Aggregator

"What you need is a paladin, a brave knight to ride into battle for you."

Kyle Tucker's near-cycle headlined a promising week for him and the Dodgers

One video of the big cat posted on X by @CKaftonKTVU shows it wandering behind bushes in the small front yards of multiple homes, with a window above the animal slightly open.

America Is Using The Wrong Artificial Intelligence Scoreboard

Authored by Paul Meeks via RealClearMarkets,

Since OpenAI released ChatGPT in late 2022, America has kept score in the artificial intelligence race by asking which lab has the best model. Unfortunately, that scoreboard is dangerously incomplete. Frontier capability matters, but temporary benchmark leads do not by themselves create durable technological dominance by any single nation. The true national edge comes when its technology becomes the platform on which the world builds.

The distinction came into focus at the White House in August. Administration officials met with leading AI companies to discuss a voluntary framework for government testing of the most advanced models before release. However, the framework will not cover open-weight models, whose underlying parameters can be downloaded and adapted. That was the right decision. But declining to restrict open models is not the same as having a strategy to ensure that the world builds on American models.

The Trump administration already understands the stakes. Its AI Action Plan warns that open models could become global standards in business and research and therefore have "geostrategic value." It calls for leading open models founded on American values. The insight is correct. Implementation has not kept pace with the market.

In strict technical terms, open-weight is not the same as open-source. The former makes a model's learned parameters available; the latter also implies access to such elements as training code and data. Most models commonly called "open-source AI," including China's leading releases, are actually open-weight. Economically, however, the important point is that users can download, operate and adapt them without remaining dependent on a single provider.

American companies dominate the market for high-end closed models. Customers access them through websites or application programming interfaces, while the companies retain the model weights and charge for usage. China has pursued a different strategy. Its developers are releasing increasingly capable open-weight models cheaply or freely, inviting companies, researchers and governments to customize them and build products on top of them.

This is where China is converting diffusion into market power. Moonshot AI's Kimi K3 reached the top tier of global models while being released open-weight. Alibaba's Qwen family has spawned more than 100,000 derivative models on Hugging Face, more than any Western model family. The U.S.-China Economic and Security Review Commission's 2026 "Two Loops" analysis even cites one Andreessen Horowitz partner's rough estimate that 80% of American startups use Chinese base models to develop derivatives for their businesses.

Even if that figure is only directionally correct, the warning is extraordinary. A meaningful share of America's AI application layer may already rest on Chinese foundations because developers found capable, affordable and adaptable models when they needed them.

We are in a contest over far more than individual models. It is also a contest over the technology stack on which they will run. This will shape the skills developers learn, the products entrepreneurs build, the infrastructure customers buy, and ultimately own the standards that eventually become difficult to dislodge. America's objective should be clear: the world's AI economy should be built primarily on an American and allied technology stack.

China knows - and is building policy around the fact - that every adoption strengthens the ecosystem. Developers create compatible tools. Workers learn model-specific skills. Investors finance complementary applications. Businesses integrate the technology into workflows that become costly to change. The resulting feedback loop attracts more users and produces more improvements. In investor terms, diffusion creates the moat. In foreign policy terms, diffusion locks in global influence.

American closed-model companies are not behaving irrationally. Restricting access protects intellectual property and produces recurring revenue. But the business model that maximizes revenue for a few companies does not necessarily maximize American economic power. A closed model can sell many tokens while an open competitor becomes the technological language learned by the rest of the world. Washington should not confuse the commercial interests of dominant vendors with a national strategy.

Anthropic CEO Dario Amodei has raised the strongest objection towards open-source diffusion warning that once capable model weights are released, they cannot be withdrawn, and bad actors may use them without guardrails or monitoring. That concern deserves a serious response but it also does not justify American abstention. China will continue releasing capable open models regardless of what U.S. labs do. Unilateral restraint would not reduce the number of open models in circulation; it would determine which country supplies them.

America has the computing power, talent and capital to lead both the closed and open portions of the AI market. What it lacks is a sustained strategy to put those advantages into circulation - and to ensure that the developers, companies and governments adopting AI abroad can build on trusted American technology rather than becoming dependent on Chinese model ecosystems.

The AI race will not be decided by which company tops the next benchmark. It will be decided by whose technology stack becomes indispensable: whose models developers choose, whose tools they learn, whose infrastructure they deploy and whose standards organize the applications built above them. Implementing an American open-weight strategy is not a departure from AI dominance. It is how America ensures that the world builds on an American technology stack - and how technological leadership becomes durable.

Paul Meeks is a technology-sector investor with more than 30 years of experience in public and private markets. He is a Professor of Practice at The Citadel's Baker School of Business.

Tyler Durden Fri, 09/18/2026 - 14:52

Suffolk County has unexpectedly delayed the replacement of its current gunshot detection system with a more controversial and potentially invasive version from Flock Safety.

Oswaldo Cabrera has already found a new home.

Mark Walter has more legal troubles amid an ongoing federal investigation

It may be time to take this old-school pastime off the shelf.

A Georgia couple is fighting to save their first home after an HOA sought foreclosure over disputed dues that reportedly ballooned to roughly $20,000.

China Rare Earth Giant Eyes Takeover Of MP Materials' Seventh-Largest Shareholder As Resource War Intensifies

One way to view the Reuters report saying that state-owned China Rare Earth Group is in takeover talks with Shenghe Resources is that the deal could further cement Beijing's control over critical materials, especially rare earths. But what's most intriguing is that Shenghe holds a minority stake in US rare earth producer MP Materials.

The potential takeover would bring one of China's top rare earth mining and refining companies under the state group's control, with some private ownership. It would also extend that control to Shenghe's overseas holdings, including a 3.11% stake (7th largest shareholder) in MP Materials.

The outlet reported:

Talks between the two companies have been underway since earlier this year, said the sources who spoke on the condition of anonymity given the sensitivity of the matter. China Rare Earth Group wants to take a controlling stake, one of the people said.

The takeover would almost certainly cause some alarms in Washington: a major Chinese state-owned supplier could inherit a minority holding in a US company amid efforts by Washington to break China's stranglehold on critical materials supplied to the West.

The sources did not know what would happen to Shenghe's foreign assets and stakes.

In terms of leverage, China Rare Earth Group's takeover of Shenghe Resources would give Beijing tighter control over materials that are critical to electric vehicles, wind turbines, electronics and the defense sector. These are the same materials that Beijing has restricted some access to the US over the past 1.5 years amid a resource war. 

Recall that one move in Beijing's playbook was buying Canada's only antimony mine and then shutting down operations several years ago. Antimony is a critical mineral used in military hardware, from small arms and artillery shells to advanced missile seekers and night-vision goggles.

Beijing's leverage over the US lies in critical materials, while the US crusade from Venezuela to the Strait of Hormuz has been about leveling the playing field with China and squeezing Beijing's access to crude.

Tyler Durden Fri, 09/18/2026 - 14:40

The "Nashville" alum died on Aug. 16 in Greenville, South Carolina, at 36 years old. The investigation into her passing remains ongoing.

The "Nashville" alum died on Aug. 16 in Greenville, South Carolina, at 36 years old. The investigation into her passing remains ongoing.

A group of fisherman got quite the catch when a massive humpback whale made a rare appearance in the Sacramento River.

Barclays Sees Two Key Drivers Behind A Potential Tesla Q3 Delivery Beat

Tesla is expected to report third-quarter earnings in late October. 

Ahead of the release, Barclays autos analyst Dan Levy expects deliveries to "beat" consensus, driven by two key factors: stronger Full Self-Driving adoption and rising exports from Shanghai.

FSD

First, FSD uptake is increasingly relevant - not only in serving as the "consumer AV" element of Tesla's AV push, but also in providing both a margin boost, and perhaps more importantly a volume boost to Tesla. Indeed, Tesla's 2Q delivery beat was in part driven by North America, and we assume that with FSD uptake of 55% in the quarter, buyers are increasingly choosing Tesla because of FSD.

Asia Demand

Tesla is increasingly benefiting from its China exports. In our visit to Giga Shanghai last week as part of our China Autos fieldtrip (see here and here), we were reminded of Tesla's significant cost advantage in Shanghai. We believe exports from Shanghai may be at least 20% of Tesla's global volume this year, and many rest-of-world markets which had previously been afterthoughts (i.e. Australia, Colombia, Asia ex-China) are now providing key volume boosts.

Levy estimates Tesla will deliver about 475,000 vehicles, above Wall Street consensus of roughly 466,000 and above his previous forecast of 450,000. However, that would represent a decline of about 4% from a year earlier and 1% from the second quarter.

Tesla is tracking toward 1.8 million deliveries for this year, up 10% from last year but back to its 2023 peak. 

"We believe a solid 3Q deliveries result would be a further validation point that Tesla's vehicle growth has inflected positively, which became more evident after the significant 2Q delivery beat (480k vs cons 406k). Recall, at 2Q mgmt noted Tesla exited the quarter with its largest backlog since 2023, implying the potential for further growth ahead. We now turn to 3Q commentary for reads as to whether mgmt continues to see robust demand ahead," Levy said. 

Barclays regional TSLA deliveries forecast

Levy pointed out that a delivery beat would not translate into stronger margins. He expects automotive gross margin, excluding regulatory credits and including stock-based compensation, to remain flat or edge below the second quarter's 16.3%.

Tesla shares have slumped 18% year to date as of early Friday morning.

Wall Street analysts tracked by Bloomberg have assigned 29 "Buy" ratings, 24 "Hold" ratings and 8 "Sell" ratings, with an average 12-month price target of $391.

Looking ahead, there has been Tesla-SpaceX merger rumors this summer (read full report). 

Tyler Durden Fri, 09/18/2026 - 14:00

K-Shaped Economy: Reality Or Media-Driven Perception

Authored by Lance Roberts via RealInvestmentAdvice.com,

“What the K-shaped economy gets right, what it exaggerates, and what believing the worst version is costing a generation.”

The bottom half of American households owns about 2.5% of the nation’s wealth. That number is real, and it ought to bother you. However, that number is also higher than it was in 2019 and 2015, and roughly six times higher than the 0.4% low it hit in 2011. You will not read that in many places because it doesn’t “fit the narrative.”

Unfortunately, the K-shaped economy headlines have settled into a single unvarying note, and after a while, people stop hearing anything else. I’ve spent the past several weeks working through the underlying data. While there is some truth to the coverage, most of the claims are exaggerated for “clicks and views.” But the psychological damage is clear.

So, before we get into our discussion, here are some numbers for you.

Where The K-Shaped Economy Headlines Are Right

Let me start where the “Persistent Purveyors of Doom” crowd bases its argument, as there is indeed a K-Shaped economy. However, what is critical to understand is that the K-shaped economy is not new. In every economy throughout history, there has always been a K-shaped divide between those at the bottom and those at the top.

Nonetheless, as the headlines suggest, the wage compression of 2020 through 2023 was extraordinary. Autor, Dube, and McGrew documented it in their paper “The Unexpected Compression.” The 90/10 wage ratio fell far enough to reverse roughly a third of forty years of divergence.1 Then it stopped, and worse, it began running the other way.

The Economic Policy Institute data for 2025 show that real wages at the 10th percentile fell by 0.3%, while the median rose by 0.8%.2 The lowest-paid workers in America went from the fastest-growing group in the distribution to the only one moving backward.

However, the Cleveland Fed adds a detail that should end many K-shaped economy arguments. Between 2020 and late 2025, real wages at the 10th percentile rose 9.7% against 4.5% at the 90th. In dollars, that’s $1.34 an hour against $3.09.3 Percentage compression off a small base is not catching up. And the 2015 to 2020 dollar gains were LARGER at every percentile in the bottom half than the celebrated pandemic-era gains were.

The price level is also crucial to discuss, and is where I think most commentary goes soft. Inflation falling from 9% to 3.4% is a change in the rate, not the level. Since December 2019, consumer prices have risen by roughly 29% and have stayed there. That is a permanent shift in the cost of living, and it is the part of the K-shaped economy argument that sticks, and it hits households with no assets the hardest.

As I’ve written before, “wage growth as a leading inflation indicator” matters for policy. The level is where people actually live. McKinsey asked 30,119 Americans this April, and 60% named the cost of living as one of their top three barriers. That held even with those over $150,000 in income.

Furthermore, the hiring rate hit 3.1% in February 2026, the lowest reading outside the pandemic, while the share of unemployed workers for 27 weeks or more reached 27.5% in May. Separately, expiration of the enhanced ACA credits pushed average net marketplace premiums up 58% and average deductibles up 37% in a single year.4 That is a real, dated, 2026 hit to exactly the households everyone is arguing about.

The honest summary is that the ladder from the bottom of the K to the top got harder to climb, even as the rungs themselves stopped moving apart.

Where The K-Shaped Economy Headlines Are Exaggerated

The single most repeated statistic in this entire debate, the one anchoring roughly every set of K-shaped economy headlines you have scrolled past this year, is that the top 10% of earners account for about half of all consumer spending.

It comes from Moody’s Analytics. The number is shakier than it looks. Moody’s revised its own estimate down from 49.2% to 45.8% after a methodology change, and Mark Zandi told reporters plainly that he “wouldn’t die on the hill of the top 10% accounting for 45% of the spending.”5 Berkeley’s Antoine Levy points out the arithmetic problem: the top decile takes home 35% to 40% of disposable income and saves a fifth of it, so its spending share cannot be half. The BLS Consumer Expenditure Survey puts the figure at 22.9%.

While you may think that is just economists arguing amongst themselves, it isn’t. What is crucial to note is that when the number that anchors the entire narrative varies by a factor of two depending on who computes it, that is a problem. In other words, the narrative is doing work the data cannot support. Such is the nature of a story that has outrun its evidence.

Furthermore, the perception gap runs deeper than just one statistic. In that same McKinsey survey, 56% of consumers named food as the category with the largest price increase in 2024.6 Here is why that is important. During that same period, insurance, housing, and childcare all rose faster, meaning that people are not tracking the data.

In other words, people are tracking what they hear on television and read on social media, and the two have become detached.

Where The K-Shaped Economy Headlines Are Simply Wrong

Here is where it gets interesting.

Everyone “knows” wealth concentration is worse than ever. As I laid out in my earlier piece on the K-shaped economy and why the middle class moved up, the income story runs in the opposite direction from the coverage.

The wealth story is stranger still. Pull the Federal Reserve’s Distributional Financial Accounts and compute it yourself, and the top 10% share of household net worth peaked at 70.3% in the first quarter of 2019. It sits at 67.9% today. The bottom 50% share bottomed at 0.4% in late 2011, was 1.7% at the end of 2019, and is 2.5% now.

When looking at wealth concentrations, it is very easy to blame those at the top of the wealth pyramid. Yes,  the top 10% of the population held a 31.8% share of economic wealth in the fourth quarter of 2025. Yet the bottom half gains since 2019 came almost entirely from the 90th to 99th percentiles, which fell from 39.7% to 36.3%. In plain English, the professional class lost relative ground, not the working class. Such is a detail that changes who you think is complaining.

Furthermore, the recovery that no one called K-shaped was far worse. Between 2007 and 2016, median wealth for the bottom 30% of families fell 31% while the top 10% fully recovered.7 Saez found the top 1% captured 91% of real income growth from 2009 to 2012. Nobody ran a K headline in 2013. The data was uglier then.

The last false claim is the one that worries me most, because young people believe it about themselves. That is the real damage the K-shaped economy headlines have done. Vanguard’s administrative records show 401(k) participation among young workers at 54%, against 28% for the same age group in 2004. Savings rates are higher, and average balances have roughly doubled.8 Vanguard’s own model puts 47% of Gen Z on track to sustain their standard of living in retirement, seven points ahead of the boomers. The problem is NOT that young people stopped saving

McKinsey found the same thing from the other direction. Adults aged 18 to 24 face the worst entry-level labor market in decades, and 34% name mental health as their top barrier, against 14% of older adults. Yet they were more likely than any other older group to say their finances will improve and that their lives have momentum.

“The generation everyone is writing eulogies for has not read them.“

Do The K-Shaped Economy Headlines Become Self-Fulfilling?

This is the question I actually wanted answered, so I went looking for the research. Does talking constantly about a K-shaped economy help create one? The answer splits cleanly in two, and almost nobody reports both halves.

At the level of the whole economy, no. The Chicago Fed published the number in June. The correlation between the Michigan sentiment index and annual real consumer spending growth ran 0.69 before 2020. Since 2020, it has been roughly zero.9 Their composite estimate says Michigan currently understates sentiment by 25 to 30 index points. About 10 of those points trace to the 2024 switch from telephone to online collection. Then there is the receipt test. A Fed study matched roughly 10,000 survey responses to verified purchase records. Some 43% said they were doing worse than in 2019. Most had actually bought more.

Secondly, Barsky and Sims settled the mechanism years ago: confidence is a leading indicator, not a cause.

In the economy, confidence carries information that people already have; in a survey, they respond to what they have read or seen, rather than to what they expect. This is also the structural reason why the doom loop can’t close at the macro level. Bank runs feed on themselves because if you withdraw your money, it makes my withdrawal smarter. However, in the economy, consumption lacks this property. Your neighbor skipping a vacation does nothing to make skipping yours a better idea. Such is why sentiment can collapse, and spending can increase.

At the level of one household, yes, and this is where it bites. The K-shaped economy doom loop is real. It just doesn’t run through GDP. It runs through the handful of large, irreversible decisions a person makes over a lifetime.

The clearest evidence comes from Bailey and co-authors. They matched 1.4 million Facebook users to 525,000 housing transactions, then used the house price experiences of geographically distant friends to isolate the belief channel. When distant friends saw 5 percentage points more price appreciation, a renter’s probability of buying rose 3.1 points off an 18% base.10 Beliefs picked up socially, from people nowhere near your housing market, changed whether you bought a house.

Now apply that to a young person marinating in K-shaped economy headlines. I’ve pushed back before on the lazy version of this story, the one painting a whole generation as financial nihilists. That framing is still wrong. The behavior at the margin has gotten worse anyway. Baker and colleagues at Northwestern, using transaction data on 230,000 households, found that every dollar wagered on sports betting reduces net household investment by about 99 cents.11 Not lottery spending. Not other gambling. Savings.

The damage compounds from there. New York Fed researchers found credit card delinquency rates rising 1.02 percentage points among households under 40 in states that legalized. Furthermore, separate work by UCLA and USC estimates that roughly 30,000 additional bankruptcies a year are attributable to online betting.12 The same restlessness shows up in the options tape. Zero-day contracts reached 65% of total SPX volume in May 2026. Citadel Securities reports that nearly half of all retail options volume on its platform now expires on the same day, up from 13% in 2021.

None of that is saving or investing, and it is the real culprit behind the “K-shaped economy” narrative. In other words, the narrative is driving behavior that is creating the outcome. As we documented in our work on why retail traders consistently underperform, the average retail equity investor earned 16.54% in 2024, compared with 25.02% for the index. The performance gap is due to behavior, not access.

While everyone agrees that the economy is hopeless for the young, the agreement itself is the tell.

What To Do About It

Are there problems in the economy? Yes. Let’s recap what we know.

But here is the real question to ask yourself, particularly if you “feel” like your future is hopeless.

“Do you have the ability to change your outcome?”

That answer is unequivocally – “yes.” You just have to be willing to do the work.

First, fix your benchmark. You are not competing with a stranger’s vacation photos or the top 1% of a country of 340 million people. The relevant comparison is your own plan, and whether this year moved you closer to it. Everything in thinking like an investor rather than a speculator starts there. McKinsey found Americans with strong community ties were nearly four times as likely to feel their lives have momentum. Only a third felt they were connected. Trade some screen time for the other thing.

Second, stop gambling and call it what it is. Nobody ever bet their way out of the K-shaped economy. Will a sports parlay occasionally pay off? Sure. Will it build wealth over 30 years? The data is very clear that it doesn’t. More notably, the ones betting are also the ones who can least afford it.

Third, set goals you can actually hit. The $1.46 million “magic number” that circulates every January is a survey artifact from a company that sells retirement products. It is not your number. The number you need to focus on comes from your spending, your timeline, and your obligations, which is a smaller and far more solvable problem than headlines imply.

Fourth, automate the boring parts. The reason that Gen Z is projected to retire better than the boomers is not superior discipline. It is auto-enrollment. Company 401 (k) plans that enroll workers by default have a 94% participation rate, compared with 64% for voluntary plans. Design beats willpower, every time.

On housing, I recently argued that home affordability is better than the headlines suggest, and that holds for the monthly payment burden. Harvard’s housing center set home prices near five times the median income, up from roughly three times in the 1990s. That is indeed a barrier to entry.

However, the down payment for homes today is 3% versus 20% in the 1990’s. So, yes, the payment is manageable once you’re in, but the hard part is saving up for the down payment. I get that, and here is the hard truth. If you can’t save up a 3% down payment, you have other financial problems (e.g., overspending) that you need to resolve first. The mortgage payment is one thing; the taxes, fees, maintenance, and everything else that goes with the joy of homeownership is quite another.

The K-shaped economy is real, and it is old. What changed isn’t the shape of the economy; it’s just that the media found a narrative that gets lots of clicks and views, and we let headlines do our thinking for us.

Believe the headlines, and you will make exactly the decisions that guarantee they come true for you.

* * *

Tyler Durden Fri, 09/18/2026 - 13:40

Auto Stocks Slide As VW Cuts Outlook, Industry Urges Trump To Keep BYD Cars Out

Earnings pressure and trade-policy uncertainty are weighing on auto stocks on Friday.

Volkswagen shares fell as much as 7.5% after the struggling European automaker lowered its operating-margin forecast, reflecting a write-down on its Porsche stake and weak Chinese demand.

Separately, US auto industry groups urged the Trump administration to maintain restrictions on Chinese vehicles, according to a Bloomberg report.

"Allowing them to open a domestic facility would provide a foothold in the US market at the expense of manufacturers operating here," the coalition wrote.

Signatories include the Alliance for Automotive Innovation, whose members include Ford, General Motors, Toyota and Volkswagen, alongside Autos Drive America, the American Automotive Policy Council and the National Automobile Dealers Association.

The letter to the White House, seen by Bloomberg, comes less than a week before President Trump meets with Chinese leader Xi Jinping next Thursday. It warns that a flood of Chinese BYD vehicles would undercut and upend domestic automakers and parts suppliers.

Europe's move to welcome BYD has been nothing but trouble for the continent, which is seeing its industrial base hollowed out further.

The S&P 500 Automobiles & Components Index remains in a descending channel. 

In US markets, General Motors shares fell 5% this morning, their steepest intraday decline since June, as selling spread across the auto sector. Ford dropped 4%, while Stellantis' US-listed shares slid 5%.

Tyler Durden Fri, 09/18/2026 - 13:20

Yen Jumps On Report Of BOJ "Rate Check" But It's "Too Little Too Late"

Update: (12:40pm ET)

The Bank of Japan, not to mentioned Scott "the House" Bessent, have been most displeased with the yen plunge following today's BOJ rate hike, and so they once again do what they do pretty much every other week now: intervene in the market. 

As we said earlier (see below) when we predicted that some sort of central bank intervention was inevitable, the yen pared declines on Friday after Japan's Nikkei newspaper reported that the Bank of Japan had conducted a rate check in the foreign-exchange market.

Just as it was intended, the report immediately reversed some of the yen’s huge losses triggered earlier in the session by disappointment among traders who had wanted clearer guidance from the central bank on its plans to raise borrowing costs further to stabilize inflation, following a widely expected rate increase on Friday. Instead, what they got were two dissenters appointed by the ultradovish Prime Minister Sanae Takaichi, with two more members due to leave the board next year and likely also replaced by more dovish policymakers, thus kneecapping expectations for more rate hikes. 

Such intervention is meant to squeeze speculative yen shorts and accelerate a move in thin markets, but its ability to produce a lasting reversal may depend on monetary policy. The Fed’s renewed tightening cycle threatens to keep the US-Japan rate differential wide even after Friday’s BOJ rate increase, preserving the incentive for investors to borrow in yen to fund higher-yielding positions elsewhere.

Speculative positioning is also lighter than before the previous intervention. Leveraged funds halved their bearish yen bets in the week through Sept. 8, according to CFTC data, leaving fewer short positions to squeeze if authorities step in again.

The Japanese currency was down 0.6% at 156.83 per dollar at about 12:30 p.m. ET after losing as much as 1.3% earlier in the session. The Nikkei reported that the BOJ inquired with market participants about exchange-rate levels, without saying where it got the information. Such a move has previously preceded official intervention. 

“This is too little, too late,” said Win Thin, chief economist at Bank of Nassau 1982. “The BOJ had another chance to go big and they missed it, same as July. If they really wanted to boost the yen, they should have hiked more than expected and then intervene massively.”

As reported earlier, the yen had weakened to about 158 per dollar after BOJ Governor Kazuo Ueda sent mixed signals on the path for future rate hikes following the bank’s widely expected increase. While he said the stage for policy setting has shifted, he also said it was difficult to determine the terminal rate for the current tightening cycle. Analysts saw his remarks as falling short of the market’s increasingly hawkish expectations.

Japan has entered a holiday period through next Wednesday, when thinner liquidity could amplify the impact of any official intervention. Authorities used a similar window around the Golden Week holiday period this year, first stepping in after the yen weakened beyond 160 just before the holidays and then apparently intervening again during the thinly traded period.

Of course, neither of the previous interventions worked, and this one will fail as well. 

Japan and the US conducted a coordinated yen-buying operation this summer, the first since 1998, raising the stakes for traders betting against the yen. Japan spent a record ¥15.4 trillion on intervention in the month through Aug. 26, according to Finance Ministry data. US Treasury Secretary Scott Bessent has since continued to signal support for a stronger yen.

Despite the coordinate global attempts to boost the yen, the fundamental pressures weighing on the yen remain in place, including Japan’s wide interest-rate gap with other major economies, concerns over the fiscal outlook under Prime Minister Sanae Takaichi’s expansionary spending plans, and - of course - the biggest debt load in history, where every rate hike will lead to much more interest expense.

* * *

Earlier:

The yen sank to a two-week low against the dollar ​on Friday after two policy makers at the Bank of Japan dissented from a widely expected decision to raise ‌interest rates, extinguishing expectations for back-to-back hikes. Governor Kazuo Ueda now needs, at a minimum, to preserve expectations for a December move to prevent markets from unwinding most if note all of the tightening path already priced into rates.

While Japanese policymakers pushed rates to their highest level in 31 years at 1.25%, the move failed to boost the currency as traders felt there was a lack of explicitly hawkish guidance.

As a result of the dovish split, the yen tumbled and the US dollar rose more than 1.2% against the Japanese currency, hitting a a ​two-week high of 158.07 yen after wavering during BOJ Governor Kazuo Ueda's press conference. It was set for its biggest daily increase versus the ​yen since December and the largest weekly rally since September 2024.

Traders had already discounted the equivalent of another hike by year-end before today’s policy meeting, leaving a high bar for any hawkish surprise. The presence of two dissenters signals that support for another rate increase in October is weakening, with OIS assigning around a 20% probability to such an outcome. That leaves Ueda’s press conference carrying the burden of preserving expectations for a December hike and keeping the BOJ on a tightening path that at least matches the Fed’s recent pace.

"They've just clearly underwhelmed versus expectations here," ⁠said Ray Attrill, head of FX strategy at National Australia Bank in Sydney. "And I think that one of the more staggering aspects ​of it was that they couldn't even get the unanimous vote for that," he said. "That really raised eyebrows in the market."

"The statement offered little additional hawkish guidance to support ​bullish Japanese yen positions," said Frantisek Taborsky, currency strategist at ING. "The dissent from (Toichiro) Asada and (Ayano) Sato points to resistance against the fastest pace of rate ‌increases in ⁠more than three decades and suggests they may increasingly act as a brake on further tightening."

According to Mizuho strategists, the dissenters raise concerns that further rate hikes become harder to deliver, potentially steepening the JGB yield curve. Senior strategist Masayuki Nakajima said that Friday’s two dissenters were appointed by Prime Minister Sanae Takaichi. Two more members are due to leave the board next year and could potentially be replaced by more dovish policymakers

“Should their successors come from the reflationist camp, four of the nine Board members would become dovish,” he says; “While that would still fall short of a majority, it could reinforce expectations that sustaining the tightening cycle may become more difficult in the future”

“If so, concerns that the BOJ is falling behind the curve could re-emerge, potentially leading to further curve steepening,” he added.

Commenting on the market reaction, Bloomberg's Ven Ram said that the decision was: 

• marred by dissent from two policymakers who voted against the hike;
• there was none who called for a bigger margin of increase;
• and the accompanying statement, while vowing to continue raising rates, failed to signal a sense of urgency by not saying when they will come.

Japan’s benchmark rate still trails the neutral rate by a considerable margin, and without back-to-back interest-rate hikes, the yen will stay weaker for longer. Only the franc carries a lower interest rate in the G-10 economies, with the Swiss central bank due to meet next week. Should that monetary authority reiterate its preference for keeping rates at zero, it will engender low volatility in two of the major exchange rates that represent the preferred funding currencies.

After a slew of central bank meetings and with Brent crude headed for the first weekly decline this month, global bonds that were deeply oversold are finding some respite. Longer-dated gilts received a boost from the Bank of England’s plan to pause bond sales and stop selling securities that mature in 2049 or later. Gilts with a maturity of 30 years stand to benefit considerably, so an immediate follow-through of Thursday’s rally is likely even though the looming autumn budget realities may check the pace of gains.

Here are some other reactions to the split BOJ decision from Wall Street traders:

NAKA MATSUZAWA, CHIEF MACRO STRATEGIST, NOMURA SECURITIES, TOKYO:

"It's (the yen's decline) a knee-jerk reaction to the two dissent votes. The bottom line is I think it's not too hard for the BOJ to keep the currency pricing for market expectations of rate hikes, basically every three months. And I do think that's what the BOJ wants to keep, not necessarily suggesting an October hike."

RAY ATTRILL, HEAD OF CURRENCY STRATEGY, NATIONAL AUSTRALIA BANK, SYDNEY:

"They've just clearly underwhelmed versus expectations here. And I think that one of the more staggering aspects of it ​was that they couldn't even get the unanimous vote for that. I think that really raised eyebrows in the market. (There was) nothing to put the market more firmly on the sense of another increase in Q4. It's clearly on Governor Ueda to put the market back more firmly on that stance. If he fails to do that, then I think dollar-yen is headed higher. It's hard ‌to believe that just on the back of one quarter-point the (US) Treasury Secretary is going to be jumping for joy and as willing to replicate what they did in August (by intervening). The risk here is that we're heading back up to 160."

BART WAKABAYASHI, BRANCH MANAGER, STATE STREET, TOKYO:

"They raise rates and the currency loses 100 points - I think the market is looking at the BOJ versus the G3 and G10 central banks and the interest rate spread is what is in play. I think it's important that the six-month cycle has been broken, and that leaves the market to say, hey, these guys are willing to act if they have to."But there is a factor where they need to keep up (with other central banks)...if (Ueda) is not as hawkish as the Fed (at the news conference), dollar/yen could really take off higher."

DAVID CHAO, GLOBAL MARKET STRATEGIST FOR ASIA-PACIFIC, INVESCO, SINGAPORE:

"The BOJ has finally shed its long-term status as a monetary policy outlier and is joining the ranks of the other major central banks. The market fully anticipated this rate hike, but it has to be taken in context with what's going on with ​the rest of the world. The BOJ, Fed and ECB have all hiked rates in the same month."

MASAHIKO LOO, SENIOR FIXED INCOME STRATEGIST, STATE STREET INVESTMENT MANAGEMENT, TOKYO:

"Markets should focus less on the statement and more on Ueda's press conference. Expect a neutral-to-slightly hawkish tone, emphasizing that every meeting remains 'live' from here given resilient growth, persistent inflation risks and a policy rate (real yield) that remains accommodative even at 1.25%.More broadly, Japan is ​increasingly participating in a synchronized global tightening cycle. The debate is no longer whether the BOJ hikes, but how far rates ultimately go as major central banks continue to grapple with sticky inflation, AI-driven investment demand and rising term premium. Combined with higher domestic yields and growing confidence in the BOJ's normalization path, more capital is likely to ⁠stay in Japan rather than flow abroad. The bigger story remains that Japan is gradually ceasing to be a marginal buyer of foreign assets, not because it is selling aggressively, but because domestic alternatives are becoming more attractive."

CAROL KONG, CURRENCY STRATEGIST, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY:

"The fact that two BOJ board members appointed by Takaichi opposed a hike today suggests the government still leans against BOJ rate hikes. This, together with the lack of guidance on the future pace of ​tightening in the statement, triggered a sell-off in the JPY. As usual, Governor Ueda’s post-meeting press conference will provide more insights into the rate outlook. The risk is Ueda fails to match markets’ hawkish expectations, fuelling further JPY weakness. We expect a follow-up hike in December."

YUGO TSUBOI, CHIEF STRATEGIST, DAIWA SECURITIES, TOKYO:

"Overall, the decision is likely to be seen as dovish. There had been some concern, albeit limited, about a 50-basis-point rate hike, but that did not happen. With two dissenting votes, markets likely ​took the view that it would be difficult to assume the pace of rate hikes will accelerate rapidly. U.S. Treasury Secretary Bessent's negative comments on reflationary policy had also raised concerns about the potential economic damage from the BOJ becoming more hawkish than previously expected. Those concerns have receded, prompting a rise in stocks."

SHUN HONG LIU, CHIEF INVESTMENT OFFICER, HONG INVESTMENT ADVISORS, HONG KONG:

“Honestly, it is so hard to have a very strong view in this market, given things are so political everywhere else in the world. Just imagine Japan needing to get consent from the US for intervention—what can be done and what cannot be done will be coordinated by so many politicians. Last week, if you had asked me, I would have answered yes, it is the end of the yen carry trade (after the rate hike). But now I would answer no, as Takaichi confirms a 3.5% military spending target, while people suddenly believe that Warsh is an uber-hawk. So I just keep my eyes open and trade accordingly."

KANAKO NAKAMURA, ECONOMIST, DAIWA INSTITUTE OF RESEARCH, TOKYO:

"The expected dissent by two members suggests political pressure ​on the BOJ has not entirely faded. The reappointment of Minister Kiuchi in the cabinet reshuffle also signals continued support for expansionary fiscal policy, raising concerns that fiscal stimulus could add to inflation pressures."While the BOJ's statement showed readiness to address upside inflation risks, Governor Ueda's press conference will be key for assessing the future pace of rate hikes.With producer prices remaining elevated, oil prices rising on Middle East tensions, and a weak yen adding to inflation risks, we do ​not believe this rate hike alone will be sufficient. We expect the BOJ to accelerate rate hikes to roughly once a quarter."

PRASHANT NEWNAHA, SENIOR RATES STRATEGIST, TD SECURITIES, SINGAPORE:

"No real surprises from the BOJ decision to hike the target rate 25bps to 1.25%, and neither was the 7-2 split, with recent Takaichi appointees Sato and Asada voting against the hike. The statement retains most of the hawkish tone from the July Statement noting 'accommodative financial conditions are expected to be maintained' even after the hike, and the ‌Bank 'will continue to raise the policy ⁠interest rate'. The Bank reiterated its concerns that underlying inflation could deviate upwards from its 2% target, but we don’t see a smoking gun supporting a back to back hike in October. We stick with our call for rate hikes roughly every quarter with the next 25bps hike in December."

TOHRU SASAKI, CHIEF STRATEGIST, FUKUOKA FINANCIAL GROUP AND FORMER BOJ OFFICIAL, TOKYO:

"It's a little bit surprising to see that the yen weakened after the announcement. Maybe some market participants were expecting intervention like the last time before and after the BOJ's decision.Probably some were surprised because two members opposed the decision and maybe some were expecting some mention of a 50 basis point hike. It's a bit difficult to meet market expectations. Ueda-san has to be very hawkish to keep the yen from depreciating, but I think it's a bit difficult for him to be so hawkish. He has to say that the BOJ will probably hike the policy rate again within this year. But I think it's difficult for him to say, so the market will take it as a dovish press conference."

ANTHONY MALOUF, EBURY, SYDNEY:

"The seven-to-two vote is a touch wider than a clean hawkish consensus would suggest. Dissenters Asada Toichiro and Sato Ayano argued that inflation and growth have not accelerated enough to justify tightening now. The more telling split, though, sits elsewhere. Board members Takata Hajime and Tamura Naoki opposed the outlook language from the opposite direction, arguing underlying inflation has already reached a level consistent with ​the 2% target, which points to appetite for a faster pace rather than a slower one. The yen sold off ​after the decision. We interpret this as markets focusing on the two dissents, suggesting the board is ⁠less united behind a faster pace than the vote count alone implies, rather than doubting the hike itself. That fits our own view that the BOJ will deliver further hikes at a steady quarterly pace, with the next move in December and another in the first quarter of 2027, taking the policy rate to its neutral level near 1.75%."

KENTO MINAMI, SENIOR ECONOMIST AT DAIWA SECURITIES, TOKYO:

"The overall impression of the statement was dovish. BOJ’s new board members Ayano Sato and Toichiro Asada dissented from the decision. They were chosen by Prime Minister Sanae Takaichi, which suggests difficulties in raising rates in the future as the BOJ will have new board members going forward. "The statement indicated that the BOJ would raise rates at least ​once every six months, but this was in line with market expectations that the BOJ would raise rates every three months. These two dissenters were a dovish factor, which is why the yen started falling right after the decision."

MASATO KOIKE, SENIOR ECONOMIST, SOMPO INSTITUTE PLUS, TOKYO:

"I think the statement was hawkish, but markets had expected something ​even more hawkish, which is why the yen weakened after the announcement. "What ⁠struck me as hawkish was the explicit reference to accommodative financial conditions, and the wording that the BOJ will continue to adjust the degree of monetary easing. It also clearly mentioned upside risks. In addition, the BOJ cited a range of factors — not just crude oil, but price increases linked to AI-related demand, the weaker yen, and the mutually reinforcing mechanism between wages and prices. Those elements made the decision look hawkish overall. I don't think (Sato joining Asada in dissent) will have an impact when it comes to the pace of rate hikes being delayed. Sato's dissent was in line with expectations, but I see it as opposition to the timing or pace rather than a blanket objection to rate hikes. It did not come across as outright opposition, which I think is positive for the BOJ as it proceeds with further rate increases."

HIROFUMI SUZUKI, CHIEF FX STRATEGIST, SMBC, TOKYO:

"The rate hike itself was in line with market expectations, but the two dissenting votes came as a modest surprise, as only some market participants ⁠had anticipated them. The outcome has somewhat ​tempered expectations for further rate hikes and conveyed a dovish impression. The pace of future rate hikes is likely to depend primarily on the views of the BOJ's leadership. We therefore do not expect the pace to differ significantly from current market expectations.The yen initially weakened following the ​decision, but attention now turns to Governor Ueda's inflation outlook and policy stance at the press conference."

FRED NEUMANN, CHIEF ASIA ECONOMIST, HSBC, HONG KONG:

"The tone of the statement, along with two dissenters on the decision to raise rates, leaves lingering doubts that Japan’s central bank will be cautious in tightening monetary policy further. In addition, new inflation numbers out this morning for August showed that price pressures remained unchanged in August, rather than accelerate. All eyes are now on the press conference to be held by Governor Ueda, with the market looking for hawkish reassurances that the BOJ is prepared ​to raise rates again soon. While back-to-back hikes appear unlikely, investors will look for clues as to whether officials are prepared to raise interest rates again in December. Given that the Fed has tilted into a more hawkish direction, the pressure remains for the BOJ to follow suit: Governor Ueda will have to follow-up today's rate hike with by keeping the door open for another hike before the end of the year."

Sellside reactions aside, Governor Kazuo Ueda said that with the price trend very close to the bank’s 2% target, authorities now need to ensure inflation doesn’t overshoot.

“It has become important to stabilize the rate of price increases at a level of around 2%,” Ueda said in a post-decision briefing. “In that sense, I believe the phase of policy has shifted to a new stage.” The bank should act preemptively to avoid being forced into a situation where rapid hikes might become unavoidable, he added.

Traders also remained ​alert to the risk of intervention to prop up the currency after Finance Minister Satsuki Katayama said Tokyo won't hesitate to conduct further coordinated action, following a joint US-Japan move to boost the yen in late July.

The yen rallied sharply in early September to its highest since February as traders bet the BOJ ​would embark on multiple rate hikes, although those wagers came under question on Friday. 

The dollar rally against the yen helped the DXY dollar index climb 0.25% to 100.48, as broader currency markets remained focused on energy prices and the U.S. Federal Reserve. The index, which tracks the ​currency against six major peers, was ​up 1.4% for the week to ⁠around a six-week high after the US Federal Reserve hiked interest rates on Wednesday and signaled more increases could be coming.

Traders now see a roughly 55% chance of a quarter-point hike at the Fed's next ​two-day meeting next month, up from 27% a week ago, according to the CME Group's FedWatch ​tool.

Finally, it's worth noting that the BOJ dissenters directly jeopardized the plan of Steve Bessent for a stronger yen (and thus less fears of TSY selling to prop up the yen through intervention). According to Bloomberg, Warsh should "seriously consider a little Friday afternoon intervention to ensure that this bounce in USD/JPY makes a lower high than the prior ascent to just over 160."

Of course, the problem with constant meddling in market prices is the risk that the market tests you, forcing ever-more frequent action to keep things in line. At the very least anyone who stayed with the short-dollar trade has received a painful kick in the shin, which arguably will dissuade some punters from staying in the position the next time that the authorities step in. 

Tyler Durden Fri, 09/18/2026 - 13:01

Huh. Maybe MobLand is asking harder, deeper questions than I thought.

Use the Polymarket promo code NYPMAX1 to deposit $10 and get a $50 trading bonus for Texas Tech vs. Houston.

Tony-winning producer Tom D’Angora launched the fundraiser with a goal of $25K to support Hilton's children and mother.