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OpenAI's Claims Of Solving Million-Dollar Math Problem Marred By Allegations From Academic

Authored by Jacob Burg via The Epoch Times,

OpenAI announced on Sept. 8 that one of its internal artificial intelligence (AI) models had found the solution to a generations-long mathematical problem that deals with the natural mechanics of fluids like water and air.

The Navier-Stokes equations govern how humans understand weather, ocean currents, blood flow, and aircraft and vehicle aerodynamics, and have been around for nearly 200 years. Mathematicians have spent decades trying to understand how smooth three-dimensional fluids can break down, and whether all the equations converge into sensible solutions despite their widespread success in various applications.

This question, known as the Navier-Stokes existence and smoothness problem, or Navier-Stokes for short, was selected in 2000 as one of the Clay Mathematics Institute's Millennium Prize Problems - considered the seven most important mathematical problems.

Anyone who solves one of the problems is offered $1 million in prize money.

OpenAI said an internal model "significantly more capable than GPT-6 Astra" solved the Navier-Stokes existence and smoothness problem. If so, it would mark one of the most significant advances in AI technology to date, even after previous AI models had solved other critical math problems.

"This is a Deep Blue-Kasparov moment," New York University (NYU) mathematician Tristan Buckmaster wrote in a statement released on Monday, referring to the moment a supercomputer beat world chess champion Garry Kasparov nearly 30 years ago.

"The community needs to have serious and unhurried discussion about where to go from here," he added.

However, Buckmaster said in the same statement that he had been working on the problem with mathematician and Anthropic employee Levent Alpöge, and had made significant progress last month after using Anthropic's Claude and OpenAI's Codex.

Before they could publish their work, Buckmaster said he contacted a prominent mathematician at OpenAI on Sept. 3 after rumors spread that Anthropic had solved a major open problem, and after Alpöge said he had received tips that information regarding the pair's progress on Navier-Stokes had been given to OpenAI.

OpenAI told Buckmaster that an internal model had produced a proof after the firm gave it a prompt to solve the problem. Buckmaster then asked when the prompt was sent, but said he did not receive an immediate response.

"Eventually it was agreed that it had been sent in the past few days, after information about our work had reached OpenAI," he said.

The NYU mathematician asked OpenAI whether the model had been trained on or had access to his Codex sessions with Alpöge, since the pair had inputted their project drafts into the AI model.

"I was told the model did not look up user data. I asked again, about training, and I did not get an answer," Buckmaster said.

Buckmaster alleges that OpenAI offered him two paths forward: He and Alpöge could post their results about part of the problem, known as Euler, a day before OpenAI published results on Navier-Stokes; or Buckmaster alone could publish a paper on Navier-Stokes, acknowledge that an internal OpenAI model had solved it, and remove Alpöge as an author since he works for the company's competitor, Anthropic. In the first instance, OpenAI would cede the prize to Buckmaster, saying that they would have been the "closest humans to the problem."

OpenAI, Buckmaster, and Alpöge did not respond to requests for comment by publication time.

In its announcement on Tuesday, OpenAI said, "While unlikely, we cannot rule out that de-identified data derived from their usage of our products helped improve our models."

OpenAI mathematician and AI researcher Sébastien Bubeck wrote on X on Tuesday that he did not ask to remove Alpöge from authorship of his own work, but had said "it would be simpler" if he was not an Anthropic employee "because I felt it would be inappropriate for an Anthropic employee to author OpenAI's work."

Sam Altman, CEO of OpenAI, also jumped into the fray on Tuesday, claiming that Alpöge refused to meet with his team, and that the Anthropic mathematician and Buckmaster had taken a different approach in working to solve Navier-Stokes.

"It is true that we tried this because there were rumors on the internet last week that Anthropic's models had solved a millennium problem and we were curious if ours could do it too," Altman said.

The comments did not address whether OpenAI had accessed Buckmaster's Codex logs, but Wired reported that the firm gave a closed press briefing on Tuesday where Bubeck and other OpenAI executives denied inspecting the logs or using them to inform their work.

"We, whether it's the researchers or the agents, did not see any of their work until it was released publicly last night," Bubeck told reporters.

Tyler Durden Wed, 09/09/2026 - 09:00

"I Am The House Now": Bessent Goes Full Judge Dredd On Yen Bears

US Treasury Secretary went full judge, jury, and executioner on speculative yen shorts overnight with probably the most direct explicit jawboning we have seen in years...

“I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do,” Bessent said at a Southern Methodist University event in Texas on Tuesday.

“And you can bet against me if you want.”

As Bloomberg reports, the comments were among Bessent’s most strident yet in an extraordinary campaign to bend markets to his will, even in the face of investor skepticism.

The former hedge fund executive, who made his name with outsized currency wagers, recently oversaw the first purchases of yen by US authorities in three decades and surprised market participants last month with plans to ramp up buybacks of US Treasuries to restrain a surge in yields.

He argued that Treasury has an informational advantage because of its visibility into Japanese policymakers and the BOJ.

“Whenever people say, ‘Oh, well, Treasury Secretary is taking a risk,’ - well, it’s my dream, I have asymmetric information,” Bessent said.

Bessent’s remarks also underscore his unusual level of engagement on economic policymaking in Japan, which is among the world’s largest holders of US debt.

Bessent has coordinated with Japan Finance Minister Satsuki Katayama on currency interventions and put increasingly public pressure on the central bank to raise interest rates, a move that would support the yen and reduce Japan’s need to sell Treasuries for market intervention.

“Bessent’s remarks carry immense weight. The message is clear: do not defy the Treasury Secretary,” said Tadashi Matsukawa, head of bond investments at PineBridge Investments Japan Co. in Tokyo.

“The old way of thinking — that interest rates would be raised once every few months — no longer applies.”

Interestngly, Takumi Naya, head of the FX trading group at Sumitomo Mitsui Banking Corp.’s global markets operations department, suggested that,“Bessent’s remarks suggest that he expects a correction in the yen’s strength even at current levels."

Bessent's remarks have certainly flipped the positioning with hedge funds now betting the yen will strengthen beyond 150 per dollar by year-end, with some longer-dated options trades targeting a move to 140.

“Leveraged investors have been active and reacting to a potential regime change in the currency,” said Jerry Minier, global head of linear G-10 FX trading at Citigroup in London.

“Option structures targeting dollar-yen below 150 by year-end have been popular.”

Nomura has seen a similar shift toward bearish dollar-yen sentiment among macro hedge funds that seek to profit from market swings triggered by economic or political events.

There has been “much stronger demand for downside in the option space from the macro community who have shifted to increasing shorts, particularly since we broke 155.00 as most viewed that as a support line in the sand,” said Graham Smallshaw, Singapore-based senior foreign-exchange spot trader at Nomura.

While there was some profit-taking on Sept. 8 when the pair dipped below 153, “the view for now is very much concentrated on the 150/152 target,” he added.

The stance contrasts with that of Japanese retail investors, who boosted their net short-yen positions to an estimated ¥3.61 trillion ($23.5 billion) last week, according to a Bloomberg compilation of data from the Financial Futures Association of Japan and Tokyo Financial Exchange.

“Bessent’s ‘I am the house’ remark reflects the mindset of a former trader who truly understands market dynamics, which is likely why the market shows him a certain level of respect,” said Kazushige Kaida, head of FX sales at State Street Bank & Trust Co.’s Tokyo branch.

“Whether it’s US Treasuries or the yen, his series of verbal warnings are probably aimed at correcting what he sees as moves that have gone too far.”

However, as Goldman's Delta-One desk-head, Rich Privorotsky noted, "whatever you think of the rhetoric... the yen objectively continues to appreciate as the market leans into BOJ tightening/repatriation."

But, he adds, the secondary implication matters more for equities... "what happens as yen funded carry trades unwind back into Japanese bonds/equities?"

"The S&P and mega cap complex have felt strangely heavy without a great fundamental reason.

Worth keeping in the back of the mind that some leverage/carry may simply be diffusing out of the system."

Be careful what you wish for Judge Bessent...

Tyler Durden Wed, 09/09/2026 - 08:40

Futures Slide As Brent Tops $100, 10Y Yields Rise Above 4.81% Ahead Of Expanded Treasury Buyback

US equity futures are lower as oil continues its ascent, pushing Brent above $100 for the first time since July 24 and pushing 10Y yields to 4.81%. As of 8:15am, S&P futures are trading at session lows, down 0.5% and after erasing early gains, echoing a rally in Asian technology shares that lost momentum as the session progressed. Nasdaq futures are down 0.6% as Mag 7s trade mixed premarket: META +5% after saying early Muse AI usage has “blown way past our projections” with users engaging 10x more than its test cohorts, while AMZN -0.4%.  The Treasury Department is expected to announce on Wednesday the size of the next day’s operation to repurchase outstanding 10-year to 20-year securities. Treasury 10-year yields trade above 4.81%, rising by 3bps. USD extended losses, trading near a 7 month low.The yen extends gains to trade near 153.30 per dollar, outperforming its G-10 peers. Treasury Secretary Scott Bessent challenged traders to test his resolve on boosting the Japanese currency. Hedge funds are betting the yen will strengthen beyond 150 by year-end. Commodities were mostly higher with WTI surging above $95 and Brent topping $100 (with Shanghai oil trading almost $10 higher) for the first time since July 24 after the US struck Iranian tankers near the Kharg Island export hub and in the Gulf of Oman. Tehran responded by firing missiles at Jordan and warning ships in the Persian Gulf. Precious metals and ags are all higher. US economic data slate includes weekly ADP employment change at 8:15am. Fed speaker slate is blank during Sept. 5-17 external communications blackout period around the Sept. 15-16 FOMC meeting

In premarket trading, Mag 7 stocks: Meta rises 5% with analysts positive on the Facebook parent after it debuted Muse, an AI assistant; 
Microsoft +0.04%, Apple -0.2%, Amazon -1.6%, Nvidia -0.4%, Alphabet -1.8%, Tesla -0.9%

• Braze (BRZE) slides 11% after the software company’s adjusted EPS forecast for the third quarter fell short of the average analyst estimate.
• Casey’s (CASY) drops 11% after the convenience-store operator reported a miss on first-quarter gross margin, as well as fuel gross profit. The stock had surged 33% this year as of Tuesday’s close.
• Chime (CHYM) jumps 9% after striking a deal to buy Stride Bank for $590 million in cash, snapping up its longtime partner as the fintech streamlines its operations.
• Evommune (EVMN) falls 8% after the drug developer said a mid-stage trial of its experimental therapy to treat atopic dermatitis failed to meet primary and secondary endpoints in any of the doses studied.
• Mission Produce (AVO) gains 4% after the avocado producer reported adjusted earnings per share for the third quarter that beat the average analyst estimate.
• ServiceTitan (TTAN) is down 17% after the software company’s third-quarter revenue forecast fell short of expectations. Bloomberg Intelligence highlights that the company slowed scaling of its agentic AI product Max.
• Tyra Biosciences (TYRA) tumbles 21% after announcing initial results from a Phase 2 study.

In other corporate news, Uber is said to be looking to raise around €4 billion ($4.7 billion) from its debut five-part euro bond. Amazon is selling its debut sterling bonds in a four-part deal. BP’s North Sea operations have drawn interest from suitors including Adura and NEO Next+, as the oil major works to exit the basin. Top lithium supplier Albemarle reached a preliminary wage agreement with union leaders in Chile on the final day of mediated talks before a strike was due to begin.

Oil prices extended gains for a fourth day, pushing Brent above $100 for the first time since July 24 with WTI around $95 - maintaining energy’s position as the key macro driver -  after US forces destroyed five Iranian tankers carrying crude in response to two attempts to hit a US Navy warship with ballistic missiles. Tehran responded by firing missiles at Jordan and warning ships in the Persian Gulf.  Treasuries fell across the curve, with the shorter end bearing the brunt. The two-year yield climbed three basis point to hit 4.42%, the highest since 2024. Europe saw a steeper selloff.

Brent reaching a threshold last crossed in July comes days ahead of the latest US inflation print. The data is widely seen as decisive in tipping the scales for or against a Federal Reserve interest-rate hike next week, with money markets pricing around a 60% chance of a move.

“The risks to equity markets continue to pile up as the discount rate which they face gets higher and higher and higher,” said Ashley Lester, chief research officer at MSCI. “The question is to what extent can continued AI earnings growth continue to push equity markets onward.”

Traders are now waiting for an announcement on the size of Thursday’s buyback operation for outstanding 10-year and 20-year Treasuries, part of Treasury Secretary Scott Bessent’s efforts to restrain yields.

Bessent stole headlines overnight, offering views on markets, bonds, GDP and the Midterms. He challenged traders to test his resolve on boosting Japan’s currency, saying “I am the house now,” and warned that the US faces dire consequences if it loses out in the AI race with China.

Bessent is also set to reveal today how far he’s initially willing to go to restrain US bond yields via an expanded buyback program, with wide-ranging estimates of as much as $10 billion per operation. Bloomberg strategists said this test to support the market is likely to fail, as years of budget deficits have helped drive the long-term natural rate of interest in the US to the highest in two decades.

Barclays strategists raised their S&P 500 target for year-end 2026 to 7,950 from 7,800, citing continued earnings strength. RBC strategists said the risk of a near-term 5% to 10% pullback in the S&P 500 are rising, citing weak seasonality, US midterms volatility and the Iran war. 

Conferences season is full steam ahead: conferences include Goldman Sachs Communacopia & Technology Conference (San Francisco), Jefferies Industrials Conference (New York), Citi Global TMT Conference (New York), Citi GEMS Conference (New York), Barclays Global Consumer Staples Conference (Boston), Goldman Sachs European MedTech & Healthcare Services Conference (London), Bernstein’s Annual Pan-European Strategic Decisions Conference (London), Morgan Stanley Industrial CEOs Unplugged (London), UBS Global Materials Conference 2026 (New York), Wells Fargo 21st Annual Healthcare Conference (Boston), Kepler Cheuvreux Autumn Conference (Paris).

In tech, Apple is holding its most anticipated event in years: New CEO John Ternus is set to debut a roughly $2,000 foldable iPhone, with larger-storage configurations going up to roughly $3,000. The shares have surged over the summer, while history shows that they’ve fallen on five of the past eight days when new versions of the iPhone were unveiled.

In AI, Google is planning its biggest investment in Europe, an AI infrastructure build out worth at least €13 billion in Finland. And US security agencies accused China’s top AI companies including DeepSeek and Alibaba of using distillation techniques to access and draw information from American AI models “at an industrial scale.”

In politics, Chris Pappas won the Democratic primary for a New Hampshire Senate seat, setting up a November showdown with former Republican Senator John Sununu.

Elsewhere, the US escalated its trade war with Canada, moving to block imports of some products, while slapping new tariffs on others and is seeking to bar Canadian companies from selling to government contractors. The import bans for some Canadian dairy products and alcohol will take effect in three weeks, a senior administration official told reporters.

In Europe, sectors sensitive to the economy dragged the Stoxx 600 down 1.5% in a move led by industrials which are sensitive to energy costs. Here are the biggest movers Wednesday:

• Fortum shares gained as much as 11%, the most since Feb. 2022, after the Finnish energy company said it has signed a 22-year power-purchase agreement with Google covering up to 50% of the capacity at its Loviisa nuclear plant from 2028
• Victrex shares jumped as much as 17% to the highest since March 2025 after the thermoplastic specialist said annual underlying pretax profit will top guidance following a strong performance in the final quarter of the financial year
• Interparfums shares rise as much as 4% after the perfume and cosmetic product manufacturer reported earnings comfortably ahead of expectations in the first half, bolstered by better margins
• Kinnevik shares rose as much as 8.2%, briefly hitting their highest level since February, after being upgraded at SEB Equities
• Gym Group shares rose as much as 6.7%, the most in a year, after its first half earnings beat expectations, according to Panmure Liberum
• Energean gained as much as 6.6%, the most in five months, after the oil and gas producer reported first half production and revenue that beat expectations
• Inditex shares fell as much as 4.9%, the most in six months, after the Zara owner’s first-half earnings missed sell-side expectations due to rising operational costs
• AUTO1 Group shares fell as much as 5% after the online used-car dealer announced CFO Christian Wallentin is stepping down for family reasons
• Webuild dropped as much as 9.2% as the company announced that Italy’s market regulator Consob has ordered the restart of the review period for the firm’s voluntary tender offer on all Trevi-Finanziaria Industriale’s ordinary shares

Asian stocks rose as sustained enthusiasm for artificial intelligence lifted chipmakers, with investors looking past escalating hostilities in the Middle East. The MSCI Asia Pacific Index advanced as much as 0.7% before trimming gains. South Korea’s Kospi rose 1.4%, as SK Hynix and Samsung Electronics tracked their US peers higher. Benchmarks in Japan and Taiwan weakened throughout the session as higher oil prices fueled concerns over inflation.  Interest in technology shares persisted even as geopolitical tensions intensified and oil prices extended their climb. Brent crude hit $100 a barrel as attacks between the US and Iran and a recovery in Chinese oil buying propel the global crude benchmark higher. Meanwhile, Citi sees Indonesia equities rising about 9% from current levels by year-end but maintains a cautious stance on the world’s worst performer this year. The Jakarta Composite Index has gained about 25% from a June low, entering a technical bull market.

“There’s no evidence the capex cycle’s slowing,” Christopher Wood, global head of equity strategy at Jefferies, said on Bloomberg TV. “I would still rather own the picks-and-shovels trade than the people spending the money.”

In FX, the Bloomberg Dollar Spot Index is down 0.1%, nearing its lowest level in nearly seven months as the yen rallied, with traders looking ahead to the US Treasury’s buyback announcement and inflation data later this week. The yen advanced against all its Group-of-10 peers after US Treasury Secretary Scott Bessent challenged traders selling the Japanese currency. USD/JPY fell 0.3% to 153.47 after touching 152.89 on Tuesday, the lowest since February. When the US intervenes with the yen, “I have pretty good insight” into what the Bank of Japan and Japanese policymakers are going to do, Bessent said. “And you can bet against me if you want”

In rates, treasuries hold modest losses led by front-end tenors as oil prices extend their climb, spurring traders to price in increased chance of a Fed rate hike at next week’s policy meeting.  US yields are up 1-2bps across the curve ahead of the US buyback announcement and 10-year supply. Supply also weighed as a 10-year note reopening is set to draw the highest yield since 2007 and new corporate bond sales are seen topping Tuesday’s almost $40 billion haul. Long-end tenors have support from uncertainty about the size of Thursday’s expanded buyback operation, to be announced at 11 a.m. 2- to 7-year yields are 2bp-3bp higher on the day with long-end tenors outperforming, flattening 2s10s curve by about 1bp, 5s30s by about 2bp; 10-year is around 4.805% with bunds and gilts in the sector lagging by an additional 2.5bp.  Treasury auction cycle continues with $39 billion 10-year reopening at 1 p.m. New York time; Tuesday’s $58 billion 3-year new-issue drew good demand at highest yield since 202.  WI 10-year yield around 4.81% is ~13bp cheaper than last month’s auction result. IG dollar issuance slate includes a couple of names so far. Eighteen offerings were priced on Tuesday, with issuers paying about 2bp in new issue concessions on deals that were 3.9 times covered. Stand-downs and flurry of mandates announced Tuesday point to a potentially busier Wednesday session

In commodities, Brent crude topped $100 a barrel for the first time since July 24 as the US war on Iran flared and Chinese buying recovered; WTI crude is up 2.3% after topped $95 for the first time since June. European natural gas prices hit a three-year high. The weaker dollar helped push gold higher by 1%. Bitcoin adds 1.3%. 

US economic data slate includes weekly ADP employment change at 8:15am. Fed speaker slate is blank during Sept. 5-17 external communications blackout period around the Sept. 15-16 FOMC meeting

Market Snapshot

Top Overnight News

• The US military struck five Iranian tankers on Tuesday, sinking one, after Iran fired ballistic missiles at a US Navy warship, in a fresh escalation of fighting in the Middle East. The attacks prompted a significant retaliation from Iran, which launched a missile barrage toward regional US ally Jordan, saying it was targeting US military assets (18 of 20 missiles were intercepted, and two fell into unpopulated areas, with no casualties reported).  CNN
• Commercial vessel traffic through the Strait of Hormuz is poised to remain at about 5% of prewar levels after the resurgence of US-Iran hostilities. Crossings will stay severely suppressed through late 2026 even if a lasting ceasefire takes hold. BBG
• Brent oil topped $100 a barrel for the first time since July, as attacks between the US and Iran and a recovery in Chinese oil buying propel the global crude benchmark higher: RTRS
• Treasury Secretary Scott Bessent challenged traders to test his resolve on boosting Japan’s currency, “I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do,” Bessent said at a Southern Methodist University event in Texas on Tuesday. “And you can bet against me if you want”. BBG
• Hedge funds are betting the yen will strengthen beyond 150 per dollar by year-end, with some longer-dated options trades targeting a move to 140: BBG
• Treasury Secretary Scott Bessent is set to reveal how far he’s initially willing to go restrain US bond yields via an expanded buyback program that has Wall Street dealers on edge. The Treasury Department is expected to announce on Wednesday the size of the next day’s operation to repurchase outstanding 10-year to 20-year securities; past precedent indicates it would be at 11 a.m. in Washington. It will be the first such release since the Treasury shocked market participants Aug. 19 by saying it would “at least double” the $2 billion sizes it had penciled in just two weeks before. BBG
• Apple is holding its most anticipated event in years today: New CEO John Ternus is set to debut a roughly $2,000 foldable iPhone, with larger-storage configurations going up to roughly $3,000. The shares have surged over the summer, while history shows that they’ve fallen on five of the past eight days when new versions of the iPhone were unveiled. BBG
• Meta on Tuesday formally launched Muse, a personal AI agent “that understands your goals and works 24/7 to get things done for you”. WSJ
• China’s consumer and factory-gate prices edged higher in August, fueled by energy-market jitters tied to renewed tensions in the Middle East. The producer-price index climbed 3.8% in August from a year earlier, accelerating from July’s 3.5% increase. The figure topped the median 3.7% increase projected by economists. Core CPI (+1% vs. the Street +0.9% and vs. +0.9% in Jul) while headline CPI was inline (+0.8%, up from +0.5% in Jul). WSJ
• US agencies accused DeepSeek, Alibaba and other Chinese AI firms of systematically extracting proprietary knowledge from American firms. BBG
• The US escalated its trade war with Canada following Ottawa’s tariff retaliation, moving to block imports of some products while slapping new tariffs on others, as well as seeking to bar Canadian companies from selling to government contractors. Donald Trump said he would also seek to bar Canadian companies from selling to government contractors. CNN
• India is ramping up scrutiny of Wall Street traders with the nation’s securities regulator turning more aggressive in targeting even prominent foreign players like JPMorgan Chase & Co. in its $5 trillion stock market: BBG
• LIV Golf filed for bankruptcy protection Tuesday, a dramatic fall for the Saudi-backed league that had big ambitions to challenge the supremacy of the PGA Tour: BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed as the region attempted to shrug off the weak lead from Wall Street, where all major indices declined on return from the long weekend amid rising oil prices and geopolitical escalation. ASX 200 was subdued as gains in energy, resources, mining and materials were offset by weakness in healthcare, financials and the consumer-related sectors. Nikkei 225 swung between gains and losses with few fresh catalysts and as further reports continued to point to a BoJ rate hike next week, while Nintendo was among the laggards after its Legend of Zelda 40th Anniversary Direct announcements underwhelmed. KOSPI resumed its regional outperformance and climbed above the 7,000 level with Samsung underpinned following several recent announcements and with SK Hynix unfazed by reports that Kioxia's CEO dismissed prospects of closer ties with the South Korean chipmaker. Hang Seng and Shanghai Comp were mixed, with price action contained after the PBoC continued to refrain from open market operations and as participants digested the Chinese inflation data in which CPI matched estimates, but PPI was firmer-than-expected and showed an acceleration in factory gate prices.

Top Asian News

• US Treasury Secretary Bessent said he has good insight when they intervene on the yen and dared people to bet against him, while Bessent commented that he has information and good insight into what the BoJ and policymakers will do.
• Japan cabinet reshuffle is set for September 17th, according to Asahi.

European bourses (STOXX 600 -0.9%) are entirely in the red, given the renewed US-Iran tensions overnight. US CENTCOM announced that it destroyed 5 Iranian oil tankers in response to the IRGC targeting a US Navy warship. In retaliation, the IRGC struck back, firing ballistic missiles at a base in Jordan and attacking 10 ships. Energy prices have climbed in turn, with Brent Nov'26 briefly extending above the USD 100/bbl mark. Sectors highlight the negative bias. Utilities, Telecoms and Energy are the only sectors in the green. The clear underperformer is Retail, given losses in Inditex amid mixed H1 earnings, while Consumer Products & Services and Banks round out the sector laggards.

Top European News

• French PM Lecornu is considering plans to reduce the exceptional contribution imposed on very large companies, TF1 reported

FX

• G10s are mostly firmer against the USD. The JPY mildly outperforms vs peers, continuing to build on its recent strength. The Kiwi is the slight laggard this morning. Westpac remains short NZD/USD, targeting 0.5700 or lower vs a current price of 0.5843.
• DXY is incrementally lower this morning despite higher oil prices, and currently holding within a 98.61 to 98.82 range. Focus has been on geopolitical updates, after another bout of US-Iran fighting has led to a leg higher in energy prices, which in turn has lifted domestic yields. The US 2yr (4.4%) now holds near recent highs. On the trade front, the Loonie is relatively unmoved to the US announcing an import ban on alcohol and other goods from Canada in response to the latter's tariff retaliation.
• The JPY modestly outperforms this morning, with USD/JPY holding within a 152.93 to 154.01 range. A continued bout of pressure will see the pair trade well within levels seen in mid-February, however, it will likely find some support at the 152.00 level, which was the low on 27 Jan 2026. A breach beyond that level would likely require a dovish US CPI report on Friday, a hold at the Fed next week and a hawkish BoJ policy announcement thereafter.
• The outperformance this morning can be attributed to daring commentary from US Treasury Sec Bessent. He stated that “I am the house now”, and has good insight into what Japanese policymakers and the BoJ will do. He provided a final warning that he has asymmetric information. The strong commentary from Bessent, along with hawkish BoJ speak over the past couple of weeks will keep JPY vigilantes on the sidelines, at least for now. However, once we get past the string of policy decisions next week – markets may begin to shift their attention back to energy dynamics, which JPY is particularly sensitive to.

Fixed Income

• Unsurprisingly, given the late-Tuesday action, Gilts gapped lower at the open. Down by 19 ticks and then another 19 to a 85.62 low, but clear of Tuesday’s 85.56 base. Since, in a morning of somewhat less macro newsflow than the last few days, the benchmark has held in proximity to that low, unable to find and respite as peers did overnight; though, they too have faded in recent trade.
• Bunds spent the APAC session modestly in the red, but in a very thin range, as the complex awaited a major update on the geopolitical front. Since, in the European morning as energy climbs and after Brent surpassed the USD 100/bbl handle, further pressure has emerged taking Bunds to a 121.64 low. Concerning for Europe, and lifting short-end yields in particular, is the ongoing climb of TTF, to over EUR 79/MWh today, a high for the October contract. An ascent that underscores the expected ECB hike on Thursday.
• USTs were flat/firmer in APAC trade, holding around 107-10 for the most part. Since, given the above, some modest pressure has emerged to take the benchmark just into the red by a couple of ticks and prints a low at 107-07+. Today is focused firmly on the Treasury buyback announcement, the first after the move to at least double the long-end operations from the current USD 2bln maximum. Given the “at least” language, and the commentary from Secretary Bessent that operations could be above the implied USD 4bln level if required, we are attentive to the announced size, any scheduling update and/or accompanying commentary the Treasury may choose to provide.
• Germany sells EUR 4.201bln vs exp. 5.5bln 3.00% 2036 Bund: b/c 1.47x (prev. 1.15x), average yield 3.39% (prev. 3.26%), retention 23.62% (prev. 37.2%).
• Amazon (AMZN) begins the sale of its four-part Sterling bond. Guidance: 3-year +70bps to Gilts, 6-year +90bps to Gilts, 12-year +105bps to Gilts, 19-year +110bps to Gilts.

Commodities

• In geopolitics, US forces destroyed five Iranian crude oil tankers tied to the IRGC in response to repeated attempted missile attacks on US Navy warships, with US Secretary of State Rubio warning that Iran will lose tankers each time it targets American vessels. Iran retaliated with further missile strikes, including at least 20 missiles targeting bases in Jordan, although Jordan said 18 were intercepted and no casualties were reported, while the IRGC claimed attacks on US warships and commercial vessels and threatened further retaliation against US interests. Meanwhile, Iran said it remains committed to its MoU with Washington despite reportedly demanding new conditions for negotiations, while explosions were also reported in Saudi Arabia’s Jazan region and oil fields.
• Crude futures are on a firmer footing, with Brent Nov extending above USD 100/bbl this morning for the first time since late July. Attention has been on some UKMTO updates, which have appeared to outline some of the activity seen on Wednesday. Both benchmarks are towards the upper end of intraday bands, WTI Oct in a USD 93.76-95.19/bbl (vs yesterday’s 90.87-94.73/bbl range) and Brent Nov within USD 98.80-100.68/bbl (vs yesterday’s 96.78-99.46/bbl range). Dutch TTF firms by almost 4% intraday and resides close to EUR 79/MWh after briefly topping the level this morning from a base under EUR 77/MWh, with winter heating demand also taking focus.
• Metals are mixed. Precious metals cheer a weaker Dollar irrespective of the firmer oil prices, with a weaker Buck allowing geopolitical risk premium to be baked in. Spot gold found support at its 100 DMA (USD 4,343/oz), with the bullion trading in a current USD 4,341-4,413/oz range, with yesterday’s peak at USD 4,443/oz. Spot silver found support near yesterday’s low around USD 65.50/oz, and resides not far from its 100 DMA (USD 67.15/oz) in a current USD 65.52-67.01/oz range.
• Base metals are mixed, with copper prices subdued following recent record highs on the LME, and with the mood cautious against the backdrop of higher energy prices and its impact on inflation and growth. 3M LME copper trades in a USD 14,596.50-14,725.03/t range.
• Iraq is reportedly seeking a significant output quota increase during OPEC+ audits, wanting to target 6mln bbls/day, Bloomberg reported.
• Turkish Energy Minister said that they are starting an oil exploration in the Western Black Sea in the coming days.

Trade/Tariffs

• US President Trump said he is directing the General Services Administration, working with the USTR, to take all necessary steps to remove Canadian-origin products from GSA’s Multiple Award Schedules unless Canada restores full and fair reciprocity for American farmers and companies.
• White House posts proclamations regarding modifying scope of Canadian products subject to additional duties and excluding certain products from importation to the US, with respect to motor vehicles, dairy and alcoholic beverages.
• US senior administration official said President Trump approved a series of proclamations on Canadian trade measures, with the ban on dairy, most alcohol and motorcycle imports from Canada under Section 338, while the official stated the restrictions are to take effect in about 3 weeks and that Trump's stance on the January 1st, 2027 auto tariff hike remains in effect.
• Canada's Minister Responsible for US Trade LeBlanc said they are assessing the latest tariffs from the US, while he is in contact with USTR Greer and will work in good faith when the US is ready to engage.
• US Commerce Secretary Lutnick will meet with Mexican President Sheinbaum and Economic Minister Ebrard and will discuss US tariffs on Mexican autos and metals, according to POLITICO.

Geopolitics: Iran

• US Central Command confirmed that forces destroyed five Iranian crude oil carriers on Tuesday after the IRGC targeted a US Navy warship with ballistic missiles twice over the past two days.
• US Secretary of State Rubio said every time Iran tries to hit US Navy ships, they will lose tankers.
• Iran launched missiles at targets in response to US strikes on tankers, while it launched at least 20 missiles at bases in Jordan, with the Al-Salti and Prince Hassan bases targeted, according to SNN. However, Jordan said air defences intercepted and destroyed 18 of 20 Iranian missiles, and two fell away from population centres, while it stated that no casualties were reported after the Iranian missile strike. Furthermore, it was later reported that Jordan intercepted additional missiles in the east.
• IRGC claimed missile strikes on US combat destroyers, while it announced that it attacked two US vessels, eight oil vessels and ten violating ships that intended to cross the prohibited and unsafe area of the Strait of Hormuz.
• Iran's MP said there is a "possibility of re-examining the plan to withdraw from the NPT in the parliament", ILNA reported.

Geopolitics: Ukraine

• Russia is anticipated to prolong the Ukraine war into 2027 as peace talks stall, with President Putin believed to be waiting for a stronger military and political position before serious negotiations. Furthermore, Western officials warned that Moscow will intensify winter attacks on Ukraine's energy infrastructure whilst escalating cyber attacks, sabotage and influence operations across Europe.
• Ukraine Drone Forces Commander said that Ukraine hit military vessels at Russia’s Novorossiysk naval base.
• Russian strikes hit port infrastructure in Mykolaiv, according to Ukrainian officials.
• CPC oil terminal on the Black Sea was reportedly attacked by drones overnight.

Geopolitics: Other

• Top US diplomat in Taiwan said, aside from the human toll, any conflict across the Taiwan Strait would have a bigger impact on the global economy than the Second World War.

US Event Calendar

• 7:00 am: Sep 4 MBA Mortgage Applications, prior 0.8%

DB's Jim Reid concludes the overnight wrap

Today is the day when I work out whether the thing that's truly been missing from my life over the last few years, or even decades, is a foldable phone. I usually go into an Apple launch event day saying that this time my vast collection of Apple products is finally now stable and mature. That said, I usually come out the other side with 10 timers set so as not to miss the eventual first order point for the new products.  

As we await "iFold”, markets seem to be treading water this week as increases in energy prices dampen risk appetite, as Brent crude is nearing the $100 level last seen six weeks ago. While Brent did give some of its initial gains yesterday to settle +0.95% at $97.92/bbl, news late in the US session of new strikes in the Gulf have left it another +1.45% higher at $99.34/bbl this morning after touching $99.67/bbl earlier in the session. And with inflationary pressures still mounting, that kept the pressure on other asset classes too. Indeed, the S&P 500 (-0.58%) posted a fresh decline as US markets returned after Labor Day, whilst the 5yr Treasury yield (+1.8bps) closed at a 19-month high of 4.56%.   

The initial catalyst for the fresh increase in oil came just as we were going to press yesterday, as Saudi Arabia halted operations at multiple energy sites after they were attacked. The Houthis claimed responsibility shortly after. And while oil prices fell back late in the European session, they then spiked again amid news of explosions near Kharg Island, which houses Iran’s main oil export facilities. US Central Command announced later that US forces destroyed five Iranian tankers in response to attempts to hit a US Navy warship with ballistic missiles. In response to the strikes, Iranian state TV cited an IRGC warning to tankers in the vicinity of Bahraini and Kuwaiti piers to evacuate their vessels “as they will be targeted”. Iran also launched missiles towards an air base in Jordan overnight.
So all that has left investors growing more concerned about further disruption and pricing a longer period of high energy prices. In fact, the 6-month Brent future (+1.52%) closed at its highest level since mid-June, at $84.78/bbl. It is another +1.45% higher this morning. So there is growing scepticism that oil prices will meaningfully revert over the coming months.   

In the meantime, the relentless rise in European natural gas prices also continued yesterday. For instance, the front-end future rose +3.46% to €75.80/MWh, its highest since January 2023, so the inflationary pressures were clear in multiple directions. The latest move comes as Europe is seeking to fill up its storage, but it’s still only 67% full, which is lower than it’s normally been at this time of year. Indeed, storage was 79% full in 2025, and was 93% full in 2024, so that’s added to concerns ahead of the winter heating season. The refilling shortfall has been concentrated in some of the northern continental countries, including Germany (55% full) and Netherlands (50% full). Given all that, investors were pricing in higher inflation too, with the 1yr Euro inflation swap (+2.9bps) moving back up to 3.40%, its highest since May. The ECB's comments on the latest developments at their policy meeting tomorrow will be fascinating.  
That backdrop meant it was a more challenging day for equities, with fresh losses on both sides of the Atlantic. In the US, the S&P 500 (-0.58%) fell back as part of a broad-based decline, with more than 70% of the index lower on the day. The Nasdaq (-0.32%) and the Mag-7 (-0.35%) saw slightly smaller declines thanks to a recovery in chipmakers, which also sent the Philly semiconductor index (+1.30%) higher for a 4th consecutive session. Meanwhile in Europe, the STOXX 600 (-0.05%) slipped back again slightly, with the continent’s indices generally seeing little movement. So the FTSE 100 (-0.10%) and FTSEMIB (-0.10%) posted modest declines, whilst the CAC 40 (+0.14%) eked out a gain. Stoxx futures are around half a percent lower this morning.  

The latest inflation pressures also kept up the pressure on US Treasuries, with yields rising across the curve, particularly at the front-end. So the 2yr yield was up +2.8bps to a one-week high of 4.39%, whilst the 5yr yield (+1.8bps) just about hit its highest since January 2025, at 4.56%. By contrast, the 10yr yield (+0.7bps) only saw a very modest increase to 4.79%, leaving it just shy of its 4.80% peak a week earlier, which had been the highest since October 2023. Overnight yields are fairly steady across the curve.

Those moves come ahead of the US Treasury’s upsized long-end buyback operation tomorrow, the size of which is expected to be announced today. Yesterday Bessent described the increased operations which were announced last month as aiming to quell a “fever” that was building in the bond market.  

Over in Europe, the inflation pressures were also clear. But even as inflation breakevens moved higher, a reduction in real rates ultimately left sovereign bond yields lower on the day. So that meant that yields on 10yr bunds (-2.0bps), OATs (-1.8bps) and BTPs (-2.2bps) all rallied. In Europe, UK gilts were the relative underperformer, with the 10yr yield only down -0.2bps. In part, that’s because gilts have generally been more sensitive to higher oil prices. But Bank of England Governor Bailey also warned that inflation risks remain “on the upside”.   

In Asia, tech continues to support the KOSPI (+1.63%) which is again outperforming regional peers. Elsewhere, Japan's Nikkei (+0.07%), Hong Kong's Hang Seng (+0.02%), China's CSI 300 (+0.10%) and ASX (-0.17%) are all struggling to gain meaningful traction. S&P 500 futures are up +0.09% with Nasdaq 100 futures advancing +0.22%.

Early morning data showed that China's inflation pressures picked up in August, with both factory-gate and consumer price growth accelerating. The move was driven largely by higher energy costs linked to supply risks stemming from the Middle East conflict, even as underlying domestic demand remained subdued. Producer prices rose +3.8% year-on-year, above economists' expectations of +3.6% and up from +3.5% in July. Meanwhile, consumer prices increased +0.8% from a year earlier, in line with forecasts and accelerating from July's +0.5% gain.

Finally, there wasn’t much data of note yesterday. But we did get the NFIB’s small business optimism index from the US. That fell more than expected to 98.7 in August (vs. 99.3 expected), falling back again after rising over June and July. Otherwise, we also had the NY Fed’s latest Survey of Consumer Expectations. That showed growing pessimism about unemployment, as the mean probability of the US unemployment rate being higher in a year rose to 44.4%, the highest in the survey since April 2020 during the initial phase of the pandemic. 

Looking at the day ahead now, data releases include French industrial production for July. Central bank speakers include Bundesbank President Nagel. And today is also when the US Treasury department will increase their buybacks for longer-dated Treasuries

Tyler Durden Wed, 09/09/2026 - 08:37

There's More Juice Left In The Trade For Higher Real Yields

Authored by Simon White, Bloomberg macro strategist,

TIPS continue to mean revert and risk overshooting to the downside, leading to a continuation in rising real yields.

Real yields in the US have had a remarkably good run, with 10-year reals bottoming at about 1.72% at the end of March and rising to near 20-year highs at 2.43% currently. That’s even more remarkable when you consider that oil has on net risen almost 70% over the same period.

TIPS were overbought coming into the Iran war, but are now back to their mean. As the chart below shows, TIPS’ annual return is a mean-reverting series, with a decaying mean. Like a pendulum, when the series gets back to its mean it typically overshoots.

If that was to recur, then we should expect real yields to keep rising.

That is consistent with the message from my leading indicator for real yields. Its inputs include G10 excess liquidity and the Federal Reserve’s policy rate, and it anticipates the 10-year real yield rising more over the next three months or so.

Short positioning in TIPS looks elevated, based on the short interest of the iShares TIP ETF. We’re not likely to see significant short covering while momentum is in the bears’ favour.

In shares terms, the short interest is not as high as it was during the inflation flare of 2021/22 and subsequent rapid Fed tightening, but the short interest ratio, ie normalised by the shares outstanding, is at a similar level to what it was back then.

There are different drivers this time. Fed pricing is not as big a part of it, with only two and a bit rate hikes expected over the next year. Instead it’s a combination of rising real growth expectations and greater competition for capital, driven by the seemingly insatiable demand for investment in AI infrastructure.

A good slug of the rise in real yields this year, however, also comes from increasing risk premium for TIPS. No wonder short positioning is high.

Tyler Durden Wed, 09/09/2026 - 08:05

Bitter Harry and Meghan Fire Off Blunt Statement After King Charles Blocks Royal Return

King Charles delivered a humiliating public slapdown to Prince Harry and Meghan Markle yesterday after the couple's surprise return to Britain, making it crystal clear they remain firmly out of the Royal Family.

Buckingham Palace issued a stinging letter on Monday spelling out that the Duke and Duchess of Sussex have no official role, no working duties and no hope of a half-in, half-out arrangement.

"It is well known that in January 2020 the Duke and Duchess stepped down from undertaking representative duties on behalf of The Sovereign, and are no longer working Members of The Royal Family," read the letter sent by the Lord Chamberlain, the royal household's top official. "This position, distinct from the State and Royal duties undertaken by the working Royal Family, and with the personal latitude it brings the couple in respect of financial independence and protection of their privacy as they would wish, will continue to be fully respected."

Buckingham Palace stressed that simply pitching up on British soil does not restore their royal standing.

"It follows that there is no change to the current status of the Duke and Duchess of Sussex," the letter added. "Their styles as His and Her Royal Highness remain in abeyance and are not used. The charitable work of the Duke and Duchess is a personal matter for them both and undertaken in their private capacity. In short, their position is akin to private citizens with commercial and charitable interests."

A spokesman for Harry and Meghan responded to the letter with a terse statement, claiming that the pair had been blindsided.

"We were a little surprised not to have been told about this in advance. The publication of the letter had caught the couple off guard," their statement reads.

However, Palace officials only told them of the King's position an hour before the letter was published, according to GB News.

Meanwhile, some royal watchers said that no one should be remotely shocked by the king's actions.

While Harry and Meghan are returning, they are not regaining official royal roles," British royals expert Hilary Fordwich told Fox News. "Nor was there any agreement to a 'half-in, half-out' construct. They have been thwarted by trying to do what they agreed to with Queen Elizabeth II."

Tyler Durden Wed, 09/09/2026 - 07:45

IRGC Says 'Smart Submarine' Operated By US Seized In Hormuz, Releases Images

Iran's Islamic Revolutionary Guard Corps (IRGC) navy announced Tuesday it had captured an unmanned US submersible at the entrance of the Strait of Hormuz, a claim which corresponding photographs appear to back.

The US side has yet to confirm the capture of the advanced naval drone, but some reports suggest it was "lost" after failing to operate properly. The IRGC statement called it a "complex intelligence and operational action."

Tasnim identified the captured system is a Dive-LD in a report, describing the autonomous unmanned underwater vehicle built by US defense firm Anduril Industries.

The Dive-LD is a very new, cutting edge weapon system, having only been delivered to the US military in 2025. It is able to operate up to ten days at a time without coming back to port or ship, and is reported to have a maximum operating depth of about 19,700 feet (6,000 meters).

Later on the same day, an unnamed US official issued the following (via Newsquawk wire):

US official says a US military underwater drone malfunctioned more than a day ago in the Middle East

The sea drone may have been operating as part of a US mission to de-mine the Strait of Hormuz. It is capable of mapping the ocean floor, as well as rapidly locating floating mines and other water hazards.

There have been recent widespread reports that elite Navy Seals have been engaged in a four-month mission to remove mines set in place by Iranian forces as part of its effort to close the Strait of Hormuz and hold global energy markets hostages to use as leverage against Washington.

This undoubtedly confirms that in recent weeks, the U.S. has attempted to conduct a covert operation to clear the Strait of Hormuz.

In fact, this naval drone is precisely a Dive LD, primarily used for mapping the seabed, inspecting underwater infrastructure, relaying and… https://t.co/z6zV7tmxDq pic.twitter.com/Cjb3egGW50

— MoloMonitor 🇮🇹 (@MoloWarMonitor) September 8, 2026

The above was not the only big Tuesday announcement by the Iranians:

Iran’s Islamic Revolutionary Guard Corps claims its air defenses have “intercepted and destroyed” an MQ-1 drone over the Strait of Hormuz, according to an IRGC statement carried by Iranian broadcaster IRIB.

The MQ-1 is a US-made remotely piloted drone often used for surveillance and reconnaissance.

The Pentagon has not yet definitively weigh in on this claim either. A huge number of advanced US drones have either crashed or been intercepted throughout the war, so this would hardly be the first such loss by American forces.

More images of sub capture: The submersible shown closely matches Anduril’s Dive-LD, an advanced large-displacement autonomous underwater vehicle deployed by the US Navy.

🇮🇷🇺🇸 IRGC captures advanced U.S.-made underwater drone in Strait of Hormuz

The IRGC Navy has released new footage and photographs of the autonomous underwater vehicle it says it captured while entering the Strait of Hormuz.

The vehicle shown closely matches Anduril’s Dive-LD,… pic.twitter.com/8t2QBtpmro

— DD Geopolitics (@DD_Geopolitics) September 8, 2026 Tyler Durden Wed, 09/09/2026 - 06:55

German Industrial Orders Up: Massive Boost From Arms Spending

Submitted by Thomas Kolbe

Was this the turning point of the summer, a kind of summer-sun Merz-turnaround?

Latest figures from the Federal Statistical Office show a significant jump in industrial orders in Germany: The order volume of companies across all sectors rose by 2.5 percent in July compared with the previous month – the third consecutive increase.

These are good numbers for the Chancellor, who is desperately looking for supporting arguments for his political course ahead of the state elections in eastern Germany. The economic reporting of the past week was striking: Economic institutes are revising their growth forecasts for the current year upward. LBBW, for example, now expects growth of 0.7 percent for the current year, up from 0.5% previously.

Growth of 0.7% – given an officially reported government spending ratio of 52.5% and new borrowing of around 4% this year, this is a pitiful figure. It marks no turning point. The figure merely shows that the private sector remains on a path of contraction and will lose at least two to three percent in substance.

We are witnessing a statistical effect. Merz is inflating a debt-financed economic phantom, raising the question: How can real economic prosperity grow out of artificially created credit? If the world were really that simple, all of humanity could catapult itself into the economic stratosphere from one day to the next with a debt-financed Keynesian demand program.

But reality, unfortunately, does not correspond to the voodoo economics of long-faded theories.

Let us therefore return from the Keynesian dream world to the world of true economics.

Comparing incoming orders with the situation a year ago could give the impression that we have reached the peak of an economic boom: In July, incoming orders were 13 percent above the previous year's level – a fabulous figure, one the German economy may have last seen during the years of the post-war economic miracle. The July figure stands out so markedly that investment demand is pushing up the entire gross domestic product and more than compensating for the dramatically poor figures in the other sectors of the economy.

A brief classification: Retail sales were down 2.5% in real terms in July compared with the previous year. Hospitality revenue fell by more than 5% in real terms year-on-year. All in all, consumption stagnated in the first half of the year; only credit-financed government demand prevented a dramatically negative figure. On top of this, inflation, now at three percent, is slowly but surely eating holes into the purchasing power of private households.

But the beautiful appearance of the numbers is deceptive. Everything stands and falls with the large orders recorded statistically. Looking into the mechanics of the statisticians, one sector in particular catches the eye: other transport equipment. It contains, above all, orders for military goods. The statistics currently reflect the development of the military sector almost exclusively, because the private sector is not investing in major projects.

If this sector, which had exploded by a staggering 126.4% compared with the previous month, is excluded, industrial orders as a whole actually fell by 1.4% in July. That would hardly be a reason for celebration, including for the Chancellor, who seems to have gotten lost somewhere in the east on his campaign tour while searching for media-friendly crumbs.

Looking at individual items, the situation in German industry remains dramatic. In the automotive industry, it looks downright apocalyptic. German automakers had to absorb a 12.5% decline in orders compared with the previous month.

Free fall in Germany, the land of the automobile.

Foreign orders overall fell by 2.1% – customers outside the eurozone ordered even 10.1% fewer industrial goods. Domestic orders, by contrast, rose by 9.1% compared with June – another indication supporting the thesis that these may be the first larger waves generated by the German government's debt-financed special fund.

Friedrich Merz and his debt minister Lars Klingbeil are presenting us with an economic experiment that has been performed many times in the past and has always failed.

Once caught in the ideological degrowth trap, the pressure to act in the political boiler continues to rise. As a result of climate policy, dark clouds are gathering over the economic horizon, and political rescue efforts begin reflexively. Friedrich Merz is prescribing the debt-financed military Keynesianism described above as the extinguishing agent for the economic wildfire. Tanks, drones and howitzers are supposed, if the Chancellor has his way, to replace specialized machinery, motor vehicles, machine tools and industrial plants.

Welcome to the economic military yoke of the statist Merz.

But, like every form of interventionism, this policy will leave nothing behind but new mountains of debt, if not an entire Himalayas of debt.

And, as if to confirm this, statisticians reported at the beginning of the week that Germany's new borrowing had risen from €35 billion to €71 billion in the first half of the year.

Correctly calculated and expanded to include municipal debt as well as the special fund that will only become effective in terms of payments in the second half of the year, Germany's debt will increase by at least €180 billion this year. That corresponds to new borrowing of more than 4 percent of GDP. We are facing the disastrous legacy of the debt king Merz, who has sacrificed his country's creditworthiness in pursuit of his personal political goals.

Only economic illiterates regard debt-financed government consumption as economic prosperity.

The construction of the state economy has consequences.

Germany has been seized by a process of economic erosion. Total industrial production in Germany has lost around 15 percent of its volume since the best year, 2018 – a political scandal that to this day is successfully ignored by the relevant circles in the specialist press, the daily media and politics alike, if it is not simply dismissed as a figment of the imagination of malicious opponents.

The booming arms manufacturers, too, should not celebrate too early. The path of the booming sector is predetermined, and it points toward the same abysses toward which civilian industry is heading. The fog will lift the moment the flow of subsidies dries up as a result of the economic crisis in the country.

Then the abyss will become visible. Because at the toxic German location, with its high energy costs, excessive regulation and unfavorable political climate, industrial investment simply no longer pays off.

The flash in the pan of Merz-style military Keynesianism will not change this finding either.

* * * 

About the author:  Thomas Kolbe, a German graduate economist, has worked for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Wed, 09/09/2026 - 06:30

France's Champagne Output Set To Crash 48% As Harvest Crisis, Sliding Chinese Demand Batter Vineyards

A perfect storm of sliding demand, shrinking vineyard acreage, and weather-damaged yields has sent France's Champagne output forecast for this year plunging.

Bloomberg cites new data from the Agriculture Ministry showing that Champagne output is projected to plunge 48% from 2025 to 1.34 million hectoliters. The estimate is based on the latest figures through Sept. 1.

The ministry also said that nationwide wine production is expected to fall 6% to 34 million hectoliters, putting the harvest 17% below its five-year average and among the smallest in three decades.

For French winemakers, the squeeze is coming from many directions: declining wine demand and adverse weather conditions have sent wine and spirits exports into a downward trend.

For instance, top French wine and spirits exporters Ricard, LVMH's wine and spirits division, and Rémy Cointreau show that weaker US and China demand has pressured sales since 2022-23. 

via Bloomberg...

In Burgundy, best known for its prestigious wines, particularly reds made from Pinot Noir and whites made from Chardonnay and situated in the eastern part of the country, losses exceed 50%. However, in the Bordeaux region, production is expected to rise 10% compared with the very low level recorded in 2025, thanks to improved yields. But the region is still expected to be 11% below the 2021-25 average. 

Last week, French authorities allocated more than 1 billion euros to farmers and vineyards affected by this summer's scorching heat waves and wildfires.

Separately, the Hong Kong-based South China Morning Post reported last month that much of the slowdown is coming from Asia buyers in revolt. 

"We've seen a much sharper drop in customers from China," Chinese-French wine merchant Arsen Zhao said. "Consumers are trading down, while large volumes of European wine imported previously have yet to be sold, leaving inventories high and weighing on new orders."

Zhao noted, "Some high-end French wines are now selling for less in China than in France." This has created turmoil for major wine brands as unsold inventory piles up and prices come under pressure. 

Turning to prices, Liv-ex, short for London International Vintners Exchange, a global marketplace where professional wine merchants buy and sell fine wine, reports that the latest data for several price indexes, including the Liv-ex Fine Wine 100 and Champagne 50, have fallen from peaks over the last several years. 

The Liv-ex Fine Wine 100 index peaked in late 2022, plunged nearly 30%, and has formed what appears to be a bottom. 

The Champagne 50 index peaked in late 2022 and subsequently bottomed in 2025.

For wine collectors, the key question is whether the decline in Liv-ex wine indexes has put in a proper bottom, creating an attractive entry point to add to their collections.

Tyler Durden Wed, 09/09/2026 - 05:45

Green Steel: ArcelorMittal Finally Pulls The Plug

Submitted by Thomas Kolbe

In the end, economic reality prevails. Green steel has no future in Germany, regardless of how much funding may continue to flow through the channels of the green subsidy machine: At Germany’s overregulated, energy-policy-driven and increasingly sidelined industrial location, industrial production is becoming less and less profitable.

That ArcelorMittal, one of the green economy’s poster boys, threw in the towel at the end of the week and announced that it would end steel production at its Duisburg site is the latest painful blow to the proponents of the green transformation ideology.

From October next year, ArcelorMittal will completely close the Duisburg steelworks and will also cease operating the billet rolling mill, where around 800 employees are currently employed. Around 550 employees could be affected by the closure. Only the wire rod mill is to remain. The semi-finished products required to operate it will in future be sourced from other ArcelorMittal sites and external producers.

The news carries a double weight: That green steel — meaning steel produced through a production route in which hydrogen is used instead of carbon as the reducing agent — would not be able to compete in the face of significantly lower production costs at other locations is hardly surprising. But the fact that, ultimately, even conventional steel production is gradually having to retreat from Germany is tragic — a resounding no from business to the ideologically contaminated energy and location policies of the slowly crumbling industrial heart of Europe.

The basic materials industry is a fundamental component of industrial value chains. Particularly in view of geopolitical tensions, national control over raw materials and primary products is becoming increasingly important. Since the best year, 2018, crude steel production in Germany has fallen from 42.4 million tons to 34.09 million tons in 2025, a decline of around 20 percent — a dramatic indication of the complete failure of Germany’s energy and industrial location policies.

The green transformation is crumbling before our eyes while Germany’s industrial base is being deindustrialized. Capital seeks better returns, regardless of how rosy the world of the green transformers surrounding former Economy Minister Robert Habeck, the spiritus rector of the ecological central planners, may have been.

For Habeck, green steel “Made in Germany and Europe” was indispensable. The Green politician was convinced that steel produced with coal would have no future on the world market. How wrong one can be!

Representatives of this transformation ideology are presumably looking on at developments in the industry in bewilderment. Where is the traitor? they will ask themselves. After all, limitless subsidies, credit assistance and artificially imposed cost disadvantages through the CO₂ mechanism were all made available to traditional competitors in order to push this artificial product forward.

ArcelorMittal is by no means the only corporation pulling back. Previously, thyssenkrupp and Salzgitter also abandoned the misguided notion that they would one day be able to produce green steel in Germany.

Ultimately, everyone has to ask themselves: What does it actually cost to produce one ton of green steel? And who will compensate for the loss-making operation in the face of substantially cheaper, considerably more cost-effective competition, for example from India or China? Will these companies have to remain dependent on the taxpayer forever?

The cost gap is enormous: Depending on the calculation and production conditions, green steel increases production costs by around $100 to $500 per ton. For the European steel industry, the conversion to low-carbon production methods is estimated to entail additional costs of 35 to 100 percent per ton. This simply cannot work.

Green steel was one of the political pet projects of the Green Deal. Companies that decided — or were politically encouraged — to convert their production were supposed to be supported through two subsidy channels.

On the one hand, there was the classic subsidy payment. In the case of ArcelorMittal, around €1.3 billion in funding was earmarked for converting the plants in Bremen and Eisenhüttenstadt; the overall project was estimated at around €2.5 billion. Direct reduction plants and electric arc furnaces were planned, with everything ultimately intended to run on hydrogen. Then came the surprise withdrawal: On June 19, 2025, ArcelorMittal announced the end of the projects. According to the Ministry of Economic Affairs, the €1.3 billion was never drawn down. What a blow to green ideology: Even massive public funding could not make the project profitable.

A second subsidy channel for green cronyism runs through the CO₂ emissions trading system. Energy-intensive producers such as the steel industry receive free certificates to protect them against international competitors with lower climate-related costs. If a company emits less CO₂ than permitted by its freely allocated certificates, it avoids purchasing additional allowances and can sell surplus pollution rights to other companies. Conventional steel production is made relatively more expensive by this allocation mechanism — everything possible is being done to keep the industrial homunculus of green steel somehow breathing.

Since January 1, 2026, the CBAM mechanism is supposed to provide additional protection for industry. It is not a formal tariff barrier, but it serves a similar function: CO₂-intensive imports such as steel are now subject to comparable regulatory costs imposed by the EU climate machine. Yet even this market barrier cannot change the fact that industrial production in Germany has simply become unprofitable.

Along the entire value chain — from conversion subsidies and free certificates to protection against foreign competition — the state is playing every card in its hand to impose its centrally planned environmentalism on the private sector.

Brussels and Berlin are thus providing an impressive demonstration of the internal contradictions and high costs of a centrally planned state economy. Everyone can now see what happens when the state interferes with price formation and dictates technology and the actions of individual companies: It becomes expensive for the taxpayer. Costs do not simply disappear; they are merely redistributed and concealed through subsidies. When the state repeatedly intervenes in the economy, scarce resources no longer flow to where competition would generate the greatest benefit. Instead, they flow into the pockets of those whose ingenuity lies in hunting for grants and subsidies. This is how the final chapter of the market economy begins.

* * * 

About the author:  Thomas Kolbe, a German graduate economist, has worked for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Wed, 09/09/2026 - 05:00

China's Oil Scramble Sends African, Canadian, Latin American Crude Prices Soaring

China, the world's largest oil importer, is bidding up crude prices across Africa, Canada, and Latin American markets as disruptions in the Hormuz chokepoint and limited Iranian supplies intensify competition for alternatives. The scramble is squeezing smaller Chinese refineries that once relied on heavily discounted Iranian barrels, according to a new Bloomberg report. 

The renewed Chinese buying marks a major shift from a period when subdued Chinese buying helped restrain crude oil prices. With Iranian exports almost entirely shut off by the US blockade and fighting flaring again, as seen Monday when Saudi Aramco's Jizan oil facilities were reportedly hit, the race to find replacement supplies around the world is becoming an increasingly expensive task for the Chinese. 

Traders spoke with Bloomberg. Here's what they had to say:

The turnaround is producing spikes in the price of various grades. Congo's Djeno crude was offered to Chinese buyers at premiums of as high as $20 a barrel over ICE Brent this week, up from around $15 a couple of weeks ago, according to traders who asked not to be named as they're not authorized to speak to the media.

Chinese buyers are also buying tanker loads of crude from Canada, Brazil, and Argentina, while stronger demand has lifted prices for Russia's ESPO crude. Asian buyers are also pushing Dubai crude futures toward $100 per barrel.  

Chinese seaborne crude imports aren't back to prewar levels and are currently trending toward 10 million barrels per day - still below pre-conflict levels. That means the race for alternative supplies may still intensify. 

Bloomberg pointed out that the rebound in crude imports comes as refinery math improves and inventories are being rebuilt in China. Improved processing margins, the resumption of fuel exports, and commercial restocking are encouraging refiners to ramp up purchases, according to GL Consulting founder Liao Na. 

Smaller independent refiners, known as teapots, face the greatest pressure because their traditional sourcing channels for Iranian and Venezuelan crude have eroded this year as access to those supplies has collapsed amid the Trump administration's push to rewire global energy markets. 

Liao said, "China's robust buying lately is largely driven by refiners taking advantage of decent margins," adding, "Active restocking by commercial players has also helped, but it’s not necessarily a sign of stronger underlying demand that’s supporting the recovery."

Separately, Goldman Sachs energy expert Daan Struyven expects China's ability to adjust purchases to prices to help moderate any spikes in crude prices.

Brent Crude 

Notably, China has a massive SPR against Brent crude prices in triple-digit territory. Its crude inventories are estimated at at least 1 billion barrels, giving buyers room to reduce purchases when prices become unattractive.

Tyler Durden Wed, 09/09/2026 - 04:15

Massive Escalation: Iran Sends Large Ballistic Missile Salvo On Jordan Bases, After US Strikes Iranian Oil Tankers Summary

• US Strikes Iran: US forces reportedly hit Iranian oil tankers near Kharg Island and Jask.
• Iran Targets US Ships & Jordan: Iran reportedly launched another attack on US naval assets, though no American ships were hit, say US officials. Ballistic missiles raining down on Jordan overnight. 
• Oil Near $100: Brent crude surged as tensions threaten Iranian exports and the Strait of Hormuz.
• Houthis Hit Saudi Arabia: Ballistic missiles and drones struck Saudi energy and military targets, causing fires and operational disruptions.
• Yemen War Escalates: Saudi airstrikes resumed as Saudi-backed forces vowed to retake Sanaa, raising fears of wider regional spillover.

//--> //--> //--> Strait of Hormuz traffic returns to normal by September 30?
Yes 2% · No 98%
View full market & trade on Polymarket Iranian Missiles Raining Down on US Bases in Jordan: Reports

State Tasnim reports: Iran has launched missiles at targets in response to US strikes, while unofficial sources cited by Tasnim noted that explosions were heard in Jordan following Iranian missile attacks.

The below brief recap shows this new flare-up and tit-for-tat came in rapid succession... Senior US officials to FOX:

US military has struck targets near Kharg Island and Jask. The targets include Iranian oil tankers. This is part of a larger effort to squeeze Iran economically. The strategy includes sinking and disabling Iranian crude oil tankers. -FOX

Looks like a significant number of Ballistic missiles launched by Iran pic.twitter.com/yDSMvEPjb3

— Amichai Stein (@AmichaiStein1) September 8, 2026

How many Patriot interceptor missiles are being plowed through this time?

Video shows the large Iranian ballistic missile attack on Jordan pic.twitter.com/cF3qR9ALlB

— Faytuks Network (@FaytuksNetwork) September 8, 2026

More unverified but widely circulating images out of the region overnight:

Insane footage shows the massive Iranian ballistic missile attack against U.S. bases in Jordan.

At least 30 missiles have been launched, and many of them also released cluster munitions while falling from the sky. pic.twitter.com/RM8XqcHBRw

— MoloMonitor 🇮🇹 (@MoloWarMonitor) September 8, 2026

Iranian leaders have lately vowed to hit US bases and assets harder in all forthcoming rounds of fighting...

This retaliation reflects what Ghalibaf stated a few days ago: that in #Iran's regime's mind, the era of proportional responses is over. https://t.co/VxSVmwJZdh

— Jason Brodsky (@JasonMBrodsky) September 8, 2026 US Attacks Iran Tankers, After American Navy Ships Targeted

Oil climbed on reports of explosions on Iran's Kharg Island:

IRIB reports that US forces attacked a commercial vessel in the coastal waters of Jask City

MULTIPLE EXPLOSIONS HEARD NEAR KHARG ISLAND ANCHORAGE, A KEY IRANIAN OIL EXPORT HUB; CAUSE, ORIGIN & ANY POTENTIAL DAMAGE REMAIN UNCONFIRMED. - MEHR NEWS AGENCY

US is currently attacking Iranian oil tankers, i24 news reports, citing a US source

A small Iranian tanker was targeted by a missile attack from the US army 4 miles from Kharg Island, Tasnim reports
Via Tasnim

IRAN LAUNCHED UNDISCLOSED SECOND ATTACK ON US SHIPS ON MONDAY: WSJ

NO AMERICAN SHIPS WERE STRUCK IN THE ATTACKS: WSJ

Fox correspondent confirms Iranian oil tankers (plural) and “targets” (plural) were struck by the United States in recent minutes. This does nothing to “squeeze” Iran, just to be clear. The tankers are inside the US blockade line and the Tanker for Tanker policy is just a… https://t.co/bwLrw9QO7v

— Brett Erickson (@BrettErickson28) September 8, 2026 Oil Climbs, Brent Near $100

Nothing official has yet to emerge, also amid unconfirmed reporting that Iran’s IRGC Navy has launched anti-ship cruise missiles from Jask toward the Strait of Hormuz. According to breaking Al Jazeera News:

Several explosions have been heard on Iran’s Kharg Island, according to Iran’s semi-official Mehr news agency. No official information has been released on the cause or origin of the explosions.

More from WSJ on the prior Monday attack incident: "No American ships were struck in the attacks, but Iran's recent attempts to hit American naval assets are raising alarms that the regime is using more sophisticated weapons and could be getting assistance from China or Russia."

But Trump claims the US is in 'control' of Hormuz and that the war is over. 

Heavy Yemen-Saudi Fighting Breaks Out

The heaviest fighting since the Iran war began is taking place in Yemen currently, also involving significant overnight attacks on Saudi energy and military sites by the Houthis.

The Houthis have since unveiled new operations, in a Tuesday statement saying the Iran-aligned group is targeting critical Saudi oil and military infrastructure. Widely circulating local videos suggest the attacks on multiple sites were in some case simultaneous and overwhelming.

"In response to this brutal aggression and in confronting comprehensive escalation with comprehensive escalation, the YAF carried out a large-scale … operation, targeting Aramco facilities in Abha and Najran, the Economic City, Aramco in Jizan, and Khamis Mushait Air Base, using dozens of ballistic missiles and drones," said the Houthi statement.

Yemen state media/The Independent: Smoke billows from burning trucks on Yemen-Saudi border after claimed Houthi attack

"The strikes, by God's grace, were accurate and direct and caused significant damage to those facilities," it added. 

The kingdom's Energy Ministry has indeed acknowledged fires and operations stoppages at several sites as a result, as well as damage and injured personnel.

Houthis Attacked Four Saudi Cities, Energy Installations

"Several energy sector facilities and installations in the southern region of the kingdom were targeted this morning," the energy ministry stated.

"The attacks caused fires at several locations, leading to a temporary halt in some operations. Specialized field teams have begun containing the fires, securing the sites, and assessing the damage," the statement said. Aramco sites have been targeted on multiple occasions this summer, resulting in operations halts, particularly at key sites near the Yemeni border. Damage is still being assessed at the Aramco Jisan oil facilities, which were targeted yet again.

Also military and supply missions were hit, with the Houthi statement also indicating the destruction of Saudi military equipment and convoys of Saudi-backed forces of the internationally-recognized government.

For anyone putting a lot of faith in those pipelines that bypass Hormuz...

⚡️BREAKING: Houthis have released footage of Striking Saudi Arabia's Supply Lines to Pro-Saudi Forces in Yemen with Ballistic Missiles pic.twitter.com/b3JQ78LQrK

— Iran Observer (@IranObserver0) September 7, 2026

"Arms trucks coming from Saudi Arabia were targeted and caught fire at the Al-Wadiah military camp," the Houthis stated.

In response later on Tuesday, Saudi airstrikes have reportedly resumed on Yemen in the governorates of Al-Jawf, Al-Bayda, Ma'rib, Taiz, and Al-Hudaydah. Already the death toll is mounting from these renewed strikes:

Houthi rebels in Yemen accused Saudi Arabia of striking a prison on Monday in the country’s north, killing seven, including a child, as tensions escalate between the Iran-backed group and Saudi-backed Yemeni forces.

The strike on the Central Corrective Facility in the strategic city of Hazm in Jawf province also wounded at least seven people, including a woman, said Anees al-Asbahi, a spokesman for the Houthi-run health ministry.

The prison’s warden told the Houthi al-Masirah news channel 35 prisoners and a woman who was visiting her husband were trapped under the rubble.

The Saudi side has meanwhile said that dozens were injured in the Houthi attacks. Major General Turki Al-Maliki, spokesman for the Saudi-led Coalition Forces, blasted the new Houthi aggression as "dangerous" and "senseless" - and announced that at lest 73 people have been wounded, including women and children.

🚨BREAKING: Yemeni Drone Strike Impacts Near Saudi Arabia’s King Khalid Airbase

Stunned lookers in Khamis Mushait film the attack.

This is part of the largest ongoing missile & drone attack on Saudi Arabia from Yemen in years. A retaliatory campaign after strikes on Yemen. pic.twitter.com/SO1YVgl92K

— MintPress News (@MintPressNews) September 8, 2026 Yemen Escalation

Both sides are now vowing escalation:

Houthi military spokesperson Brig. Gen. Yahya Saree accused Saudi Arabia of launching airstrikes and “committing massacres” in Jawf, as well as deploying a reconnaissance drone and supplying mercenaries with various weaponry.

“The ongoing Saudi aggression against Yemen will not go unanswered or unpunished,” he said.

The aerial war is additionally heating up: "Saree said later Monday that Houthi forces downed a total of four reconnaissance drones belonging to Saudi Arabia over the past 24 hours, including one that was spotted Monday morning in Bayda province," as cited in The Associated Press.

Another test of the Mecca Agreement, which says an armed attack on any one of the three states will be regarded as an attack on all three. https://t.co/4V6lbh9LMN

— Jason Brodsky (@JasonMBrodsky) September 7, 2026

Oil prices on world markets continue to steadily inch higher, rising more than 1% as a result of Tuesday's Saudi-Yemen escalation.

The Saudi coalition says it aims to liberate the country's capital of Sanaa from the Iran-backed rebels. "The decision has been made to retake Sana’a. There are surprises we will not reveal now," the Deputy Defense Minister Major General Samir Al-Sabri told state-run Yemen TV.

The Yemeni army further released a statement saying that "From today, we declare that our goal is clear and unequivocal: to liberate Yemen from the grip of the terrorist Houthi militias and restore Sana’a as a capital for all Yemenis."

This appears a return to the kind of bull-blown war in Yemen which marked the latter half of the last decade. But this time it's more complicated and dangerous in terms of regional spillover, given it comes in the context of the Iran conflict, the Strait of Hormuz crisis, and Houthi efforts to close Red Sea shipping to the Saudis, Israelis, and their allies.

Trump acknowledges 1) oil prices are high, 2) it's because of the war with Iran, 3) the war has not ended, 4) the US has not won, yet. pic.twitter.com/gcsfqYmu0E

— Gregory Brew (@gbrew24) September 7, 2026

Below are more developments via Al Jazeera:

• Saudi Arabia has carried out new attacks in Yemen against al-Jubah district in Marib, in the Houthi-controlled part of the country, according to a news report in Houthi-run media.
• Forces loyal to Yemen’s internationally recognised government have launched a counteroffensive against the Houthi rebels, with officials saying they aim to recapture the capital Sanaa from the Iran-backed group.
• The Houthis say they repelled an offensive in al-Jawf, and at least seven people were killed in an air strike on a prison in the town of al-Hazm, pledging that the “aggression will not go unpunished”.
• Saudi Foreign Minister Prince ⁠Faisal bin Farhan Al Saud has described Yemen’s Houthi rebels as “selfish” for putting their own interests above the welfare of the country’s people. “The Houthis choose to prioritise their narrow interests over the interests of Yemen and resort to violence,” he said at a news conference in the Russian capital.
• Russia’s Foreign Minister Sergey Lavrov has told his ⁠Saudi counterpart, Prince Faisal bin Farhan Al Saud, in Moscow that Russia is ready to help resolve the spiralling situation in the Middle ⁠East.

Saudi-led forces in Yemen bombed Al-Jawf Central Prison:

#BREAKING

Saudi-led forces in Yemen bombed Al-Jawf Central Prison, causing death and injuries to at least 35 people. Terrible scenes#houthis #yemen #saudiarabia pic.twitter.com/sNBhWOZdaI

— METRONIDAZOLE (@METRO_NIDAZOLE) September 7, 2026 More Overnight News

via Newsquawk

• US President Trump posted, "Oil prices will drop precipitously, like everything else is dropping (but more!), when we WIN the war with Iran. Three Dollars a gallon, but ultimately, below Two Dollars a gallon. It will all happen quickly, and Iran will never have a Nuclear Weapon. MAGA!"
• Iranian President Pezeshkian said Iran has always opposed war but will continue to resist aggression with full force until the aggressors are made to regret their actions.
• Iran's top national security official Rezaei said Washington has received a clear warning from Iran’s new missiles and that economic warfare will be met with a maritime exclusion zone across the Persian Gulf to the blockade perimeter, while he added that the operational posture toward US warships and bases has been fundamentally recalibrated.
• Tasnim analysis suggests that commentary from Iranian official Rezaei signals that Iran is considering expanding the geographic scope of its maritime confrontation into the northern Indian Ocean.
• Saudi Energy Minister said a number of energy facilities and utilities were hit and that some operations have been temporarily halted. This was later confirmed by the Houthis, in which they added that they struck the Khamis Mushait Air Base in retaliation to recent Saudi airstrikes. The group warned that further attacks on Yemen will be met with broader strikes on Saudi.

Tyler Durden Wed, 09/09/2026 - 04:00

The Future Of Volkswagen?

Submitted by Thomas Kolbe

On Thursday evening, Volkswagen’s Supervisory Board unanimously approved the company’s “Future Plan 2030.” The decision had originally been scheduled for Friday. By moving faster, Volkswagen is not only seeking to underline that the situation is genuinely serious, but also that it has recognized the danger and is now taking control of the situation again. Symbolism is everything these days, as the damage caused by the company’s business strategy of recent years has become visible like a gaping wound. Supervisory Board Chairman Hans Dieter Pötsch described the decision as evidence of the Group’s determination to transform itself and work with all its strength toward its long-term future and competitiveness, as Pötsch put it. Nevertheless, the impression remains that the Group’s consolidation course represents less a controlled downsizing than an internal corporate collapse — the twilight of an economic era.

50,000 jobs worldwide are to be eliminated by the middle of the 2030s. Social plans and early-retirement offers will probably account for the lion’s share of the workforce reduction. Volkswagen is said to be facing an overcapacity of 500,000 vehicles in Europe. The restructuring costs for the Group could amount to as much as €10 billion. VW is stumbling over social hurdles that the company itself created during the good times — German labor law prevents a rapid, situation-appropriate adjustment of corporate structures to the conditions of the market and the company’s actual economic strength.

For Germany as an industrial location, the outlook is bleak: VW’s plants in Emden, Hanover and Zwickau, as well as the Audi plant in Neckarsulm, are likely to fall victim to the Group’s downsizing. The decision has not yet been formally made — by the end of June 2027, the company intends to clarify how the individual sites will proceed. From 2031 to 2034 onward, there will no longer be a competitive follow-up allocation of production at these plants, suggesting that VW is preparing to abandon the sites.

Remarkably, only a few days ago, CEO Oliver Blume had emphasized during a visit to the Zwickau plant that the site would, as he put it, receive the same chance as every other plant in Europe. Blume, however, had already pointed to its lack of profitability compared with other locations: Labor costs there were more than twice those of comparable European sites, according to Blume.

This is where the real problem lies: Volkswagen is no longer competitive. Excessive labor costs, excessive energy costs and rampant overregulation are driving not only carmakers but industrial production in general away from Germany.

There is indeed an urgent need for action in Wolfsburg. The China business in particular has virtually collapsed. Overall, revenue in the first half of the current year fell slightly to €158.1 billion. The problem is that operating profit plunged by 11.6 percent to €5.9 billion, leaving an embarrassingly low operating margin of just 3.8 percent. It is the continuing negative trend that is causing concern. Volkswagen therefore does not merely have a sales problem, but above all an immense cost problem. The possibility that liquidity problems may also be becoming visible was demonstrated by the sale of the Group’s large-engine subsidiary Everllence, formerly MAN Energy Solutions: Volkswagen sold a majority stake to U.S. investment firm Bain Capital, generating proceeds of €7.4 billion.

Volkswagen — and with it the entire German automotive sector as well as energy-intensive industries more generally — has its back against the wall. As Bild reports, citing internal Volkswagen Group data, factory costs per vehicle at the Emden plant amount to €4,850, roughly 4.5 times the comparable figure at VW’s Chinese plant in Tianjin, where the figure is €1,078. Direct production labor costs are reportedly €74 per hour in Emden, compared with €12 in Tianjin — a factor of more than six.

The mistakes of the past become particularly apparent when looking at labor productivity. In Emden, the calculation comes to 29 vehicles per employee per year, compared with 51.3 in Tianjin. That corresponds to roughly 77 percent more vehicles per employee. Absenteeism due to illness also differs dramatically in the internal comparison: In Emden, the rate is 10.5 percent, compared with 1.0 percent in Tianjin. This figure is more than merely a personnel-policy issue affecting internal operations. Has the downward spiral into which the Group and the entire industry have fallen perhaps already left its mark on employee morale? In any case, this particular figure requires interpretation, precisely because it is so striking.

The consequences of Germany’s nuclear phase-out and the continued expansion of climate regulation have been discussed often enough here. Taken together, they create the impression of an ideologically driven economic suicide by a satiated society that was convinced of its own success — and must now watch as its industrial substance, the engine of prosperity, is ground down between excessive energy and labor costs, growing regulation and the merciless forces of global competition.

Volkswagen has become a victim of increasing political central planning and the permeation of the corporate landscape with environmental ideology. The lesson now is clear: corporatism and reliance on political steering do not pay off in the long run. In the end, things turn out as they always do: Others pay the bill — namely employees and investors who had placed their trust in the future of the automaker.

* * * 

About the author:  Thomas Kolbe, a German graduate economist, has worked for over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Wed, 09/09/2026 - 03:30

Europe Heads Toward Winter With Too Little NatGas And Skyrocketing Prices

European natural gas prices are trading near their highest level in more than three years as the race to replenish storage puts a bid under prices, while ongoing disruptions through the Strait of Hormuz intensify competition for scarce LNG cargoes ahead of winter.

On Tuesday morning, European natural gas benchmark futures edged up nearly 3% to trade around 75 euros per megawatt-hour, the highest level since early January 2023.

Bloomberg reporter Priscila Azevedo Rocha noted, "Europe needs higher gas prices in order to attract more seaborne cargoes to its shores, but with less than a month left until the heating season, the region’s inventories are still lagging behind."

Rocha's view was very similar to the assessment in Goldman Sachs commodities expert Samantha Dart's note last week, in which she said December 2026 TTF prices may need to exceed 100 euros per megawatt-hour to discourage Asian LNG demand.

"We have argued that, in the absence of an improvement in LNG exports through the Strait of Hormuz (SoH) (Exhibit 1), European gas prices (TTF) would need to rise to discourage Asia LNG demand, thereby freeing incremental cargoes to be sent to Europe to help manage European gas storage levels," Dart explained.

EU natural gas storage facilities were around 67% full at the start of the week, compared with a 15-year average of around 72.5% for this time of year. Readers can see the latest chart pack from MarketEar on EU natural gas here.

Separately, Timera Energy analysts wrote in a note earlier, "As the European gas market heads into winter with unusually low inventories, its flexibility to absorb further supply or demand shocks is limited," adding, "Europe is pricing up to outcompete Asia for marginal LNG."

Beyond tight gas markets, the struggling continent also has to contend with a diesel crisis. As we warned in early August, "winter is coming"...

Tyler Durden Wed, 09/09/2026 - 02:45

Intense SoCal Heatwave Sparks Cooling Demand Surge, Testing Grid Reliability

The National Weather Service has issued heat advisories across California's Central Valley and coastal areas, including the Bay Area and Los Angeles, with more severe extreme heat warnings in parts of Southern California. Cooling demand is expected to soar over the next several days, putting pressure on the power grid, particularly in the evening as solar generation declines.

Bloomberg reports that Los Angeles-area temperatures are forecast to reach 85F to 105F, roughly 10 to 15 degrees above normal. San Francisco could hit 86 degrees Wednesday, while Sacramento is expected to reach 100 degrees Thursday.

The California Independent System Operator forecasts that peak power demand will hit 47,379 megawatts Wednesday, below the September 2022 record of 52,061 megawatts.

CAISO, which operates the power grid serving roughly 80% of California and a small part of Nevada, forecasts Thursday's peak at around 45,183 megawatts.

Wholesale power prices are already reflecting the incoming surge in cooling demand. Southern California's SP15 hub saw its day-ahead price for Tuesday's 6 p.m. hour reach $87.69 per megawatt-hour, the highest hourly reading in a little over a week. Grid monitoring company Arcus Power compiled the data on its NRGStream platform.

Forecasts from Bloomberg show that maximum temperatures in California will peak Thursday at around 95F before sliding to about 75F by mid-month.

Tyler Durden Tue, 09/08/2026 - 23:00

NIH Ends Biodefense Focus, Signs Pact With Department Of War

Authored by Paul D. Thacker via The DisInformation Chronicle,

Senior officials inside the Department of Health and Human Services (HHS) were baffled late last week when Congresswoman Rosa DeLauro issued a statement that Pentagon officials are trying to "raid" NIH funds to cover defense shortfalls. "The administration must provide Congress with a full accounting of how this interagency agreement was developed and exactly how much taxpayer money it is trying to transfer to DOD," wrote DeLauro, who serves as the top Democrat on House Appropriations.

DeLauro's statement spurred a flurry of media reports, including a fact-addled piece by Nature Magazine's Max Koslov, who falsely implied NIH was transferring hundreds of millions of dollars in research monies to the Department of War (DOW). Koslov also erred in misreporting that NIH maintains a biodefense research portfolio, even though NIH Director Jay Bhattacharya announced that he was cutting NIH's biodefense portfolio in an essay last January.

Ironically, Bhattacharya's essay appeared in Nature Medicine, a journal published by Koslov's own employer.

"Koslov is a fiction writer," said an exasperated HHS official. "Absolute fiction. Our comms people at NIH don't respond to him because he lies."

DOW released the interagency agreement with NIH on Friday, which shows no money has been transferred to NIH. The agreement was signed in early August by Bhattacharya and Robert Kadlec, a physician and former CIA officer who wrote most of our biodefense laws while working for several decades as a congressional staffer. Kadlec is now an assistant secretary at DOW in charge of counterterrorism and biodefense.

According to HHS and NIH officials, who have negotiated the agreement with Kadlec since February, Kadlec asked NIH to transfer the $2 billion allocated to NIH for biodefense over to DOW. NIH denied this request, although DOW officials have continued to press the $2 billion matter in private discussions.

The agreement allows two types of cooperation. One is called 7600A which lists the rules and terms for cooperation on a project, while a 7600B allows transfer of funds as payment. NIH has not signed any 7600Bs, and an official negotiating with DOW said NIH doesn't have any dollars to transfer to the Pentagon, because the money is already spent.

"The money on emerging infectious diseases is booked up for years in advance with contracts and grants," said the NIH staffer.

Part of the confusion stems from conflicting definitions and terminology deployed over the last two decades by Tony Fauci while he ran the biodefense program at the National Institute of Allergy and Infectious Diseases (NIAID).

As reported by Ashley Rindsberg in UnHerd, Fauci began the NIH's biodefense program in 2003 with billions of dollars directed to him by Vice President Dick Cheney, following an increase in biodefense spending after 9/11 and the anthrax attacks in 2001. This moved biodefense for the first time out of Pentagon oversight, while providing Fauci direct access to the White House and a $2 billion pot of money each year since.

But over succeeding decades Fauci began mixing the dollars designated for biodefense with programs targeted at other infectious diseases - eroding the distinction between public health research and scientific studies for biodefense. "Fauci spread the bioterrorism money into programs on emerging diseases," said the NIH official. "The reality is there's no $2 billion to give."

A senior Trump appointee who has worked with Bhattacharya and Kadlec to hammer out the agreement said that DeLauro is right to ask hard questions, which NIH needs to answer. But after the COVID pandemic mess, NIH is not the place to run bioterror research. "Look, everyone in this field knows that Kadlec is an operator," said the Trump official. "But Kadlec is an experienced hand and we need aggressive oversight on this research."

Referring to NIH money Fauci directed to the Wuhan Institute of Virology, he added, "What was the point of NIAID funding a BSL-4 lab in a foreign country? Nobody has explained that."

For the last three decades, Kadlec has labored to counter biological weapons for an alphabet soup of various agencies - JSOC, DOD, CIA, DHS, and the UN. Kadlec also wrote the critical legislation that undergirds America's biodefense infrastructure while a staffer for Senator Richard Burr of North Carolina.

Now the country's leading biodefense lobbyist at DLA Piper, Burr represents the University of North Carolina and sits on the board of READDI, a North Carolina biodefense company founded by virologist Ralph Baric.

In a 2023 interview with The DisInformation Chronicle, Kadlec pointed to a 2015 virus study published by Ralph Baric and funded by Fauci as evidence that the virology community had been dishonest with the American public about the scientific evidence that the pandemic started from a lab. Fauci and others, Kadlec said, served as a "cabal" to bury this evidence in an "information operation."

Last April, I reported for RealClearInvestigations that the NIH had yanked all of Baric's grants after determining that his research helped create the COVID virus. UNC put Baric on leave and he retired from the university in June.

"We gave Fauci billions and he burned the house down," said the Trump official working with NIH and DOW. "The world was on fire for two years and millions died. And if Democrats want the NIH to remain in the biodefense business, I wish them luck on selling voters on that."

A senior HHS official said it remains unclear how much money might eventually migrate over to DOW but it won't be anywhere near $2 billion as biodefense research is now gone from NIH's portfolio. Nonetheless, NIH faces an uphill battle convincing Congress that they are no longer in the biodefense game.

After determining it was biodefense research and unsafe for Americans, NIH dissolved an $82 million Fauci initiative last June called the Centers for Research in Emerging Infectious Diseases (CREID). CREID grantees included Peter Daszak of the nonprofit EcoHealth Alliance and Kristian Andersen of Scripps Research. But earlier this year, lobbyists inserted language into an appropriations bill that forces NIH to spend $18.2 million to fund CREID centers once again.

"We're not funding Kristian Andersen and that virologist crew," said the senior HHS official. "We're out of biodefense, and that CREID money will go to people looking at infectious diseases in public health."

Tyler Durden Tue, 09/08/2026 - 22:35

Lindsay Clancy Supporters Threaten The Father Of The Children She Murdered

Patrick Clancy, the father of three children killed by his former wife, Lindsay Clancy, inside the family's Duxbury, Massachusetts, home in January 2023, is now the target of an online harassment campaign built on the false claim that he was involved in their deaths.

The claim has no foundation. Lindsay Clancy confessed. She never disputed killing her three children. Her defense spent the trial arguing she wasn't criminally responsible because of severe mental illness, including postpartum psychosis, while prosecutors countered that she knew what she was doing. 

Nobody on either side of that courtroom argued Patrick did it or was involved in any way. However, that inconvenient fact hasn't stopped supporters of Lindsay Clancy from claiming otherwise.

On Tuesday, Attorney Howard Cooper of Todd & Weld, who represents Patrick Clancy, issued a statement addressing what he described as a coordinated harassment effort.

"Over the past months, Patrick Clancy and his family have been subjected to a relentless, escalating and destructive defamation campaign," Cooper said.

Cooper placed the blame on a familiar cast of characters.

He pointed to "minor celebrities, so-called influencers and outright conspiracy theorists" who found a payday spreading false claims about a grieving father, seemingly untroubled by the fact that his ex-wife already admitted to the killings.

The harassment hasn't slowed since Friday's mistrial, either. Cooper said it has only intensified, "now fueled by insatiable media coverage" and sitting "at a fever pitch," with real threats to Patrick's reputation, livelihood and life.

Somewhere in the online ecosystem that turned Lindsay Clancy into a folk hero for a certain strain of aggrieved women, a father who buried three children became the villain of his own tragedy, at least according to those sympathetic to his ex-wife.

Cooper said Patrick's aim is stopping the harassment, holding the people spreading it accountable, and getting back to preserving the memory of Cora, Dawson and Callan while supporting other women navigating perinatal mental health crises. The irony belongs to nobody except his accusers.

"Enough is enough—this spread of blatant and baseless falsehoods must stop," Cooper said. "Those responsible should understand that there will be consequences, and every appropriate measure will be pursued to hold them accountable, including legally." Cooper confirmed he has already notified law enforcement.

The mistrial occurred because the jury could not agree on whether Lindsay Clancy was criminally responsible for the deaths after one juror held out for a verdict that would have found Clancy criminally responsible. District Attorney Tim Cruz still has the option to retry the case, and prosecutors have considered a retrial at a later date. However, Cruz has not given any definite timeline after the court announced the mistrial.

Patrick Clancy sat through much of that trial as the prosecution's first witness. He described the day his children were murdered, his former wife's mental collapse in the weeks before, and the moment he came home with food and medicine to find his children gone. None of that has translated into sympathy from the people now targeting him. 

Attorney David Meier, also of Todd & Weld, issued his own statement after the mistrial, striking a different tone than the online mob. "Patrick Clancy is grateful to the Court and to the jurors for their hard work, their commitment, and their perseverance," Meier said. "The loss of Patrick's children is something from which he will never recover and from which there will never be closure. The prospect of reliving this tragedy through another trial is extraordinarily painful."

Patrick has said before that he forgives Lindsay, calling her ill instead of evil, a distinction that seems to matter to no one running the harassment campaign against him. 

Tyler Durden Tue, 09/08/2026 - 22:10

Most US Workers Fear Obsolescence In AI Era, Experts Say Adaptation Goes Beyond Tech

Authored by Mary Prenon via The Epoch Times,

Just as "The Obsolete Man," which aired in 1961, depicted a future society in which technology had rendered certain professions obsolete, a recent survey showed that, as AI reshapes the workplace, most U.S. workers fear becoming obsolete in the future workforce and believe developing new skills is essential to job security.

While many workers attributed their fear of obsolescence to a lack of skill with the latest technologies, some hiring and workforce professionals said building interpersonal skills is increasingly critical, especially at a time when many young people are living in a digital world.

ETS, a global nonprofit educational testing and measurement organization, reported that 54 percent of U.S. workers felt underprepared for the next generation of jobs in the coming decade, compared with 49 percent globally. Meanwhile, 75 percent said they have no clear indication of what those jobs will entail in 2035.

This uncertainty, in turn, is accompanied by fears of obsolescence, with 58 percent of those surveyed saying they fear becoming obsolete in the future workforce. The figure rises to 74 percent among technology workers and 73 percent among those in financial services.

"The reasons workers give are consistent across markets: they lack experience with emerging technologies such as AI, automation or data tools. Many also report limited hands-on exposure to innovative systems that are becoming central to modern work," ETS stated.

Some workers also feared that their newly acquired skills could become obsolete almost as quickly as they learn them, the report said.

Nevertheless, 78 percent of U.S. workers said there will be no job security without constant adaptation, while 85 percent said developing new skills will be necessary.

According to a March report from the International Monetary Fund, demand for new and digital skills is increasing, with one in 10 job postings in advanced economies and one in 20 in emerging markets requiring at least one new skill.

Ireland, Finland, and Denmark ranked as the top three countries in the organization's Skill Readiness Index, combining high shares of tech graduates with strong adult literacy and retraining systems. The United States ranked ninth among the 23 countries analyzed.

Barriers

However, many barriers, including time, cost, access, and employer support, are limiting workers' ability to pursue adaptation, ETS stated.

The report indicated that 71 percent of those surveyed were proactively developing new skills, falling short of the global average of 77 percent.

"U.S. workers are taking stock and waiting for clearer guidance, especially from governments, employers and educators," the report said.

Research from Blu Ivy Group, a Canadian employer brand and recruitment marketing company with offices in Michigan, indicates U.S. businesses spent $102.8 billion on employee training in 2025, but many failed to provide additional time for training, according to Stacy Parker, the company's cofounder and managing director.

"The biggest problem we see is that in many cases, employees are expected to participate in this training on evenings and weekends," she told The Epoch Times. "They are so busy with different projects at work and are not given any time during the day to complete the training."

Parker noted that in other countries, employee training is integrated into the workday.

"While North American companies tend to treat training as an HR [human resources] initiative, other nations see it as part of their competitiveness strategy," she said. "Managers need to have accountability for developing people alongside technology."

Meanwhile, Devin Hornick, cofounder and partner at KORE1, an Irvine, California-based nationwide staffing and workforce management company, said another reason U.S. workers lag behind their global counterparts is that they fail to discuss job expectations with their managers.

"In the U.S., the relationship between the growth of an employee's skills in the workplace, combined with a career and income increase, is not clear, and employees will prioritize simply surviving the work week," he told The Epoch Times.

Hornick added that unless an employer makes the relationship clear with a specific developmental career path, employees will not make the time to invest in developing a new skill. The issue can become more complicated, he said, when a company does not provide paid time off for employees to participate in training. Other companies do not cover the cost of training, and some do not offer training, Hornick said.

"Most professionals I place don't have the bandwidth to take on additional responsibilities and build new skills," he said.

"If there's no budget set aside for employee development, that means there's little to no value placed on training by employers and that results in the disconnect."

Real-Life Skills Over Technology

Stacey Cohen, president and CEO of Co-Communications, a New York-based marketing and public relations agency, believes that job readiness should start as early as high school.

The author of two "Brand Up" books that guide high school and college students in personal branding techniques, Cohen stresses the need to develop interpersonal skills - even more than AI skills - to create career opportunities.

"It's not just about knowing the latest technology," she told The Epoch Times.

"What employers are looking for today are durable skills like communication, critical thinking, collaboration, relationship building, and problem-solving. Employees need to be adaptable, and this is becoming more critical than ever."

Reviewing her own children's high school curriculum, Cohen noticed a void in interpersonal skill development.

"They were teaching things like yoga and photography, but why not interviewing and leadership skills?" she said.

"Textbooks can prepare you for a test, but to succeed in the workplace you need a different set of skills."

One factor affecting today's teens' ability to develop interpersonal skills is that they live in a digital world, she said.

"They text all the time and don't necessarily have to speak to another human," she said. "Even at the grocery store, you can choose the self-check-out lines instead of human cashiers."

Cohen believes it's never too early to teach young people these durable skills, such as using their own judgment, anticipating what people need, and learning the value of customer service.

"Even early part-time jobs like waiting tables require these types of skills," she said.

Cohen noted that the hotel industry devotes considerable time to onboarding new employees. This intense orientation and training program reviews every aspect of guest relations, from initial greetings to problem-solving.

Cohen said businesses should adopt a similar onboarding method to not only create a smooth job transition but prepare employees for how the job may change over the next decade.

Erin DeVito, general manager of North America for Impact, a global learning and development firm, works with both executive leadership and employees to support and improve workplace dynamics.

"Even leadership is scrambling and trying to keep up with changing business strategies today," she told The Epoch Times.

"The key is to help people develop skills of adaptability so they can shift, change, and learn new things. What worked years before may not be working now."

DeVito and her team work with businesses of all types, industries, and sizes, offering customized leadership and team development, as well as coaching and other services. She said sometimes the solution can be as simple as encouraging coworkers to talk with each other instead of emailing.

"When we rely on email and text, we lose human connectedness," she said. "While we're all embracing emerging technologies like AI, sitting underneath those are real-life skills."

DeVito used the example of her daughter, who was spending too much time texting on her phone and began to exhibit changes in her behavior.

"I took the phone away and put in a landline," she said. "After just a day, she was talking with people and started acting like herself again."

She eventually gave the phone back to her daughter, but with time-use restrictions.

Bridging the Gap

Hornick believes American workers can bridge the gap between the skills they bring to the table now and what will be expected in the next decade by setting the stage early enough with their immediate supervisors.

"I tell most of my candidates this: meet with your manager to find out what capabilities the company will need in the next 12 to 18 months and request a stipend, certification program, or protected time to develop those skills," he said.

"If the employer will not invest, look at low-cost, credentialed resources that are recognized in your field. Waiting for the perfect comprehensive program is how people fall further behind."

Parker said there's still a "real paradox" with leadership in their ability to provide clarity when so much transformation is happening.

"Organizations are in continuous change and redirection, and often, employees have less confidence about where the company is headed and what will happen to their jobs," she said. "Sometimes they think their jobs will be eliminated, but the company may actually have retraining in mind."

In her experience, Parker has seen technology, corporate retail, and business-to-business firms undergo the most change and reshuffling.

"Employees often are burdened with heavy workloads, businesses are sometimes understaffed, and promotion pathways can be unclear," she said.

As business leaders strive to find the best solutions, DeVito encourages both leadership and employees to learn as much as they can from everyone around them.

"It's also important that leaders be honest when they don't have all the answers," she said.

Tyler Durden Tue, 09/08/2026 - 21:45

China's "Quasi-Monopolistic" Grip On Critical Materials Ignites Western Supply Race: First To Deliver Wins Big

The global push toward electrification carries several risks, including replacing dependence on foreign oil and natural gas with reliance on Chinese technology and critical materials, as access to cheap electricity dictates investment flows and where AI and industrial bases thrive.

Christian Keller, Barclays' global head of economics research, co-authored a note Tuesday on how rapidly accelerating geopolitical fragmentation and surging power demand are rewiring the global economy. He argued that countries must secure traditional fuel supplies while investing heavily in electricity generation, grids and storage.

Keller identified China's near-total control of more than 95% of critical material refining in areas such as heavy rare earths as a major vulnerability for countries dependent on those supplies.

Critical materials whose mining or refining China controls are critical inputs for electricity infrastructure, industrial production, the upcoming rearmament cycle, and the AI data center buildout. Replacing Chinese supplies requires far more than discovering new deposits and will take years. 

For the West, building competitive supply chains outside China, from mining critical materials such as tungsten to refining rare earths and manufacturing magnets, will be extraordinarily difficult and time-consuming. China's dominance in the space is expected to persist through at least 2030 despite ongoing Western efforts to diversify.

"China's quasi-monopolistic position provides it with significant geopolitical leverage," Keller warned.

A Reuters report late last week revealed that some Chinese rare-earth suppliers were refusing to ship materials to US customers. The report suggests supply disruptions remain a major issue ahead of the Trump-Xi meeting scheduled for later this month.

Here is Keller's warning for the West: 

Negotiating critical minerals supply chains

Electrification is only likely to advance as a global trend. Especially in energy-importing countries, being key for achieving energy sovereignty (next to lowering carbon emissions). In turn, that transition towards an electricity-dominated system is contingent on critical minerals (Transition minerals: unearthing opportunities from a $500bn supercycle). However, the global reserves of these minerals are often concentrated in certain locations: eg, lithium (over 30% in Chile), cobalt (over 50% in DR of Congo), nickel (over 40% in Indonesia). Moreover, the degree of processing is often crucial, potentially also making small reserves valuable, if fully processed.

In this context, China plays a crucial role, given its tight control over the global critical mineral supply chain and refining capacity, including graphite, gallium and rare earths (Figure 10 & Figure 11). China's quasi-monopolistic position provides it with significant geopolitical leverage. Other countries also use export controls for minerals where they have dominant positions to gain strategic leverage, eg, Indonesia with nickel and bauxite.

Hence, critical minerals will likely play central roles in international negotiations about trade or geopolitical settlements. The US tariff concession to Beijing in order to retain access to rare earths and its plan to build its own rare earth mining and refining capacities are likely only the beginning . Efforts to re-shore minerals mining and refining capacity are also likely to take time, as shown by the persistent concentration of value chains projected out to 2030 (Figure 12). Potential conflicts over critical minerals access in some of the already unstable African regions are also likely. Australia could play an increasingly important role, given its abundance and diversity of reserves in critical minerals and rare earths.

The key complement to resources in the ground are the capital flows to provide the necessary financing. Here, capital-rich advanced economies such as those in Europe could try to increase their role. However, as Figure 13 and Figure 14 show, despite the industrial strategy efforts of governments in the West, building out a comprehensive and cost-effective 'mine to magnet' value chain decoupled from China is extremely difficult and likely to take time.

Overall, economic statecraft involved in securing critical mineral supply chains will become a mix of export controls, foreign investment restrictions, access to foreign capital, and sanctions, possibly project-focused and with changing alliances.

Keller's warning underscores why we've made China decoupling a core investment theme, building on our nuclear theme, AI buildout, and powering up America themes, highlighting companies such as MP Materials and Almonty as the West races to secure alternative critical material supplies.

Breaking Beijing's "quasi-monopolistic" grip will require operating mines, processing capacity, and reliable deliveries. Many junior miners still face years of permitting, financing and construction before producing their first commercial shipments. Companies that can bring supply online sooner could capture a crucial early market advantage, such as Almonty's ex-China tungsten production ramping up in South Korea. 

Jefferies initiates critical mineral companies Almonty, Materion, USA Rare Earth and Neo Performance with Buy; the firms are expected to benefit from increased demand for supply outside of China.

Almonty (buy, PT $26.25)

Sees Almonty offering public exposure to Western tungsten…

— zerohedge (@zerohedge) September 2, 2026

The SPDR S&P Metals & Mining ETF (XME) has yet to confirm another breakout but certaintly coiling. 

Related:

• Ukraine's Drone Warfare Devouring 4% Of Global Germanium Demand As China Chokes Supplies

For readers, the decoupling theme is about identifying miners already producing and able to close the supply gap. The opportunity lies in who can deliver first in size.

Tyler Durden Tue, 09/08/2026 - 21:20

US Navy's New Air-To-Air Missile AIM-424 Malice: Countering China's Growing Airpower

By Rick Fisher, senior fellow at the International Assessment and Strategy Center.

With its revealed range in “excess of 250 nautical miles” (287 miles), the U.S. Navy’s new long-range air-to-air missile (AAM) constitutes a major upgrade in the ability of the United States to arrest China’s quest for superior air power in Asia.

On May 7, 2025, Chinese air combat technology gave Pakistan a historic, beyond-visual-range (BVR) victory, when, during a record aerial engagement between 72 Indian Air Force and 42 Pakistan Air Force combat jets—that did not enter the other’s territory—Pakistan claimed to have shot down five Indian combat aircraft at ranges approaching a record 125 miles, including three French-made 4.5-generation Dassault Rafale fighters.

Pakistan’s victory was enabled by its acquisition of 20 Chengdu Aircraft Corporation 4.5-generation J-10CE fighters, equipped with an estimated 105- to 125-mile-range active electronically scanned array (AESA) radar, and armed with 125-plus-mile-range Luoyang PL-15E (‘E’ for export model) long-range AAMs.

When long-range AAM engagements exceed the range of the fighter’s radar, “off-board cuing,” or guidance, is necessary, such as from Pakistan’s Chinese-made Shaanxi KJ-500 airborne warning and control system (AWACS) with an estimated 300-mile-range AESA radar, but these reportedly were undergoing modifications and were not in the battle.

But Chinese-source rumors at the time credited China with helping Pakistan fight this air battle by providing satellite and perhaps electronic intelligence that helped enable maximum-range interceptions by Pakistan’s PL-15 AAMs.

This performance has also finally encouraged more foreign sales for the J-10CE, with Uzbekistan now taking delivery of about 12 to 24, and Bangladesh and Algeria reportedly close to placing orders for 20 to 30 each.

China’s very large investment in longer-range and self-guided AAMs provides the “tip-of-the-spear” for Beijing’s massive investment in air superiority, starting with the 2000 purchase of 50-mile-range Russian Vympel R-77 self-guided AAM technology to enable the 60-mile-range Luoyang PL-12 by 2005—similar to early versions of the U.S. Raytheon AIM-120 AMRAAM.

By 2011, China was providing the first glimpse of its Luoyang PL-15 being carried in the internal weapons bay—to preserve stealth—of a prototype Chengdu J-20 fifth-generation heavy fighter, with an estimated range of up to 190 miles, far outranging the best U.S. fifth-generation Lockheed Martin F-22A and AIM-120 combination.

Furthermore, in 2016, China’s People’s Liberation Army Air Force (PLAAF) revealed its longer-range Luoyang PL-17, carried externally on a Shenyang Aircraft Corporation J-16 heavy twin-seat strike fighter, reportedly in PLAAF service since 2022.

These advanced Chinese AAMs can now arm 1,838 fourth- and fifth-generation fighters in the PLAAF, according to the latest annual Defense White Paper of the Japanese Ministry of Defense.

These now include: 308 J-20 fifth-generation fighters, whereas the Obama administration halted F-22A production at 187; 350 J-16 fighters compared to only 133 of the similar U.S. Air Force (USAF) Boeing F-15E heavy twin-seat strike fighter; and 608 J-10 fighters, more than 300 of which may be AESA-equipped J-10B and J-10C fighters, compared to about 150-plus USAF Lockheed Martin F-16C AESA-modified fighters.

But long-range BVR engagements by these fighters can be enabled by about 100 PLAAF AWACS platforms, including about 90 KJ-500s, whereas the USAF has had to fight furiously to secure funding for 26 next-generation Boeing E-7 Wedgetail AWACS with new AESA radar.

In addition, the PLAAF is working toward the sixth generation of air combat power, and since late 2024, it has been testing sixth-generation fighter aircraft from the Chengdu and Shenyang corporations, and by September 2025, it had revealed five types of future autonomous unmanned fighters or collaborative combat aircraft (CCAs) that will employ artificial intelligence (AI) to extend the survivability and combat reach of manned fighters.

So it is an understatement to say that the United States, which fought hard to achieve air superiority over the Soviet Union to keep the Cold War from turning hot, is now in a vital race to ensure that U.S. air power can continue to deter global conflict with China and its Russian and North Korean allies.

Central to the U.S. air power investment is the Lockheed Martin fifth-generation F-35 medium-weight fighter, which now has about 800 of a planned purchase of 2,450, to be extended by a networkable virtual “aerial alliance” of 700 to 800 more F-35s ordered by non-U.S. air forces.

The F-35 likely employs the world’s superior AESA radar, along with ultra-long-range optical sensors and perhaps the world’s best offensive/defensive electronic warfare systems, with advanced networking, and is capable of providing off-board cueing for ground-launched missile interceptors.

By the early 2030s, the USAF expects to take delivery of the Boeing F-47 sixth-generation fighter, with technology development prototypes having flown in 2020. The U.S. Navy is expected to select its sixth-generation fighter developer later this year.

To multiply and extend its combat power, the United States plans to acquire up to 1,000 CCAs and is now testing prototypes developed by Anduril and General Atomics.

But central to the American air power investment for more than a decade has been an effort to develop better, longer-range AAMs to keep pace with and overtake the Chinese AAM threat.

In addition to continually improving and extending the range of the AIM-120, the U.S. Navy has led the development of the Raytheon AIM-174B Gunslinger, revealed in July 2024, with a classified range estimated at up to 300 miles, but this large AAM can only be carried externally.

In development since at least 2019, the first images emerged in May this year of the estimated 120-plus-mile-range Raytheon AIM-260 AAM, which is close in size to the AIM-120 and can be carried internally by the F-22A and F-35.

But on Aug. 22, reporting from a Reno, Nevada, symposium of the Tailhook Association, a nongovernmental organization that supports naval aviation, Aviation Week and Space Technology magazine first revealed the U.S. Navy was “flight testing” the AIM-424 Malice.

About a day later on its webpage, the U.S. Navy revealed size and performance data for the AIM-424 Malice, to include a range in “excess of” 287 miles—with unofficial estimates approaching 400 miles—and a size that would allow internal carriage by the F-35 and the F-22A.

Images of the AIM-424 reveal that it is a two-stage AAM, meaning that unlike single-stage long-range AAMs, it has a better chance of sustaining high energy, or speed, to ensure lethality at the end of its engagement.

China’s immediate response has been to throw “shade” at the AIM-424, with Chinese state media Guancha publishing Aug. 28 commentary by Taiwanese expert Lu Shili saying:

“I believe that at this stage [AIM-424] is still more of a concept, and its main function is to respond to the development of China’s long-range air-to-air missiles and prevent the United States from looking too bad in terms of public opinion and equipment comparison.”

For sure, the Chinese Communist Party dearly wants to preserve its promoted image that its new air combat technology is superior to that of the United States, even though it has only been demonstrated in one, albeit large, air battle.

But the reality is that since World War II, the United States has been, and intends to remain, the world’s superior air power, a fact just affirmed by the revelation of the AIM-424 Malice.

Tyler Durden Tue, 09/08/2026 - 20:55

Iran Says Basij Force Commander Killed In Mystery Insurgent 'Terror Attack'

American and Israeli officials have continued to speculate about fomenting some kind of internal rebellion or large-scale street uprising inside Iran, in hopes of toppling the leadership of the Islamic Republic. Bombs have largely fallen silent, for now.

But the longer the Iran war drags on, amid sporadic tit-for-tat action between US and Iranian forces as they clash over who controls the Strait of Hormuz, the more unlikely the kind of groundswell of protests like what was seen last January will be.

The Trump administration is betting that long-term severe economic 'D-Day' sanctions will eventually break Iranian society, but there's also the reality that a wartime and de facto martial law situation now makes large public anti-government demonstrations all the more difficult. It is also the case then when a country is under attack, there is a 'rally around the flag effect' - making it further easier for authorities to stamp out dissent before it spreads. And without doubt, Iran leaders have genuine support across various sectors of the Iranian populace, as they face down the United States.

via Iran state media

Additionally, it has been a longtime claim of Iranian officials that Israeli Mossad has infiltrated and in some cases armed protest groups.

"They have trained some people inside and outside the country; they have brought in some terrorists from outside," President Masoud Pezeshkian had said of Israeli and foreign intelligence back in January, amid the violent economic unrest that served as a precursor to Trump launching Operation Epic Fury.

Fast forward to now more that six months into the US-led war, and there are still instances of ground level deadly confrontations between Iranian security services and mysterious armed 'opposition' entities.

The AFP and Israeli media report of a fresh incident, "A local commander in Iran’s paramilitary Basij force was killed in a 'terrorist attack' in the country’s restive southeast, local media reports." According to more:

Abdolraouf Eshaghi, a commander in the Parud district of Sistan-Baluchistan province, had been “martyred,” the semi-official Tasnim news agency says, without providing details. It is not immediately clear who was behind the attack.

Yesterday, Iranian authorities said three people were killed and nine arrested during a raid in the province on hideouts of Islamist groups it claimed were affiliated with Israel and the United States.

However, armed clashes with ethnic groups which have separatist movements and leanings are nothing new for Iran, particularly in restive Sistan-Baluchistan province. That province has witnessed a long pattern of attacks on IRGC and Basij units by Baloch insurgent groups, going back decades.

While Iranian society is overwhelmingly Shia, most of the border province's large Baloch population is Sunni. But Tehran has long been worried that foreign intelligence could 'weaponized' the impoverished Sunni population, and a similar thing has been at issue with the Iranian Kurdish minority, which tends to be in the mountainous north of the country near Iraq. So this is a plausible scenario and very real possibility.

Trump back in April openly boasts "we sent some guns" to the "people of Iran"...

Trump:

We sent some guns; they were supposed to go to the people of Iran. You know what happened? The people we sent them through kept them.

I am very upset with a certain group of people, and they will pay a big price for that. pic.twitter.com/dACg5aZyMS

— Clash Report (@clashreport) April 6, 2026

It should also be noted that similar dynamics were at play during the lengthy Syrian proxy war. Washington and Gulf allies funded, trained, and armed Sunni radical insurgent groups as well as Kurds, which pressured Damascus from the north and east of the country.

Tyler Durden Tue, 09/08/2026 - 20:30