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The vocally-gifted showman isn't going anywhere anytime soon.

The 'Daejon Love' Stock Market

Submitted by QTR's Fringe Finance

Words cannot do justice to the sheer idiocy of the story that broke this past week. It is hilarious, depressing, fascinating and deeply embarrassing for the human race all at once…a story that is proof that we may collectively be both far more gullible and far more comfortable with deception than even the most cynical among us previously imagined.

The story centers on a man named Daejon Love who, according to federal prosecutors, allegedly spent years convincing women that he was a professional football player for the San Francisco 49ers when he wasn’t.

Not trying out for the 49ers. Not once affiliated with the team. Not played professionally somewhere else and exaggerated the details. He convinced women that he was an actual NFL player for one of the most famous franchises in American sports when we wasn’t.

Yes. You read that right. In an era in which the entirety of all human knowledge is accessible from a 6 inch by 2 inch rectangle sitting in literally everyone’s front pocket, this 35 year old allegedly constructed an elaborate fictional life around himself that everyone believed and no one took the time to fact check. He did it by, among other things, carrying a 49ers helmet and gear around with him and wearing them…no matter how absolutely f*cking ridiculous it looked…all the time.

He even had a 49ers birthday cake made with his name on it and apparently created a video of himself “signing” with the team. He carried the helmet everywhere, including to the beach, where he filmed himself running some of the worst wide receiver routes ever captured on camera while some rando with a vermicelli noodle for an arm underthrew him passes as he lumbered around full sized telephone company construction cones set up on a beach.

Eventually, according to reporting on the FBI investigation, Love’s fake online footprint became convincing enough that search engines and artificial intelligence occasionally helped perpetuate it. AI started listing him as a professional NFL wide receiver when he wasn’t.

I couldn’t help but read the story yesterday and realize it is a perfect analogue to our modern stock market. You don’t have to be an actual NFL player anymore. You just need the helmet, the jersey, some followers, a few pictures standing next to expensive shit and enough people repeating the story. Eventually an algorithm looks around, sees that everybody else appears to believe you’re an NFL player and concludes that you must, in fact, be an NFL player.

Look, many of today’s big name stocks are exceptional businesses generating actual free cash and net income. Just like Jerry Rice used to actually make his way onto the field and catch actual passes in real NFL games.

But there’s also a growing number of Daejon Love companies in today’s market, because somewhere along the way Wall Street decided that actually turning a profit no longer mattered. If Jerry Rice is a fat free cash flow yield, Daejon Love is the 10-K of a company posting massive losses while pointing to its revenue, narrative and bullshit future projections instead of its net income and capital needs.

Nowadays, revenue can be projected decades years into the future and slapped with a multiple that would have gotten you involuntarily committed in 1995.

Revenue projections are faking you’re an NFL player when you’re not. Like with Daejon, narratives get you “investors”. If you’re a 35 year old dipshit pretending to be someone else with all your free time instead of working an actual job for a living, revenue projections get you laid under false pretenses by women who’d never want to talk to you otherwise.

Net income, on the other hand, is terribly inconvenient. The line of thirsty women dries up quick when it comes down to profit and loss. The second that reality starts inching into the picture, you become the guy no one can stand or wants to talk to.

The modern market would much rather hear that revenue grew 48% than that you lost $2 billion last year.

Nowadays, when investors ask, “Did the company actually make any money?” analysts respond, “Why are you being so negative? Revenue grew 48%!”

When investors ask, “Okay, but did free cash flow grow?” analysts respond, “You’re missing the opportunity. Revenue grew 48%.”

When investors ask, “How much capital expenditure did it take to generate that growth?” analysts respond, exasperated, “This guy just doesn’t understand AI. Revenue. Grew. 48%.”

This is essentially the Daejon Love method of equity valuation: don’t ask whether I play for the 49ers. Just look at my helmet.

Federal prosecutors say Love and his alleged accomplice, Taylor Jamie Chan, built an elaborate system designed to convince women that Love was extraordinarily wealthy. Fake investment accounts were allegedly displayed. Chan allegedly played the role of Love’s successful financial adviser. Three way FaceTime calls reportedly showed supposed investment gains. The government says at least 26 women ultimately sent approximately $1.3 million.

The appearance of wealth established credibility. Credibility attracted money. The incoming money helped finance the appearance of wealth. That appearance attracted additional money. Every additional participant therefore helped validate the story for the next participant. Daejon invented the public relations department of a Ponzi scheme.

The stock market has developed its own similar loop. A company projects enormous future revenue, investors bid up the stock, and the higher valuation gives the company access to more capital. It raises money, makes acquisitions, increases spending, and uses its expensive stock as currency to generate the growth needed to justify its valuation. That growth pushes the valuation higher, allowing the cycle to repeat. In effect, the company is trying to grow into a valuation that is itself financing the growth. It works until the market stops providing cheap capital, the promised cash flows fail to materialize, and the entire loop begins to reverse.

This is when everyone in the world discovers you don’t play for the 49ers.

This is what makes the Love story such a wonderful metaphor. Again, Love’s fabricated internet presence became substantial enough that Google searches and AI generated results occasionally identified him as an actual 49ers player. The internet had effectively begun marking his bullshit to market. He could point toward the search result and say, effectively, don’t take my word for it. Google says I’m an NFL player.

Wall Street does this every day. Don’t believe the narrative? Look at the stock price. Don’t believe the stock price? Look at the market capitalization. Don’t believe the market capitalization? Look at the revenue growth. Don’t believe the revenue growth? Look at total addressable market. Don’t believe total addressable market? Look at the analyst price targets.

Why did the analysts raise their price targets? Because the stock price went up. Excellent. Due diligence complete. Look at the f*cking helmet.

Then, at some point nobody remembers which piece of evidence was originally supposed to independently validate which other piece of evidence. The machine is simply validating itself.

This isn’t entirely irrational. Rapidly growing companies should often prioritize expansion over maximizing near term profits. Amazon famously spent years reinvesting enormous amounts of money into its business. Many of the greatest companies in history would have been badly misunderstood if investors had looked exclusively at current year earnings.

But Wall Street has taken a reasonable idea and, as Wall Street tends to do, driven it directly through the guardrail. Remember WeWork’s “Community Adjusted EBITDA”?

We have entered an environment where investors can seemingly forgive almost anything if the revenue chart points northeast. No profits? Growth company. Negative free cash flow? Investing for the future. Massive stock based compensation? Noncash expense. Enormous capital expenditures? Building the infrastructure for the future. Constant dilution? Funding growth. Acquisition spending? Expanding the platform. Adjusted EBITDA? Now we’re talking.

This becomes especially entertaining when discussing AI. The AI revolution is real. The demand is real. The infrastructure buildout is real. The revenues are real. And some of the companies supplying the boom are producing extraordinary amounts of actual free cash flow and net income.

But the market doesn’t stop with those companies. It takes the legitimate economics at the center of the boom and radiates them outward. The chip company makes enormous profits, therefore the data center company deserves a giant multiple. The data center company is growing rapidly, therefore the electricity provider deserves an AI premium. The electricity provider needs generation, therefore nuclear is an AI trade. Nuclear needs uranium, therefore uranium is an AI trade. Data centers need cooling, so cooling is an AI trade. They need copper, so copper is an AI trade. They need buildings, so buildings are an AI trade. They need financing, so private credit is an AI trade.

Eventually the non-English speaking man on an e-bike from Senegal delivering the DoorDash lunch to another man responsible for emptying the portable shitters at the construction site of a data center will soon trade at 28x revenue himself…because he has “exposure to the AI infrastructure ecosystem.” This is how things lead up to a crash.

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Once the narrative attaches itself to a company, investors begin valuing revenue differently. Revenue is where imagination lives. Net income is where imagination goes to die. Free cash flow is worse because it asks the deeply antisocial question of whether shareholders will ever actually receive any money.

You can build magnificent valuation models when you don’t concern yourself with that detail. Take a company with $1 billion in revenue. Assume the addressable market is $100 billion. Assume it captures 20% of that market. Assume 30% margins once it reaches scale. Assume the market continues paying a premium multiple in 2032. Discount everything back using whatever rate produces the number you wanted before opening Excel. Congratulations. Your $15 billion company is worth $60 billion.

Valuation increasingly seems to work the same way. A company worth $20 billion can look speculative. At $50 billion, it becomes interesting. At $100 billion, institutions start paying attention. At $250 billion, analysts explain why it has a defensible moat. At $500 billion, portfolio managers explain why they have to own it. At $1 trillion, CNBC installs a permanent camera outside headquarters. At $2 trillion, somebody explains that you’re thinking too small. At $4 trillion, the valuation itself becomes part of the bull case. Obviously the market wouldn’t value it at $4 trillion if it weren’t worth $4 trillion. Right?

Price creates legitimacy. Legitimacy attracts capital. Capital pushes up price. Price creates more legitimacy. It’s the custom 49ers helmet of finance.

And if the stock gets there before the earnings do, simply extend the forecast another five years. Again: look at the jersey. Don’t ask who’s wearing it.

But when someone asks Daejon to suit up on Sunday? That’s where things get interesting. And that day is coming for the market and AI eventually…

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Tyler Durden Mon, 08/31/2026 - 11:40

Key Events This Week: Jobs, JOLTS, Beige Book And ISM

Following on the heels of Warsh’s speech at Jackson Hole last Friday, which was hawkish yet which also sent yields to multi-year highs thus refuting claims the Fed Chair regained some credibility, the data docket picks up this week with the main event being Friday’s August employment report. Regarding Warsh, he delivered a crisp message to market participants last Friday that resolved much of the confusion from his July post-meeting press conference. Indeed, Warsh went one step further and provided his own views on recent data trends. On inflation Warsh stated, “And while this summer's PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved.” It will be interesting to see if Governor Waller reinforces this message when he takes part in a moderated discussion on inflation this Thursday at Reuter’s Next conference.

On the labor market, Warsh noted that “When labor supply is barely growing, monthly job gains are naturally going to run low. There are always areas of concern in the labor market—for example, among recent graduates. In general, though, people who want to work, by and large, are holding or finding jobs. They may well be concerned about possible future labor disruptions, but as of now, I believe the labor markets are consistent with full employment.” In short, Warsh delivered a message that was bullish on the economy and hawkish on inflation, reinforcing our longstanding view that the Fed will hike rates at the September 16 FOMC meeting.   

Market participants will no doubt be trading upcoming data within the context of the views Warsh laid out last Friday. Though economists expect headline nonfarm payrolls to rebound (+65k forecast vs. -23k previously) due to payback from state and local education hiring, the private payroll forecast is somewhat more muted (+25k vs. +30k). Meanwhile, Bloomberg economists say there is a "decent chance" of a second consecutive negative print... and the Fed has never hiked after two negative prints.

I think next week’s payrolls print will disappoint, and has decent (though not our baseline) chance of being negative.

Supposed it is a negative print. There is no modern Fed era precedent of Fed hiking after two negative payrolls prints.

Still 50-50?

— Anna Wong (@AnnaEconomist) August 29, 2026

That said, with average hourly earnings (+0.4% vs. +0.1%) also expected to rebound following some unusually soft prints in specific sectors last month, the year-over-year growth rate of the DB payroll proxy for nominal income should remain around 4.0%. To be sure, Fed officials are likely to focus greater attention on the unemployment rate, which economists expect will remain unchanged at 4.1%, though there is some risk that it rounds up to 4.2%. However, even if the unemployment rate ticks up a tenth, it is unlikely to result in the Fed reappraising its labor market view, particularly given as Chair Warsh noted “Unemployment claims, on a four-week average—an empirically robust real-time indicator—are near their lowest level in decades.”

As DB notes in its weekly preview, there are a few data points ahead of Friday’s employment report print that could on the margin impact sentiment heading into the print. While Tuesday’s JOLTS data are somewhat dated given that they correspond to July, they will nonetheless provide the latest readings on the hiring, layoffs and quits rates. Broadly speaking, most of these rates are expected to remain unchanged from recent tight ranges – still painting the picture of a “low hiring / low firing” labor market environment that we’ve been accustomed to for the past three years. Wednesday’s ADP private employment survey (+44k exp) should reinforce the picture of a stable labor market, albeit at depressed levels of gains partly due to low labor supply growth that Chair Warsh mentioned. Our ADP forecast is consistent with the latest reading for their weekly series.

Lastly, Tuesday’s manufacturing ISM (55.8 vs. 55.6) and Thursday’s services ISM (54.1 vs. 54.1), while not directly impacting forecasters’ payroll expectations, will nevertheless provide a more forward-looking view from businesses on hiring trends. Note that while the employment component of the manufacturing survey has been trending up over the last three months, the employment component of the services series has been moving in the opposite direction and remains below 50.

In summary, should this week’s labor market data come in close to expectations, it will reinforce monetary policymakers’ view of a stable labor market that is consistent with their maximum employment mandate. As Chair Warsh emphasized “Inflation is running above our 2 percent target. So the Fed's predominant focus right now should be on prices.” As we noted in our Jackson Hole recap note, the specificity of Warsh’s comments and the uniformity of the color in a hawkish direction, has changed the setup for the September FOMC meeting. As long as incoming data do not surprise meaningfully to do the downside, Warsh’s speech has established a rate hike as the most likely policy outcome next month.

Here is a day by day preview courtesy of Rabobank

• Monday: sees German inflation numbers for August, starting with the regional states and followed later that day by the first estimate for the nationwide and harmonised gauge. Last week, data from France, Belgium and Spain already indicated that the rebound in energy prices would push inflation higher again following its easing trend since May. We expect the same in Germany. In the US, the main figure to watch is the (second-tier) Dallas Fed Manufacturing Activity survey for August.
• Tuesday: German retail sales (July), Italian GDP details (Q2) and UK money supply and credit (July) all feature in the morning session, but the key figures to watch are Eurozone headline and core inflation for August. In particular, a renewed rise in core inflation (not our base case, but a possibility) could trigger further rate hike expectations beyond the September meeting. No change in the Eurozone unemployment rate for July would only underscore those risks. In the US, we have the JOLTS (July) labor-market flows data. Normally not a market mover, it could nevertheless shed more light on the recent slowdown in job growth. Meanwhile, only a small fall in the US ISM manufacturing survey for August (as per the consensus) could be interpreted by the market as a sign that US, as well as global, manufacturing activity is recovering despite ongoing concerns over tensions in the Middle East.
• Wednesday: Australia releases its Q2 GDP numbers. Consensus expects quarterly growth to match Q1 at 0.3%. The Fed also releases its Beige Book, but Wednesday’s key event is likely to be the Bank of Canada’s interest rate decision, which investors may suddenly see in a different light since the eruption of the US-Canadian trade war. There are no signs that negotiations will resume anytime soon.
• Thursday: Australia releases July trade balance figures, while the US calendar includes the July trade balance and August ISM services survey. Final S&P Global PMI releases and country extensions are also due, including for Spain and Italy, alongside Eurozone PPI and German factory orders for July.
• Friday: The US nonfarm payrolls and unemployment figures are the highlight of the day. The street forecasts net job creation of 55,000 in August, following an unexpected dip in July. Although the jobs report is always a market mover, Fed Chair Warsh’s comments at Jackson Hole suggest the Fed’s focus is now on the near-term path for inflation rather than the labour market. Eurozone retail sales for July are expected to recover from a dip in June, but the underlying trend remains lacklustre as households face slowing real wage growth. The ECB’s Lane speaks in Dublin, but since –by then– the ECB’s pre-rate decision quiet period has commenced, he may not address current policy issues. 

Finally, looking at just the US, Goldman writes that the key economic data release this week is the employment report on Friday. There are several speaking engagements with Fed officials this week including events with Governor Barr on Tuesday and Governor Waller on Thursday. 

Monday, August 31 

• There are no major economic data releases scheduled. 

Tuesday, September 1 

• 09:05 AM Fed Governor Barr speaks: Fed Governor Michael Barr will speak about the economic outlook and financial inclusion at the Second Chance Lending Forum in Washington DC. Speech text and Q&A are expected. 
• 09:45 AM S&P Global US manufacturing PMI, August final (consensus 53.3, last 53.2)
• 10:00 AM ISM manufacturing index, August (GS 56.0, consensus 55.2, last 55.6): We estimate that the ISM manufacturing index edged slightly higher to 56.0 in August, reflecting a modest improvement in regional manufacturing surveys—our manufacturing survey tracker increased by 0.3pt to 56.3 in August—and a slight tailwind from residual seasonality.
• 10:00 AM Construction spending, July (GS -0.1%, consensus flat, last -0.1%)
• 10:00 AM JOLTS job openings, July (GS 7,300k, consensus 7,313k, last 7,359k): We estimate that JOLTS job openings edged down to 7.3mn in July based on the signal from online measures of job postings from Indeed and LinkUp.

Wednesday, September 2 

• 08:15 AM ADP employment change, August (GS +55k, consensus +47k, last +44k)
• 10:00 AM Factory orders, July (GS -0.2%, consensus +0.6%, last -0.3%)
• 02:00 PM Fed releases Beige Book, September meeting period: The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The Beige Book for the July FOMC meeting period noted that economic activity increased at a slight to moderate pace in all but one Federal Reserve Districts and that consumer spending edged up as higher prices, particularly for fuel, dampened sales in other categories. In this month’s Beige Book, we will mainly look for anecdotes related to how consumers and firms are responding to the increase in energy prices from the conflict in the Middle East, the evolution of labor demand, and firms’ expectations of activity growth for the remainder of the year.

Thursday, September 3 

• 08:30 AM Trade balance, July (GS -$91.1bn, consensus -$90.0bn, last -$73.3bn)
• 08:30 AM Nonfarm productivity, Q2 final (GS +1.4%, consensus +1.4%, last +1.4%); Unit labor costs, Q2 final (GS +1.1%, consensus +1.3%, last +1.3%): We estimate that nonfarm productivity growth will be unrevised at +1.4% quarterly annualized in the second release for 2026Q2. Since 2019Q4, labor productivity has grown at an annualized rate of 2.1%, a much stronger pace than the 1.6% average pace of the prior cycle. We estimate that unit labor costs—compensation divided by output—will be revised down by 0.2pp to +1.1%.
• 08:30 AM Initial jobless claims, week ended August 29 (GS 205k, consensus 205k, last 203k): Continuing jobless claims, week ended August 22 (consensus 1,787k, last 1,778k)
• 08:30 AM Fed Governor Waller speaks: Fed Governor Christopher Waller will speak in a moderated conversation at the Reuters Next event about the outlook for inflation, the U.S. economy more broadly, and the Fed's policy response;  
• S&P Global US services PMI, August final (consensus 56.8, last 56.8); 10:00 AM ISM services index, August (GS 54.1, consensus 54.1, last 54.1)  We estimate that the ISM services index was unchanged at 54.1 in August, reflecting a decline in our non-manufacturing survey tracker (-1.1pt to 53.5) but a tailwind from potential residual seasonality.
• 03:00 PM Cleveland Fed President Hammack (FOMC voter) speaks: Cleveland Fed President Beth Hammack will give pre-recorded opening remarks at an event called Connecting Communities: When Every Dollar Counts: Worker Perspectives on the Economy. On August 27, Hammack said, "I think it’s appropriate for us to put some restraint there to help bring inflation back down to target... The longer inflation stays above our objective, the harder it will be for us to bring it back down."

Friday, September 4 

• 08:30 AM Nonfarm payroll employment, August (GS +40k, consensus +55k, last -23k); Private payroll employment, August (GS +40k, consensus +53k, last +30k); Average hourly earnings (MoM), August (GS +0.4%, consensus +0.3%, last +0.1%); Unemployment rate, August (GS 4.1%, consensus 4.1%, last 4.1%): We estimate nonfarm payrolls increased 40k in August, reflecting a softer signal from alternative data. Additionally, August payrolls have exhibited a consistent negative bias—particularly in initial prints—over the last decade. We estimate average hourly earnings rose 0.4% month-over-month in August, reflecting positive calendar effects. We estimate that the unemployment rate was unchanged at 4.1% in August, reflecting a stabilization in continuing claims.

Source: Rabobank, DB, Goldman

Tyler Durden Mon, 08/31/2026 - 11:30

It's time to revisit all the drama from the Villa!

Star-spangled sales to feel good about.

Messi's decision comes more than three weeks after his father, Jorge, died at 68 following a battle with an illness.

Bessent To Unveil Weekly Iran-Related Secondary Sanctions, After 1st Round Falls Flat

The US Treasury Department plans to roll out new secondary sanctions every week to intensify economic pressure on Iran, US Treasury Secretary Scott Bessent revealed Sunday.

"You're going to see a lot more of these every week," Bessent said ahead of a meeting of Group of 20 (G20) financial leaders in Asheville, North Carolina, confirming that announcements will come on a weekly basis.

The warning and threat follows on the heels of the US having sanctioned a couple UAE branches of a major Egyptian bank last week, after which some pundits called out the weakness and flimsiness of the action.

via Reuters

Treasury named the UAE branches of Egypt's Banque Misr, alleging financial ties to Iran and money laundering, cutting them off from the US financial system for obtaining dollars.

However, Banque Misr itself - which is Egypt's second largest financial institution - is at the moment not facing any direct Washington punitive measures. Treasury had made clear the new measures wouldn't apply to "Banque Misr operations in any other country."

What's more is that even the targeted UAE branches of the Egyptian institution appear to have an appeals window of sorts, and may be given a chance to rectify the matter over a period of 30 days. No other UAE bank has come under the same threats so far.

According to Al Jazeera:

Banque Misr UAE’s customers include “front companies used by Iran’s Ministry of Defence and the Islamic Revolutionary Guard Corps to evade US sanctions, as well as to launder money on behalf of Iranian Supreme Leader Mojtaba Khamenei,” the Treasury said.

The US government’s proposed punishment is expected to come into effect in 30 days after a public comment period, and will not impact any other branches of the bank.

So much for 'Economic D-Day'...

And recall this scene from just a week ago:

Reporter: You describe this as an economic D-Day, but D-Day wasn’t a threat of invasion, and the U.S. didn’t give a timeline to Germany. Why not impose the sanctions today?

Bessent: Well, we are giving everyone the opportunity to remedy bad behavior. Why would I want to blow up the global financial system? We believe that it is important to level set, and give people a cure period, but they should know that will move very quickly and we are serious. Secondary sanctions are a very powerful tool.

Still, Bessent continues to talk tough, telling the AP in a Sunday interview, "This is going to be financial violence if we have to."

"We are showing people that we know who you are, you know who you are, and this has got to stop," he added.

Bessent further previewed his plan to reinforce the message to G20 finance ministers and central bank governors this week, stressing: "There can be no leakage. You're either with us, or you're with the Iranians."

Treasury is trying to thread an untenable needle. It wants to look like it's acting forcefully following its D-Day announcement, but has limited options without, as Secretary Bessent said, blowing up the global financial system. They also appear to want to avoid UAE banks for now

— Timothy E Kaldas (@tekaldas) August 31, 2026

Notably, the Trump admin has been relatively silent on whether it intends to target Chinese entities, with Beijing having long been in effect an Iranian economic "lifeline".

The whole 'weekly' secondary sanctions rollout seems intended to just keep kicking the can down the road, as the US administration appears still in frantic search of a strategy for dealing with a continually defiant Iran. The endgame remains perfectly unclear.

Tyler Durden Mon, 08/31/2026 - 11:20

Something Big?

By Elwin de Groot, head of macro strategy at Rabobank

Icelanders voted “no” to reopening EU membership talks in a referendum over the weekend, albeit by the fairly narrow margin of 2.8 percentage points. Against a backdrop of uncertainty over global trade and geopolitical ructions – including the Greenland crisis at the turn of the year – one intriguing conclusion is that the vote appears to have been driven by economic interests rather than security concerns. Iceland has no military and relies on its NATO allies for defense. Yet it already enjoys good trade relations with the EU, while some voters feared that membership would leave its large fishing industry vulnerable to EU policies. At the same time, Europe’s recent inability to project geopolitical power convincingly and collectively probably did not help sway voters towards the “yes” camp. In a response, PM Frostadóttir said that negotiations with the EU would not continue and that “[…] something big has to change in the next 24 months for this [EU membership] to be at the top of the agenda.” Perhaps she had an ‘Iceland crisis’ in mind?

Staying with European politics, the latest Elabe presidential poll – conducted on 29-30 August 2026 for BFMTV and La Tribune Dimanche – unsurprisingly shows a highly fragmented French political landscape with one dominant feature: Marine Le Pen is the clear front-runner for the 2027 presidential election. Across the scenarios tested, Le Pen (RN) attracts 34% to 35.5% of first-round voting intentions, putting her well ahead of every rival. The contest for second place is much tighter. Édouard Philippe currently appears best placed, polling at around 47.5% against 52.5% for Le Pen. The poll also suggests that Mélenchon has lost momentum and may find it harder to reach the run-off, while social-democratic candidate Glucksman appears to be consolidating support on the centre-left. Most strikingly, Le Pen wins every run-off tested by Elabe: she is the overwhelming favorite to reach the second round and, on current projections, to win the presidency.

For investors worried about fiscal profligacy under a Mélenchon presidency, these probabilities – though they could still shift considerably with more than seven months to go – may offer some comfort. For the EU, however, a Le Pen presidency would still create a more difficult environment. Although she no longer openly advocates leaving the euro or holding a referendum on EU membership, she continues to seek a reduction in EU powers over areas including immigration, budgetary decisions, trade policy, and judicial and constitutional sovereignty. The current discussion over an expansion of the EU budget for 2028-2034 to almost €2 trillion – which requires unanimity – could become a flashpoint should discussions be delayed into 2027.  

Le Pen’s stance broadly resembles the approach of parties such as Meloni’s Brothers of Italy: not seeking to leave the EU, but deeply sceptical of further integration. Meloni has pursued that strategy with surprising success in Italy (and without major consequences for the EU), but France’s fiscal position is considerably more fragile. Could something big still change the polls?

Turning to financial markets, Friday certainly delivered something big. Fed Chair Kevin Warsh appeared to rebuild some of his credibility as an inflation fighter in his first speech at the annual Jackson Hole Symposium, stressing that the Federal Reserve still has “work to do” to return inflation to its 2% target. The message marked an important shift from the communication strategy he had followed since taking office. After the 17 June FOMC meeting, the US yield curve steepened and Treasury term premia rose noticeably as investors concluded that Warsh’s tough rhetoric on inflation was not being matched by policy action.

Part of that unease reflected Warsh’s outspoken opposition to forward guidance. In his view, excessive guidance encourages investors to pay less attention to incoming data and underlying economic trends, while constraining the central bank’s policy flexibility. Markets, however, read the combination of policy inaction and limited communication as a sign that Warsh was content to let higher market interest rates do part of the Fed’s work by tightening financial conditions and containing inflation.

At Jackson Hole, Warsh sought to dispel that impression without abandoning his broader philosophy – or at least that is our reading. He emphasised that “price stability does not emerge on its own, nor does inflation automatically return to target. It is the Fed’s responsibility to deliver price stability.” More importantly, for the first time since becoming Chair, he explicitly expressed dissatisfaction with recent inflation developments and signalled that he was open to further rate hikes unless underlying inflation began to improve convincingly. As he put it: “We must be convinced that underlying inflation is moving toward our target clearly and at a sufficient pace. Otherwise, we still have work to do.”

Markets accordingly priced a greater probability of additional rate increases. Yet longer-dated Treasury yields fell, suggesting that investors saw Warsh’s remarks as reducing policy uncertainty and reinforcing the Fed’s commitment to restore price stability. Put differently, the reaction combined a slightly more hawkish near-term policy outlook with lower longer-term inflation and policy-risk premia.

So Warsh’s prepared remarks seemed designed to lift rate-hike expectations, rebalance the September debate towards the hawks and rebuild his inflation-fighting credibility after July’s “all talk, no action” criticism. Yet this creates a difficult balancing act, as the White House may oppose a hike so close to November’s midterms. On balance, we still think the FOMC is more likely to remain on hold for the rest of the year, but the upside risks to our forecasts have clearly rebounded, as our US Strategist and Fed watcher Philip Marey writes here.

Even so, Warsh delivered an important signal: the Fed is not relying on tighter financial conditions alone and remains willing to tighten further if underlying inflation stalls. The next round of data – especially the 4 September employment report and 11 September CPI – could therefore prove crucial for the Committee’s swing voters.

On inflation, medium- to longer-term gauges such as 5y/5y inflation swap forwards remain broadly consistent with central-bank policy targets – an observation also highlighted by Stephen Miran in a recent FT opinion piece. That is true in both the US and Europe. Yet these measures may not fully capture the upside risks, particularly as energy prices have continued to climb in recent weeks. Over the weekend, the US and Iran exchanged strikes for the first time in more than a month, as Iran launched a missile-and-drone attack on US air bases in Jordan early Monday in response to an American airstrike on Iranian rocket launchers on Sunday.

The weakening correlation between energy prices and inflation swaps could be reassuring: markets may simply trust central banks to keep long-run inflation anchored. But it could also indicate that investors view long-term inflation mainly through the lens of policy credibility and structural regime risks, such as a return of fiscal dominance. Such regimes rarely change gradually; they tend to shift suddenly. And that would take something big.

Tyler Durden Mon, 08/31/2026 - 11:00

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