Zero Rss

The Pentagon's Hidden Housing Scandal: Outsourcing Duty Of Care

Authored by Jay Rogers via RealClearDefense,

Sen. Jon Ossoff released a report on July 8 documenting lead exposure in a newborn, mold-related emergency room visits, and a cockroach infestation living inside a family's oven, all in privatized military housing at Fort Benning and Fort Stewart. Read it and you'd think it was written in 2022. It wasn't. That's the scandal: the Pentagon outsourced a duty of care to private landlords and never enforced the contracts meant to keep it intact.

I've spent thirty years in institutional investment management and now serve as an expert witness in fiduciary litigation. The pattern is one I recognize immediately: an institution hands a core obligation to a private operator, collects a fee for oversight it doesn't actually perform, and treats the delegation itself as if it discharged the duty. It didn't. Outsourcing a duty of care doesn't outsource the duty.

Congress created the Military Housing Privatization Initiative in 1996 to fix decrepit on-base housing without loading the capital cost onto the Pentagon's books. Private companies would own, renovate, and maintain the homes under leases running as long as fifty years, with servicemembers' Basic Allowance for Housing flowing straight to the landlord as rent. The Pentagon would keep oversight, backed by incentive fees for good performance and penalties for bad. On paper, a clean alignment of interests. In practice, a guaranteed revenue stream with an oversight function nobody actually staffed.

Fort Stewart's housing has been run by Balfour Beatty Communities since the base was privatized. In December 2021, Balfour Beatty pleaded guilty to one count of major fraud against the United States, agreeing to pay more than $65 million in criminal fines, restitution, and a related civil settlement. The company's employees falsified maintenance records and destroyed resident comment cards between 2013 and 2019 to fraudulently collect incentive fees they hadn't earned. Deputy Attorney General Lisa Monaco said the fraud was "a consequence of BBC's broken corporate culture" that put profit ahead of servicemembers' welfare.

Four months later, the Senate Permanent Subcommittee on Investigations found the conduct hadn't stopped. Its bipartisan staff report on the mistreatment of military families in privatized housing documented that Balfour's post-2019 behavior mirrored the misconduct behind its guilty plea; in the same period the company was under active federal investigation. A company can plead guilty to defrauding the government over housing conditions and keep collecting Basic Allowance for Housing checks from the families living in the homes it failed.

Fast-forward to this month. Fort Stewart is still Balfour Beatty's. Fort Benning's housing is run by a different company, the Michaels Organization's Villages of Benning. Ossoff's report found nearly identical failures at both: mold, lead, cover-ups, families told their complaints were handled when they weren't. That detail should stop anyone from treating this as one bad company. Two operators, two installations, the same pattern. The failure sits in the oversight structure, not the logo on the leasing office.

The government's own auditors have said as much. In an April 2023 report, the Government Accountability Office made 19 recommendations to improve DOD's oversight of privatized housing, including a priority recommendation that the Pentagon set clear, consistent, department-wide home inspection standards, after finding that comparable maintenance problems were getting graded differently depending on who held the clipboard. As of GAO's most recent public status update, that priority recommendation was still open, with DOD not expecting signed guidance until mid-2025 at the earliest. Congress had to legislate the fix GAO had already recommended.

This is the same structural failure I've written about previously in public pension governance, wearing a uniform instead of a suit. A pension trustee who delegates asset management to an outside manager doesn't delegate away fiduciary responsibility for the outcome; the law is explicit that the duty stays with the trustee. The Pentagon's relationship with its housing contractors works the same way as a matter of principle, even though the enforcement mechanism is a lease rather than ERISA. Both share the same defect: an incentive-fee structure that pays out on paperwork instead of results, and an oversight office too thin to catch the difference until a senator's staff does the job for it.

That fix is now in the books. The Fiscal Year 2026 National Defense Authorization Act, signed in December, directs the Secretary of War to establish a standard inspection and audit program for privatized and government-owned housing using independent, qualified inspectors, and separately tightens the rules on when a housing company may close a maintenance work order. Falsified paperwork closed BBC's work orders and inflated its bonuses for six years before anyone with subpoena power looked at the underlying data; an inspector who doesn't answer to the landlord closes that loophole.

Whether the law works depends on what determines whether any oversight regime works: whether a breach costs the party responsible for it. Balfour Beatty's $65 million penalty amounted to roughly one percent of the $6 billion in military housing assets the company reported managing at the time of its plea. A one-percent toll on a six-year fraud scheme is a minor cost of doing business, not a deterrent. If the penalty barely registers against the portfolio, the next audit will look exactly like the last one. Congress wrote the inspection program. It still has to write the consequence.

Jay Rogers is a financial professional with more than 30 years of experience in private equity, private credit, hedge funds, and wealth management. He has a BS from Northeastern University and has completed postgraduate studies at UCLA, UPENN, and Harvard. He writes about issues in finance, constitutional law, national security, human nature, and public policy.

Tyler Durden Mon, 08/03/2026 - 20:05

The Kospi Made South Korean President Lee Jae Myung; It May Yet Unmake Him...

There is a particular cruelty in the timing. When the Kospi began its final, cratering descent in late July, President Lee Jae Myung was roughly 11,000 miles away, midway through an 11-day diplomatic tour of South America, watching from hotel suites as the index he had made the totem of his presidency collapsed. His finance minister apologized to lawmakers. The heads of both financial regulators cancelled their holidays as retail investors laid funeral wreaths at the gates of the National Assembly in Yeouido.

Near the main gate of the National Assembly in Yeouido, Seoul, there are condolence flowers installed calling for the delisting of single-stock leveraged ETFs. (Photo: Yonhap News)

From its record close of 9,114.55 on June 22, the benchmark fell into the 5,600s by July 30 - a peak-to-trough drawdown of roughly 39 percent on a closing basis, erasing more than $2 trillion in market value in under six weeks. Trading was halted four times during the month, a record run of circuit-breaker suspensions for a tool that was barely used before this year.

Then, on Friday, after an emergency late-night meeting of the country's top financial authorities produced a package of curbs on leveraged products, the index ripped 17.91 percent higher to close at 6,595.45 - the largest single-day gain in its history. SK Hynix hit its 30 percent daily limit. Samsung gained 27 percent. On Monday it gave back 5.12 percent, closing at 6,257.45.

Some retail traders have vowed not to step back in.

Samsung fell 8.76 percent, SK Hynix 8.79 percent. Foreign and institutional investors sold a net 2.84 trillion won and 1.95 trillion won of shares respectively. Retail investors bought a net 4.65 trillion won - stepping in front of the same train, four days after the government had promised to protect them from it.

Also on Monday, Realmeter published a weekly tracker putting Lee's approval at 45.9 percent, the lowest of his presidency, with disapproval at 50.5 percent - crossing the majority threshold for the first time. The fieldwork matters here: 2,508 respondents surveyed from July 27 to 31, with a margin of error of two points. The poll closed on the day of the record rally and captured none of Monday's reversal. Realmeter attributed the third consecutive weekly decline to the market rout and to a parallel controversy over whether a constitutional amendment might let a sitting president seek reelection.

The same pollster had Lee at 59.7 percent in May, against 35.7 percent disapproving. A net positive margin of twenty-four points has become a net negative of nearly five - a swing of some twenty-eight points in under three months. Realmeter runs lower than its peers; Gallup had him at 51 percent in late June, the National Barometer Survey at 53 percent on July 30. But all three recorded lows for his presidency, and all three were falling.

The problem of ownership

Presidents survive bad markets all the time, but this debacle is Lee's to own - after running in 2025 on a campaign drive the Kospi past 5,000 - an unusual promise for a head of state, and one he blew past in January. He is a former day trader, a fact his opponents recite with relish. He urged Koreans to move their savings out of Seoul property and into equities. In June, with the index sagging below 8,000, he told reporters the retreat was temporary and Korean shares remained undervalued. His policy chief, Kim Yong-beom, predicted Korea would become a top-three equity market by capitalization within three years.

And then there are the ETFs.

The sixteen single-stock leveraged and inverse funds tracking Samsung Electronics and SK Hynix launched on May 27, roughly a week before the June local elections - instruments that use derivatives and debt to double a stock's daily move, sold to professionals almost everywhere else in the world. Retail investors poured about 78 trillion won ($54.2 billion) into Kospi shares across May and June. As we noted, three SK Hynix vehicles alone held over $23 billion at the peak - more than 2.5 times average daily turnover in the underlying shares. Assets across the complex went from under $10 billion at the start of 2026 to more than $50 billion in June, then down to roughly $16 billion by late July.

The combined weight of the two chipmakers in the Kospi rose from 51.06 percent on May 26, the day before listing, to 55.17 percent by July 10. Their share of total market trading value went from roughly 30 percent to 44 percent. A market that was already a two-stock bet became a two-stock bet with a gamma engine bolted on.

The opposition's charge is not that Lee failed to prevent a crash. It is that his office built the machine that produced one. "It was pushed through at an extraordinary pace," said Park Soo-young, a People Power Party member of the National Assembly's Strategy and Finance Committee, arguing that such speed was inconceivable without direction from the presidential office. The PPP is now demanding Kim Yong-beom's dismissal and a full parliamentary investigation. Finance Minister Koo Yun-cheol, pressed by lawmakers on whether he would resign, said it would be irresponsible to speculate while markets were still unstable.

That is the language of a government buying time with subordinates. It usually works. It works less well when the paper trail leads upward.

The arithmetic says he is safe

South Korean impeachment requires 200 votes in a 300-seat National Assembly, followed by Constitutional Court confirmation. Lee's Democratic Party holds 179 seats. Removing him would require his own party to supply twenty-one executioners - and the DP has no incentive to hand the presidency back to a PPP that lost the June local elections nationwide, capturing only Seoul's mayoralty as consolation. There is no national election until April 2028. Lee's term runs to 2030. He is fourteen months in.

The market case for calm is similarly strong. Even at Monday's close the Kospi sits at roughly double its 52-week low, and Bloomberg had it up more than 50 percent on the year as of Friday's close, the best performance among the world's biggest economies. The fundamentals underneath are not the problem: SK Hynix posted record second-quarter revenue of 79.3 trillion won, up 257 percent year on year, at a 76 percent operating margin. Samsung's preliminary operating profit for the period rose nineteenfold to about 89.4 trillion won. Korean semiconductor exports in June came in at $44.8 billion, up 199.5 percent. Morgan Stanley upgraded Korea to overweight on the back of the leverage unwind. Lale Akoner of eToro, who called the episode a textbook collision of a crowded trade and leverage, was careful to add that it should not be read as a collapse of the AI investment case.

Both chipmakers fell hard anyway, on the days they reported those numbers. That is the tell: this is a positioning event, not an earnings event. Positioning events resolve.

On the numbers, Lee is in no danger whatsoever.

THAT SAID...

South Korea has impeached two presidents in the last decade. Park Geun-hye in 2016. Yoon Suk Yeol in December 2024, which is the only reason Lee holds the office at all. Whatever the threshold once meant as a norm, it now means considerably less. What changed in both cases was not the seat count on day one - it was ruling-party lawmakers deciding the president had become a heavier liability than the opposition.

Three things could shift that calculation.

The first is the scale of household damage, which is no longer hypothetical. By July 13, more than 1.2 million leveraged retail accounts had triggered margin calls, with an estimated 320,000 to 360,000 fully liquidated by brokers - some left owing money. Korea Investment & Securities reported that nearly half of its 880,000 clients holding Samsung were underwater, and nearly 70 percent of its 408,000 SK Hynix investors. The KODEX SK Hynix leveraged product is down more than 80 percent from its June peak. This is not a story about speculators. In a country of 52 million, it is a story about a constituency.

The second is the Democratic Party's own convention - though here the case has to be made against the present data rather than with it. In a companion Realmeter survey, DP support rose 3.8 points last week to 45.1 percent, while the PPP fell 2.9 points to 37.7 percent. The party is gaining as its president falls, and that is precisely the configuration under which lawmakers stay loyal. What changes it is the calendar. Song Young-gil, competing for the leadership, has already said the presidential office's policy line needs thorough re-examination. Whoever wins runs the party into the 2028 general election - the contest that determines whether the DP ever reaches the two-thirds majority it has coveted. A party polling ahead of the opposition has no reason to move against its own president. A party leader who concludes that Lee's name on the ballot costs seats is the beginning of a lame-duck presidency, and Korean presidents are traditionally devoured by their own side, not by the opposition.

The third is the constitutional amendment, and this is where Lee has already, almost certainly, lost something irretrievable. Placing a two-term, four-year presidency at the top of a 123-item agenda was the signature legacy project. Article 128(2) bars the sitting president from benefiting, so this was never about his own reelection; it was about being the president who rewrote the 1987 constitution. Amendment requires 200 votes and a national referendum, meaning PPP cooperation. Speaker Cho Jeong-sik has floated 2027 as the window - and his suggestion that voters should decide whether an incumbent may seek another term is, on Realmeter's own reading, one of the two forces currently dragging Lee's numbers down. The legacy project has become a liability before it has become a bill. A president polling below 50 percent, with two trillion dollars of household wealth destroyed on his ledger and a parliamentary investigation pending, has no leverage to extract twenty-one opposition votes for anything.

What losing the job actually looks like South Korean President Lee Jae Myung attends an agreement-signing event at Villa Doria Pamphili in Rome, Italy, June 12, 2026. REUTERS/Remo Casilli/File Photo Tyler Durden Mon, 08/03/2026 - 19:40

"I No Longer Trust Anyone..."

Authored by Todd Hayen via Off-Guardian.org,

Sad, but true. Since the Covid fiasco, I’ve seen the true nature of people - or at least the nature they were willing to show once the fear got turned up and the herd started moving.

Most of them are still firmly under the sheep banner, content to graze wherever they’re told.

A small handful stand under the “critical thinker” banner. Those are the ones I still trust.

The sheepies? I don’t trust them anymore. Did I ever, really? I thought I did, back when I was younger and still believed most people were basically decent when the chips were down. Turns out that was optimistic.

Lately this loss of trust has had me thinking about the American Wild West. Not the Hollywood version—the real one.

Back then, almost every man who wanted to stay alive carried a revolver on his hip. It wasn’t for show. You never knew when some mean-eyed bastard might decide your horse, your money, or your life was worth more to him than it was to you.

The sensible ones stayed ready. They watched people. They didn’t assume good intentions just because someone smiled and said howdy. Trust was something you earned slowly, usually after a man had proven he wouldn’t sell you out the first time it became convenient.

So, did folks in that dusty, hard country go around trusting their neighbours? Hell no. You bet your boots they didn’t. And the ones who did—the tenderfoots who rode into town believing everybody was basically good underneath—usually got fleeced, shot, or both. The sheep of that era didn’t last long.

I keep coming back to that because it feels uncomfortably close to where we are now. The difference is the wolves don’t need to hide behind a bandana anymore. They wear white coats, or sit in glass offices, or smile at you from a television screen while they tell you what you need to do for your own good.

And the sheep-types? They didn’t just follow along during Covid. A lot of them became enthusiastic enforcers.

They reported neighbours for having too many people over for dinner. They cut off family members who wouldn’t take the shot. They posted smug little memes about how the unvaccinated were selfish and stupid while their own kids were losing years of school and their elderly parents were dying alone in nursing homes. They did it with a clear conscience, because the authorities had given them permission to be cruel.

That’s the part that still sticks in my throat. Not the government lying—governments always lie when it suits them. Not even Big Pharma doing what Big Pharma does—make scads of money and not giving a crap who suffers for it. It was the ordinary people, the ones I used to think were mostly harmless, who turned out to be so willing to turn on anyone who stepped out of line.

The masked Karens. The vaccine passport enthusiasts. The ones who genuinely seemed to enjoy punishing others for non-compliance. I saw longtime friends and even family members do things I would have sworn they were incapable of. And they did it without a second thought. That’s what really got to me—not the betrayal itself, but how easily it came to them. How little it seemed to cost them.

The rest of us were the ones who kept their powder dry. We asked questions when the story kept changing. We noticed the bodies didn’t match the narrative. We refused to pretend that “following the science” meant following whatever the people who owned the science told us to do.

For that, we got called dangerous, selfish, and—my personal favourite—grandma killers. The irony was almost funny if you had a dark enough sense of humour. The real danger was coming from the people screaming the loudest about keeping everyone safe.

I don’t know if this loss of trust is permanent. Maybe it softens over time. But right now, it feels pretty solid. I still have my circle. Those are the people I can still talk to without wondering whether the conversation is going to end up on some government list or get repeated at the next family gathering as evidence of how crazy I’ve become. With them I can lower my guard a little. We’ve got each other’s backs. That counts for something in a world where most people will throw you under the bus the moment the authorities give them a good enough reason.

Everyone else?

I’ll be polite. I’ll make small talk. I’ll even hold the damn door. But I’m not handing over trust again just because someone seems nice or shares my politics or went to the same school. That ship sailed somewhere around 2021, and I don’t see it coming back into port anytime soon. Once you’ve watched people you cared about turn into informants and punishers, it changes how you move through the world. You don’t go back to the old way of seeing things. You can’t.

Maybe that’s the real lesson buried in all this mess. The Wild West never actually ended. The outlaws just got better costumes and much better PR. And the sheep-types learned to police each other instead of waiting for the sheriff. The thinkers are still here, though—eyes open, hands near the metaphorical holster, not particularly interested in pretending everything is fine just to make other people comfortable.

All this has seemed to calm down a bit. But don’t kid yourself. It is still there. That’s the hard part now; you can’t tell who from who. But you know it is there. There are still occasional masks, a tell-tale sign the murmuring sheep-mind is still bubbling underneath. We don’t have to be mean to strangers; we can still love our fellow human beings no matter how lost they may be, but we must be wary, and not automatically expect a helping hand if needed.

So yeah. I no longer trust anyone the way I used to. And I’m not sure that’s entirely a bad thing. It’s clarifying, at least.

You find out who’s really with you when the pressure is on. And you find out who was only ever along for the ride until it got inconvenient. The ones who stayed? Those are my people now. The rest can go graze somewhere else.

Tyler Durden Mon, 08/03/2026 - 19:15

Children's Hospitals To Begin Offering Restorative Care For Detransitioners

Authored by Darlene McCormick Sanchez via The Epoch Times,

When Texas Children's Hospital's "detransition clinic" opens in Houston, it will become the first facility of its kind, giving patients who regret life-altering procedures a chance at restorative care.

Illustration by The Epoch Times, Zereshk/CC BY-SA 3.0

The facility, which has yet to announce an opening date, is part of an agreement with state and federal authorities to halt "gender-affirming care" at children's hospitals while offering help to those who transitioned medically.

A 10-page settlement term sheet, recently obtained by The Epoch Times through an open records request to the Texas attorney general's office, showed that services at the clinic will focus on multidisciplinary care.

Services are to include endocrinology, surgery, fertility counseling, psychiatry, psychotherapy, and speech pathology, among others.

In May and June, the Department of Justice (DOJ), along with the attorneys general of Texas and Ohio, secured settlements with large hospitals over allegations of fraudulent insurance billing practices related to "gender-affirming care" for children.

The hospitals denied wrongdoing in their billing practices or standards of care.

These agreements require the hospitals not only to cease transitioning procedures, but also to offer discounted or free restorative medical care to detransitioners.

Attorneys representing detransitioners and their clients praised the efforts of the DOJ and the states to assist those suffering from the consequences of life-altering medical changes.

Detransitioners are those who stopped or reversed a medical gender transition they started earlier in life.

'They Deserve Specialized Care'

Mark Trammell, CEO of the Center for American Liberty, which represents several detransitioners, including Chloe Cole, told The Epoch Times that restorative care for detransitioners was an important step.

"The creation of these clinics is a recognition that detransitioners are real, their experiences matter, and they deserve specialized care," Trammell said in a text message.

Cole, who drew national attention after speaking out against subjecting children to gender-reassignment procedures such as hormones and surgeries, told The Epoch Times that healthcare for detransitioners was a long-needed win.

"The opening of Texas's detransition clinic and the funding being put into care for those of us who need it most will transform a sorely neglected area of healthcare," Cole said.

Cole, who was 15 when she received hormones and a double mastectomy that changed her life forever, said via text that it took five years to find medical professionals to help her.

When she decided to seek help, medical providers referred her back to the gender clinic that refused to address her needs, she said.

In Texas, attorney Josh Payne, founding partner of Campbell Miller Payne, which represents detransitioners, including Soren Aldaco, agreed that establishing a restorative care clinic was needed.

"Many detransitioners need specialized care for the rest of their lives to cope with the damage of lost body parts and the ability to function normally," Payne told The Epoch Times in an email.

"Some detransitioners may not want to return to health centers that harmed them in the first place. Hospitals like Texas Children's should establish a fund for victims to defray the costs of lifelong care and compensate them directly for their injuries."

Aldaco, a detransitioner whose fight to continue her medical malpractice lawsuit put her in the spotlight, won her appeal before the Texas Supreme Court on June 26.

By a unanimous decision, the Texas court reversed the dismissal of her lawsuit, ruling that the statute of limitations had not expired, meaning her medical malpractice case against her former therapist could proceed.

The statute of limitations for medical malpractice suits is two years in many cases, which is a major hurdle for many detransitioners.

Aldaco was 19 when she had her breasts removed.

"If you're a 13-year-old on puberty blockers, you might not realize you're infertile until you're 26 and you just got married, and you're trying to have kids," she told The Epoch Times in a February interview.

Aldaco's story is like those of many others who spent years "transitioning" as teenagers, only to change their minds later in life.

First-of-its-Kind Clinic

Under an agreement reached on May 15, Texas Children's Hospital, the largest pediatric hospital in the country, is set to create the nation's first detransition clinic.

In an email to The Epoch Times, the hospital declined to confirm an opening date or comment about the facility's future operation.

The Houston-based hospital will establish the detransition clinic to provide medical care to patients who received gender transitioning procedures through age 21, and obstetric-gynecology care for those over age 21, according to documents.

Additionally, the hospital will provide clinic services at no cost to patients for a period of five years.

Texas Children's will create and maintain an easily accessible landing page on its website describing the available services. The facility will be listed on the hospital's donation website, and the funds will support free detransitioning services beyond the initial five years of operation.

Also, the hospital will amend its bylaws to ensure swift dismissal for any physician who violates the state's prohibition on medical interventions aimed at transitioning minors.

The hospital will pay more than $10 million in damages and civil penalties to Texas and the federal government to resolve a three-year federal and state investigation into the hospital's alleged improper billing practices to the state's Medicaid program to transition children, according to a press release by the Texas attorney general from May.

Texas Children's agreed to permanently fire and revoke privileges for five "woke" doctors who performed harmful medical procedures on Texans, according to the release.

The hospital said in a May press release that it had agreed to a settlement "to protect [its] resources from endless and costly litigation."

"This settlement will allow us to redirect those precious resources to focus on the life-saving care and groundbreaking discoveries of our exceptional clinicians and scientists," the release said.

According to the Texas attorney general, Texas Children's billed Texas Medicaid for "unallowable and illegal 'gender-transition' interventions, including by using false diagnosis codes."

Nonetheless, the DOJ commended the hospital for its cooperation during the investigation and its commitment to providing care for detransitioners.

Prestigious Clinic Agreement

On June 5, the DOJ announced that the Cleveland Clinic, a renowned medical institution in Ohio, had reached a similar settlement with the federal government and the state.

The agreement requires the clinic to provide restorative care to detransitioners and prohibits the use of puberty blockers, cross-sex hormones, and transgender surgeries for minors for the next 20 years.

Like in Texas, the clinic was under investigation for allegedly falsifying billing to cover transgender procedures for minors. The Cleveland Clinic denied any wrongdoing, according to the government agreement.

As part of the settlement, the clinic will pay $308,000 in penalties and provide $2 million in restorative care for detransitioners who face financial barriers to such services.

The Department of Justice in Washington on Feb. 21, 2026. ​In May and June, the Justice Department, along with the attorneys general of Texas and Ohio, secured settlements with large hospitals over allegations of fraudulent insurance billing practices related to “gender-affirming care” for children. Madalina Kilroy/The Epoch Times Tyler Durden Mon, 08/03/2026 - 18:25

China's AI Knife Fight: DeepSeek's New Model Runs 100x Cheaper Than Anthropic's Flagship

The price of artificial intelligence just printed a new low. DeepSeek's V4-Flash, officially released Friday, costs roughly three cents to run through a standard battery of benchmark tests, according to San Francisco research firm Artificial Analysis. Moonshot AI's Kimi K3 costs 86 cents; OpenAI's GPT-5.6 Sol, $1.86; and Anthropic's Claude Fable 5, the industry's top-scoring model, $3.15. In realized terms, the Chinese model is more than 100 times cheaper to run than the American flagship, according to Reuters.

Sarah Rogers / MITTR | Photo Getty

V4-Flash is the cheapest well-known model in the world, and by a wide margin. The figure is even more striking because of a detail buried in the firm's write-up: V4-Flash is unusually verbose. It consumes tokens heavily and still lands at three cents. The per-token price is doing all the work.

The same firm supplies the caveat. V4-Flash scores 50 out of 100 on the Artificial Analysis Intelligence Index, a composite of nine benchmarks spanning coding, reasoning, and workplace tasks. That ties Google's Gemini 3.6 Flash and puts it one point behind Meta's Muse Spark 1.1 and Zhipu's GLM-5.2. Moonshot's Kimi K3 scores 57, while Anthropic's Claude Opus 5 and Fable 5, along with OpenAI's GPT-5.6, score at least nine points higher.

That said - V4-Flash kicks massive ass at routine tasks, but the frontier models still own the heavy lifting. In difficult, multi-step agentic work, small reliability gaps at each step compound into enormous end-to-end differences. Essentially that's the current state of play for frontier pricing. But for the routine volume that makes up most production traffic - summarization, boilerplate code, and back-office automation - V4-Flash is where it's at.

Chinese Knife Fight

V4-Flash's 3-cent print is the fourth shot in an 18-day barrage: China's AI labs are cutting each other for domestic share, and the fallout is repricing the model market everywhere else. On July 16, Moonshot shipped Kimi K3, a 2.8-trillion-parameter model that promptly took the number-one slot on Arena's Frontend Code leaderboard from Fable 5 and GPT-5.6 Sol. On July 19, Alibaba rushed a preview of Qwen3.8-Max onto the stage at the World AI Conference in Shanghai. There was no pricing, no model card, and its claim of ranking "second only to Fable 5" rested on Alibaba's internal evaluations.

On July 27, Moonshot answered by open-sourcing K3's full weights, the largest open-weight release in history. DeepSeek shipped V4-Flash on July 31. Then on August 3 - Monday, the same morning the Reuters story ran - Alibaba took Qwen3.8-Max to general availability: 2.4 trillion total parameters, 95 billion active parameters, a one-million-token context window, and flat pricing of $2 per million input tokens and $6 per million output tokens, with no long-context surcharge.

Qwen's release promptly landed at No. 4 on the Frontend Code Arena with 1,668 points - one point behind Claude Opus 5 at high effort, eight behind Kimi K3, and ahead of both Fable 5 at 1,630 and GPT-5.6 Sol at 1,620. Of the five models Arena identifies on the cost-performance Pareto frontier, four are Chinese: Kimi K3, Qwen3.8-Max, GLM-5.2, and V4-Flash. The lone American entry, Opus 5, occupies the expensive tip, defended by 37 Elo points.

Qwen3.8-Max by @Alibaba_Qwen has reshaped the cost-performance Pareto frontier in Frontend Code Arena, with pricing of $2 per input MToken and $6 per output MToken.

Top models on the Pareto frontier:
- Claude-Opus-5
- Kimi-K3
- Qwen3.8-Max
- GLM-5.2
- DeepSeek-V4-Flash

Congrats… https://t.co/3S4tW1KmlI pic.twitter.com/CiWU7Hh4BD

— Arena.ai (@arena) August 3, 2026

Alibaba's own benchmark table is more candid. Qwen3.8-Max edges Fable 5 and Opus 4.8 on Terminal-Bench, 86.6 to 84.6, while trailing badly on hard repository engineering: it scores 67.7 on SWE-bench Pro against Fable 5's 80.0. The preference-judged coding moat is gone. The deep-engineering moat remains intact - for now.

All of this raises a more basic question: who is paying for three-cent inference?

Until this spring, DeepSeek had never taken outside money. Founder Liang Wenfeng bankrolled the company through his quant fund, High-Flyer. In late May, DeepSeek closed its first external round - more than 50 billion yuan, or roughly $7.4 billion, at a valuation above $50 billion - as first reported by The Information.

The round's structure is unusual. Commercial investors, reportedly led by Tencent and CATL, bought into a limited partnership controlled by Liang, with no voting rights and a five-year lockup. Exactly one party received direct equity and a vote: China's state-backed National AI Industry Investment Fund. Within weeks, DeepSeek was in talks for a follow-on round at roughly $71 billion, with proceeds earmarked for data centers and chips.

Add the 75% API discount the company made permanent earlier this year, and the arrangement begins to resemble industrial policy conducted through an API: state-privileged capital underwriting below-cost tokens to capture global share. It is working: in June, DeepSeek accounted for nearly 23% of the tens of trillions of tokens flowing through Vercel's enterprise AI gateway, compared with Anthropic's 32%.

Meanwhile...

As we (and now Wall Street) have been noting, the Token Expenditure Index - a usage-weighted average of what the market pays per million tokens, blended across frontier APIs and open-weight platforms - peaked above 2.0 in May after nearly doubling from its December launch, and is now slip sliding lower. 

Strategist Andreas Steno Larsen called it the one everyone should be watching, warning that sustained weakness in token pricing would end the memory, hardware, and data-center trades for this cycle. The index last printed 1.3394, roughly a third below its May high. Bloomberg flagged the rollover in early July as evidence that AI vendors were losing pricing power with increasingly cost-sensitive customers; Silicon Data's own commentary interpreted it as usage drifting back toward open-weight models.

Also relevant - the pushback to data centers amid a capex boom running north of $700 billion. As we reported last month, from the nationwide July 18 protests organized by Tea Party veteran Amy Kremer's Humans First to the widening fracture inside the Republican coalition over land, water, and power - domestic politics has entered the chat, something Beijing doesn't have to deal with - so now they've got a three-cent benchmark financed on terms no Western lab can match. Through open-weight releases, it is also portable onto American silicon, where US inference providers will happily serve Chinese models at commodity margins. Export controls cannot contain a set of weights on the torrent.

The model to watch is V4-Pro, the heavier system DeepSeek has confirmed without naming a release date. Flash at three cents pressures the budget tiers at OpenAI and Google. If Pro lands anywhere near frontier scores at DeepSeek prices, the last 37 Elo points - and the frontier premium that OpenAI and Anthropic both charge to underwrite the buildout - will be directly in play.

Tyler Durden Mon, 08/03/2026 - 18:20

'They Are United': California Democrats Move Forward With 5% Billionaire Tax

In a development that will stun absolutely no one, the California Democratic Party's roughly 380-member executive board gathered at a waterside Sheraton in San Diego this weekend and voted to endorse Proposition 40 - a "one-time" 5% levy on the net worth of the state's roughly 200 billionaires - clearing the 60% supermajority required for the party's official blessing, three months before voters render judgment on November 3.

A large banner is seen at a campaign event for a proposed "billionaire tax" in Los Angeles on Feb. 18, 2026. | Jae C. Hong/AP

If it passes - California residents on January 1, 2026 whose net worth is $1 billion or more on December 31, 2026, will owe Sacramento a nickel on every dollar. Directly held real estate is largely excluded - which means the drafters carved out the one asset class that cannot board a Gulfstream. The measure originated with a major healthcare union, the Service Employees International Union United Healthcare Workers West (SEIU-UHW), which claims it would raise $100 billion to offset what it calls deep healthcare funding cuts under the Trump administration. Progressive lawmakers, including Sen. Bernie Sanders and Rep. Ro Khanna, have cheered it on. SEIU says it will raise about $100 billion, mostly to backfill federal healthcare cuts, with some crumbs earmarked for education and food assistance.

The arithmetic: $100 billion at a 5% rate assumes roughly $2 trillion in billionaire net worth sitting obediently in Atherton and Bel Air through year-end, marked to market and liquid enough to cut nine- and ten-figure checks to the Franchise Tax Board.

“I strongly support the grassroots effort in California to impose a 5% wealth tax on 200 billionaires worth $2 trillion,” Sanders said of the tax. “This is a model that should be emulated around the country, which is why I will soon be introducing a national wealth tax on billionaires.”

Yes: We need a wealth tax on billionaires. pic.twitter.com/2OUwSos5De

— Bernie Sanders (@BernieSanders) December 30, 2025

The weekend itself was democracy at its most catered. The union threw a hospitality suite and handed out hats and T-shirts celebrating the confiscation of other people's balance sheets, while the "No on Prop 40" campaign - whose ranks include the California Medical Association (yes, the doctors oppose the measure written to fund them, calling a one-shot levy a flawed answer to a recurring hole), though its real bankroll is one Google co-founder, of whom more below - reportedly picked up around $7,000 in hotel rooms and travel for select board members via a hired consulting shop. Both sides whipped votes like the leveraged proxy fight it effectively was.

Afterward, the union's president declared that the endorsement settles the question of Democratic unity on the measure. Sure - minus the sitting Democratic governor, the party's own candidate to replace him, the California Teachers Association, and the state's firefighters. When even the teachers' union calls a tax too much, that tells you something.

Gavin Newsom - a man who never met a revenue stream he didn't like until it threatened his 2028 ambitions - has suddenly discovered the Laffer curve, warning that the state's largest taxpayers might simply leave.

After the measure qualified in June, he and his allies leaned on the union to pull it. The union's counteroffers tell you everything about the shelf life of "one-time": days before the June 25 withdrawal deadline, it publicly offered to swap the 5% levy for a 2% version Newsom would push through the Legislature - he passed - and, per the LA Times, union chief Dave Regan separately offered in private negotiations to pull the measure outright in exchange for help securing union contracts at several medical facilities - a demand he denies making. The temporary tax was, from birth, a down payment. Meanwhile, Bernie Sanders and Ro Khanna cheer from the sidelines - neither of whom, we note, will be writing a check. Newsom, for his part, now stumps for a federal wealth tax - one billionaires can't dodge by moving - which concedes the entire case against this one.

In May, one of the co-authors of California’s controversial tax appeared to suggest that the levy could extend beyond a single imposition. Marxist economics professor Emmanuel Saez, who hails from France, made the comment during a heated debate against economist Arthur Laffer at the University of California, Berkeley

“I don’t think it’s going to be a one-time tax. Because you can’t surprise billionaires more than once,” Saez said. "Even then, maybe some of them were expecting something like this. So, it’s going to be a debate about this time, you know, a permanent wealth tax at a low rate that’s going to last for a number of years.”

How These Taxes Usually End

Do these people ever learn? Recall New Jersey circa 2016, when a single hedge fund manager's change of address to Florida had Trenton's budget officials publicly sweating over the state's revenue forecast - one guy, one moving truck, one fiscal panic. Recall Illinois' richest resident, Ken Griffin, packing his entire firm off from Chicago to Miami in 2022, taking what was reportedly the state's largest individual tax bill with him. Recall the Pacific Northwest's most famous ex-resident developing a sudden fondness for South Florida in 2023, mere months after Washington's shiny new capital gains tax survived its court challenge - and then unloading billions in stock from the comfort of a state that taxes none of it. Recall the world's richest man decamping California for Texas in 2020, with his companies trailing behind like ducklings.

And it's not just an American genre. Norway hiked its wealth tax in 2022 and promptly watched a procession of its wealthiest citizens establish residency in Switzerland. France ran the grand experiment for decades, bleeding tens of thousands of millionaires across its borders, until Macron finally euthanized the ISF - preserving, in the ultimate irony, a wealth tax on real estate alone, the one thing that couldn't flee. Prop 40's drafters studied that lesson and inverted it: exempt the immovable, tax the mobile.

California, of course, has been talking itself into this outcome for years - the 2023 wealth-tax bill with its infamous reach-back provisions for former residents died in committee, but the memo was received loud and clear in Austin, Miami, and Incline Village. The state lost a congressional seat after the 2020 census for the first time in its history, net domestic outmigration has been running for years, and the top 1% already supply north of 40% of state income tax collections. The geese aren't just laying the golden eggs; they're carrying the farm.

About that Incline Village entry: Sergey Brin decamped to the Nevada side of Lake Tahoe last year - safely ahead of the January 1 snapshot - and has since pumped roughly $82 million into the No side's war chest, a committee called Building a Better California that has raised north of $118 million from fewer than a dozen donors, with Peter Thiel dropping a separate $3 million on the California Business Roundtable, the lobby anchoring the institutional opposition. Nor did Brin leave alone: at least six billionaires got out before the residency date locked, clipping an estimated $27 billion off the projected haul before a single ballot was printed. Every anecdote in the genre now has a live, hometown edition - the man whose fortune was minted in Mountain View is bankrolling the fight against a California tax he has already arranged not to owe.

The trap already snapped shut: because residency was fixed on January 1, 2026, leaving now won't dodge this levy if it passes - that trap closed eight months ago. What leaving now does is guarantee you're not around for the sequel. So expect a December blizzard of trust restructurings, charitable pledges, and valuation disputes over illiquid private stakes, followed by a constitutional bar brawl that keeps white-shoe litigators billing well into the 2030s. Collecting 5% of a private company position from a founder newly domiciled in Texas will be a spectacle.

Polling shows a strong majority of California Democrats on board and a narrower majority of the overall electorate - which is to say, this thing can absolutely pass. The No campaign calls the measure "bad for our budget, bad for our economy and bad for our future." 

Tyler Durden Mon, 08/03/2026 - 18:00

Louisiana AG Announces Investigation Into Fauci

Authored by Zachary Stieber via The Epoch Times,

Officials in three states are investigating or plan to investigate Dr. Anthony Fauci following the release of his diary and his refusal to answer questions during a Senate hearing.

Dr. Anthony Fauci, former director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health, testifies before the Senate Committee on Homeland Security and Governmental Affairs in Washington on July 29, 2026. Madalina Kilroy/The Epoch Times

"Fauci lied," Louisiana Attorney General Liz Murrill wrote on X on Aug. 1. "Louisiana and Missouri deposed Dr. Fauci. At the time, he claimed to not recall many key details of his own actions and now we are discovering contemporaneous records he kept."

Murrill said the investigation would look at whether Fauci committed any crimes for which state prosecutors could charge him.

Sen. Tommy Tuberville (R-Ala.), who is running to be Alabama's next governor, said during a recent appearance on Newsmax that his state would be probing Fauci.

"Hopefully in the next six months, I'll be the governor of the state of Alabama," Tuberville said. "And I promise you one thing, we will find out if there's a possibility that we can bring him to Alabama, to put him in front of a court and a jury, to see if we can put this guy in prison."

Florida's attorney general said on July 29, also after Fauci's appearance before the Senate, that his office was opening an investigation into Fauci.

"It's past time we get the truth of what happened during COVID," Attorney General James Uthmeier said in a post on X.

He wrote in another post, "If he lied, and it resulted in physical and economic harm to countless Americans, billions of taxpayer dollars in 'medical expenses,' and learning-loss for our next generation, there should be accountability."

Fauci and his lawyer did not respond to requests for comment by the time of publication.

Fauci, 85, was director of the National Institutes of Health's National Institute of Allergy and Infectious Diseases from 1984 to 2022. He was also the chief medical adviser to the president during the Biden administration.

Fauci received a preemptive pardon from President Joe Biden in early 2025. That covers any federal crimes Fauci may have committed from Jan. 1, 2014, through Jan. 19, 2025.

Attorneys general from 17 states, including Alabama, Florida, and Louisiana, later in 2025 said they were conducting a joint investigation into Fauci for allegedly making misleading statements and suppressing scientific debate.

"The American people also have a right to transparency and accountability from the public officials whose decisions affected millions of lives. We will continue pursuing the truth because the American people deserve nothing less," South Carolina Attorney General Alan Wilson, leader of the coalition, said in a July 29 post on X.

Ohio legal analyst Mike Allen, a current defense lawyer and former prosecutor, told The Epoch Times in an email that the statute of limitations for many offenses prosecutors may target Fauci over has likely expired.

Tyler Durden Mon, 08/03/2026 - 17:40

ID To Buy Gov't Bread & Milk, But Not To Vote: This Is Mamdani's Socialist NYC Utopia

So far, in Zohran Mamdani's socialist utopia in New York City, it can take multiple forms of identification to shovel snow and, if his proposal is implemented, potentially to shop at government-run grocery stores.

Yet New Yorkers still do not have to present voter identification during elections, and the hypocrisy is just off the charts, as this only highlights an inconsistency in the state's approach to identification requirements:

• ID Required: Shovel snow
• ID Required: Buy milk and bread at a gov't-run grocery store
• No ID Required: Voting in elections 

"We are looking to make sure that we target New Yorkers … sort of a library card-esque thing," one of Mamdani's socialist officials said.

Mamdani wants to protect tax payer funded grocery store from non-NYC residents… they’ll need an ID card to enter.

You can make this up. pic.twitter.com/lXs2SKdjBt

— Nick Plumb (@PlumbNick) August 2, 2026

Elon Musk, who has repeatedly backed the SAVE Act, a federal election proposal that would require documentary proof of U.S. citizenship to register for federal elections, weighed in on NYC's proposed identification requirements for government-run grocery stores with a pointed response: "Oh, the irony is too much …"

Oh, the irony is too much … pic.twitter.com/k0NgRxMoLT

— Elon Musk (@elonmusk) August 3, 2026

"THIS IS JIM CROW 2.0! How dare Mamdani expect black people to have IDs? Am I doing this right or are IDs only racist when you have to show them to be able to vote in elections?" conservative activist Robby Starbuck wrote on X.

The problem with Democrats, socialists, and the far left, who are weaponizing their imported illegal alien army to vote in elections in places where no ID is required, is that the narrative that requiring ID is "racist" no longer works. There is a growing push for election security as socialists seek to exploit the system to seize as much power as possible at the local level and, in their own words, begin the collapse of the nation. Socialists are not after affordability. DSA flat-out says what they want: "The most important thing we can do is take that (American) empire down from within."

Tyler Durden Mon, 08/03/2026 - 17:20

Study Finds Daily Marijuana Use Surpasses Daily Alcohol Consumption Among US Adults

Authored by Bryan Hyde via American Greatness,

Daily or near-daily marijuana use has surpassed daily alcohol consumption in the United States, reaching 20.9 million to 21.4 million daily users compared to roughly 17.2 million daily or frequent alcohol drinkers.

Fox News reports that new data from the 2025 National Survey on Drug Use and Health, from the Substance Abuse and Mental Health Services Administration (SAMHSA), reveals that daily marijuana users outnumber the the 19.9 million people who smoke cigarettes and the 17.2 million who consume alcohol.

While tobacco and alcohol use has been plummeting, down 28 percent and 24 percent since 2021, daily pot use — including smoking and edibles — surged 21 percent.

Marijuana has officially surpassed both alcohol and cigarettes as the most-used daily substance among U.S. adults.

21.4 million use marijuana daily or almost daily, compared to 19.9 million daily cigarette users and 17.2 million daily alcohol users.https://t.co/yE6yjKgqgC pic.twitter.com/4d01T0rFQK

— Theo Holmes (@theo_69_holmes) August 3, 2026

According to SAMSHA, the biggest jump occurred between 2021 and 2022 with an increase of roughly 2.8 million users.

Between 2021 and 2025, the number of adults 18 and older using marijuana daily or almost daily increased about 22%, from 17.2 million to 20.9 million.

A Modern Health survey of 1,000 full-time employees in April 2026 found that 63% of the workforce engages in at least one form of self-medication after the workday, while 52 percent have self-medicated during the workday.

According to Fox News, Gen Z is the only generation of workers where THC use exceeded alcohol use after work – 59 percent report using marijuana products compared to 50 percent who drink alcohol.

Among 18-to 25-year-olds, roughly 10-12 percent reported daily or near-daily marijuana use, while only 3-5 percent drank and 9.6 percent smoked cigarettes daily or near-daily.

The study found daily cannabis use has accelerated rapidly among adults aged 26 and over with millions of Americans in their 30s, 40s, and 50s  now using cannabis daily or near-daily.

General past-month cannabis use rose to 15.1 percent, driven by state-level legalization, while frequent drinking and cigarette smoking continue to decline, according to Yahoo.

Fox News senior medical analyst Dr. Marc Siegel said the SAMHSA data shows a “very disturbing trend” and told Fox News Digital: “Too little attention has been paid to the growing THC content in all cannabis products, which makes it far more dangerous in terms of mental performance, judgement, memory and all forms of impairment.”

Seigel added, “So I firmly believe that the rising use – coupled with decreasing alcohol and cigarettes – is directly due to lack of awareness of all the dangers of marijuana versus an increased awareness of all the dangers of cigarettes and alcohol.”

Tyler Durden Mon, 08/03/2026 - 17:00

Zelensky: We Seek To End War By Winter Through Escalation On Military, Diplomatic Fronts

Ukraine is openly advancing plans to escalate militarily against Russia, in hopes that it will force a return to diplomacy, and hasten an end to the war by winter time.

President Volodymyr Zelensky has made clear he aims to ramp up diplomatic, economic, and military pressure on Moscow, while acknowledging that a short timeline is ideal but likely very difficult to achieve. 

via Reuters

Speaking Monday at a gathering of Ukrainian ambassadors in the capital, Zelensky identified autumn 2026 as the target window. "We will try very hard to make this happen before winter, in the autumn," he said, according to Ukrainian national media.

But he quickly tempered expectations, adding: "We clearly understand who we are dealing with and that Putin hopes to continue dragging out this war."

According to Zelensky, the Kremlin is preparing for a prolonged conflict. "He is preparing mobilization at home and new strikes. We see Russia's true intentions, we are uniting our partners and putting pressure on the aggressor," he said in reference to Putin.

He said this campaign is to include continued reliance on allied military and economic measures, until Moscow has no realistic alternative but to negotiate.

Zelensky pointed to what his government calls "long-range sanctions" - Ukraine's term for strikes on Russian military and industrial infrastructure supporting the war, alongside conventional sanctions imposed by Western governments.

The objective, he said, is to bring all of these tools to "such a level of pressure that Russia is left with no alternative other than peace."

Lately attacks have expanded to include targeting online Russian retailer giant, Wildberries...

The attacked Wildberries warehouse near Vladimir is burning over an area of 100,000 square meters.

Forbes analysts estimated the losses of Russian businessmen from Ukrainian strikes on logistics warehouses at €2.3–3 billion. pic.twitter.com/QyJQQ6rIth

— Visegrád 24 (@visegrad24) August 3, 2026

On Monday yet another large Wildberries warehouse went up in flames, this time in Vladimir region, marking the third attack in a mere two weeks on the e-commerce company's logistics network. There's been over a dozen similar attacks so far over the last month.

Zelensky has alleged these warehouses are involved in providing Russian forces with drone components, navigation equipment and other military supplies listed on its website. There have also been reports of underequipped Russian soldiers ordering straight from Wildberries to make up for front line deficiencies. 

Tyler Durden Mon, 08/03/2026 - 16:40

Everybody Knows

Authored by James Howard Kunstler,

“I underestimated how emotionally committed much of the press is to rallying around Anthony Fauci. His reputation is more important to them than anything. . .”

- Matt Taibbi

The baleful afterburn of Dr. Fauci’s one-sentence testimony (“On the advice of counsel, I respectfully decline to answer. . . .”) seeps over the land like some ghastly pestilence now. You couldn’t have seen a more vivid demonstration of manifest evil than the master bureaucratic grifter formerly self-styled as “The Science” stonewall his way through that fateful reckoning in Sen. Rand Paul’s committee hearing last Wednesday.

The score so far: over a million dead in America from the Covid-19 virus that Dr. Fauci helped develop starting as far back as the 1990s, with Dr. Ralph Baric of the University of North Carolina. Tens of thousands left with serious, lasting injuries from the vaccines they promoted. The exact number of vaccine-connected deaths unknown because the public health agencies refused to report honestly on an operation that they caused to happen. There are whole legions of high officials and doctors behind Dr. Fauci now desperate to cover their asses.

Along with the mendacious news media. HHS Sec’y Robert F. Kennedy, Jr. happened to be on Dana Bash’s CNN Sunday morning program. By the way, Dana Bash used to be married to one Jeremy Bash, Chief-of-Staff to CIA-Director Leon Panetta under Barack Obama. CNN lied consistently to the American people during the years of the Covid emergency. You have to wonder if CNN takes direction from the CIA, or maybe rogue elements in (or retired from) the agency. Sunday, Dana Bash went on offense against RFK,Jr.

Didn’t work. RFK, Jr. kept his cool. The harshest thing he said to Bash through all her hectoring was “you were part of the problem,” a startling understatement. Ms. Bash otherwise only wrecked herself, over-speaking her guest at every opportunity, pettifogging, and filibustering. Everybody could see what she was up to. Imagine how desperate CNN was to think that Dana Bash could bluster her way over Mr. Kennedy. He helped her expose herself as a tool.

The news media has been a very active co-conspirator in the Covid operation. You’d think Senator Paul might want to subpoena some network executives from CNN, CBS, NBC, MSNOW (especially), plus Executive Editor Joe Kahn of The New York Times (and his predecessor during Covid, Dean Baquet) to find out why they reported so much pure falsehood around the so-called pandemic. How did they happen to become the propaganda department for the Democratic Party, and what was the party’s interest in the Covid operation? D’unh. . . .

Everybody knows. Even the super-hyped-up cat ladies, nose-rings, NPR stars, and moiling transsters of the lefty-left know. They have kin and friends who either died on respirators with IV lines of remdesivir in their arms, or were gifted by the vaxx shots with turbo-cancer or myocarditis or neuromuscular disease or immune system failure or some mystery illness. They have been harmed even more than those of us who declined to get vaxxed. Sooner or later, that’s got to mean something.

As for Dr. Fauci’s motive in this huge fiasco. . . it’s got to be clear both from the record of his career — nicely reported in RFK,Jr’s 2021 book The Real Doctor Fauci — and from the 1000-plus-page personal diary he recorded on the HHS computers, that Fauci was doggedly in pursuit of glory. Glory! And that his personal holy grail was to find a “universal vaccine” that could defeat any virus, so as to be acclaimed by all mankind! Glory! Glory! Glory! Given what is understood now about viruses and their interaction with vaccines — for instance, the flu vaccine which uniformly fails to adapt to annual virus mutations — that Dr. Fauci’s quest was quixotic, very basically foolish. All he ever produced, from the AZT wonder-drug for AIDS he developed back in 1986 (that probably killed as many people as died from the disease itself) to the Pfizer / Moderna mRNA shots for Covid in 2021 . . . all that frantic, questing “science” just ended up killing and harming the credulous in large numbers. The buttoned-up little fellow appears to be guilty of mass-murder on an epic scale.

Of course, he is presumed to be protected by the autopen-signed peremptory pardon he received from minions of “Joe Biden.” Perhaps Dr. Fauci’s invoking the Fifth Amendment under those circumstances will prompt an overdue look at just how this autopen thing really worked. In any case, Dr. Fauci is liable to be voted in contempt of Congress this week for not answering any questions put to him. The connected legal procedure will keep Dr. Fauci’s misdeeds under public scrutiny for at least months to come.

It’s also a fact that the autopen pardon does not shield him from charges brought in state courts. The AGs of Florida, Louisiana, Alabama have declared investigations. Louisiana and Missouri have already made Dr. Fauci sit for depositions, and now they can compare his answers with the entries from his diary. It is obvious that on countless occasions and on many vital issues, Dr. Fauci told the public one thing while he believed (and recorded) the opposite in his diary.

One question that the public badly wants Secretary RFK,jr. to answer: how come you haven’t pulled the mRNA Covid vaccines altogether?

They don’t work and they harm people.

Why are they even still available? Would such a move amount to an admission that the whole emergency was a fake and a failure? And that the government’s own public health agencies are culpable? Would the survivors of the 268-million Americans who got the shots be a little pissed-off? What, then?

Tyler Durden Mon, 08/03/2026 - 16:20

'Cycles Line Up Like They Did Before 1929': Charles Nenner Warns Of "Very Big Downturn" In Stocks'

Via Greg Hunter’s USAWatchdog.com,

Renowned geopolitical and financial cycle expert Charles Nenner is usually way ahead of market moves.  When nobody wanted silver ($29), he was buying it.  When everyone wanted silver a few months ago ($120), he was selling it. 

So, what is Nenner seeing in the markets right now?  Let’s start with the big surprise prediction coming in oil prices.  Lots of people say oil is going higher, a lot higher.  There are plenty of predictions of oil breaking over $200 a barrel.  Heck, even President Trump thinks oil will hit $200, but Nenner says he’d be wrong.  Nenner explains:

“The crazy thing is, based on all my analysis, is crude oil looks weak for the next year.  I am not sure what it means. . .. I see oil going down longer term. 

Maybe other countries are going to find oil because they cannot rely on oil (from the straight of Hormuz) anymore.  By the way, Saudi Arabia has plans to make a pipeline through Israel to bring it to the sea.  So, they won’t need the Strait of Hormuz anymore. 

Intelligence will find a solution.  I think they are going to pump more oil.  If people think they will flood the world with oil from other countries, then the price will come down. . .. there may be an outside chance of oil hitting $101 (per barrel).”

On gold, Nenner predicts, “Some cycles are very interesting.  The gold cycle came down at $5,300 (per ounce).  We have a 30-day free subscription, and you can see those cycles.  They are close to bottoming now."

" Soon, there should be a new up move for gold.  We had a (downside) price target of around $3,800 per ounce.  We are very close.  So, gold starts looking good into 2027.” 

Nenner says the next gold bull market starts next month in August.

On silver, Nenner says:

 “Silver was a catastrophe because we had the cycle top at $121 (per ounce), and we couldn’t get people out of it. . ..

Silver is also going to be in a new bull market.   It could go back to the old highs of $120.”

On the stock market, Nenner says:

“The cycles in 1926 and 1927 line up like they did before the crash of 1929. 

This is almost August, and big investors have time to be very defensive. 

I want to repeat my forecast of a very big downturn in the stock market.”

Nenner likes cash, and he says watch out for big losses coming from some big banks. 

Nenner says:

“Real estate is a bad investment. 

I know big pension funds, and they have real estate in New York, and they are selling with a loss.  Other banks have losses, and nobody speaks about it—yet...

So, there is a lot going on that the average person doesn’t know. 

I know it because I work with these people, and things don’t look very safe...

I think we could have a banking crisis.”

There is much more in the 40-minute interview.

Join Greg Hunter of USAWatchdog as he goes one-on-one with renowned cycle analyst and financial expert Charles Nenner for 7.31.26.

Tyler Durden Mon, 08/03/2026 - 15:40

Murders In The US Set To Hit 126-Year-Low Following Illegal Immigrant Deportations: DHS

Authored by Naveen Athrappully via The Epoch Times,

Crime rates have fallen to “historic lows” across the United States, with homicides this year on track to register the lowest level in at least 126 years, according to the Department of Homeland Security (DHS).

In the first half of 2026, homicides were down 18 percent compared to the first half of last year, DHS said in a July 31 statement. Carjacking crimes tumbled 47 percent during this period, motor vehicle thefts fell 20 percent, robberies dropped 17 percent, and residential burglaries declined 13 percent.

The numbers come from a July 2026 report from the nonpartisan think tank Council on Criminal Justice (CCJ) that assessed crime stats across various U.S. cities.

Compared to the first half of 2022, the second year of the Biden administration, homicides in the first half of 2026, the second year of the current Trump administration, were down by 51 percent, according to the CCJ report.

For violent crimes, 2 percent fewer aggravated assaults and 6 percent fewer gun assaults were reported in the first half of 2026 compared to the same period last year. However, domestic violence incidents were up 8 percent, and sexual assaults by 3 percent for this period.

When compared to the first half of 2019, the year prior to the COVID-19 pandemic onset, homicides, aggravated assault, gun assault, sexual assault, domestic violence, robbery, and carjacking crimes were all lower in the first six months of 2026, the report said.

In its statement, DHS gave examples of some of the illegal immigrants with criminal histories who have been deported from the United States: A Salvadoran national with convictions for homicide and assault, a Costa Rican with convictions for property crimes and burglary, a Honduran Tren de Aragua gang member convicted for robbery, and a Vietnamese national convicted for armed carjacking.

“President [Donald] Trump promised to make America safe again, and he has done just that,” Lauren Bis, assistant secretary at the DHS’s Office of Public Affairs, said in the statement.

“Crime has fallen to record lows under the Trump Administration.”

“It’s no surprise that this drop in crime coincides with deportations of dangerous criminal illegal aliens. It is common sense. When you remove criminals from the country, crime rates fall,” Bis said.

In the first year of the current Trump administration, almost three million illegal immigrants had left the United States, then-DHS Secretary Kristi Noem said in a Jan. 20 DHS statement.

Declining Homicides

The CCJ report said that there is no single explanation for the historic low in homicide crimes in the first half of the year. It cited potential impacts from changes in criminal justice operations and strategies, shifts in society and culture, and technological advances.

In a July 23 statement, CCJ said it planned on convening a two-day summit in September with researchers from fields such as criminology, psychology, economics, and sociology to examine the factors likely driving the decline in homicides.

“Murder and other crime rates are falling across the map, in cities with different political leadership, housing and economic conditions, policing and prosecution strategies, violence reduction models, and levels of federal enforcement activity,” CCJ president Adam Gelb said in the statement.

“Local policies and programs surely matter, but the striking consistency of the decline suggests that macro-level forces are exerting enormous influence as well,” Gelb said.

The White House attributed the crime decline in the first half of the year to the Trump administration’s policies in a July 29 statement.

America’s neighborhoods are now safer, registering fewer victims and a decisive end to the crime surge seen in the last decade, the White House said, highlighting that this was “not accidental.”

“It is the direct result of the Trump Administration’s relentless efforts to enforce the rule of law, back the police, and surge resources into communities,” according to the White House.

On Jan. 20, 2025, the first day in his second term, President Donald Trump signed an executive order restoring the death penalty, highlighting that capital punishment was an “essential tool” to deter and punish those who would commit heinous crimes.

The same day, Trump signed another executive order targeting illegal immigrants. In the order, Trump clarified that it is the policy of the United States to faithfully execute immigration laws against all removable illegal immigrants, especially those who “threaten the safety or security of the American people.”

And in April last year, Trump signed an executive order that focused on providing new best practices to local and state law enforcement to “aggressively police communities against all crimes.”

Tyler Durden Mon, 08/03/2026 - 15:20

VC Money Floods Into US Nuclear Startups As AI Power Demand Explodes

Authored by Haley Zaremba via OilPrice.com,

• Global VC funding for nuclear fission and fusion startups has already topped $4.5 billion across 81 companies in 2026, on pace to beat 2025's $6.2 billion record.

• Big Tech figures including Sam Altman and Bill Gates are pouring money into fusion to keep up with AI's ballooning electricity demand.

• Critics warn the startup boom is skipping voluntary safety guardrails and pulling attention from proven large-scale reactor technology.

Venture capitalists are taking a major interest in nuclear energy start ups. Funding is surging for both nuclear fusion and fission firms as the technology becomes an increasingly essential part of a feasible pathway toward sustainable energy security in the face of the artificial intelligence boom.

According to reporting by Axios, global investment in both fission and fusion has topped USD $4.5 billion across 81 companies in 2026 so far. At this pace, by year’s end, this year will shatter 2025’s previous record of $6.2 billion for 93 companies.

Data center hyperscalers are driving up energy demand projections to previously unthinkable levels that will require an all-of-the-above approach to energy development that is likely to prominently feature nuclear energy as a round-the-clock source of zero-emissions electricity. In the United States, the public and private sectors alike are extremely bullish on the technology and clearly eager to usher in a new nuclear era. As a result, the majority of this year’s funding surge is going to U.S. companies.

Big Tech has taken a particular interest in expanding nuclear energy deployment and technological advancement to feed its own ballooning energy needs.

Some of the tech sector’s biggest names, including Bill Gates and OpenAI’s Sam Altman, are major investors in and advocates of nuclear fusion as an answer to AI’s ballooning energy problem.

"There's no way to get there without a breakthrough," he said at the 2024 World Economic Forum in Davos, Switzerland. "It motivates us to go invest more in fusion."

The Trump administration, too, is a major proponent of nuclear energy expansion, with a particular focus on next-gen nuclear technologies as part of a broader push to "reestablish the United States as the global leader in nuclear energy” and “produce lasting American dominance in the global nuclear energy market.” To this end, Executive Order 14301, signed by Trump in May 2025, mobilizes significant resources from the U.S. Department of Energy’s Reactor Pilot Program to fast-track the testing and commercialization of advanced nuclear technologies in order to bring them to scale.

These advanced technologies include nuclear fusion as well as small modular reactors (SMRs) which hold major promise for overcoming some of the hurdles that have been causing nuclear energy to fall out of fashion in the United States. Traditional nuclear power plants are enormously costly and face long timelines and miles of red tape to come online. The country’s most recent traditional nuclear power plant, Georgia’s Plant Vogtle, finally came online years late and billions over budget. The hope is that modular and alternative technologies won’t face the same issues, as they can be built offsite relatively cheaply.

SMRs are still an emerging technology. While one SMR design has been officially approved for development in the United States, and many more firms are seeking approval for their plans, zero SMRs have yet come online in the country.

“The U.S. Nuclear Regulatory Commission took about six years to approve the first advanced small reactor design, from fission developer NuScale,” Axios reports.

“President Trump has sought to accelerate the process, aiming for 18 months. But that still could give first movers a major advantage in locking down contracts with data centers and electric utilities.”

With the backing of both the federal government and Silicon Valley, it’s no surprise that nuclear startups are going gangbusters. But while the increasing fragmentation and privatization of the nuclear energy sector could be great for innovation and expansion of the technology, it also poses some key drawbacks. For one thing, nuclear startups have so far shown a concerning disregard for voluntary safety guidelines that were tacitly accepted in the nuclear sector until now.

In addition to safety concerns, some critics have argued that a focus on cutting-edge nuclear energy technologies and startups may be diverting energy and funding from proven technologies that would better serve nuclear power capacity addition goals. A recent op-ed for the Wall Street Journal argued that “The administration is chasing unproven technology when it could encourage Wall Street investment in large-scale reactors,” and, as a result, Trump’s nuclear renaissance is stalling.

Tyler Durden Mon, 08/03/2026 - 14:40

After Blockbuster IPO, China's Memory Giant CXMT Plans Second Chip Plant In Beijing

CXMT, China's largest chipmaker by output and certainly by market value thanks to its blowout IPO pricing one week ago, which saw its stock surge more than 7x from its offering price of 8.66 yuan per share, is considering building a second memory-chip plant in Beijing ​and is in financing talks with a tech manufacturing hub backed by the local government, Reuters reported citing source familiar.

The move ‌comes as CXMT, which is currently the world's 4th largest maker of DRAM memory but has ambitions to become the world's largest, seeks to boost production amid a global chip shortage driven by debf-funded AI infrastructure spending. It highlights intensifying competition among Chinese local governments to attract CXMT, as the memory chipmaker pursues a major expansion following its $8.6 billion IPO last month, the largest mainland Chinese semiconductor listing on record.

Reuters previously reported that CXMT was building new plants in Shanghai and Hefei and was in ​discussions with authorities elsewhere about another facility.

Those projects, when fully operational, could double its capacity to more than 600,000 wafers per month. The new Beijing ​12-inch plant would be built in Yizhuang, about 20 km (12 miles) southeast of central Beijing, where CXMT already operates a ⁠fab producing dynamic random access memory (DRAM) chips. CXMT currently operates two 12-inch DRAM ​fabs in Hefei and one in Beijing, each with capacity of about 100,000 wafers per month, the Reuters sources said.

CXMT is seeking at least 60 million yuan ($8.9 ​million) in support from the development zone's governing body, also known as the Beijing Economic-Technological Development Area, and other state-owned tech companies have also expressed interest in participating ​in the financing, they said.

The talks are at an early stage and the size and structure of any funding package could change, the sources said. It was not immediately clear whether the funding would come directly from the development zone's administrative authority or through its investment vehicles.

Reuters adds that the planned capacity and total ​investment for the proposed fab were not immediately known. Building a fab that can produce leading-edge DRAM chips usually costs more than $10 billion. 

The discussions began before CXMT's stock market debut last week, which provided ‌the company ⁠with fresh capital for an expansion drive during a memory-chip upcycle fueled by demand from AI infrastructure, data centres and consumer electronics. 

The company has become a key pillar of Beijing’s drive to build a self-sufficient chip industry and narrow the gap with the U.S. in strategic technologies such as AI amid a fierce tech rivalry between the two superpowers.

Although CXMT is the world's fourth-largest DRAM producer, it remains far smaller than Samsung Electronics, SK Hynix and Micron whose combined global ​market share approached 90% in the ​first quarter, according to data from ⁠Counterpoint Research.

Within China, however, CXMT's growing dominance has enabled it to raise prices for customers such as Huawei, Reuters reported last month. 

CXMT has been in the news over the past couple of months due to reports that have suggested that Apple is interested in buying the firm's memory chips. The global memory shortage has affected the Cupertino, California-based consumer electronics giant's supply chain as it has been unable to secure supplies without having to face price hikes.

Yet, as wccftech reports, others have suggested that CXMT's ability to target the global memory market is limited, as the firm has to primarily meet the needs of China's domestic memory market. US sanctions on China, which limit its ability to procure high-end chips and manufacturing equipment, have come at a time when Beijing is aiming towards semiconductor self-sufficiency despite the capital and knowledge-intensive nature of the industry. 

Today's report follows one that surfaced last week and claimed that CXMT was making progress with its LPDDR6 memory chips. These are among the latest in the world, and the sources suggested that the Chinese firm was eager to target the gap left by Samsung and Micron. The two are focused on making high-bandwidth memory (HBM) chips, and CXMT hopes to utilize the gap they've left to establish itself as a player in the global memory market. The sector is currently dominated by the two firms plus Korea's SK hynix, which control the vast majority of the market share.

The company's rise has been closely linked to the "Hefei model," under which the capital of Anhui province has used state funding to ​nurture strategic technology companies... because as we said a year ago, it is only a matter of time before the AI arms race is directly funded by the governments of China and the US directly. 

Beijing and Shanghai have also provided CXMT with funding and other support, as the cities seek a larger share of the economic and strategic benefits generated by the company's growth. 

CXMT's Beijing-based fab, operated by Changxin Jidian, was founded in 2020 and received funding from E-Town Capital, a state-backed investment arm of the Yizhuang development zone, and its ⁠affiliate Beijing ​E-Town Technology, according to corporate records.

The Beijing development area is a manufacturing base for technology and ​chip companies, including contract chipmaker SMIC, chip equipment maker Naura Technology and smartphone and electric-vehicle maker Xiaomi. 

The area is also positioning itself as a hub for robotics and AI. Last year, it hosted what organisers ​described as the world's first humanoid robot half-marathon, part of an effort to promote and test embodied-AI technologies.

News of China's aggressive push to boost memory output is one of the reasons for the weakness in memory and chip stocks in early trading, and also slammed Korea's Kospi which slumped 5% with Samsung / Hynix both tumbling -9%. 

Additionally, the market is again focused on Chinese open-source model releases, with BABA +4% on new Qwen model this weekend as well as DeepSeek V4 Flash model launched Friday. 

As reported earlier, BABA’s latest Qwen 3.8 Max Model was released overnight (stock closed +7% in HK) - a 2.4t parameter model (smaller than Kimi K3 @ 2.8t ) but looks relatively comparable on benchmarks (I.e. broadly Opus + level) and will go open-weight release next week.

The model is also far cheaper: API tokens are priced at $2/m input & $6/m output (cheaper than Kimi K3 @ $3/M input & $15/M ⁠output)...  & 80% cheaper than current GPT flagship 5.6 Sol's output tokens.

Qwen3.8-Max by @Alibaba_Qwen has reshaped the cost-performance Pareto frontier in Frontend Code Arena, with pricing of $2 per input MToken and $6 per output MToken.

Top models on the Pareto frontier:
- Claude-Opus-5
- Kimi-K3
- Qwen3.8-Max
- GLM-5.2
- DeepSeek-V4-Flash

Congrats… https://t.co/3S4tW1KmlI pic.twitter.com/CiWU7Hh4BD

— Arena.ai (@arena) August 3, 2026

The marketing campaign has been well received showing Qwen as an “always on workmate” that completes tasks while people go to the beach, fish & play tennis. 

Over the weekend, Goldman revised up its aggregate China model ARR estimates, now forecasting to reach US$13bn by year-end 2026 (prior: US$10bn) on higher demand /faster ramp.

Tyler Durden Mon, 08/03/2026 - 14:00

Kalshi & Polymarket's Combined Volume Reaches All-Time High In July, Topping $50 Billion

Authored by Danny Park via TheBlock.co,

Kalshi and Polymarket saw their combined trading volume soar to a new all-time high in July as prediction markets continued to gain steam around the World Cup.

According to The Block's data dashboard, Kalshi, Polymarket, and Polymarket US posted $50.59 billion in combined monthly trading volume in July, marking a 7.8% increase from June's $46.95 billion monthly volume.

Kalshi remained in the lead, and recorded $37.7 billion in the past month. This marks a 14% month-over-month growth.

Notably, the monthly data indicates a shift in volume between Polymarket and Polymarket US. While Polymarket's monthly volume contracted 26% to $7.9 billion, the U.S. platform saw its volume rise 54% to $5 billion. The combined volume of Polymarket and Polymarket US decreased from $14 billion to $12.9 billion.

The U.S. platform, regulated by the Commodity Futures Trading Commission, dropped its initial waitlist restrictions in May, opening the platform to all U.S. users. This allowed U.S. traders who had previously bypassed regional blocks to participate legitimately on the platform. 

Earlier this year, Rutgers University statistician Harry Crane estimated that U.S. traders drove about 30% of Polymarket's main, offshore platform volume during the 12 months ending April 30, 2026.

World Cup boost

July's overall surge in volume can be attributed to the FIFA World Cup, which started on June 11 and ended on July 19. Kalshi's prediction market on the final match between Spain and Argentina alone drew roughly $1.9 billion. Polymarket's bet predicting the World Cup winner attracted around $4 billion.

Since the end of the World Cup, however, open interest on the three prediction market platforms has dropped significantly, from around $2 billion at the start of July to $1.2 billion by the end of the month.

Despite growing activity and legitimacy, prediction markets continue to face U.S. legal scrutiny, primarily over sports-related contracts. 

Over a dozen state regulators have accused Kalshi and Polymarket of operating unlicensed gambling platforms, taking action to block event contracts in their respective states. In response, the platforms — alongside the CFTC — are contesting these state enforcement actions, arguing that federal oversight preempts state jurisdiction.

Tyler Durden Mon, 08/03/2026 - 13:40

Is The Momentum Crash Over?

Authored by Lance Roberts via RealInvestmentAdvice.com,

What a week that was...

Despite a hopeful bounce to end the month, it was a bloodbath for most assets. It was the Nasdaq’s worst July in 22 years, bonds’ biggest July yield spike since 2005, and oil’s biggest July jump in over 30 years.

Leaving investors with one big trillion-dollar question: is the momentum crash over?

As I discussed on Thursday on the Real Investment Show, the average retail investor portfolio is likely faring far worse than the broad market index. The momentum crash we just lived through was the fastest on record. It ended last Thursday with a $45 billion hedge fund handing its entire public equity book to Citadel in a single block trade.

None of it should have been a surprise. On June 22, in The Technical Backdrop: When Flows Meet a Hawkish Fed, I wrote that a market running on flows, leverage, and shrinking leadership could melt up into July. It could also reverse hard the moment those mechanical buyers turned into sellers. The close of that piece was blunt, and was published on the exact day momentum peaked. It is also named the mechanism.

“Lastly, watch the long end of the curve. If Warsh’s signal keeps the ten-year climbing, the most expensive, most crowded, most rate-sensitive corner of this market, the same one soaking up forty cents of every dollar, is the corner that pays for it first.“

The most crowded corner of this market, the one soaking up forty cents of every S&P 500 dollar, would pay for rising yields first. That is precisely what happened. Two weeks ago, Momentum Meltdown Catches Traders By Surprise flagged the same divergence in miniature. Last week, The AI Capex Bill Comes Due walked through the $800 billion megacap air pocket. The only question left is whether the correction is finished or whether this was the first act.

Momentum Crashed. The Average Stock Did Not.

Start with the magnitude, because the numbers are without precedent. Morgan Stanley’s sector-neutral momentum index fell 17.4% over four sessions, the worst four-day stretch in the history of the series. The comparable declines were roughly 11% after the dot-com peak and again in the 2022 inflation bear, and 14% after the Covid crash. The technology and media slice of that basket dropped 36% in four days, against a prior record near 20% set in the 1999 to 2001 unwind.

You can see the same thing in instruments you can actually trade. The iShares Momentum ETF fell 18.0% from its June 22 peak to its July 29 low, and semiconductors, measured by SOXX, surrendered 29.0% over those same twenty-five sessions. Momentum broke. The equal-weight S&P 500 closed at a record high on July 28. Right in the middle of the wreckage.

While for many retail investors, it may “feel” like a market crash, it wasn’t. It was a rotation, and leveraged traders were liquidated.

None of that is new. In More Market Wisdom: Jesse Livermore, Part 2, we walked through how leadership rotates across cycles. The Nifty Fifty became the laggards of the late 1970s. Technology dominated the late 1990s, then delivered a lost decade. Energy was close to unownable from 2014 through 2020, then led the market in 2021 and 2022. Staying rigidly committed to yesterday’s leaders is the most reliable path to underperforming in the next cycle.

Diversification is what converts that rotation from a portfolio problem into a portfolio feature. We covered the practical version in Momentum Strategies, and Physics: Mass And Velocity Matter, and the structural version in The Passive Aggressive Market, where investors rotate hard between factor ETFs and still call it passive investing. Last week priced the difference. Own the equal-weight index, and you made a record high on July 28. Own the momentum factor, and you gave back 18%.

Leverage Was The Mechanism. Rates Lit The Fuse.

During Thursday’s meltdown, I called Michael Lebowitz, and we discussed that it “felt” as if someone was being liquidated. It turned out that a hedge fund, Situational Awareness, which ran leverage roughly 4x its equity base through total return swaps, was the victim. Within a day, it liquidated nearly 3/4 of its holdings.

It is the structure that matters. Prime brokers hold the physical shares while the client takes the economic exposure, so the position never appears in a public filing, and no single broker sees the whole book. Goldman Sachs, JPMorgan, and Bank of America were the counterparties here.

Here is the crucial point: When the collateral fell far enough, the “Prime Brokers” decided to sell. Not the fund.

We have written that sentence before, in Margin Debt Surges As Bulls Leverage Bets:

That process is at the discretion of the broker-dealers that extended that leverage in the first place.

So what tipped the collateral? Rates. After the FOMC meeting this past week, the front end of the curve barely flinched. The long end did the damage, with the 30-year closing that day at 5.20%, its highest level in 19 years. Nothing in this market is more sensitive to the long end than an unprofitable growth stock bought with borrowed money.

The backdrop was already stretched thin. Margin debt set another record in June at $1.50 trillion, up 49% from a year ago, while the net investor credit balance sank to a record negative $1.06 trillion. That is the thinnest cushion against forced selling ever recorded, a point we walked through in Margin Debt Risk: The Ratios That Mislead Investors.

The timing in the chart below is what matters. Leverage actually fell from January into March. Then it went vertical. Margin debt jumped 23.0% in the three months through June, and the credit cushion thinned by $268 billion over that same stretch. That build topped out precisely as momentum did.

Situational Awareness was not the only leveraged buyer in that corner, either. Citadel’s desk put levered ETF assets at a record $218 billion in June, up roughly 60% from the end of March, with semiconductor-linked leverage nearly tripling. We mapped where that money was pointing in A Supply Tsunami Is Coming.

The Daily Shot tracks a slightly wider universe, and its version shows the round trip. Net market exposure across US levered and inverse ETFs peaked near $436 billion in mid-June, about 3.4 times its level in the summer of 2021. It has since fallen 27%, and fund assets are down 25% from their peak.

That is the retail mirror of the de-grossing of the reported prime desks. It also explains why Thursday had so much fuel. Two dollars in a 3x fund carries six dollars of market risk, so when that complex shrinks, the selling is mechanical, and then it stops.

The Fundamentals Never Broke

Here is where the opportunity argument lives, and it deserves a fair hearing. Microsoft grew Azure revenue 43% in constant currency, above a 40.2% estimate, and surpassed $100 billion in annual Azure revenue for the first time. Amy Hood told the Street that capital spending will grow again in fiscal 2027. Amazon lifted its 2026 capex plan toward $220 billion on an AWS-driven beat.

That scorecard kills the simple version of the story. Amazon spent the most of anyone, $53 billion against $45 billion of operating cash flow, printed the worst free cash flow in the group, and jumped about 9% after hours. Alphabet spent less, burned less, and fell 7%.

So, why the difference? It clearly was not an issue of “cash flows” as the narrative suggests. What separated them was evidence that the spending is already earning inside the operating line.

• AWS grew 37% with segment operating income up 64% and margin back to 39.4%.
• Azure grew 43% with remaining performance obligations at $678 billion.

However, Meta went the other way, with operating income down 8% and the margin down from 43% to 31%. After that, the market did the talking with Microsoft rising 15.5% on Thursday, and Meta falling 8.0% in the same session. This wasn’t surprising after Meta missed by more than a $1 per share, guided Q3 revenue to the low end, and declined to commit to a 2027 spending figure.

The market is not punishing capital spending, nor rewarding cash flow. It is paying for proof that the spending is already earning inside the operating line. Read that again, because it is the entire trade.

Both halves of that scorecard are distorted by a single timing mismatch, which I laid out in “AI Capex Depreciation Risk Is The Catch To Record Earnings.” Cash leaves now, so free cash flow understates these businesses. Depreciation lands later, so operating income flatters them. Roughly $760 billion in spending this year is offset by only about $211 billion in recognized depreciation.

So is the market mispricing Alphabet, which is investing, against Apple, which is not? Partly, yes. Alphabet was sold on an in-line core quarter, not a broken one, and 82% cloud growth against a contracted backlog is not a sign of a business in trouble. But that is not a free option either.

Consensus already assumes free cash flow snaps back from roughly $16 billion this year to $387 billion by 2029. That snapback is an assumption, not a result. And Microsoft just stretched the useful life of its data centers from fifteen years to twenty-five, which cuts reported depreciation without changing a single server. Demand is REAL. What broke was the financing stacked on top of it, and who pays the depreciation bill remains unsettled.

Is The Correction Over? The 2000 Playbook Says No.

So, for the one question everyone wants an answer to: “Is it safe to go back into the ‘momentum’ waters?”

BTIG’s Jonathan Krinsky called time on the momentum crash Thursday morning, and on the bounce I think he’s right. Goldman’s high-minus-low momentum index had fallen 23% below its 200-day average after sitting 40% above it in mid-June. It has rarely spent much time beyond 20% below that line in twenty-five years. Stretched is stretched. A dislocation that extreme produces a Thursday almost mechanically, and Microsoft’s print gave buyers a reason to show up at once.

However, a bounce is not a bottom. Krinsky’s own 2000 comparison is the useful part of that note. One month past the dot-com peak, the SOX had fallen 35%. It then rallied roughly 37% and still went on to test its 200-day moving average. Semiconductors closed Thursday 23.0% below the June 22 peak, 11.1% under the 50-day moving average, but still 25.6% above the 200-day.

Sit with that last figure for a second. Even after the fastest momentum crash on record, SOXX trades a quarter above its own long-term trend line. Trapped longs from June do not sell on the first bad day. They sell into the first rally that gets them close to even.

What Should Investors Do Now

Okay, what do we do now heading into the seasonal weak months of August and September? First, treat this bounce as a gift for repositioning, not an invitation to re-risk. The forced seller is gone. But Citadel holds a large block of the same paper and has no obligation to keep it. Secondly, if the 30-year keeps threatening a multi-year breakout, that adds to the risk, and that one variable decides whether the AI complex gets a durable bid or another leg lower.

However, there are opportunities in the rubble, and the following is a quick screen to start from, grouped by what each name actually does in the buildout. Look at the last column before anything else, because Friday rewrote it. Five names now sit above where they were at the momentum peak, and the top two are Microsoft and Amazon, the two heaviest spenders in the group. While some of the selling was certainly due to the liquidation of Situational Awareness, not all of it was. Everything that builds, supplies, or finances the buildout, without yet showing a return, is still down 10% to 47%.

Two things follow. The levered bucket is already flushed, so the case for trimming it is no longer about valuation; it is about which balance sheets survive a retest. And the builders and suppliers are where contracted revenue meets washed-out prices, which is the part of this list I would spend the weekend on.

My read is a tradable rally that fails that potentially fails, particularly if rates continue to push higher this week. If I’m wrong, I’m wrong by buying quality early. That’s the cheaper mistake. We continue to suggest using strength to upgrade quality, cutting names whose only thesis was price momentum, and holding cash to act on a retest of support.

Trade accordingly.

Tyler Durden Mon, 08/03/2026 - 13:00

Texas Approves AI Data Center Co-Location Next To Wind Farm, With Curtailment Caveats

By Marlene Wilden of UtilityDive

The Public Utility Commission of Texas last week approved a net metering arrangement for a 260-MW AI data center co-located with a wind farm of approximately the same capacity in a case that could serve as a template for other co-located loads in the Lone Star State.

The data center is the second one planned for the site, and the developer had argued it should not be subject to the same curtailment requirements as the first because the total load of both – about 525 MW – exceeds the generation resource’s capacity of 265.5 MW. 

An Oncor substation in December 2025 next to an up to 600-MW Skybox data center in Hutto, Texas. A data center net metering arrangement approved by the Public Utility Commission of Texas on July 24, 2026, could serve as a template for other co-located loads in the Lone Star State. Getty Images

The commission rejected that argument. According to the July 23 order, the data center must be capable of curtailing its full load within 30 minutes during grid emergencies, with physical breaker disconnection if necessary. It is also barred from participating in paid demand response programs tied to the arrangement.

The proceeding represents one of the first major tests of Texas’ SB 6, which became law last year and established new rules for large loads in the Electric Reliability Council of Texas’ territory, including giving the grid operator the authority to disconnect data centers during grid emergencies.

Rather than creating a project-specific exception, commissioners largely adopted ERCOT’s proposed reliability conditions. The order allows the co-location arrangement to move forward while establishing operating requirements for future behind-the-meter projects. 

Chris Talley, co-founder of GridTracker, wrote in a LinkedIn post following the decision that the order is not a “death blow” to co-location in ERCOT.

“It just means that this architecture now essentially requires full backup capacity,” he said.

In a follow-up message to Utility Dive, Talley clarified that by “full backup,” he meant resources capable of carrying the load off-grid for a meaningful period of time, rather than simply riding through a short interruption. He cautioned that this was an “untested assumption” and pointed to a pending co-location application from Amazon and Vistra to build a data center campus next to the Comanche Peak nuclear plant, southwest of Fort Worth, as a case to watch. 

“How ERCOT and the Commission treat that arrangement will be very telling,” Talley said.

The decision requires the data center to operate with greater flexibility than a traditional industrial load. The order states ERCOT should provide 60 minutes’ advance notice “when practicable,” while allowing the operator to voluntarily commit to a faster 10-minute response. 

By prohibiting the project from receiving compensation for reducing its load during grid emergencies, the order distinguishes mandatory emergency curtailment from voluntary grid services. The ruling treats the ability to rapidly shut down as a reliability requirement for operating behind generation.

Crusoe, the developer of the AI data center, and Ensign, the large load customer that plans to operate the site, argued that forcing the entire site offline was disproportionate and that additional curtailment was unnecessary after the earlier reliability condition on the co-located wind project. Commissioners largely adopted the administrative law judge’s recommendation, including revisions from Chairman Thomas Gleeson, and concluded that allowing the second load to remain online while the first is curtailed would undermine the goal of ensuring generation capacity is available to the grid during emergencies. 

The case also attracted filings from the Texas Competitive Power Advocates and natural gas producer BKV, which argued the proposed framework could discourage future co-location projects. PUCT staff contended those parties lacked standing under the governing statute, and the commission’s final order did not address their arguments.

Tyler Durden Mon, 08/03/2026 - 12:20

Trump Blasts Oil Majors: "Get Gas Prices Down Now!"

President Trump blasted oil companies on Monday morning for high gasoline pump prices, telling them:

That goes for other Oil Companies as well…and get your consumer (retail!) Oil Prices DOWN, NOW! Thank you for your attention to this matter. President DJT

As of Monday morning, the national average for 87-octane gasoline at the pump stood at $4.09 a gallon, according to AAA data, marking the second consecutive week above the politically sensitive $4 threshold. Pump prices surged following the tit-for-tat strikes between the US and Iran, although upward momentum has begun to moderate as both sides signal a willingness to pursue a negotiated resolution to the conflict.

Here's the timeline of our reporting:

July 15: US Gasoline Prices Could Top $4 Per Gallon Within Days

July 20: US Gas Prices Cross Politically Sensitive $4 Level Closely Watched By Trump

July 24: Gas Prices Nearing Levels That Could Push Trump Towards Iran Talks, Says JPM Commodities Expert

Then diplomacy:

August 2: Trump Says "Perimeters Of A Deal Reached" With Iran To Reopen Hormuz After Call With Saudi Crown Prince

August 3: Iran Denies Negotiations With US After Trump Announces Talks For Monday Afternoon

Latest energy reporting:

Three Reasons Gas Prices Are Likely To Remain Elevated

"Diesel Is At Epicenter Of Supply Squeeze,": Goldman

"Really Only One Thing Worries Us A Lot": Here's What Keeps Goldman's Commodities Guru Up At Night

Trump's pressure on major oil companies to bring down gasoline prices comes as the national average remains above the politically sensitive $4-a-gallon threshold, with the midterm elections now less than 100 days away. Elevated fuel costs risk becoming a political liability, which helps explain why Washington is racing toward diplomacy following the recent tit-for-tat strikes.

Tyler Durden Mon, 08/03/2026 - 12:00

Groundhog Day

By Benjamin Picton, senior market strategist at Rabobank

It’s Monday morning again and it feels like Groundhog Day as I sit down to write that the US President has (again) halted strikes on Iran and teased that a diplomatic breakthrough is close. Brent crude prices have dutifully fallen in early trade, risk currencies are rallying and equity markets are poised to extend the gains posted late last week.

In his trademark bloviating style, President Trump posted to Truth Social that the USA was “locked and loaded” to unleash “levels of Military Terror, Strength, and Power not seen since World War II”, but that “for the future benefit of the WORLD” he had responded to a request from Iran and other Middle Eastern countries to hold off as the outline of a deal had been agreed. Trump went on to claim that the deal would include the “Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT”, as well as an end to the Iranian nuclear threat.

Obviously we’ve heard this one before. Iran’s Fars news agency reports that “informed sources” deny that any agreement has been reached on the status of the Strait of Hormuz, and that policy regarding the critical shipping route remains unchanged.

Meanwhile, Iran’s IRNA news agency reported that negotiations between Iran and Oman over the administration of the strait are in the final stages. Foreign ministry spokesman Esmail Baghaei said that talks have centerd around agreeing a new route for shipping, and that the talks are unrelated to the question of whether Hormuz is open or closed. He said that issue is a separate discussion. However, markets will take the positive signal that agreeing a new shipping route implies future shipping. What it does not tell us is where the ships will head to and under what conditions.

Of course, the other aspect of the Hormuz Groundhog Day is that later in the week strikes typically resume, oil prices rally, equities sell, and bond yields rise. While there is every chance of that happening this week for now the impression seems to be of ‘strikes for strikes’. This would require somebody to break the current pause that seems to suit the purposes of both sides for the moment. Encouragingly, Iranian sources continue to stress “proportionality” in responding to US aggression, which seems to imply an unwillingness to escalate, but there also continues to be a sense that the civilian government in Tehran is not on the same page as the IRGC – who broke the most recent pause in hostilities by attacking US targets in Jordan.

Less than five days left until Trump announces the next massive Iran strikes at 4:01pm on Friday

— zerohedge (@zerohedge) August 3, 2026

The relentless logic of arithmetic continues to be the critical factor in Middle East developments. Markets have so far taken large draws in global inventories in their stride with price rises mostly insufficient to cause severe demand destruction. At the same time, higher prices have induced a supply response by lifting US oil rig counts by almost 11% since the war broke out, increasing refinery capacity utilization, and prompting OPEC+ to announce another 188,000 lift in production quota from September onwards.

The physical realities of war in the Eastern Europe and the Middle East have rendered the latter a mostly theoretical increase for the time being, but could contribute to a structural reshuffling of the energy deck on the other side of the current crisis. Product markets continue to provide the clearest hints of the seriousness of the current supply squeeze, with Singapore gasoil spot prices still sitting more than two standard deviations above the long-run spread to Brent.

China continues to play the role of balancing entry in global energy trade while also pedalling faster than most to reduce its dependence on imported energy. The manufacturing investment boom in solar panels, batteries and electric vehicles is helping to offset the slow-motion trainwreck that is the Chinese real estate market, while also building supply chain resilience and doing planet Earth a solid with regards to climate change.

While geopolitics and a protectionist tilt away from Chinese goods in an effort to safeguard domestic supply chains is underway, some are still happy to take the subsidy from China and import those cheap goods to boost domestic living standards. Australia is one such country, where new household battery installations in the first half of 2026 was roughly equal to total household battery installed capacity in the United States, a country with more than twelve times the population. BloombergNEF reports that Australia now ranks third globally in terms of installed battery capacity, behind only the USA and China. This sounds good in the short term, but critics will note that this perhaps invites new risks for Australia’s domestic energy infrastructure – not to mention the trade and security relationship with the United States.

Electric vehicle sales has similarly surged since energy flows through Hormuz were interrupted, with battery and hybrid vehicle sales reaching almost 50% of total sales in Q2 and interrupting Australia’s long-running love affair with diesel pickup trucks. The surge in EV sales has accrued mostly to new market entrant brands from China and to (largely Chinese-made) Tesla. Year-on-year sales growth in June was 131% for BYD, 89% for Tesla, 327% for Geely, 569% for Jaecoo, 1660% for Zeekr and 316% for Leapmotor. Four of the top ten, and seven of the top twenty best-selling brands are now Chinese.

The success of those new entrant Chinese brands highlights the challenges faced by legacy manufacturers in the US, Japan, South Korea and, especially, Europe – where marques such as Fiat and Citroen have already exited the market, while Peugeot is reportedly considering a similar move. In an era where supply chain sovereignty and industrial capacity matters for national security, how can legacy manufacturers compete with the Chinese industrial juggernaut without meaningful restrictions on Chinese trade or massive export subsidies of their own?

Tyler Durden Mon, 08/03/2026 - 11:00