a new war.
• Israeli source said an additional round of strikes against Iran seems to be a matter of time, Al Hadath reported. The source added that Iran is intensifying the transfer and fortification of the Natanz nuclear project. Additionally, the source said Israel does not see a real chance of reaching an agreement between the US and Iran, and that the US wants to end the Iran war with a political agreement or a decisive attack that topples the regime. On further strikes, the Israeli source said they will strike Iranian nuclear facilities again if Iran crosses the red lines, with or without US involvement.
• US Treasury Secretary Bessent said they are getting sometimes up to 17mln oil barrels out of Hormuz and noted that probably 80-90% of Iran's external flights are shut down.
• Chinese Foreign Minister said the Strait of Hormuz conflict must be resolved through dialogue and calls on all parties to seek a peaceful solution, Al Arabiya reported.
• Pakistan's Foreign Minister told Iran's Foreign Minister that they must remain committed to dialogue and diplomacy.
• Iran's Foreign Ministry noted that Iran's Foreign Minister held a meeting with Pakistani counterpart at the UN General Assembly.
• UK Chancellor Healey said he spoke with US Treasury Secretary Bessent today about stepping up pressure on Iran and how to work together to drive growth in both nations.
• EU's Costa spoke to Iran's President Pezeshkian and urged Iran to resume its cooperation with the IAEA, while he also called for an end to Iran's strikes against its neighbours and a full restoration of freedom of navigation in the Strait of Hormuz.
• Initial reports noted two explosions in Bandar Abbas and one in Sirik, southern Iran, with the explosion in Sirik reportedly coming from near the coast, off to the sea.

Geopolitics: Ukraine

• Russia's Kremlin said no decision yet has been made on a December summit between US President Trump and Russian President Putin and that discussing a possible agenda is premature.
• Waves of Russian missiles attacked Kyiv and more than a dozen heavy explosions were heard in 30 minutes, according to an FT reporter.

US Event Calendar

• 5:00 am: Aug F Building Permits, prior 1394k
• 8:30 am: 2Q Current Account Balance, est. -257.4b, prior -226.83b
• 8:30 am: Sep 19 Initial Jobless Claims, est. 200k, prior 196k
• 8:30 am: Sep 12 Continuing Claims, est. 1740k, prior 1730k
• 10:00 am: Aug New Home Sales, est. 615.55k, prior 607k

Central Bank Speakers 

• 4:10 am: Fed’s Williams Speaks During Moderated Discussion
• 8:30 am: Fed’s Barkin In Fireside Chat With Economic Club of Washington
• 8:50 am: Fed’s Hammack Delivers Opening Remarks at Inflation Conference
• 10:10 am: United States Fed’s Paulson Speaks At Fintech Conference

DB's Jim Reid concludes the overnight wrap

As we go to press, the main story is still the huge global bond selloff, with yesterday seeing the biggest jump in the 10yr Treasury yield (+15.2bps) since the market turmoil around Liberation Day in April 2025. The main driver was a strong batch of PMIs, along with a rebound in oil prices, which both led to mounting speculation about faster rate hikes. Indeed, futures this morning are pricing a 71% chance of a Fed rate hike at the next meeting in October. So that drove a bunch of records, and we even saw the 5yr Treasury yield (+16.7bps) rise above 5% for the first time since 2007. In addition, there were growing signs of stress in Europe, where the Franco-German 10yr spread (+6.2bps) rose to 110bps by the close, marking its highest level since the Euro crisis in 2012. So it was a rough day all round, and risk assets came under fresh pressure, with the S&P 500 (-0.75%) posting its biggest decline in a month, with futures down another -0.21% this morning.

Those moves had several catalysts, but the biggest were the US flash PMI numbers, where the composite PMI unexpectedly hit a 5-year high of 58.4 in September (vs. 55.3 expected). So that played into the narrative of resilient growth, which in turn would enable the Fed to keep hiking rates to deal with inflation. And significantly, this was part of a global theme, as we found out earlier that the Eurozone composite PMI hit a 3-year high of 53.1 (vs. 51.7 expected). So if anything, the initial signal from the PMIs suggested that growth was accelerating in September across many of the world’s biggest economies.

That positive data drove the hawkish repricing, but it got a further boost thanks to a fresh rebound in oil prices. Indeed, Brent crude (+3.86%) ended a run of 5 consecutive declines yesterday, closing back up at $103.08/bbl. That came amidst growing doubts about the chance of a US-Iran deal, despite the talks at the UN this week. For instance, a spokesman for Iran’s foreign ministry said that Iran had presented a list of conditions to the US for restarting negotiations via Qatari mediation. That included the US accepting a shipping route agreed by Oman and Iran, along with an end to the naval blockade and the release of Iran’s frozen assets. And Iran’s President Pezeshkian struck a defiant tone, saying that Iran would not allow freedom of navigation through Hormuz while the US blockade and sanctions remain in place. So for investors, the sense was that the two sides were still far apart, and the 12-month Brent future (+0.42%) hit a 3-month high of $80.96/bbl by the close. So it was clear that investors were still expecting a protracted period of higher oil prices.

Collectively, that strong data and the oil rebound led to growing speculation about faster rate hikes. But interestingly, this fits into the usual pattern of recent cycles, where investors have tended to underestimate the scale of hikes at the outset, before adjusting in a hawkish direction. We explored this pattern on Monday (link here), where we pointed out several reasons that leant in the direction of faster hikes. For instance, much as inflation is lower than in the 2022 cycle, broader financial conditions are much more accommodative today. Moreover, another historical pattern is that central banks tend to correct for the last crisis, and in 2021-22 they faced criticism for not reacting to inflation fast enough, so we’re already seeing a more hawkish reaction function this time. And looking forward, the latest uptick in commodity prices hasn’t filtered through to the inflation numbers yet either.

This hawkish repricing was clear over the last 24 hours, and when it came to the Fed, market pricing for an October hike rose from 53% on Tuesday, to 69% by last night’s close. Similarly for the ECB, the chance of an October hike rose from 48% on Tuesday to 66% by the close. So in other words, there was a mounting sense that central banks would need to accelerate the hiking cycle, and that hikes at every other meeting might not be enough to get inflation back to target again. Looking beyond the next meeting as well, market pricing also shifted hawkishly. So for year-end, investors are now pricing in 37bps of Fed hikes, implying a near-even chance that they’ll deliver two more hikes before the year is out, which is the most hawkish pricing for December 2026 so far. That backdrop led to another huge bond selloff yesterday, with yields seeing big rises across the board. That was particularly clear for US Treasuries, where the 10yr yield (+15.2bps) saw its biggest daily jump since the market turmoil after Liberation Day in April 2025, taking it up to a post-2007 high of 5.11%. The moves were clear across the curve as well, with the 2yr yield (+14.2bps) jumping to its highest since May 2024, at 4.90%, whilst the 30yr yield (+9.9bps) hit a post-2007 high of 5.40%. A weak 5yr auction also didn’t help matters, with yields up to their intraday highs after $70bn of notes were sold at 5.03%, +3.1bps above the pre-sale yield. And in turn, the rise in US yields saw the dollar index (+0.49%) rise to its highest since July, while gold (-1.68%) had its biggest decline in two weeks.

That selloff was echoed in Europe, where the energy price gains and the strong PMIs drove a hawkish repricing as well. So that pushed bond yields up to fresh multi-year highs, with the 10yr bund yield (+9.2bps) at a post-2009 high of 3.55%, whilst the 10yr OAT yield (+15.4bps) hit a post-2008 high of 4.66%. Notably as well, it also pushed the Franco-German 10yr spread up to 110.4bps, which was a level last seen in July 2012, a few weeks before Mario Draghi delivered his famous “whatever it takes” speech that was a key turning point in resolving the crisis.

All that put a lot of pressure on equities, even though the growth data surprised on the upside. So the S&P 500 (-0.75%) posted its biggest decline in a month, with all the major sector groups apart from energy (+1.04%) losing ground. The NASDAQ (-1.13%) and the small-cap Russell 2000 (-1.77%) saw even larger falls. Meanwhile in Europe, the STOXX 600 (-0.44%) also saw a pullback, alongside declines for the DAX (-0.66%) and the CAC 40 (-0.39%) as well.

Overnight in Asia, the bond selloff has continued, with Japan’s 2yr yield (+4.8bps) up to a post-1995 high of 1.88%, whilst the 10yr yield (+11.1bps) is up to its highest since 1996, at 3.07%. And that’s been echoed in other countries, with Australia’s 10yr yield (+10.4bps) up to 5.32%, whilst New Zealand’s 10yr yield (+14.1bps) is up to 5.04%, the highest since November 2023. So equities have also struggled, with losses for the Hang Seng (-0.52%), the CSI 300 (-1.29%), the Shanghai Comp (-0.93%) and the S&P/ASX 200 (-0.80%). The main exception has been the Nikkei (+0.94%) although that reflects a catch-up after the index has been closed for the previous three days. Meanwhile in South Korea, markets are closed for a public holiday.

Looking forward, a key event today will be the summit between Presidents Trump and Xi. From a market standpoint, the main news was US Treasury Secretary Bessent saying they’d agreed to extend last year’s trade truce by two months, which will now keep tariffs lower until January 10. This extension was shorter than had been floated by US officials beforehand, but does offer more time to potentially reach a longer deal.

Finally, as oil prices were rising, another energy story yesterday was around whether the US might restrict diesel exports. Trump said on Tuesday that he was considering a possible export ban, and US diesel prices then slumped yesterday after Politico reported that the US was preparing a plan for a 90-day export ban. However, Reuters then reported a White House official who said this wasn’t accurate, while US Energy Secretary Wright said that “a full blanket ban or zero exports of diesel” are not being discussed. However, he did say that the administration was working with refiners to voluntarily curb exports of diesel. So despite the rises in crude, US wholesale diesel prices settled -3.35% lower after trading as low as -7.45% intra-day.

Looking at the day ahead now, and US data releases include the weekly initial jobless claims, new home sales for August, and the Kansas City Fed’s manufacturing index for September. Then in Europe, we’ll also get the Ifo’s business climate indicator from Germany for September. Otherwise from central banks, we’ll hear from the Fed’s Williams, Barkin, Hammack and Paulson, the ECB’s Schnabel and Lane, and the BoE’s Dhingra, Breeden and Lombardelli. The ECB will also publish their Economic Bulletin.

Tyler Durden Thu, 09/24/2026 - 08:46

They Used AI To Race-Swap Him...

Authored by Steve Watson via Modernity.news,

Stanford University took a real photograph of three students in a dining hall, ran it through artificial intelligence, and published the result as a "Welcome Home" banner. However, one of those students, Hispanic undergrad Billy Ramirez, class of 2027, was gone.

In his place stood an AI-generated Black woman. The two students next to him had their faces slimmed and altered. Clothing was even changed into Stanford merchandise.

This was not a student meme. It was official marketing from Residential & Dining Enterprises, the office that runs housing and dining for one of the richest universities in America - an institution that still soaks up hundreds of millions in taxpayer money while preaching ethics about "synthetic media."

Stanford busted using AI to race swap white male student for black female in ad: 'Silenced and erased' https://t.co/qZMddVpNMP pic.twitter.com/8vR8JRjb3s

— New York Post (@nypost) September 22, 2026

Ramirez recognized the shot. A Stanford photographer had taken it at a 2024 Lunar New Year dinner as he held a plate of noodles. Dining posted the unedited picture the next day. Years later it came back as campus décor, but completely redesigned.

"I was driving to school from my hometown when my friend sent me the images comparing the banner to the original photos, and I was immediately baffled," Ramirez told The Stanford Review, which broke the story.

Ramirez further explained, "At first, I found it hilarious that they had used AI to completely change our appearances, including my race and gender. But after looking at the comparison, I was also upset because I don't agree with Stanford making those choices about how we were represented. Seeing my identity changed and being left out of the picture made me feel, in a way, silenced and erased from a representation that was supposed to include me."

He later told The New York Times, "To see me erased like that so easily was kind of very upsetting." To the San Francisco Chronicle he added that the doctored banners were "all over campus. It's the first thing you see when you walk in."

The conservative campus paper posted the side-by-side.

?? Stanford's dining and housing office ran an ad through AI, and somehow erased an actual Hispanic student and replaced him with a generated black woman.

Billy Ramirez says a Stanford photographer took the original image, but when it turned up in university advertising, he had... pic.twitter.com/lcB1K7kAzE

— Mario Nawfal (@MarioNawfal) September 22, 2026

Stanford's own AI guidelines for marketing and communications are not vague. The university forbids creating or publishing AI-generated content that "falsely depicts Stanford people, events, research, facilities, or achievements."

It requires clear identification of AI-manipulated images when leaving that out could mislead people about what is real. It also bars synthetic media depicting real individuals without explicit consent.

Residential & Dining Enterprises did all of it anyway: no consent from Ramirez, no disclosure on the banners, and a fabricated person dropped into a photo of actual students.

After the Review published, the university stopped pretending it hadn't happened. Public relations director Charlene Gage said the school had reviewed the matter and confirmed AI was used "in violation of university policy."

"Stanford's A.I. policy is clear: The use of A.I. in producing or altering images of Stanford people, events, research, facilities or achievements is strictly prohibited," the university said. "Both the alteration and lack of disclosure in this case violate that policy. We are working with Residential and Dining Enterprises to provide additional training and ensure proper review of all materials."

The banners came down. Officials promised more training. The Chronicle also noted the same dining shop appeared to have used AI on meal-deal posters earlier in the year. The instinct was already there. This time they race-swapped a living student and hung the result where freshmen walk in.

The punchline writes itself. A real minority student was deleted and replaced with a computer generated person so the brochure could appear to be more diverse.

Stanford has spent years treating race as a branding problem to be managed. In 2022 it rolled out the "Elimination of Harmful Language Initiative," a list that treated "American" as suspect and put "grandfather" and "brave" on the chopping block before national ridicule forced a retreat.

The word "American" is one of dozens on the chopping block under the university's Elimination of Harmful Language Initiative, launched to eradicate "racist, violent and biased" language in websites and code. https://t.co/j8zMqEyPnM

— The Washington Times (@WashTimes) December 22, 2022

Stanford University has taken down its 'Elimination of Harmful Language Initiative' site, following feedback that the effort was 'counter to inclusivity.' For Stanford it's a lesson learned: censorship is no way to educate.https://t.co/ZjCSiMFJVo

— Wall Street Journal Opinion (@WSJopinion) January 11, 2023

In 2024 it was still demanding DEI statements from students applying to an engineering marketing class. This year it was still funding racialized research titles even after claiming it had wound that machinery down.

When the real campus does not match the poster in their heads, they no longer have to hunt for a different group of volunteers. They generate one.

The same racial script is not confined to Palo Alto. At the University of Illinois Urbana-Champaign, a required first-year education course walked future teachers through slides on "undocumented" language rules, "internalized oppression," "minoritized identities," and how "white peers" supposedly silence everyone else.

A whistleblower told Fox News Digital the professor kept repeating that "you as future educators" must carry this into classrooms - while the class taught almost nothing about how to actually teach math or reading.

Further down the pipeline, schools have been sorting children into "affinity groups" by race. White kids get the lecture on privilege and America's sins. The other room gets praise and, in the New York example that spread last year, cupcakes. Parents described children coming home in tears. The program is not a rumor from a single district. It has shown up across progressive school networks.

Thousands of schools in America have implemented a program of separating their students into 'Affinity Groups'

Children are separated by race. White children are scolded and told about their white privilege and racism, the non-whites are praised and given cupcakes (THIS IS REAL)... pic.twitter.com/L5zq7W7PJ4

— Wall Street Apes (@WallStreetApes) September 2, 2025

Ramirez was not asking to be a symbol. He was in a photo holding noodles. That was too inconvenient. His race and sex were edited out, two classmates were digitally put on a diet, and a fictional black woman was invented to complete the set.

Absolute ideological obsessive insanity.

Tyler Durden Thu, 09/24/2026 - 08:33

Japan Breaks The 'Debt Causes Inflation' Narrative

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

A dollar today buys nearly twice as many Japanese yen as it did fifteen years ago. Crude oil, in yen terms, is up roughly 70% year to date. Food prices are similarly elevated. Japan imports most of the energy and much of the food it consumes, paying for it in dollars that keep getting more expensive. Those facts alone should lead us to conclude Japan has an inflation problem.

As if those factors weren't enough, add their debt overhang, with the narrative that mounting government debt is inflationary. If that logic holds in the US, it should apply with even more force in Japan, where government debt is nearly double ours as a share of the economy, and where the yen carries none of the dollar's reserve-currency privilege to cushion its borrowing needs.

A collapsing currency, heavy import dependence, and the developed world's heaviest debt load. Surely that's a recipe for an inflation crisis. Instead, Japan's latest data shows headline CPI at 1.9% and core at 1.7%, both below where the US sits today.

Let's go to Japan and find out why an economy with seemingly every ingredient for runaway inflation has relatively tame inflation. The facts may change how you think about the relationship between government debt and inflation in the US.

The Data

From 1995 to the present, Japan's CPI averaged a mere 0.50%, with deflation marking 13 of the 31 years shown below. Since the pandemic, inflation has been above its 2% target. As a result, the Bank of Japan (BOJ) has been slowly raising its policy rate. Today, the policy rate is 1.25%, a departure from zero and negative rates that presided over much of the period shown below.

Japan's recent inflation is certainly higher than the 1995-2020 experience, but it's still running below America's, where July CPI and Core CPI were 3.4% and 2.5%, respectively.

Measure Japan United States Headline CPI, YoY 1.9% 3.4% Core CPI, YoY 1.7% 2.4% Policy rate (hiked Sept. 16) 1.25% 3.75-4.00% A Setup Built for More Inflation, Not Less

Japan self-supplies only 16% of its energy and 37% of its food, meaning most of what heats Japanese homes, runs its factories, and feeds its people is bought abroad, in dollars. Run that through a currency that's lost nearly half its value against the dollar since 2021 and oil that's up over 50% year over year, and Japanese wholesale inflation has been affected. To wit, Japan's corporate goods price index ran at 7.2% year-over-year in April, with import prices in yen up 29% versus 17.7% in the exporter's own currency. That 11.3% gap is almost entirely related to the yen's depreciation.

A 7.2% wholesale inflation rate on top of its currency and import exposure is the kind of setup that has produced double-digit consumer inflation in many other countries. Yet, Japan's consumer inflation is less than 2%.

Some of the lack of inflation pass-through to consumers stems from subsidized energy prices and businesses still absorbing costs rather than passing them through. Aging demographics and a declining population also weigh on consumer demand and inflation. Furthermore, and maybe most importantly, government debt is presenting a strong headwind, as we will discuss next.

The Debt Question

If the "debt and deficits are inflationary" story were true, Japan should be the cautionary tale, not the United States. Its government owes 1.6 times as much, relative to the size of its economy, and finances almost all of it with domestic capital. Very few foreign investors own Japan's debt, while foreign buyers absorb nearly a third of U.S. Treasuries.

The level of debt does matter, and in Japan's case it is very problematic, but not in the way most people think. Government debt isn't free money injected into the economy. Instead, it's a claim on capital today and when the debt gets serviced and rolled over in the future. Every yen or dollar used to fund the servicing and rollover of existing and new government debt is a yen or dollar a bank, insurer, or pension fund didn't lend to a business building a factory, hiring workers, investing in R&D, or expanding capacity.

Economists use the term negative growth multiplier to describe the economic impact of most government debt. Because government spending tends to be unproductive, debt servicing typically offsets the initial benefits over time. In aggregate, government debt reduces economic activity and impedes an economy's ability to become more productive.

This idea was made popular by Reinhart and Rogoff's 2010 research on debt overhang. They concluded that when government debt exceeds roughly 90% of GDP, each additional dollar of debt-financed spending buys progressively less growth, not more.

Japan Crowds Out Economic Progress

Japan is a real-world test case for Reinhart and Rogoff's theory. With banks, insurers, pension funds, individuals, and the Bank of Japan (BOJ) absorbing most Japanese debt, that capital isn't chasing more productive private investment. Furthermore, with little economic growth for the past twenty years and a generally deflationary environment, the desire to invest in private Japanese ventures has been greatly curtailed

To wit, Japanese corporations sit on some of the largest cash hoards in the developed world rather than deploying it domestically. What Japan is witnessing is the crowding-out effect. The result of the government demanding large amounts of capital is not inflation or higher interest rates, but rather capital parked unproductively in Japanese debt instead of investments that can generate organic, demand-pull inflation and economic growth.

Debt, in other words, hasn't been a demand-side accelerant in Japan. The US, with a lower debt ratio and a captive foreign bid for its debt, is not in the same boat as Japan. However, debt is crowding out investment into more productive uses, and rising interest rates will make the crowding-out effect a bigger drag. This should give pause to anyone claiming more debt equals more inflation.

TFP Tells The Story

Total factor productivity (TFP) measures the output an economy gets beyond what capital and labor add. Think of TFP as the gains from technology, innovations, and smarter capital allocation. Over long-term horizons, TFP is the main driver of per-capita growth as labor and capital have limits. In Japan's case, its aging population, strict immigration laws, and declining population mean that labor is negatively impacting economic output. Furthermore, as we have been discussing, capital is being misallocated toward the deficit. Thus, its limited TFP is the primary source of growth.

The chart below shows that Japan's Total Factor Productivity (TFP) has been flatlining around 1%, as has its real GDP growth.

Summary

The simple deficits = inflation story being used to justify buying gold and bitcoin while shedding bonds at all costs is lacking. Instead, we must consider the longer-term implications of government debt and how too much debt inhibits economic demand and limits inflation by reducing investment in more productive uses.

Japan can thank its high debt loads and aging demographics for the inflation restraint. But bear in mind that the cost paid in stagnant growth and diminished prosperity for its citizens has been dear. We do not fear an inflationary spike in the US; instead, we are concerned that the economic doldrum that has infected Japan for over 25 years will slowly work its way here.

Tyler Durden Thu, 09/24/2026 - 08:05

Aramco CEO Eyes "Fourth & Fifth" Oil Export Routes To Break Hormuz Chokehold

Brent crude futures climbed back above $104 a barrel early Thursday as Iran threatened to widen the Middle East conflict into the Indian Ocean and optimism surrounding yesterday's meetings between US and Iranian officials on the sidelines of the UN General Assembly faded.

A focal point this morning is Nikkei Asia’s interview with Saudi Aramco CEO Amin Nasser, who said Aramco is studying additional crude export routes to bypass the Strait of Hormuz.

Nasser said Aramco is conducting engineering and feasibility work on “a fourth and a fifth route” for crude exports. He did not disclose their locations.

He warned, "This crisis is not really getting better. The situation will get worse because this interruption is significant. It's not a small interruption," adding, "I don't think things are getting better."

The plan for two more oil export routes builds on the current three primary routes, one of which passes through the Hormuz chokepoint that Iran has disrupted. This comes after drone attacks earlier this month disrupted Saudi Arabia's East-West pipeline to the Red Sea, but media reports this week suggest the pipeline could restart soon at half capacity.

"When people talk about the East-West [pipeline], they think it's one pipeline. It's not, it's multiple lines," he said. "It's not easy to interrupt all the lines at the same time. So it gives us the flexibility to respond and cater to our customers."

Beyond the Hormuz chokepoint and the East-West pipeline, Aramco can move crude north through Egypt's Sumed pipeline to the Mediterranean, Nasser said.

"People think about interruptions in Hormuz, interruptions in Bab-el-Mandeb, [but] we never stopped. We continue to supply our customers," he said. "The only thing you do [is] shift more vessels, one way or the other. ... We do have this multiple optionality that allows us to meet our customers' demand."

Last weekend, Qatari Energy Minister Saad Al-Kaabi blasted Treasury Secretary Scott Bessent for saying he was "wrong" to claim that the Hormuz chokepoint would be "worthless" to the oil industry in two years. 

"I think this is completely wrong," Saad Al-Kaabi said at the Qatar Economic Forum in New York.

Speaking to Fox Business's Larry Kudlow on the sidelines of the Group of 20 finance ministers' summit in North Carolina earlier this month, Bessent said the Hormuz maritime chokepoint, in about "two years will be… a worthless piece of water," adding that oil "will be going on pipelines across land."

🚨𝗝𝗨𝗦𝗧 𝗜𝗡: 🇺🇸 Treasury Secretary Scott Bessent says

“In 2 years, the Strait of Hormuz will be like a worthless piece of water.” pic.twitter.com/B94NIWtews

— DustyBC Crypto (@DustyBC) September 1, 2026

Bessent has a point. Aramco's push for new export routes reinforces the outcome we first pointed out at the war's start: energy flows will reroute around Hormuz, gradually eroding Tehran's leverage. Iran's threat to widen the conflict may be an attempt to keep that leverage alive. And it won't be just the Saudis rewiring energy flows; it'll be all the Gulf allies with the capability to do so. 

Tyler Durden Thu, 09/24/2026 - 07:45